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In 2009, approximately 4 trillion kilowatt hours of electricity were generated by the U.S. power sector. By 2035 electricity generation is expected to rise to more than 5 trillion kilowatt hours, a roughly 25% increase from 2009 levels. The fuel mix for U.S. electricity generation includes four primary categories: (1) coal, (2) natural gas, (3) renewables, and (4) nuclear. As illustrated in Figure 1 , coal is the largest electricity generation fuel source for both actual (2009) and projected (2035) generation. However, EIA projects that natural gas and renewables are the only fuel sources that would experience growth, in terms of percentage of the electricity generation mix, over the projection period. During his January 25, 2011 State of the Union speech, President Obama proposed a Clean Energy Standard (CES) policy framework that would result in 80% of U.S. electricity generation coming from "clean energy" sources by 2035. "Clean energy," as described by President Obama, would include renewables, nuclear power, and partial credits for clean coal and efficient natural gas. While there is no official definition, a federal Clean Energy Standard might be defined as a requirement to generate a percentage of electricity from certain energy sources. It is a policy designed to encourage U.S. electricity generation from "clean" or "cleaner" energy sources within a certain time period. Many CES proposals require individual utility companies to comply with a federal CES, although some utilities may be exempt from CES requirements based on their total amount of annual electricity sales. Generally, utilities can comply with CES requirements through a combination of (1) electricity generation from qualified clean energy sources, (2) purchasing clean energy credits, and (3) making alternative compliance payments (ACPs). Each of these will be discussed below. Previous CES proposals have addressed multiple policy design parameters, including (1) technologies that qualify, (2) base quantities of electricity, (3) goals and requirements, (4) alternative compliance payments. Understanding the implications and inter-relationships of these parameters is an important element of CES policy design and will assist Congress with considering if overall objectives such as increasing clean energy generation, minimizing rate payer impacts, and job creation are likely to be achieved. This report evaluates design elements of previous CES proposals, summarizes the Administration's CES policy framework, provides state-level baseline CES compliance analysis, and presents several policy options that Congress might consider as part of a CES debate. During the 111 th Congress several Clean/Renewable Energy Standard policies were proposed, although none became law. In order to provide background on previously proposed CES legislation, four proposals were analyzed and compared against multiple design parameters (See Table 1 ). A more detailed analysis of these proposals is presented in a side-by-side comparison matrix that can be found in Appendix A . All proposals were compared in order to assess areas of commonality and divergence. While not an all-inclusive or exhaustive list, following is a brief overview and discussion of the design elements considered for this analysis. The base quantity of electricity is a critical Clean Energy Standard design element as it establishes the amount of electricity, typically measured in kilowatt-hours, that applies to CES goals and requirements. Proposals analyzed have base quantity definitions that range from 100% of utility power sales to sales less the amount of power generated by hydro-electricity and municipal solid waste (MSW) incineration. A hypothetical example of how different utilities might derive their respective CES base quantities in the latter case is provided in Table 2 . Clean Energy Standard targets and goals set the percentage of electricity that must be generated from clean energy sources by a certain date. The percentage articulated in a CES proposal is applied to the base quantity of electricity to calculate the number of kilowatt-hours that must be generated from clean energy sources in order to achieve compliance by a certain date. Examples of CES targets/goals include (1) 50% of base quantity by 2050, (2) 15% of base quantity by 2039, and (3) 15% of base quantity by 2020. Defining and determining which energy sources will qualify under a CES proposal could be a design element worthy of consideration. A clear definition of qualifying sources is important as it allows a utility company to determine which electricity generation options are available for compliance. Each of the four proposals analyzed in this paper include typical renewable energy as qualified sources. All four proposals also include coal-mine methane and landfill gas as qualifying sources. Differences among the proposals, generally, are associated with the inclusion and definition of qualified hydropower and incremental geothermal as well as the inclusion/definition of waste-to-energy, qualified nuclear, advanced coal/fossil with carbon capture and storage, and re-powering/co-firing biomass at existing coal generation facilities. Energy efficiency/savings typically refers to reductions in electricity consumption at end-use consumer facilities that are served by an electric utility company as well as reductions in distribution system losses. Some proposals also include output from combined heat and power systems as energy efficiency/savings. In order to qualify for energy efficiency/savings credits, utility companies may have to institute programs that result in consumer demand reductions. One example of such a program might be subsidies for high efficiency air conditioning systems. All four proposals analyzed allow for energy efficiency/savings credits, although some proposals place limits on how much energy efficiency/savings credits can be used to comply with a broader Clean Energy Standard. For example, one proposal allows utility companies to use energy efficiency credits to satisfy up to 25% of the CES target. Therefore, 75% of a utility company's CES target must be met by generating electricity from qualified sources, purchasing CES credits, or making alternative compliance payments. One challenge associated with energy efficiency/savings credits might be determining a baseline for calculating energy efficiency and therefore the number of credits that result from various energy efficiency programs. Alternative compliance payments (ACPs) can be paid by utility companies in lieu of generating qualified clean energy or purchasing clean energy credits. Typically expressed in cents per kilowatt-hour, ACPs provide utility companies with some degree of flexibility associated with meeting the targets/goals of a Clean Energy Standard. From a policy perspective, determining the value of ACPs can be somewhat complicated. Setting the ACP too low could potentially result in minimal development of "clean" electricity generation because some companies might choose to pay the ACP instead of generating or purchasing qualified clean energy. At the same time rate payer costs may increase as utility companies seek to recover their compliance costs. However, setting the ACP value too high might result in relatively large electricity rate increases in areas/regions that lack clean energy resources. Nevertheless, ACPs are basically a cost containment mechanism that effectively place a cap on the value of clean energy credits. Determining the value of ACPs will likely involve comparing the cost of generation from all qualified sources to the lowest generation cost from any fuel (e.g., coal, natural gas, nuclear, renewable) source. Some proposals suggest that funds generated through receipt of ACPs will be used to provide grants in support of new "clean energy" electricity generation projects. Under most of the four Clean Energy Standard proposals, utilities would be awarded credits for each kilowatt-hour of electricity generated from qualified clean energy sources. Utility companies can submit clean energy credits as a means of compliance with annual CES requirements. If a utility has more CES credits than are required for a given year, the utility may either "bank" the excess clean energy credits for a certain period of time or the utility can trade the excess credits, in exchange for cash, to other utilities. For those proposals that allow energy efficiency to count towards CES compliance, energy efficiency credits are typically handled in a similar manner. Details regarding the mechanics of how CES credit trading may work are not clearly defined in the four proposals analyzed and responsibility for establishing trading programs is delegated to the Secretary of Energy. Three of the four CES proposals analyzed include provisions for double and triple credits. Multiple credits could be an approach that further incentivizes certain types of clean energy projects or the development of projects in certain locations. Some examples of projects that might receive multiple credits include (1) projects on Indian lands, (2) on-site electricity generation, (3) first five advanced coal facilities that sequester 1 million tons per year of carbon dioxide (CO 2 ), among others. Some CES proposals include provisions that allow demonstration projects to receive clean energy credits. For example, S. 20 would provide clean energy credits for advanced coal demonstration projects, based on the amount of CO 2 that is captured and sequestered. Providing credits for demonstration projects might be viewed as an incentive to develop, deploy, and commercialize emerging clean technologies. Most CES proposals include a civil penalty for utilities that fail to comply with CES requirements. Civil penalties are typically computed by multiplying the annual kilowatt-hour target shortfall times a multiple of the alternative compliance payment (e.g., 200% of the ACP—inflation adjusted). In some cases, CES proposals may exempt certain utility companies from compliance. Two of the four proposals analyzed exempt utilities that sell less than 4 million megawatt -hours of electricity in the preceding year. All utility companies in Hawaii are also exempt. Some CES proposals empower the Secretary of Energy to make loans to support the development of qualified clean energy projects. The purpose of the loans is to assist with CES compliance and reduce cost impacts to utilities and retail consumers. On January 25, 2011, during the State of the Union address, President Obama announced a clean energy goal for the country: "By 2035, 80% of America's electricity will come from clean energy sources." On February 3, 2011, the White House released a document titled "President Obama's Plan to Win the Future by Producing More Electricity Through Clean Energy," which summarizes the goals of the President's plan. Primary objectives of the Administration's plan include: Double the share of clean electricity in 25 years Draw on a wide range of clean energy sources Deploy capital investment to sustain and create jobs Drive innovation in clean energy technologies Complement the clean energy research and development agenda Furthermore, President Obama's plan described five core principles for the Clean Energy Standard proposal. These principles are summarized in the following text box. As discussed and presented in the following sections, baseline compliance with President Obama's CES proposal differs among the states and several policy considerations may warrant further evaluation as the CES policy debate evolves. President Obama's Clean Energy Standard proposal states that 40% of electricity currently generated nationwide comes from "clean energy" sources. However, each state and each utility required to comply with a federal Clean Energy Standard has a unique electricity generation mix. The following figure shows how each state would currently comply with the CES proposal based on existing electricity generation from qualified "clean energy" sources. Data sources and the calculation methodology used to generate Figure 2 and Figure 3 are described in Appendix B . As indicated in Figure 2 , some states may be better positioned than others to comply with a Clean Energy Standard, with some states already exceeding the 80% goal for 2035 and other states generating a relatively small percentage of electricity from qualified clean energy sources. Previously proposed CES legislation has typically applied to electric utilities and has been based on the amount of electricity sold to consumers. The same data used to create Figure 2 were used to create the map shown in Figure 3 . This map illustrates potential regional differences associated with CES compliance, based on existing electricity generation sources. This map does not provide utility-level percentages, which could be the basis for CES implementation. Information provided in this report does not provide specifics at the utility level and does not represent the total amount of electricity sales to consumers. Such level of analysis is beyond the scope of this report. Nevertheless, the information presented here does illustrate generation profile differences among the U.S. states and may be useful as a baseline assessment of state and regional differences associated with CES legislation. In evaluating possible Clean Energy Standard legislation, policy considerations might include the following. President Obama's CES proposal states that 40% of U.S. electricity is generated from "clean energy" sources. However, as illustrated in Figure 2 and Figure 3 , each state has a different generation mix that results in a wide range of initial baseline compliance levels. Allowing existing "clean energy" generation to count toward the standard would enable each state to receive credit for its respective "clean energy" capacity. However, allowing existing generation to count toward a CES puts some states in a better position when compared to other states, as indicated in Figure 3 . Under this scenario, and depending on specifics of the proposed legislation, some states may experience some degree of wealth transfer as a result of purchasing CES credits from states with an excess of qualified "clean energy" electricity generation. Alternatively, Congress might decide to only allow incremental generation capacity added after the policy is enacted to count towards CES compliance. If such a policy were adopted, Congress may choose to structure the CES in a different manner than that proposed by President Obama. For instance, President Obama's 80% of total electricity generation by 2035 would be much more difficult to achieve if existing qualified generation sources are not eligible. As discussed earlier, alternative compliance payments (ACPs) provide utility companies with some degree of flexibility associated with CES compliance. In essence, ACPs act as a cost ceiling for complying with a Clean Energy Standard. Setting the value of ACPs can be complicated by factors such as the cost of electricity generation, transmission availability, regional "clean energy" resources, and finance costs for advanced technology. As a result, setting a single ACP that encourages "clean energy" electricity generation for the entire country can be difficult and challenging. An ACP set too low may simply raise rate payer electricity costs and encourage minimum amount of "clean energy" generation. In contrast, an ACP set too high may not be acceptable for states that are not endowed with "clean energy" resources. Evaluating the levelized cost of electricity (LCOE) of qualified "clean energy" generation options may be a way to begin estimating an ACP. However, since each region's "clean energy" resource base varies (solar in the southwest versus the northeast) and each technology may have different financial requirements due to real or perceived levels of technology risk, an LCOE-based analysis of ACP levels may, at best, only produce a reasonable range for the ACP. Setting a single, absolute ACP value that will be perceived as fair and equitable for all regions, and for all technologies, may be a challenging endeavor. Three of the four legislative proposals analyzed for this paper exempt certain utilities from complying with the respectively proposed Clean/Renewable Energy Standard. Two proposals exempt utilities that sell less than 4 million megawatt hours and one proposal exempts utilities that sell less than 1 million megawatt hours. If Congress were to choose to exempt certain utilities from compliance with the proposed standard, an analysis of how much electricity generation is represented by exempt utilities as a percentage of total U.S. electricity generation may be useful. CRS analyzed EIA data to estimate two items: (1) the number of utility companies that would be required to comply with a CES, and (2) the amount of electricity sales represented by non-exempt utility companies. The analysis assumed that utility companies selling less than 4 million megawatt-hours per year are exempt. Results from this analysis are provided in Figure 4 . According to the analysis summary in Figure 4 , 149 of more than 3,000 utility companies would have to comply with the CES based on the assumed exemption criteria. These 149 utility companies represent 77% of annual U.S. electricity sales. Including an exemption as part of a CES policy may prompt consideration how to effectively achieve a CES target given that a portion of U.S. electricity might be exempted from compliance. Based on the above analysis, non-exempt utilities could be required to generate more (greater than 80% by 2035 for example) electricity from "clean energy" sources in order to meet an 80%-by-2035 goal, assuming that was a goal established through legislation. All four proposals from the 111 th Congress include interim targets for CES implementation. These interim milestones serve as a means to phase in "clean energy" over a period of time. Figure 5 illustrates three possible phase-in approaches. First, the linear approach, which might consist of annual increases, may be advantageous to renewable energy and natural gas generation since development timelines for these sources are relatively short. However, nuclear and "clean coal" may be at a disadvantage under this scenario due to long development timelines (nuclear) and technology maturity/commercialization ("clean coal"). Second, the back-end loaded approach, where targets are low in the beginning years of a policy and then increase steeply in later years, may be beneficial for nuclear and "clean-coal" generation as it allows more time for development and commercialization. However, under this scenario if beginning year targets are too low some may argue that this approach does not result in demand large enough to incentivize investment in new renewable and natural gas projects. Finally, the stepped approach might include targets and goals that increase every three to five years (example: 45% by 2015, 50% by 2020, etc.). This approach offers an alternative phase-in option but may result in flurried periods of project development followed by periods of stagnant, or non-existent, market growth. Manufacturing and job sustainability may be challenged under a stepped scenario. President Obama's proposal allows a number of "clean energy" generation sources to qualify for CES compliance. This approach provides utility companies with some degree of flexibility when choosing among "clean energy" generation alternatives and it allows nuclear, coal generation with carbon capture and storage, and natural gas to compete directly with renewable (wind, solar, geothermal, etc.) generation. Some may advocate a preference for renewable energy in the form of a specific percentage of generation dedicated to renewable energy or through a multi-tiered CES credit approach that provides more credit value for electricity generated from renewable sources. Others may argue that a CES should include a broad array of qualified electricity generation sources and state/regional markets should determine the generation mix selected for CES compliance. Qualified "clean energy" sources described in President Obama's CES proposal include (1) renewable electricity, (2) nuclear power, and (3) partial credits for clean coal and efficient natural gas. The proposal indicates that "clean coal" refers to coal-based electricity generation that includes carbon capture and sequestration and "efficient natural gas" refers to natural gas combined cycle (NGCC) electricity generation. Based on the choices of qualified sources, it appears that a "clean energy" objective is to encourage the development of low-carbon power sources. If this is the case, some may argue that supercritical and ultra-supercritical pulverized coal generation should qualify for partial credits since the carbon dioxide emissions profile is less than conventional subcritical pulverized coal generation. Sorting out qualified "clean energy" sources and determining the amount of whole and partial credits awarded for various electricity generation types could warrant further analysis in consideration of a federal Clean Energy Standard. Other policy considerations may acquire increased levels of importance warranting further analysis and evaluation. Such issues include: 1. Transmission requirements and how to allocate associated costs? 2. Which federal agency should have responsibility for implementing and managing a federal CES? 3. What should be the guidelines for credit trading under a CES policy? 4. How might a federal CES affect other economic sectors, such as coal and coal electricity generation? 5. How should energy efficiency be treated under a federal CES? 6. How might a CES align and interact with renewable portfolio standards currently established in 29 states, DC, and Puerto Rico? On March 21, 2011, the Senate Energy and Natural Resources committee released a Clean Energy Standard white paper. This white paper solicits feedback on 6 broad policy design questions along with 36 clarifying questions. The six broad design questions listed in the white paper are (1) What should be the threshold for inclusion in the new program? (2) What resources should qualify as "clean energy"? (3) How should the crediting system and timetables be designed? (4) How will a CES affect deployment of specific technologies? (5) How should Alternative Compliance Payments, regional costs, and consumer protections be addressed? (6) How would a CES interact with other policies? Appendix A. Comparative Analysis of Selected Clean Energy Standards Proposed During the 111 th Congress Appendix B. State-Level Baseline Compliance Calculation Methodology Data Sources Two EIA data sources were used to perform the baseline CES compliance assessment: 1. Electric Power Annual 2009—Data Tables: 1990-2009 Net Generation by State by Type of Producer by Energy Source (EPA 2009). 2. 2009: EIA-923 January-December Final, Nonutility Energy Balance and Annual Environmental Information Data (EIA-923). Methodology Calculating the generation mix for each state started with data from EPA 2009, which provides information regarding state-by-state electricity generation. A pivot table was created to organize electricity generation data by state and by fuel source. However, the EPA 2009 data do not provide the detail necessary to distinguish between natural gas combined cycle (NGCC) generation and other natural gas generation technologies. As a result, EIA-923 data were used to extract NGCC generation figures. With electricity generation from NGCC power plants now available, the pivot table from the EPA 2009 was modified to include NGCC generation and "Other Natural Gas" generation. To be consistent with President Obama's Clean Energy Standard proposal, electricity generation sources were categorized as either "Clean Energy Generation" or "Other Generation." Energy sources categorized as "Clean Energy Generation" include: Geothermal Hydroelectric Conventional Natural Gas Combined Cycle (50% of generation) Nuclear Biomass Pumped Storage Solar Thermal and Photovoltaic Wind Wood and Wood-derived fuels Energy sources categorized as "Other Generation" include: Coal Natural Gas Combined Cycle (50% of generation) Natural Gas Other Other Gases Petroleum Other In order to calculate the percent of generation from sources that qualify as "clean energy," the sum of "Clean Energy Generation" was divided by the total amount of generation. The same calculation was performed for "Other Generation." The pivot tables allowed this calculation to be done for the entire country as well as for each state.
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During his State of the Union speech on January 25, 2011, President Obama announced an energy goal for the country: "By 2035, 80% of America's electricity will come from clean energy sources." The White House, on February 3, 2011, released a Clean Energy Standard (CES) framework focused on U.S. electricity generation. The framework describes the fundamental goals and objectives of such a policy to include doubling clean electricity, sustaining and creating jobs, and driving clean energy innovation. Congress, if it chooses to take up CES legislation, will likely sort through and evaluate a number of policy options that might be considered during the formulation of a federal Clean Energy Standard policy. Understanding previous CES proposals, the Administration's CES policy framework, state-level baseline CES compliance, and policy considerations might assist a CES debate during the 112th Congress. These areas are the focus of this report. CES and related concepts have been debated for more than a decade and several Clean/Renewable Energy Standard proposals were offered during the 111th Congress, although none became law. The scope of this report includes a comparative analysis of four proposals of the 111th Congress: S. 20, Clean Energy Standard Act of 2010; S. 3464, Practical Energy and Climate Plan Act of 2010; S. 3813, Renewable Electricity Promotion Act of 2010; and a substitute amendment offered for H.R. 2454, American Clean Energy and Security Act of 2009. This analysis, which illustrates commonality and key differences among the legislative proposals, includes an assessment of each bill based on a uniform set of design elements. While the proposals considered generally agree on the definition of "renewable energy" (wind, solar, geothermal, etc.), they differ on certain policy aspects including (1) base quantities of electricity, (2) target/goal for the standard, and (3) alternative compliance payments, among others. The Administration's proposal states that 40% of delivered electricity is generated from "clean energy" sources today and 80% should be generated from clean energy sources by 2035. Clean energy sources are defined to include (1) renewable energy, (2) nuclear power, and (3) partial credits for clean coal and efficient natural gas. However, the amount of partial credits received by clean coal and efficient natural gas generation is not explicitly defined. CRS analysis of 2009 electricity generation data from the Energy Information Administration (EIA) also suggested that 40% of electricity generated could be considered clean energy if renewable energy, nuclear power, and 50% of electricity generated from natural gas combined cycle (NGCC) power plants are classified as clean energy. Further analysis of EIA data assessed the amount of clean energy generation in each state. This work revealed differences among the states regarding existing clean energy generation, with some states currently generating more than 80% of electricity from such clean energy sources and other states generating less than 5%. Finally, the Clean Energy Standard debate involves several policy design options that Congress might consider, including (1) Should the policy credit existing and/or incremental clean energy generation? (2) What should be the value of alternative compliance payments? (3) Should utility companies of a certain size be exempt? (4) Should preference be given to renewable energy generation? and (5) Which generation sources would qualify as clean energy? These, and other, policy options are presented and discussed in this report.
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Ever since the Bush Administration's October 2008 removal of North Korea from the U.S. state sponsors of terrorism list, a series of actions by North Korea have led to calls for the Obama Administration to return Pyongyang to the list. The list identifies any country the government of which the Secretary of State determines "has repeatedly provided support for acts of international terrorism." In the spring of 2010, these calls intensified due to two developments. First, on March 26, 2010, a South Korean naval vessel, the Cheonan , sank in waters disputed by the two Koreas. Nearly 50 South Korean sailors died in the incident. A multinational investigation team led by South Korea determined that the ship was sunk by a North Korean submarine. (See " Legislation in the 111 th Congress " below for a selection of related congressional actions.) South Korea, backed by the United States and Japan, has taken the case before the United Nations Security Council. Seoul is hoping for a UNSC Presidential statement condemning the attack. On May 24, 2010, South Korean President Lee Myung-bak also announced that North Korean ships would no longer be permitted to pass through shipping lanes under South Korean control, and that North-South trade, visits, and exchanges generally would be suspended. Exceptions were made for humanitarian aid to infants and children, and for the North-South Korean industrial complex outside of Kaesong, North Korea, where over 100 South Korean manufacturers employ over 40,000 North Korean workers. South Korean Minister of Unification Hyun In-taek announced that new investments in the Kaesong complex would be stopped and that the number of South Korean personnel at the complex—which had often approached 1,000 people in mid-week—would be reduced. The Kaesong industrial park accounts for a significant share of North-South trade, so if the complex's operations continue to operate as before, it is unclear how much direct, practical effect the measures will have. Traveling in Beijing, Secretary of State Hillary Rodham Clinton stated to reporters that Lee's steps were "prudent and entirely appropriate," and that President Obama had directed U.S. government agencies to review their existing authorities and policies related to North Korea, "to ensure that we have adequate measures in place, and to identify areas where adjustments would be appropriate." When asked whether North Korea would be returned to the terrorism list, Secretary Clinton said that the State Department "continually reviews North Korea's actions" to determine its actions meet the criteria for designation as a state sponsor of terrorism. The second development was the appearance of reports, largely from Israeli sources, that a reshipment of North Korean rockets and rocket-propelled grenades that were seized in Thailand in December 2009 were ultimately destined for Hamas and/or Hezbollah. As discussed below, for years, there have been reports from a variety of sources of similar arms shipments from North Korea. (See " New Reports of Support of Terrorist Groups .") In the spring and early summer of 2010, the State Department appeared to deem these reports insufficient to place North Korea back on the terrorism list. On June 28, 2010, State Department spokesman Philip Crowley said that the Department had determined that while the Cheonan's sinking was a violation of the 1953 armistice agreement that brought an end to the major fighting of the Korean War, it was not an act of international terrorism because it was "taken by the military or the state against the military of another state." Therefore, Crowley said, the sinking "by itself would not trigger placing North Korea on the state sponsor of terrorism list." Crowley did not mention, and was not asked about, reports of recent North Korean links to terrorist groups. He said that there is a "never-ending" process of reviewing whether to re-list North Korea, and that the Administration "will not hesitate to take action" if the Department determines that North Korea has taken actions that "demonstrate a consistent support for international terrorism." The Secretary of State can designate a country as a State Sponsor of Terrorism pursuant to three laws: Section 6(j) of the Export Administration Act of 1979; Section 40 of the Arms Export Control Act of 1976; and Section 620A of the Foreign Assistance Act of 1961. Criteria considered by the Secretary of State when assessing whether a country should be added to the list include, but are not limited to: supplying a terrorist organization with planning, training, logistics, and lethal material support; providing direct or indirect financial assistance; or providing other types of assistance that could provide material support for the terrorist organization's activities. The enumerated criteria do not specify the type of incidents or the level or duration of terrorism related activities that might be considered by the Secretary of State when deciding whether or not the U.S. should designate a country as a State Sponsor of Terrorism. Some policy analysts suggest that the ambiguity of the criteria may be purposeful insomuch as it would give the Secretary of State and the President a great deal of discretion when weighing competing policy and political implications associated with placing a country on the State Sponsor of Terrorism list. On June 28, 2010, the State Department issued a press release indicating that North Korea had not been placed back on the terrorism list because it had not "repeated[ly] provide[d] support for acts of international terrorism," as required by statute. States on the state sponsors of terrorism list are subject to restrictions on trade, investment, and assistance. Listed countries are subject to severe U.S. export controls—particularly of dual-use technology—and selling them military equipment is prohibited. Placement on the list also may trigger denial of beneficial trade designation (such as normal trade relations (NTR) or inclusion in the Generalized System of Preferences (GSP) program), unfavorable tax status for investors, and stricter licensing requirements for financing trade with the United States in food and medicine. Providing foreign aid under the Foreign Assistance Act is also prohibited, though exceptions generally are made for humanitarian assistance and can be made for other types of aid. Indeed, the United States spent hundreds of millions of dollars on food, energy, and medical assistance to North Korea while Pyongyang was on the terrorism list. By law, the United States must oppose membership in and financial assistance from international financial institutions—such as the World Bank, Asian Development Bank, and the International Monetary Fund—for any state on the U.S. terrorism list. The Bush Administration's removal of North Korea from the terrorism list in 2008 does not appear to have provided Pyongyang with direct, tangible benefits. Bilateral U.S.-DPRK trade unrelated to goods provided as part of foreign aid programs has remained virtually at zero, as it was in the years before the de-listing. U.S. assistance programs were not affected by the change in status. And, North Korea does not appear to have moved closer to attaining membership in or official assistance from any of the international financial institutions. Thus, the major impact of a decision to re-list North Korea would likely be symbolic. As discussed in detail below, for nearly a decade, Pyongyang invested significant diplomatic energy on placing its terrorism list status on the bilateral and multilateral negotiating agenda. Re-listing could be interpreted by North Korean leaders as a sign the Obama Administration is further distancing itself from the nuclear agreements made during the Bush Administration. The prospects for a resumption of the six party talks, which Obama Administration officials have stated are the preferred vehicle for convincing North Korea to denuclearize, may therefore be further set back. Re-listing North Korea would likely boost hard-liners inside the Kim Jong-il regime. Indeed, many suspect that if North Korea attacked the Cheonan , a primary motivation may have been to solidify support for Kim Jong-il's efforts to secure a smooth succession by his son, Kim Jong-un. The elder Kim is known to have suffered a stroke in 2008 and is believed to be in failing health. North Korean leaders also likely would try to use a re-listing decision to convince other countries, particularly China, that it is the United States and its allies, not North Korea, that are the cause of any future tensions on the Korean Peninsula. Even without encouragement from North Korea, China may be inclined to use re-listing as a pretext for opposing U.S. and South Korean efforts to increase pressure on North Korea through other means. However, many in South Korea and Japan would likely welcome the placement of North Korea back on the terrorism list. If re-listed, North Korea likely would make removal from the list a precondition for cooperation in any future talks over its nuclear program. Thus, re-listing would represent both an obstacle to future talks and a possible bargaining lever for the United States if negotiations restart. As discussed below, many analysts have argued that the decision to remove North Korea from the terrorism list in 2008, as well as the regular decisions to retain North Korea on the list throughout the 2000s, were based more on political and diplomatic factors than legal criteria. On October 11, 2008, the Bush Administration formally removed North Korea from the U.S. list of state sponsors of terrorism. The removal came as part of a U.S.-North Korean agreement on establishing mechanisms for verifying North Korea's declaration of elements of its plutonium nuclear program. North Korea had issued the declaration on June 26, 2008. President Bush announced that he had sent to Congress notification of his intent to remove North Korea from the list of state sponsors of terrorism after 45 calendar days. Under U.S. law, the President is required to notify Congress 45 days before removing a country from the list. If Congress did not approve legislation to block North Korea's removal during the 45-day period, the President would have been free to remove North Korea. Any congressional legislation to block removal would have had to be signed by the President and could have been subjected to a presidential veto. The White House said that the President's intention was to remove North Korea on August 11, 2008, at the end of the 45-day notification period. The U.S.-North Korean nuclear agreement laid out measures to implement a February 2007 agreement reached by the six party talks on the North Korean nuclear issue. The U.S.-North Korean agreement, embodied in the measures of June 26, 2008, consists of two obligations each that North Korea and the Bush Administration agreed to fulfill. North Korea is to allow a process of disablement of its plutonium nuclear facilities at Yongbyon. The disablement process began in October 2007. The Bush Administration claimed that 8 of 11 components of the disablement process had been completed and that close to 50% of nuclear fuel rods in the Yongbyon nuclear reactor had been removed. North Korea's second obligation is to provide the United States and other members of the six party talks on North Korea's nuclear program with a "complete and correct" declaration of nuclear programs. The United States' two obligations under the agreement are to terminate economic sanctions on North Korea under the U.S. Trading with the Enemy Act and remove North Korea from U.S. list of state sponsors of terrorism. However, in the White House statement of June 26, President Bush stated that removal of North Korea from the terrorism support list was dependent on North Korea agreeing to a verification system to verify the contents of its declaration. The Administration reportedly submitted to North Korea in July 2008 a plan for a verification system that would have allowed inspectors to visit nearly any site throughout North Korea. North Korea rejected the U.S. proposal, and the Bush Administration did not remove North Korea on August 11, 2008, when the 45-day congressional notification period ended. North Korea then announced a cessation of the disablement program at Yongbyon and an intention to resume operation of its plutonium reprocessing plant at Yongbyon. Assistant Secretary of State Christopher Hill went to Pyongyang in early October 2008 and negotiated a verification deal reportedly of a more limited scope, concentrating inspections on only Yongbyon. North Korea agreed and announced a resumption of disablement. Secretary of State Condoleezza Rice announced on October 11, 2008, that North Korea was removed from the list of state sponsors of terrorism. The removal of North Korea from the terrorism list, however, did not result in an early conclusion of the February 2007 six party nuclear agreement, contrary to the expectations of the Bush Administration. The North Korean government and the Bush Administration soon conflicted over the content of the October 2008 agreement on verification, particularly over whether it allowed inspectors to take samples of nuclear materials from the Yongbyon installations. The non-North Korea five parties to the talks (the United States, South Korea, China, Japan, and Russia) also had not completed the delivery of 1 million tons of heavy oil that they had promised in the February 2007 agreement. The incoming Obama Administration faced these issues after it took office. The most critical reaction to the U.S. delisting of North Korea came from Japan. Japan had opposed delisting until North Korea had taken steps toward resolving cases of its kidnapping of Japanese citizens. The issue of North Korea's inclusion on the U.S. list of state sponsors of terrorism has been in U.S.-North Korean diplomacy since 2000, but three stages are of particular importance: the first in 2000 in Clinton Administration-North Korean negotiations; the second during the 2003-2004 Six Party negotiations over the North Korean nuclear issue; and the third in the diplomacy around the Six Party nuclear agreement of February 2007. Until 2000, the core element of U.S.-North Korean diplomacy was the Agreed Framework, which Washington and Pyongyang signed in October 1994. It dealt primarily with North Korea's nuclear program, but U.S. obligations specified in the Agreed Framework included economic and diplomatic measures. However, the issue of removal of North Korea from the U.S. terrorism list was not included in the Agreement. The issue appears not to have been a major object of the negotiations in 1994. In October 1999, the Clinton Administration unveiled the Perry Initiative toward North Korea. Formulated under the direction of William Perry, former Secretary of Defense, the Perry initiative primarily sought a new round of U.S.-North Korean negotiations over North Korea's missile program. The Perry Initiative report of October 1999 stated that if North Korea agreed to a "verifiable cessation" of its missile program, the United States would provide a series of economic and diplomatic benefits to North Korea leading to normalization of U.S.-North Korean relations. The Clinton Administration sought an early visit of a high-level North Korean official to Washington to obtain substantive negotiations. North Korea, however, began to demand several pre-conditions for a high-level visit. Beginning in February 2000, one of these was removal of North Korea from the U.S. list of terrorism-supporting countries. North Korea reportedly persisted in this demand well into the summer of 2000 before finally relenting. The high-level envoy visited Washington in October 2000. The terrorism list issue receded until 2003 when a new round of U.S.-North Korean diplomacy ensued. This round was precipitated by the Bush Administration's assertion that North Korea admitted in October 2002 to U.S. diplomats that it was operating a secret uranium enrichment program. The Administration declared the secret program a violation of the Agreed Framework and began to end U.S. obligations under the Agreed Framework. North Korea retaliated by reopening nuclear facilities that had been frozen under the Agreed Framework, expelling monitors of the International Atomic Energy Agency, and withdrawing from the Nuclear Non-Proliferation Treaty. Multilateral negotiations began in April 2003 hosted by China and ultimately involving six governments (the United States, North Korea, South Korea, China, Russia, and Japan). At six party talks in August 2003, North Korea demanded that in return for North Korean concessions on the nuclear issue, the United States agree to a number of U.S. concessions, including removing North Korea from the U.S. list of terrorism-supporting countries. North Korea made its demand more specific in December 2003 when it issued a revised proposal centered on a "freeze" of North Korea's plutonium nuclear programs (but not the uranium enrichment program). This proposal restated North Korean demands for multiple concessions in return for a freeze. Removal from the terrorism support list was near the top of the list. North Korea reiterated its demand at the six party meetings in February and June 2004 in the context of its freeze proposal. The third stage began after North Korea's test of an atomic bomb in October 2006. Bilateral meetings between Assistant Secretary of State Christopher Hill and North Korean Vice Foreign Minister Kim Gye-gwan in November 2006 and January 2007 contained discussions of the terrorism list issue as the two diplomats laid the groundwork for the nuclear agreement that the six parties announced on February 13, 2007. That agreement created a "working group" on North Korea-U.S. normalization of relations. The agreement stated: The DPRK and the U.S. will start bilateral talks aimed at resolving bilateral issues and moving toward full diplomatic relations. The U.S. will begin the process of removing the designation of the DPRK as a state sponsor of terrorism, and advance the process of terminating the application of the Trading with the Enemy Act with respect to the DPRK. The Clinton Administration reportedly presented to North Korea in February 2000 four steps that North Korea would have to take to be removed from the terrorism list: (1) issue a written guarantee that it no longer is engaged in terrorism; (2) provide evidence that it has not engaged in any terrorist act in the past six months; (3) join international anti-terrorism agreements; and (4) address issues of past support of terrorism. In consulting U.S. allies, South Korea stated that the United States need not consider North Korean terrorism against South Korea in responding to North Korea's demand and that the Kim Dae-jung administration in Seoul favored removal of North Korea from the U.S. list of terrorism-supporting countries. Japan, however, strongly urged the Clinton Administration to make a redress of North Korean terrorist acts against Japan conditions for removing North Korea from the list. Japan specifically cited North Korea's kidnapping of at least ten Japanese citizens and North Korea's harboring of Japanese Red Army terrorists since the 1970s. The U.S. State Department had cited North Korea's harboring of Japanese Red Army terrorists as a reason for North Korea's inclusion on the U.S. list of terrorism-supporting states. A State Department official stated on April 25, 2000, that the United States considers "resolving this issue as an important step in addressing [U.S.] concerns about North Korean support of terrorism." Moreover, according to informed sources, U.S. officials began to raise the kidnapping issue with the North Korea in negotiations over the terrorism list. Japan intensified diplomacy on the terrorism issue in September and October 2000 as the United States prepared to receive the high ranking North Korean official and as Japan prepared for bilateral normalization talks with North Korea. Japan urged the Clinton Administration to raise Japan's concerns over terrorism in the high-level U.S.-North Korean exchanges of October 2000 and not to remove North Korea from the terrorism list. The visit to Washington of North Korean military leader, Jo Myong-rok on October 9-12, 2000, produced two general U.S.-North Korean statements opposing terrorism. However, the State Department's North Korea policy coordinator, Wendy Sherman, said on October 12 that Secretary Albright's planned visit to Pyongyang did not mean that the Clinton Administration would remove North Korea from the terrorism list. North Korea, she said, "knows what it needs to do." The impact of Japan's entreaties was demonstrated during Albright's visit to North Korea. In the first ever meeting between an American official and North Korean leader Kim Jong-il, Albright raised the issue of the kidnapped Japanese. She reported to Japanese Foreign Minister Kono Yohei that in her meetings with Kim Jong-il, "I brought up the [abduction] issue time and again. I told him that this issue was important not only to Japan but also to the United States as well." Kono reportedly expressed satisfaction, saying "She seems to have thought about Japan." The Clinton Administration thus decided in late 2000 to give Japan's concerns over terrorism a higher priority in U.S. negotiations with North Korea over the U.S. terrorism list. This, in effect, lowered the priority of South Korea's position in U.S. policy. There were at least three components to the Bush Administration's policy regarding North Korea's inclusion on the terrorism-supporting list after the Agreed Framework collapsed and the six party talks began in 2003. The first was the U.S. response to North Korea's demand at the six party talks for removal from the list. A second was the raising by U.S. officials of the danger that North Korea would provide nuclear, biological, or chemical weapons to terrorist groups like Al Qaeda. The third was the emphasis given to the Japanese kidnapping in State Department statements on North Korea's inclusion on the list of terrorism-supporting countries. Until June 2004, the Bush Administration took the position that it would not discuss issues in U.S.-North Korean relations, including the terrorism-support list, until North Korea agreed to and took concrete steps to dismantle it nuclear programs. In line with this stance, the Administration refused to submit any comprehensive U.S. proposal at the six party talks. The Administration's position changed in June 2004, apparently because of pressure from U.S. allies, Japan and South Korea, and heightened criticism of the Administration's position from China. At the six party meeting in June 2004, the Administration proposed a detailed plan in which North Korea would freeze its nuclear programs and submit to international verification during a three-month preparatory period followed by a full dismantlement of all nuclear programs. Once North Korea had met the requirements of the preparatory period, the United States would begin negotiations with North Korea on other issues, including the terrorism-support list. The Bush Administration linked North Korea's kidnapping of Japanese citizens to the six party talks and to the terrorism-support list. When the Bush Administration took office in 2001, it reportedly assured Japan, including the families of suspected kidnapping victims, that the United States would continue to raise the kidnapping issue with North Korea and would not remove North Korea from the U.S. list of terrorism-supporting countries. In the six party talks, U.S. Assistant Secretary of State James Kelly stated several times to the North Korean delegates that North Korea should settle the kidnapping issue with Japan. In April 2004, the State Department emphasized the kidnapping of Japanese in its justification for North Korean's inclusion on the U.S. list of terrorism-supporting countries, as part of the Department's annual report on international terrorism. The State Department's Patterns of Global Terrorism 2003 described Kim Jong-il's admission of North Korean kidnapping during his meeting with Japanese Prime Minister Koizumi in September 2002 and that Japan-North Korea negotiations over the issue were continuing. Coffer Black, the State Department's top counterterrorism official, stated upon the release of the report that the kidnapping issue was a key factor in the report's designation of North Korea as a state sponsor of terrorism. During this period, President Bush, Vice President Cheney, and National Security Adviser Condoleezza Rice made public statements pledging to support Japan. At his summit meeting with Prime Minister Koizumi in May 2003, President Bush stated: "Abduction is an abominable act. The United States supports Japan completely until we find out the whereabouts of each and every Japanese citizen who has been abducted by North Korea." Condoleezza Rice described the kidnapping issue as "a priority also for the United States, that we abhor what the North Koreans have done." In April 2004, Vice President Cheney said in Tokyo that Americans shared Japan's "outrage" over North Korea's kidnappings and that the Bush Administration supported Japan's demand for a "resolution of all the issues surrounding the criminal abduction of your citizens by the regime in Pyongyang." In mid-2002, Japan and North Korea went into secret negotiations regarding the kidnapping issue. In September 2002, Prime Minister Koizumi Junichiro flew to Pyongyang where North Korean leader Kim Jong-il admitted that North Korea had abducted 13 Japanese citizens; of these, he claimed that eight had died and that five were alive. The five subsequently went to Japan. In May 2004, Koizumi again traveled to Pyongyang and secured the release of six children of the five Japanese. However, the issue quickly reached an impasse. Japan harbored doubts about the truthfulness of North Korea's claim that 8 of the 13 kidnapped Japanese were dead and that the remains of all 8 had been washed away by floods and were not available for identification. In 2006, the Japanese government added three other missing Japanese citizens to its list of Japanese kidnapped by North Korea. In Japan, publicized claims also emerged that North Korea had kidnapped up to several hundred Japanese. The Bush Administration supported Koizumi's efforts but reportedly pressed the Japanese government not to reciprocate with financial aid to North Korea before the nuclear and missile issues with North Korea were resolved. The Administration urged Koizumi prior to each visit to press North Korea for policy changes on the nuclear issue. Japan reportedly complied with the U.S. urgings. These urgings pointed up the overall importance of Japan to U.S. policy toward North Korea and thus the broader influence of the kidnapping issue. As a participant in the six party talks, Japan was viewed as crucial in any settlement of the nuclear or missile issues that involved reciprocal economic or financial benefits to North Korea. As far back as the Perry initiative in 1999-2000, U.S. officials acted on the assumption that any settlement of the nuclear and missile issues with North Korea would require a major Japanese financial contribution. Japan promised North Korea billions of dollars in aid as part of a normalization of relations, but Japan specified that normalization depends on a settlement of the nuclear, missile, and kidnapping issues. The Bush Administration pressed Japan to condition aid first to the nuclear issue. At the six party talks in June 2004, the Bush Administration put forth a detailed settlement proposal under which North Korea would receive heavy oil in the initial stage of a settlement process, financed by Japan and South Korea. The United States also offered North Korea negotiations on resolving North Korea's broader energy and electricity needs, which also undoubtedly would require a substantial Japanese financial input. On the other hand, the Bush Administration discussed with Japan the imposition of economic sanctions on North Korea. Japan joined the Proliferation Security Initiative in 2003, which President Bush proposed to stifle the proliferation activities of states like North Korea. In 2006, Japan imposed strong economic sanctions on North Korea when the United Nations Security Council approved sanctions in response to North Korea's missile tests of July 2006 and atomic bomb test of October 2006. Although the Bush Administration sought and obtained U.N. Security Council sanctions after North Korea's atomic bomb test in October 2006, it changed its policy on the North Korean nuclear issue in more fundamental ways—one of which was to bring the terrorism list issue more directly into negotiations. The change was directed by Secretary of State Condoleezza Rice and Assistant Secretary of State Christopher Hill. There were three fundamental changes in Bush Administration policy since the North Korean nuclear test that have implications for the terrorism list issue. Tactically, the Administration abandoned its opposition to bilateral talks with North Korea and actively sought bilateral meetings with Pyongyang. Moreover, Assistant Secretary of State Christopher Hill used these meetings, in late November 2006 and mid-January 2007, to negotiate actively the details of the six party agreement that was announced on February 13, 2007. The second change under the Rice-Hill strategy was in the U.S. policy objective toward North Korea's nuclear programs and weapons. Dismantlement of Pyongyang's nuclear programs and weapons remained the official Bush Administration policy goal, but the February 2007 Six Party Agreement says little about dismantlement. The two phases outlined in the agreement focus on freezing North Korean nuclear facilities in the first phase, to be completed in 60 days, then "disablement of all existing nuclear facilities" and disclosure by North Korea of "all nuclear programs" in the second phase that has no time deadline." The February 2007 agreement thus signals an apparent policy objective of containment of North Korea's nuclear programs and nuclear weapons development, limiting their size and scope. The Bush Administration continued to cite full nuclear dismantlement as its goal for 2008. However, the most realistic prospect of success was negotiating and implementing the two phases of this Six Party Agreement or at least a partial implementation. The dismantlement issue was left for the incoming Obama Administration in January 2009. Consequently, this scenario appears to have influenced the Bush Administration to delink total dismantlement as a primary condition for removal of North Korea from the terrorism list and to link removal with lesser North Korean steps in the February 2007 agreement, particularly "disablement" of the Yongbyon plutonium nuclear facilities and a declaration of its nuclear programs. Thus, the third change under the Rice-Hill strategy was to link removal from the terrorism exclusively to a successful North Korean implementation of its obligations under Phase Two of the February 2007 nuclear agreement. Beginning with the Hill-Kim Kye-gwan meeting of November 28-29, 2006, and especially in their meeting in Berlin in January 2007, Hill reportedly said that the Bush Administration would remove North Korea from the U.S. list of state sponsors of terrorism if North Korea dismantled its nuclear programs. In the February 2007 agreement, the Administration agreed to begin the process of removing the DPRK from the list. North Korea also may have increased the incentive for the Bush Administration to strengthen this linkage. The South Korean newspaper, JongAng Ilbo , quoted "a diplomatic source knowledgeable on the New York talks" between Hill and Kim Kye-gwan on March 5-6, 2007, that Kim asserted that if the United States took steps to normalize relations, North Korea could disable the Yongbyon nuclear installations within a year (i.e., March 2008). Kim specifically mentioned as a key step the removal of North Korea from the list of state sponsors of terrorism. Kim repeated this during the six party meeting in July 2007. As the Bush Administration moved toward this exclusive linkage, it began to separate the Japanese kidnapping issue from the terrorism-support list. During Japanese Prime Minister Abe's visit to the White House in May 2007, Secretary of State Rice told him that the Bush Administration had no legal obligation to link the kidnapping and terrorism list issues. State Department officials subsequently emphasized this "no legal obligation" position but also that Hill had urged North Korea to negotiate progress on the kidnapping issue with Japan. In a press conference with foreign correspondents on August 30, 2007, President Bush evaded a direct answer to a reporter's question whether progress on the kidnapping issue was a condition for North Korea's removal; Bush instead repeated his concern over the kidnappings and his feelings when he received the families of kidnapped Japanese at the White House. In September 2007 meetings between Assistant Secretary of State Hill and North Korean negotiator Kim Gye-gwan, they agreed to complete the implementation of Phase Two of the February 2007 nuclear agreement by December 31, 2007, including North Korea's obligations to disable the Yongbyon installations and declare its nuclear programs. Kim Gye-gwan and North Korea's Foreign Ministry asserted that Hill had stated that part of this implementation would be the removal of North Korea from the terrorism list. Hill did not confirm this, but it has been reported widely and believed by many observers that he made a specific commitment to Kim Gye-gwan regarding the terrorism list. On October 3, 2007, the six parties issued a statement on the implementation of Phase Two, which included a target deadline of December 31, 2007. The statement implied a U.S. commitment to remove North Korea as part of the implementation process. Referencing the U.S. commitments in the February 2007 nuclear agreement to begin the process of removing North Korea from the list of state sponsors of terrorism and the Trading with the Enemy Act, the statement read that "the United States will fulfill its commitments to the DPRK in parallel with the DPRK's actions based on consensus reached at the meetings on the working group on normalization of DPRK-U.S. relations." Christopher Hill stated at an October 25 congressional hearing that fulfilling these commitments "will depend on the DPRK's fulfillment of its Second-Phase commitments on providing a complete and correct declaration and disabling its nuclear facilities, as well as on satisfaction of legal requirements ... set forth in U.S. law." The October 3, 2007, six party statement represented what might be termed a "two for two deal" between the Bush Administration and North Korea. The United States and North Korea undertook two reciprocal obligations toward each other. North Korea agreed to allow disablement of its Yongbyon nuclear installations and provide the other six parties with a "complete and correct" declaration of its nuclear programs. The Bush Administration agreed to reciprocate by removing North Korea from the U.S. list of state sponsors of terrorism and from the sanctions provisions of the U.S. Trading with the Enemy Act that have been applied to North Korea since the Korean War. The two sides then negotiated the implementation of this deal; they reached an important agreement in Singapore in April 2008. The Bush Administration has expressed satisfaction that North Korea has allowed a significant disabling of the Yongbyon installations. However, implementation of the "complete and correct" declaration of nuclear programs was held up by North Korea's unwillingness to disclose elements of its plutonium program, its uranium enrichment program, and its proliferation activities with Syria. The Syria issue arose when Israel bombed a facility in Syria that the Bush Administration and most informed experts concluded was a nuclear reactor under construction with North Korean assistance. The Bush Administration dealt with the declaration issue by lowering the requirements for the information that North Korea must supply in the declaration, limiting the requirements to certain elements of North Korea's plutonium program. The Bush Administration reaffirmed its intension to proceed with its two obligations, including removal of North Korea from the list of state sponsors of terrorism, once its reaches an agreement on a declaration with North Korea and the six parties approve the declaration. The State Department's annual Country Reports on Terrorism , issued in April 2008, stated: "As part of the six party talks process, the United States reaffirmed its intent to fulfill its commitments regarding the removal of the designation of the DPRK as a state sponsor of terrorism in parallel with the DPRK's actions on denuclearization and in accordance with criteria set forth in U.S. law." On January 22, 2008, the State Department's coordinator for counter-terrorism stated that "it appears that North Korea has complied with those criteria" for removal from the terrorism support list because North Korea had not committed an act of terrorism for the past six months. He added that despite the unresolved Japanese kidnapping issue, "we think that even with that on the table that they still comply with the ... delisting criteria." President Bush's announcement of June 26, 2008, seemed to fulfill this intention, but the emergence of the verification issue delayed the actual removal of North Korea until October 11, 2008. In April 2007, the Department of State released its annual global terrorism report to Congress, Country Reports on Terrorism, 2006 [ Country Reports, 2006 ]. North Korea is prominently mentioned in the yearly report, which include data on terrorist trends and activity worldwide and serves as the basis for the U.S. list of state sponsors of terrorism that are subject to U.S. sanctions. Emerging, or ongoing, problem areas "areas of concern" are identified as well. In addition to data on terrorist trends, groups, and activities worldwide, Country Reports provide a description as to why countries are on the U.S. list of state sponsors of terrorism that are subject to U.S. sanctions. Thus, included in Country Reports are detailed data on the five countries currently on the "terrorism list": Cuba, Iran, North Korea, Sudan, and Syria. U.S. Administration officials maintain that the practice of designating and reporting on the activities of the state sponsors of terrorism list and concomitant sanctions policy has contributed significantly to a reduction in the overt—and apparently overall—activity level of states supporting terrorism in the past decade. Libya and Sudan are frequently cited as examples of such success, but to date, not North Korea. North Korea is also included on a concomitant list of states "not fully cooperating" with U.S. anti-terrorism efforts. This list includes the five state sponsors of terrorism currently on the Department of State's list and Afghanistan. North Korea was one of five countries currently on the list that the Secretary of State maintains have "repeatedly provided support for acts of international terrorism." Data supporting this list are drawn from the intelligence community. Listed countries are subject to severe U.S. export controls—particularly of dual-use technology—and selling them military equipment is prohibited. Providing foreign aid under the Foreign Assistance Act is also prohibited. Section 6(j) of the 1979 Export Administration Act stipulates that a validated license shall be required for export of controlled items and technology to any country on the list, and that the Secretaries of Commerce and State must notify the House Committee on Foreign Affairs, and the Senate Committees on Banking, Housing, and Urban Affairs, and Foreign Relations at least 30 days before issuing any validated license for goods and services that could significantly enhance a nation's military capability or its ability to support terrorism as required by this act. In addition, Section 509(a) of the 1986 Omnibus Diplomatic Security and Antiterrorism Act ( P.L. 99-399 ) bars export of munitions list items to countries on the terrorism list. A restriction potentially related to North Korea is found in Section 1621 of the International Financial Institutions Act ( P.L. 95-118 ). Entitled "Opposition to Assistance by International Financial Institutions to Terrorist States," Section 1621 states: "The Secretary of the Treasury shall instruct the United States executive director of each international financial institution to use the voice and vote of the United States to oppose any loan or other use of the funds of the respective institution to or for a country for which the Secretary of State has made a determination under section 6(j) of the Export Administration Act of 1979 or section 620A of the Foreign Assistance Act of 1961." In short, the United States must oppose financial assistance from institutions like the World Bank and the International Monetary Fund to any state on the U.S. terrorism list. Given the influence of the United States in these institutions, U.S. opposition would constitute a huge obstacle to any proposals for financial aid to North Korea. Section 1621, however, does not require the United States to oppose North Korean membership in the IMF and World Bank. P.L. 109-58 , the Energy Policy Act of 2005, prohibits the export, re-export, transfer or retransfer of U.S. nuclear materials and technologies to any country identified by the Secretary of State as a sponsor of terrorism. This provision, in Section 632 of the act, was authored specifically to foreclose the possibility of civilian nuclear cooperation between the United States and North Korea, either directly or through third countries that have access to U.S. nuclear technology. The DPRK also remains on a list (required by P.L. 104-132 ), which prohibits, absent a presidential waiver, the sale of arms to nations not fully cooperating with U.S. anti-terrorism efforts. In late January each year, under the provisions of Section 6(j) of the Export Administration Act of 1979, as amended, the Secretary of Commerce, in consultation with the Secretary of State, provides Congress with a list of countries supporting terrorism. Compilation of the list is the result of an ongoing process. Throughout the year the Department of State gathers data on terrorist activity worldwide, and then beginning about November, the list is formally reviewed. Each new determination under Section 6(j) of the act must also be published in the Federal Register . Congressional report language provides guidelines for designation. A House Foreign Affairs Committee report approving the Anti-Terrorism and Arms Export Amendments Act of 1989 (H.Rept. 101-296) included as criteria (1) allowing territory to be used as a sanctuary; (2) furnishing lethal substances to individuals/groups with the likelihood that they will be used for terrorism; (3) providing logistical support to terrorists/groups; (4) providing safe haven or headquarters for terrorists/organizations; (5) planning, directing, training or assisting in the execution of terrorist activities; (6) providing direct or indirect financial support for terrorist activities; and (7) providing diplomatic facilities such as support or documentation to aid or abet terrorist activities. A Senate report had similar criteria (S.Rept. 101-173). Paragraph 6(j)(4) of the Export Administration Act prohibits removing a country from the list unless the President first submits a report to the House Committee on Foreign Affairs, and the Senate Committees on Banking, Housing, and Urban Affairs, and Foreign Relations. When a government changes (i.e., a government is significantly different from that in power at the time of the last determination), the President's report, submitted before the proposed rescission would take effect, must certify that (1) there has been a fundamental change in the leadership and policies of the government of the country concerned (an actual change of government as a result of an election, coup, or some other means); (2) the new government is not supporting acts of international terrorism; and (3) the new government has provided assurances that it will not support acts of international terrorism in the future. When the same government is in power, the current situation with North Korea, the President's report—submitted at least 45 days before the proposed rescission would take effect—must justify the rescission and certify that (1) the government concerned has not provided support for international terrorism during the preceding six-month period; and (2) the government concerned has provided assurances that it will not support acts of international terrorism in the future. Congress can let the President's action take effect, or pass legislation to block it, the latter most likely over the President's veto. Since enactment of this procedure in 1989, the Bush Administration removed three countries from the list of state sponsors of terrorism—North Korea, Libya and Iraq. The Bush Administration stated that in the case of North Korea, it will adhere to the legal requirement of providing Congress with a 45-day notice before removal that would include the required certification. Congress has passed several resolutions on North Korean support for terrorism since 2005. In January 2005, the entire Illinois delegation in Congress sent a letter to North Korea's United Nations Ambassador demanding information on the Reverend Kim Dong-shik, who was kidnapped by North Korean agents in China in 2000. The Illinois delegation stated that it would oppose removing North Korea from the list of state sponsors of terrorism until his fate is resolved. H.R. 3650 , a bill introduced in the House of Representatives in September 2007 with 27 sponsors as of December 10, 2007, would continue to designate North Korea as a state sponsor of terrorism until North Korea met a number of conditions related to cessation of nuclear and missile proliferation, arms and training to terrorist groups, the counterfeiting of U.S. currency; and the release of kidnapped Japanese and Kim Dong-shik and South Korean prisoners of war from the Korean War. The FY2010 National Defense Authorization Act ( P.L. 111-84 ), contained a "sense of Congress" that if the United States determines that the North Korean government "has provided assistance to terrorists or engaged in state sponsored acts of terrorism," the Secretary of State should re-list North Korea. A complex challenge facing those charged with compiling and maintaining the list is the degree to which diminution of hard evidence of a government's active involvement indicates a real change in behavior, particularly when a past history of active support or use of terrorism as an instrument of foreign policy has been well established. For example, Iraq, which was removed in 1982, was again placed on the list in 1990, to be again removed in 2004. Some observers suggest that one reason that countries have not been dropped from the list is the reluctance of the executive branch to confront Congress on the issue. North Korea was added to the "official" list of countries supporting terrorism because of its implication in the bombing of a South Korean airliner on November 29, 1987, which killed 115 persons. According to the State Department, through the end of 2009, North Korea had not been conclusively linked to any terrorist acts since 1987. A North Korean spokesman in 1993 condemned all forms of terrorism, and said his country resolutely opposed the encouragement and support of terrorism. A similar statement was made in November 1995 and again in 2001, in the wake of the 9/11 attacks. Country Reports, 2006, continued to contain language that could be used to justify retention of the DPRK on the list of state supporters of terror: The DPRK continued to harbor four Japanese Red Army members who participated in a jet hijacking in 1970. The Japanese government continued to seek a full accounting of the fate of the 12 Japanese nationals believed to have been abducted by DPRK state entities; five such abductees have been repatriated to Japan since 2002. Using language similar to the 2006 Report, Country Reports, 2005 , in a brief two-paragraph section on North Korea states that The Democratic People's Republic of Korea (DPRK) is not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987. Pyongyang in 2003 allowed the return to Japan of five surviving abductees, and in 2004 of eight family members, mostly children, of those abductees. Questions about the fate of other abductees remain the subject of ongoing negotiations between Japan and the DPRK. In November, the DPRK returned to Japan what it identified as the remains of two Japanese abductees, whom the North had reported as having died in North Korea. The issue remained contentious at year's end. There are also credible reports that other nationals were abducted from locations abroad. The ROK government estimates that approximately 485 civilians were abducted or detained since the 1950-53 Korean War. Four Japanese Red Army members remain in the DPRK following their involvement in a jet hijacking in 1970; five of their family members returned to Japan in 2004. Perhaps most revealing of United States' policy rationale for keeping nations on the terrorism list is text contained in the "State Sponsors Of Terror Overview" section of Country Reports, 2005, and partially reprinted in Country Reports, 2006 . Prominently mentioned are two factors: (1) maintaining ties to terrorist groups and (2) "the capability to manufacture WMD and other destabilizing technologies that can get into the hands of terrorists." Libya and Sudan continued to take significant steps to cooperate in the global war on terror. Cuba, Iran, North Korea , and Syria, however, continued to maintain their ties to terrorist groups. Iran and Syria routinely provide unique safe haven, substantial resources and guidance to terrorist organizations. State sponsors of terrorism provide critical support to non-state terrorist groups. Without state sponsors, terrorist groups would have much more difficulty obtaining the funds, weapons, materials, and secure areas they require to plan and conduct operations. Most worrisome is that some of these countries also have the capability to manufacture WMD and other destabilizing technologies that can get into the hands of terrorists. The United States will continue to insist that these countries end the support they give to terrorist groups. [Emphasis and italics added.] In its "Introduction," the Patterns 1999 report cites North Korea as a possible candidate for removal from the list of state sponsors of terrorism. The Patterns 1999 report states: The designation of state sponsors is not permanent, however. In fact, a primary focus of U.S. counterterrorist policy is to move state sponsors off the list by delineating clearly what steps these countries must take to end their support for terrorism and by urging them to take these steps.... There have been some encouraging signs recently suggesting that some countries are considering taking steps to distance themselves from terrorism. North Korea has made some positive statements condemning terrorism in all its forms. We have outlined clearly to the Government of North Korea the steps it must take to be removed from the list, all of which are consistent with its stated policies. The report states that "if a state sponsor meets the criteria for being dropped from the terrorism list, it will be removed—notwithstanding other differences we may have with a country's other policies and actions." In June 15, 2000, testimony before the Senate Foreign Relations Committee, Michael Sheehan, the State Department Coordinator for Counterterrorism, testified that We need to take into account all relevant considerations in connection with moving states onto or off of the list, and we also need to explore whether it would be appropriate in any cases to identify states as "not fully cooperating" rather than as state sponsors of terrorism if doing so was warranted by the facts and would advance U.S. counterterrorism objectives ... I have been considering what intermediate steps could be taken to give state sponsors a clearer look at how they might "graduate" off the list. It may be possible that in appropriate cases state sponsors could step off the state sponsor list and be left only on the "not fully cooperating" list, with an eye towards stepping off of that list when they fully cooperate with U.S. antiterrorism efforts. Similarly, in July 12 testimony before the House International Relations Committee, Ambassador Sheehan confirmed that his earlier statements were intended as a clear signal to terrorist supporting countries that the United States would consider taking them off the list if they take the necessary steps to cease their support for terrorism. Patterns 2000 , issued in 2001 under the new Bush Administration, changed the tone. It does state that "the Department of State is engaged in ongoing discussion with North Korea and Sudan with the object of getting those governments completely out of the terrorism business and off the terrorism list." It cites the North Korean statement in the U.S.-North Korean joint statement of October 12, 2000, in which "the DPRK reiterated its opposition to terrorism and agreed to support international actions against such activity." However, as stated previously, Patterns 2000 was more specific in citing evidence of North Korean support of other terrorist groups, particularly in the Philippines. The report also asserts that "the US has a long memory and will not simply expunge a terrorist's record because time has passed." Patterns 2001 and Patterns 2002, arguably, softened language to designed to provide a rationale for retaining the DPRK on the terror list. For example, Patterns 2002, although noting that "Pyongyang continued to sell ballistic missile technology to countries designated by the United States as state sponsors of terrorism, including Syria and Libya," concluded with the statement that "North Korea is a party to six of the twelve international conventions and protocols relating to terrorism." Contrast such language to Patterns 2003 : "Although it is a party to six international conventions and protocols relating to terrorism , Pyongyang has not taken any substantial steps to cooperate in efforts to combat international terrorism. [italics provided]" Patterns 2003 , which covers the year North Korea was designated a member of the "axis of evil" by President Bush in his 2003 State of the Union Address, appears to take a somewhat more confrontational position. The 2003 report begins with text to the effect that the DPRK is not known to have sponsored any terrorist acts since 1987. The report notes, however, that North Korea continued to give sanctuary to hijackers affiliated with the Japanese Red Army. Although Patterns 2003 arguably indicates that North Korea's support for international terrorism appears limited at present, it offers no promising language to suggest that DPRK removal from the terrorism list may occur anytime soon. Country Reports, 2004 , again offers no promising language to suggest that DPRK removal from the terrorism list may occur anytime soon, but notes what can be interpreted as progress in resolving the issue of kidnapped Japanese citizens. Again restated is language to the effect that the DPRK is "not known" to have sponsored any acts of terrorism since 1987. Pyongyang, however, is cited for lack of "substantial steps" in co-operating in efforts to combat international terrorism, although it has signed six international conventions and protocols relating to terrorism. The Democratic People's Republic of Korea (DPRK) is not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987. At a summit with Japanese Prime Minister Koizumi in Pyongyang in September 2002, National Defense Commission Chairman Kim Jong Il acknowledged the involvement of DPRK "special institutions" in the kidnapping of Japanese citizens and said that those responsible had already been punished. Pyongyang in 2003 allowed the return to Japan of five surviving abductees, and in 2004 of eight family members, mostly children, of those abductees. Questions about the fate of other abductees remain the subject of ongoing negotiations between Japan and the DPRK. In November, the DPRK returned to Japan what it identified as the remains of two Japanese abductees whom the North had reported as having died in North Korea. Subsequent DNA testing in Japan indicated that the remains were not those of Megumi Yokota or Kaoru Matsuki, as Pyongyang had claimed, and the issue remained contentious at year's end. Four Japanese Red Army members remain in the DPRK following their involvement in a jet hijacking in 1970; five of their family members returned to Japan in 2004. Although it is a party to six international conventions and protocols relating to terrorism, Pyongyang has not taken substantial steps to cooperate in efforts to combat international terrorism. In a dramatic shift in U.S. position regarding DPRK removal from the terrorist list, Country Reports, 2006, clearly states that the United States has agreed to begin the process of removing the DPRK from the list of state supporters of terror: The Democratic People's Republic of Korea (DPRK) was not known to have sponsored any terrorist acts since the bombing of a Korean Airlines flight in 1987. The DPRK continued to harbor four Japanese Red Army members who participated in a jet hijacking in 1970. The Japanese government continued to seek a full accounting of the fate of the 12 Japanese nationals believed to have been abducted by DPRK state entities; five such abductees have been repatriated to Japan since 2002. In the February 13, 2007 Initial Actions Agreement, the United States agreed to "begin the process of removing the designation of the DPRK as a state-sponsor of terrorism. " [Emphasis added.] The Country Reports, 2006 , reflected the new Rice-Hill strategy of linking removal of North Korea to fulfillment of the February 2007 nuclear agreement. While it mentions the Japanese kidnapping issue, there is less discussion of it than in prior reports. Moreover, it did not describe progress or a settlement of the kidnapping issue as a condition for North Korea's removal. The State Department's long-standing claim that North Korea "was not known to have sponsored any terrorist acts since 1987" was particularly important in 2007 in view of the clear goal of the Rice-Hill strategy to remove North Korea from the list of state sponsors of terrorism. However, questions about the accuracy of the claim are relevant in view of three types of reported information. One is from the State Department itself. In the Department's Country Reports, 2005 , the section on North Korea discusses the Japanese kidnapping issue and then states that there is "credible reports that other nationals were abducted from locations abroad." The State Department does not appear to have provided clarification or details regarding these "credible reports." This assertion in Country Reports, 2005 could be seen as contradicting the assertion that North Korea has not sponsored any terrorist acts since 1987. The second type of reports, coming from several diverse sources, asserts that North Korea has provided arms and possibly training to Hezbollah in Lebanon and the Tamil Tigers in Sri Lanka and that it maintains an intimate relationship with the Iranian Revolutionary Guard. Hezbollah and the Tamil Tigers are two of the most active terrorist groups on the U.S. list of international terrorist groups. The Iranian Revolutionary Guard has been designated by the State Department as a supporter of terrorism. A third, related body of more direct evidence appeared in the form of several intercepted shipments of North Korean arms bound for Iran in 2009. Three vessels were intercepted, which contained North Korean weapons that Western intelligence and Israeli intelligence officials and non-government experts believe were bound for Hezbollah and Hamas, terrorist groups on the official U.S. list of international terrorist organizations. The largest of these shipments was aboard a ship that was searched in Dubai before departing for Iran in July 2009. All three ships contained North Korean components for 122 mm Grad rockets and rocket launchers. The shipment intercepted in Dubai contained 2,030 detonators for the Grad rockets and related electric circuits and solid fuel propellant for rockets. The 122 mm rockets have a range of about 25 miles. Iran, particularly the Iranian Revolutionary Guards, is known to have supplied significant quantities of these rockets and rocket launchers to Hezbollah and Hamas, which have frequently fired them into Israel. In December 2009, a shipment of 35 tons of North Korean weapons was intercepted aboard an Ilyushin-T76 transport aircraft. The Ilyushin had flown from Pyongyang to Bangkok, Thailand, where the arms were seized. The flight plan of the aircraft reportedly showed that its ultimate destination was Iran. The weapons reportedly included two M-1958 multiple 240 mm rocket launchers, rocket launching tubes, 24 240 mm rockets, shoulder-launched missiles, and components of surface-to-air missiles. Israeli and Lebanese newspapers quoted Western intelligence sources as concluding that most of these weapons likely were bound for Hezbollah. Charles Vick, a noted expert on arms and the arms trade, observed that the rocket-related weapons in the shipment are used often by Hezbollah and Hamas against Israel. The types of weapons in the intercepted North Korean arms shipment to Iran constituted direct evidence in support of reports of North Korean support for Hezbollah from Europe-based sources that report regularly on the Middle East. In September 2006 and April 2007, Intelligence Online , a French internet publication specializing in political and economic intelligence in the Middle East, published two reports detailing an extensive program by North Korea to provide arms and training to Hezbollah. The reports described Iran as the facilitator of the North Korea-Hezbollah relationship. According to Intelligence Online, the program began in the late 1980s and early 1990s with visits by Hezbollah cadre to North Korea. These visits were reported to involve training courses of several months run by the North Koreans. The September 2006 Intelligence Online report cited three current top Hezbollah officials who, it says, received training in North Korea during this earlier period: Hassan Nasrallah, Hezbollah's secretary-general and head of Hezbollah's military organization; Ibrahim Akil, the head of Hezbollah's security and intelligence service; and Mustapha Badreddine, Hezbollah's counter-espionage chief. Intelligence Online reported that after 2000, the program expanded with the dispatch of North Korean trainers to southern Lebanon where they instructed Hezbollah cadre in the development of extensive underground military facilities, including tunnels and bunkers. Takashi Arimoto, Washington correspondent for the Japanese newspaper, Sankei Shimbun , has reported "a document of an international organ" that in 2004, Syrian President Bashar Al-Asad met with North Korean officials in Damascus and requested North Korean assistance in helping Hezbollah to design and construct underground military installations. (North Korea is believed to have extensive underground military installations inside North Korea.) Another report, from the London-based newspaper, Al-Sharq al-Awsat , cited "a high-ranking officer in the [Iranian] Revolutionary Guard" that one such North Korean-assisted facility in southern Lebanon was a sophisticated, 25-kilometer, underground tunnel with numerous assembly points that Hezbollah used to move and concentrate troops. These underground tunnels and bunkers, according to numerous reports, significantly improved Hezbollah's ability to fight the Israelis during the 2006 Israel-Hezbollah war. These reports asserted that Hezbollah was able to hide many of its 1,000-1,500 rocket launchers underground; and thus, Israeli aerial surveillance had only limited effectiveness in locating the rocket launchers before Hezbollah fired rockets into Israel. When Israeli ground troops entered southern Lebanon, Hezbollah troops used networks of underground tunnels and bunkers to move from location to location and often to attack the Israelis from the rear. Deep underground bunkers also were found to have large storage rooms. Additional information on North Korean assistance to Hezbollah in constructing underground tunnels and bunkers has come from Lenny Ben-David, a former Israeli diplomat who served as Israel's deputy ambassador to the United States. Ben-David specified that North Korean experts and equipment were brought into southern Lebanon by the Korea Mining Development Trading Corporation. He asserted "The description of North Korean tunnels and cooperation with Iran are based on fact." An Israeli report from Jerusalem Update asserted that North Korean also had sent trainers into Lebanon to engage in the psychological training of Hezbollah cadre who are to be suicide bombers. Another report of the North Korea-Hezbollah relationship appeared in the South Korean newspaper, JongAng Ilbo , in November 2007. The author of this report was Professor Moon Chung-in, a professor at South Korea's Yonsei University. Professor Moon is a specialist on Korean security issues and was a close adviser to the South Korean government of former President Roh Moo-hyun. This advisory role has given him access to the U.S. government and other foreign governments. He is well-known to American experts on Korean issues, and he has advocated policies to improve relations with North Korea. It is noteworthy that Professor Moon cited Mossad, the Israeli government's main intelligence agency, as the source of an assessment that "vital missile components" of Hezbollah missiles fired into Israel during the 2006 war came from North Korea. Dr. Moon stated that Mossad believes that the missiles with North Korean components were assembled in Iran and were transported to Hezbollah in Lebanon via Syria. (North Korea also has sold Syria an assortment of missiles since the 1980s.) According to Professor Moon, Mossad "partially blames North Korea" for the effectiveness of Hezbollah's missile strikes into Israel. In 2008, the Israeli government reported that Hezbollah has received new missiles from Iran with longer ranges than the missiles that Hezbollah used in the 2006 war. These include 10,000 long-range missiles with a range up to 185 miles compared to a maximum range of 45 miles during the 2006 war. Hezbollah leaders reportedly admit that their missile arsenal has increased since the 2006 war. The Intelligence Online report of April 20, 2007, asserted that top Hezbollah leaders, including Hassan Nasrallah, visited Tehran in early April 2007, where Iran pledged to deliver new medium-range missiles to Hezbollah. If the Israeli estimate is correct and if the reported Mossad assessment of North Korea's role in providing components to missiles supplied to Hezbollah prior to the 2006 war is correct, it would appear highly possible the missiles that Iran is supplying to Hezbollah continue to have North Korean components. The Intelligence Online report of April 20, 2007, asserted that North Korea and Hezbollah were strengthening their relationship in the aftermath of the Israel-Hezbollah war. Citing sources in "the Pasadaran [Iranian Revolutionary Guard] leadership, the report stated that Iran and North Korea had reached an agreement under which about 100 Hezbollah field commanders would receive training in North Korea from North Korea's elite commando infiltration units and also training on intelligence-gathering and counter-espionage. This apparently was part of a broader Iranian program after the Israel-Hezbollah war to bring Hezbollah cadre to Iran for advanced military training. This report suggests the possibility that Hezbollah has sought training in infiltration tactics from North Korean military units that U.S. commanders in South Korea have described as trained to infiltrate deeply into South Korea in time of war through tunnels, by air, and by sea, to attack bases, command centers, and transportation and communication facilities. The object of such training could be to give Hezbollah the capability to infiltrate troops into Israel in another war. Another possible element of continued North Korean support for Hezbollah came in a statement from a Lebanese government official in early 2008 that Hezbollah was constructing new underground military facilities north of the Litani River in Lebanon (the Litani River was the northernmost point of Israeli military penetration in the 2006 war). Reports of North Korean arms shipments to the Tamil Tigers appeared in the Japanese newspaper, Sankei Shimbun , in September 2007. Sankei Shimbun is Japan's fifth-largest national newspaper with a circulation of 2 million daily. It is considered to be right of center politically and generally is critical of North Korea. Two reports described several North Korean attempts in late 2006 through the spring of 2007 to smuggle conventional arms, including machine guns, automatic rifles, and anti-tank rocket launchers, to the Tamil Tigers in Sri Lanka. The Sri Lankan navy intercepted and attacked three North Korean ships carrying arms in October 2006, February 2007, and March 2007. It sunk two of the vessels, seized some of the North Korean arms, and may have captured several North Korean crewmen. Sankei Shimbun published photographs of the North Korean weapons it says were seized by the Sri Lankan navy. According to Sankei Shimbun , the Sri Lankan government filed an official protest with the North Korean government. U.S. intelligence agencies, using spy satellites, may have conveyed information about the North Korean ships to the Sri Lankan government, according to the reports. Press reports in September 2006, February 2007, and March 2007 cited incidents of the Sri Lankan navy intercepting and attacking large, unidentified cargo ships, which, according to the Sri Lankan navy, were attempting to smuggle arms into Sri Lanka for the Tamil Tigers. The Sri Lankan navy cited four such ships with no flags or other indentifying markers—two on March 18, 2007. In each incident, the Sri Lankan navy contacted the ships, which gave false identifications and refused to allow a search. When the ships fired on Sri Lankan naval vessels, the navy attacked. The Sri Lankan navy claimed to have seized weapons aboard the ship in the incident of February 28, 2007. However, neither the Sri Lankan navy nor the Sri Lankan government made public any subsequent information on the identity of the ships, the crewmen, or the origins of the weapons aboard the ships. Moreover, the reported arms supply link between North Korea and the Tamil Tigers appears to be one of long duration. In 2000, the Far Eastern Economic Review reported that, according to foreign intelligence sources in Bangkok, the Tamil Tigers had received a sizeable portion of its weapons from North Korea. In its Patterns of Global Terrorism reports for 2001, 2002, and 2003, the State Department cited evidence that North Korea had supplied arms to terrorist groups. Patterns of Global Terrorism, 2002 stated that North Korea "has sold weapons to several terrorist groups." An analysis done by Jane's Intelligence Review of the video of a Tamil Tiger ship attack on a Sri Lanka navy-operated passenger vessel in October 2000 revealed that the attackers used an exclusively North Korean-version of a 107 millimeter Katyusha rocket, using dual launch tubes instead of the standard single launch tube. The State Department's Fact Sheet of October 25, 2007, on Iranian entities involved in proliferation and terrorism support activities asserted that the Iranian Revolutionary Guard (IRG) was providing "material support" for the Taliban, Hezbollah, Hamas, Iraqi Shia militants, and other terrorist groups. In 2006, U.S. District Judge Royce Lambert issued a ruling that the IRG recruited people who attacked the U.S. military facility in Saudi Arabia, Khobar Towers, in 1996 and manufactured the bombs used in the attack. General David Petraeus and U.S. Ambassador to Iraq Ryan Crocker testified to Congress in 2008 that the IRG was directing and supporting the attacks of the Iraqi Shia "special groups" against U.S. and Iraqi military and government targets. Many reports describe a close relationship between the IRG and Hezbollah. The State Department's Fact Sheet stated that the IRG has a "long history" of supporting Hezbollah with guidance, funding, weapons, intelligence and logistical support. Other reports describe IRG training of Hezbollah personnel in both Iran and Lebanon, the supply of missiles to Hezbollah by the IRG, IRG cadre in southern Lebanon directing Hezbollah's development of military facilities (including missile sites), and IRG coordination of missile attacks against Israel during the 2006 Israel-Hezbollah war. The State Department's Fact Sheet asserted that the IRG "has assisted Hizballah [Hezbollah] in rearming" since the 2006 war, presumably including the supply of new longer-range missiles described by the 2008 Israeli intelligence estimate. The State Department's October 2007 Fact Sheet also described the IRG as heavily involved in Iran's program to develop ballistic missiles. It said that the IRG is "one of the primary organizations tied to developing and testing the Shahab 3" missile (the Iranian version of North Korea's Nodong missile) and that, as recently as 2006, the IRG was procuring "sophisticated and costly equipment that could be used to support Iran's ballistic missile and nuclear programs." The Iranian announcement of its tests of Shahab-class missiles, including the Shahab 3, on July 9-10, 2007, came from commanders of the IRG. North Korea's relationship with the IRG appears to be in two areas: (1) coordination in support for Hezbollah and (2) cooperation in ballistic missile development. Reports also suggest that North Korea cooperates with the IRG and other Iranian entities in the development of nuclear capabilities or nuclear weapons. The relationship undoubtedly is financially lucrative to North Korea. Of North Korea's estimated $1.5 billion in earnings from sales and proliferation of weapons overseas, a substantial portion of this undoubtedly is gained from collaboration from Iran in missile development. Collaboration in support of Hezbollah and in nuclear weapons development likely would add considerably to the earnings from collaborative missile programs. Given the close relationship between the IRG and Hezbollah, the IRG could have facilitated the North Korean training of Hezbollah personnel by North Korea in the late 1980s and 1990s, as discussed above. The Paris Intelligence Online report of September 7, 2006, describing the role of North Korean instructors in the construction of Hezbollah's underground military installations in southern Lebanon in the period before the 2006 war, asserts that IRG General Mir Faysal Baqer Zadah supervised the construction of the underground facilities. Other reports describe IRG cadre in southern Lebanon prior to the 2006 war, as assisting in the building of underground military bases, including missile bases. The IRG reportedly has been the main supplier of missiles to Hezbollah. Thus, the reported utilization of North Korean components on these missiles prior to the 2006 war undoubtedly would have been coordinated between the IRG and North Korea as well as any North Korean components in the large number of missiles the IRG has supplied to Hezbollah since the war. Cooperation between North Korea and the IRG in the development of ballistic missiles appears to be of long standing. North Korea supplied Iran with Scud B and Scud C missiles after 1987. In 1993, the overall commander of the IRG, Major General Mohsen Rezaei, and IRG Brigadier General Hossein Mantiqi visited North Korea heading Iranian delegations. Another delegation, headed by Iran's Defense Minister and reportedly including IRG officials, visited Pyongyang in December 1993. Press reports, citing statements by Central Intelligence Agency officials, described the goal of these missions as arranging for Iran's purchase of up to 150 newly developed North Korean Nodong intermediate range missiles. North Korea first tested the missile in 1993. Paul Beaver, military expert for the Janes publications, said in an interview that the delegations negotiated an agreement with North Korea to establish a plant in Iran to produce the Nodongs. At that time, there reportedly were North Korean missile experts in Iran helping Iran to manufacture Scud missiles based on North Korean technology. Beaver's assessment appears to have been correct. By 1997, there reportedly were North Korean missile experts in Iran working on the construction of Shahab 3 and Shahab 4 missiles, Iranian versions of the Nodong. Like the State Department's October 2007 Fact Sheet, a 1997 London Daily Telegraph report stated that the IRG was directing the Shahab program. In November 1997, the IRG announced that it had conducted a successful test launch of a Shahab 3 prototype. A fully successful test flight of the Shahab 3 was conducted in 1998. North Korea reportedly continued to supply components for the Shahab 3. Recent reports indicate continuing North Korean-Iranian collaboration in trying to develop longer range ballistic missiles. A detailed report in the Los Angeles Times in August 2003 stated that "many North Koreans are working on nuclear and missile projects in Iran." One report of March 2006 was issued by the National Council of Resistance of Iran, an exile opposition group. In 2002, the National Council had revealed correctly the existence of secret Iranian nuclear facilities at Natanz and Irak. Several subsequent claims of the National Council have not been verified, but the Iranian government places severe obstacles on the International Atomic Energy Agency and other international groups that could engage in verification work. The National Council's March 2006 report asserted that North Korean experts were working at the Memot Missile Industries Complex in Iran in the development of an intermediate range missile with a range of 1,900 miles and in the continuing development of the Shahab 4 missile. Later in 2006, it was reported that North Korea had made an initial shipment to Iran of its new Musudan intermediate range missile. Subsequent reports cited 19 Musudan missiles supplied to Iran by North Korea. U.S. Secretary of Defense Robert Gates stated in November 2007 that North Korea had supplied Iran with missiles with a range of 1,562 miles (probably the Musudan). North Korea and Iran reportedly carried out joint tests of the Musudan. In 2008, Iran and North Korea reportedly signed an agreement for the continued North Korean supply of Musudan technology to Iran. The Japanese Kyodo news agency reported in December 2009 that North Korea failed to supply Iran with electronic components for the Musudan in 2009, causing Iran to postpone a test launch of the missile. Several publications reported the existence of a new Iranian missile research and development site that had the same appearance as North Korea's Taepodong missile assembly facility inside North Korea. Several reports in 2009 described Iran seeking and receiving the assistance of North Korean missile technicians in preparing to launch a missile bearing an artificial satellite. The launch on February 2, 2009, was successful. A delegation of up to 15 Iranians, from the Shahid Hemmat Industrial Group (a company connected with the Iranian Revolutionary Guards also reportedly involved in the Musudan missile project), reportedly were observers at the site of North Korea's test of a Taepodong II long-range missile on April 5, 2009. Officials from this company and IRG officials reportedly also had observed North Korea's missile launches of July 4, 2006. In short, these reports and the State Department's characterization of the IRG as a major player in Iran's missile program point to a likely continuing relationship between North Korea and the IRG, including a kind of joint venture partnership to develop missiles inside Iran. The State Department's 2007 Fact Sheet asserted that "the IRGC attempted, as recently as 2006, to procure sophisticated and costly equipment that could be used to support Iran's ballistic missile and nuclear program." The National Council of Resistance of Iran asserted in a 2006 report that the IRG was directing the nuclear program. Other recent reports have alluded to IRG leadership in at least some elements of Iran's nuclear program. The IRG reportedly directs Iran's Nuclear Control Center, which supervises the nuclear program and reports directly to Iran's Supreme Leader Ayatollah Ali Khomeini. Thus North Korea's apparent main interlocutor in missile development was in a position to bring North Korea into the Iranian nuclear program. Numerous public reports have appeared since 1993 describing elements of North Korean-Iranian collaboration in the development of nuclear capabilities. Some cite the Central Intelligence Agency or Western intelligence sources as sources of information. Other reports seem to be based, at least in part, on Israeli intelligence sources. Specific events or factors in the alleged North Korean-Iranian nuclear collaboration are described in multiple reports. Nuclear cooperation reportedly began at the same time North Korea negotiated with the IRG for cooperation in developing and manufacturing Nodong missiles in Iran. The first reports, in 1993 and 1994, said that North Korea and Iran had signed an initial agreement for nuclear cooperation. An Economist Foreign Report cited "CIA sources" that Iran was helping to finance North Korea's nuclear program and that North Korea would supply Iran with nuclear technology and equipment. A report of the U.S. House Republican Research Committee claimed that Iran would provide $500 million to North Korea for the joint development of nuclear weapons. The "CIA sources" cited by the Economist Foreign Report reportedly mentioned the development of enriched uranium as a goal of the new North Korean-Iranian agreements. Recent information has disclosed that North Korea had negotiated with Pakistan for Prime Minister Benazir Bhutto to turn over to North Korean officials detailed data on developing highly enriched uranium when she visited North Korea in 1993. U.S. officials at the time reportedly concluded that Iran was the most likely customer for North Korean nuclear weapons; the CIA reportedly was concerned that nuclear cooperation, including the transfer of materials, would be difficult to detect. The next reported stage in North Korean-Iranian nuclear cooperation, in 2003 and afterwards, appears to have been influenced by the reported joint advancement of the Nodong (Shahab) program in Iran, by North Korea's development and reported sale to Iran of the more advanced Musudan intermediate range ballistic missile (originally designed by the Soviets to launch nuclear warheads ), and by the reported initiation of joint development of the Taepodong long-range missile after 2000. Stepped up visits to Iran by North Korean nuclear specialists in 2003 reportedly led to a North Korean-Iranian agreement for North Korea to either initiate or accelerate work with the Iranians to develop nuclear warheads that could be fitted on the North Korean Nodong missiles that North Korea and Iran were jointly developing. Iran was reported to have offered shipments of oil and natural gas to North Korea to secure this joint development of nuclear warheads. North Koreans reportedly were seen at Iranian nuclear facilities in 2003. By this time, a large number of North Korean nuclear and missile specialists reportedly were in Iran. The German news magazine, Der Spiegel , quoted "western intelligence service circles" as describing Iran in 2005 as offering North Korea economic aid if Pyongyang "continues to cooperative actively in developing nuclear missiles for Tehran." During this period, Israeli officials began to assert that Iran was trying to develop nuclear warheads and that North Korea might be helping Tehran. Israeli President Shimon Peres was quoted that "there is no doubt" that Iran is developing long-range missiles to outfit with nuclear warheads. U.S. intelligence officials reportedly disclosed in early 2006 that Iran was trying to expand the nose cone of the Shahab 3 (Nodong) missile so that it could carry a nuclear warhead. They described an Iranian Project 111 as "a nuclear research effort that includes work on missile development." In March 2006, Reuters reported "an intelligence report given to Reuters by a non-U.S. diplomat" that described Iran's plans to develop nuclear warheads for the Shahab 3 missiles. Most recently, it has been reported that the International Atomic Energy Agency has evidence that Iran had developed designs of what appeared to be a nuclear warhead and that the nuclear smuggling ring linked to Pakistan's nuclear czar, A.Q. Khan, had acquired blueprints for an advanced warhead that could be mounted on a Nodong missile. Both North Korea and Iran had received other types of missile and nuclear technology from Khan. Also, in 2008, the IAEA has disclosed documents and photographs showing Iranian work in re-designing the cone of the Shahab-3 missile in order for it to carry a nuclear warhead. The February 2008 report of the National Council of Resistance of Iran also claimed North Korean-Korean-Iranian collaboration in nuclear warhead development at secret sites inside Iran. It alleges that the Iranian Defense Ministry has a secret facility at Khojir on the edge of Tehran, code-named B1-Nori-8500, that is engaged in the development of nuclear warheads for intermediate range ballistic missiles. North Korean specialists are at this facility, according to the National Council. The National Council's report so far has not been verified or refuted by governments or other organizations. European and Israeli defense officials stated in early 2007 that North Korea and Iran had concluded a new agreement for North Korea to share data from its October 2006 nuclear test with Iran. In February 2008, an Iranian delegation reportedly visited North Korea that included officials from Iran's Atomic Energy Agency. Two other forms of North Korean-Iranian nuclear collaboration have been reported recently. At least one involved direct North Korean-IRG collaboration. In 2005, the Iranian leadership is reported to have initiated a huge project to develop underground bunkers and tunnels for Iran's nuclear infrastructure, estimated to cost hundreds of millions of dollars. The project reportedly includes the construction of 10,000 meters of underground halls for nuclear equipment connected by tunnels measuring hundreds of meters branching off from each. Specifications reportedly called for reinforced concrete tunnel ceilings, walls, and doors resistant to explosions and penetrating munitions. The IRG implemented the project. North Korea is said to have participated in the design and construction of the bunkers and tunnels. In early 2005, Myong Lyu-do, a leading North Korean expert on underground facilities, traveled to Tehran to run the program of North Korean assistance. Thus, as in the case of reported North Korean assistance to Hezbollah in the construction of underground bunkers and tunnels, the IRG apparently made further use of North Korea's skills in developing underground military facilities. The second reported form of collaboration involved joint assistance to Syria in developing the Syrian nuclear reactor that Israel bombed in September 2007. The Bush Administration has said nothing about Iranian involvement in the Syrian reactor. However, the online service of the German news publication Der Spiegel has cited "intelligence reports seen by Der Spiegel" that North Korean and Iranian scientists were working together at the reactor site at the time of the Israeli bombing. Some of the plutonium production slated for the reactor was to have gone to Iran, which viewed the reactor as a "reserve site" to produce weapons-grade plutonium as a supplement to Iran's own highly enriched uranium program. A similar description of North Korean-Iranian Revolutionary Guard cooperation in the Syrian reactor came in two reports from Washington in the Japanese newspaper, Sankei Shimbun . The newspaper reported in September 2008 information from "a source familiar with the Syrian nuclear issue" that "a secret Iranian Revolutionary Guards base" in Iran housed a plutonium reprocessing facility designed to reprocess nuclear fuel from the Syrian reactor. Sankei Shimbun reported from Washington in July 2008 several specific visits of Iranian officials to the Syrian reactor in 2005 and 2006. The Sankei Shimbun report of July 12, 2008, also described two visits of high-level Iranian officials to North Korea in February and May 2008. The Iranian delegation included officials of Iran's Atomic Energy Organization and National Security Council. The apparent purpose of these visits, according to the report, was to ensure that North Korea would maintain secrecy about its nuclear collaboration with Iran in its negotiations with U.S. Assistant Secretary of State Christopher Hill. Reports in 2009 placed North Korean nuclear and missile experts in Iran as late as the anti-government protests in Iran in June 2009. The Sankei Shimbun report of September 12, 2008, also described two forms of non-nuclear military cooperation between Iran and North Korea inside Syria. One of these reportedly involves North Korean scientists and military personnel working with Iranian and Syrian counterparts at a chemical weapons plant in northern Syria. The second reportedly involves a plan by the Iranian Revolutionary Guards to deploy small, North Korean-made submarines in a military port in Syria. The Bush Administration's priority objective in removing North Korea from the terrorism support list was to achieve the completion of the disablement of North Korea's plutonium nuclear installations at Yongbyon. The shutting down of Yongbyon would prevent North Korea from producing more weapons grade plutonium for atomic bomb production. North Korea's resumption of disablement after the U.S. removal announcement of October 11, 2008, appeared to strengthen the prospect that disablement would be completed by the time President Bush left office in January 2009. However, North Korea suspended disablement in December 2008 over its disagreement with the Bush Administration over the content of the October 2008 agreement on verification. Christopher Hill and others reportedly argued within the Bush Administration that the Administration should give the highest priority in its North Korea policy to limiting and eliminating North Korea's plutonium program because the plutonium is the known source of North Korea's production of atomic bombs; other issues, such as the alleged North Korean highly enriched uranium program and North Korea's proliferation activities, therefore should be given less priority or deferred into the future. Removing North Korea from the list of state sponsors of terrorism also opened the way for what Assistant Secretary of State Hill described as a Phase Three of nuclear negotiations beyond the February 2007 six party nuclear agreement. U.S. goals in a Phase Three negotiation would be the full dismantlement of Yongbyon, securing control over North Korea's plutonium stockpile, and eliminating North Korea's stockpile of nuclear weapons. Some pointed out at the time, however, that this prospect was much more uncertain, since North Korea was likely to present new demands for U.S. concessions from the Obama Administration as part of any deal for a further reduction of its plutonium program. Given North Korea's long track record of seeking financial subsidies from other governments in nuclear and other negotiations, one of Pyongyang's Phase Three demands could be for the United States to follow the removal of North Korea from the list of state sponsors of terrorism with an "affirmative" act of proposing that the International Monetary Fund and the World Bank extend financial aid to North Korea. Removal from the terrorism support list ends the legislative requirement that the U.S. President oppose proposals of aid to North Korea from international financial agencies. There are potential negative consequences for U.S. policy in removing North Korea from the list of state sponsors of terrorism. Japanese officials have warned that there would be short-term damage to U.S. relations with Japan if the Bush Administration removes North Korea without any substantive progress on the Japanese kidnapping issue. U.S. Ambassador Thomas Schieffer expressed such concerns after October 2007. Some U.S. experts also believe there may be damage. However, a sizeable number of members of Japan's Diet voiced opposition to the Bush Administration removing North Korea from the list of state sponsors of terrorism. Japanese press and majority public opinion also appears to oppose the U.S. action. There also could be potential for longer-term damage to the U.S.-Japan alliance that could affect future Japanese policies toward U.S. military bases in Japan and support for future U.S. military operations against Muslim terrorist groups. Removing North Korea likely will encourage Pyongyang to continue and possibly expand its support for terrorist groups and other state sponsors of terrorism in the Middle East. North Korea's expansion of these activities since 2000 appear to constitute a major threat to U.S. national security policy interests in the Middle East. Relatedly, the United States will no longer have the terrorism support list as a negotiating lever if it ever decided to address North Korean activities in the Middle East in negotiations with Pyongyang. Indeed, a chief objective of North Korean leader, Kim Jong-il, in prioritizing removal from the terrorism support list may be to weaken the U.S. diplomatic hand if the United States should decide to place North Korea's activities in the Middle East on its policy agenda. H.R. 5350 (Ros-Lehtinen) . The North Korea Sanctions and Diplomatic Nonrecognition Act of 2010. Contains a sense of Congress provision that the Secretary of State should re-designate North Korea as a state sponsor of terrorism. Regardless of whether North Korea is returned to the terrorism list, the bill would continue the restrictions imposed on North Korea when it was on the list (prior to October 11, 2008), unless the President certifies that North Korea meets a number of conditions. The bill would prohibit diplomatic recognition, including the establishment of a permanent presence or United States liaison office inside North Korea. Introduced May 20, 2010; referred to House Committee on Foreign Affairs. H.Res. 1382 ( Faleomavaega ). Condemns and demands an apology from North Korea for the sinking of the Cheonan. Urges the international community to fully implement all United Nations Security Council Resolutions pertaining to North Korea, and urges the United States and other countries to take "other appropriate actions." Introduced May 20, 2010; referred to House Committee on Foreign Affairs. H.R. 2647 / P.L. 111-84 (Skelton). The National Defense Authorization Act for Fiscal Year 2010. Section 1255 requires the Obama Administration to submit a report examining whether North Korea still did not meet the requirements for inclusion on the terrorism list, and contained a "sense of Congress" that if the United States determines that the North Korean government "has provided assistance to terrorists or engaged in state sponsored acts of terrorism," the Secretary of State should re-list North Korea. House agreed to conference report, October 8, 2009 (281-146, Roll no. 770); Senate agreed to conference report, October 22, 2009 (68-29, Record Vote Number: 327); signed by President, October 28, 2009. On July 22, 2009, the Senate passed a version of section 1255, S.Amdt. 1761 to S. 1390 (66-31, Record Vote Number: 238). S.Res. 525 (Lieberman) . Expresses sympathy to the families of those killed in the sinking of the Cheonan and urges the international community to fully implement all United Nations Security Council Resolutions pertaining to North Korea. Introduced and passed by unanimous consent, May 13, 2010.
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Whether North Korea should be included on the U.S. list of terrorism-supporting countries has been a major issue in U.S.-North Korean diplomacy since 2000, particularly in connection with negotiations over North Korea's nuclear program. North Korea demanded that the Clinton and Bush Administrations remove it from the terrorism support list. On October 11, 2008, the Bush Administration removed North Korea from the terrorism list. This move was one of the measures the Bush Administration took to implement a nuclear agreement that it negotiated with North Korea in September 2007 and finalized details of in April 2008. The agreement was reached under the format of the six party talks, which involve the United States, North Korea, South Korea, China, Japan, and Russia. The President also announced that he was immediately lifting sanctions on North Korea under the U.S. Trading with the Enemy Act. North Korea's obligations under this nuclear agreement were to allow the disabling of its plutonium facility at Yongbyon and present to the United States and other government in the six party talks a declaration of its nuclear programs. North Korea submitted its declaration in June 2008. The removal of North Korea from the terrorism list, however, did not result in an early conclusion of the February 2007 six party nuclear agreement. The North Korean government and the Bush Administration disagreed over the content of an October 2008 agreement on verification, particularly over whether it allowed inspectors to take samples of nuclear materials from the Yongbyon installations. The other parties to the talks also had not completed the delivery of 1 million tons of heavy oil that they had promised in the February 2007 agreement. Against this backdrop, along with an apparent stroke suffered by North Korean leader Kim Jong-il, the six party process broke down. In the months after the breakdown of the talks, North Korea took a series of actions that have led to calls for its reinstatement on the terrorism list. In April 2009, North Korea launched devices suspected of being long-range missiles. In May 2009, North Korea tested a nuclear device. In March 2010, a South Korean naval vessel, the Cheonan, sank in waters disputed by the two Koreas. Nearly 50 South Korean sailors died in the incident. A multinational investigation team led by South Korea determined that the ship was sunk by a North Korean submarine. In June 2010, the State Department determined that the Cheonan sinking was not an act of terrorism and thus by itself was an insufficient reason for placing North Korea back on the terrorism list. Meanwhile, reports in 2009 and 2010 from French, Japanese, South Korean, and Israeli sources described North Korean programs to provide arms and training to Hezbollah in Lebanon and the Tamil Tigers in Sri Lanka, two groups on the U.S. list of international terrorist organizations. Large quantities of North Korean arms bound for Iran, intercepted in 2009, contained weapons that Iran supplies heavily to Hezbollah and Hamas. Moreover, a large body of reports describe a long-standing, collaborative relationship between North Korea and the Iranian Revolutionary Guard Corps. This report describes the rationales for including North Korea on the terrorism list from 1987-2008, for North Korea's delisting in 2008, and the debate in 2010 over whether to re-list North Korea. The major impact of a decision to return North Korea to the list would likely be symbolic, because removing North Korea from the list does not appear to have provided Pyongyang with direct, tangible benefits.
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About six months into the fiscal year, the 115 th Congress passed the Consolidated Appropriations Act, 2018 ( H.R. 1625 ; P.L. 115-141 , signed March 23, 2018), which provided FY2018 funding through September 30, 2018. Division K of the act―State, Foreign Operations, and Related Programs (SFOPS)―provided a total of $54.18 billion, including Overseas Contingency Operations (OCO) funds and rescissions. This represented a decrease of 6.1% from the FY2017 actual funding level. Of the total, $16.22 billion (excluding rescissions) was for the Department of State, international broadcasting, and related agencies, 10.7% below FY2017 levels, and $37.99 billion (excluding rescissions) was enacted for foreign operations, 4% below the FY2017 funding level. On May 23, 2017, the Trump Administration submitted its FY2018 budget request to Congress (see Appendix B for a discussion on the differences between the International Affairs budget function and State, Foreign Operations, and Related Programs appropriations). The SFOPS total requested for FY2018 (including Overseas Contingency Operations funds, otherwise known as OCO) was $40.25 billion, 30% below the enacted FY2017 SFOPS funding level of $57.53 billion. For State Operations and Related Programs, the request was $13.20 billion, 27% below the enacted level of $18.09 billion. For Foreign Operations, the FY2018 request was $27.05 billion, 31% below the FY2017 enacted level of $39.44 billion. (For a comparison of the FY2018 SFOPS request with past funding levels, see Table 1 below. For account-by-account details regarding the FY2018 request and legislation, compared to the FY2017 enacted funding levels, see Table A-1 .) The SFOPS FY2018 request sought a total of $12.0 billion in OCO funds for FY2018, representing a 42% reduction compared with the FY2017 enacted OCO level. The Trump Administration wanted to expand the designation of OCO funds from short-term, temporary war-related costs as requested by the Obama Administration to include longer-term, core costs for countries vital to U.S. national interests; for extraordinary activities that are critical to U.S. national security objectives; for preventing, addressing, or recovering from natural and manmade crises; and for securing State Department and USAID global operations. The Administration's broader FY2018 request to fund the government as a whole would have breached defense discretionary spending caps but not the caps for nondefense (that includes SFOPS) required by the Budget Control Act of 2011 (BCA, P.L. 112-25 ). To avoid sequestration, on February 9, 2018, Congress passed the Bipartisan Budget Act of 2018 (BBA, H.R. 1892 ; P.L. 115-123 ) that raised both security and nonsecurity discretionary spending limits for FY2018 and FY2019. On September 7 and 8, 2017, the Senate and House respectively passed the Continuing Appropriations Act, 2018, and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 ( H.R. 601 ; P.L. 115-56 ). As signed by the President on September 8, 2017, the act provided continuous government funding (continuing resolution, or CR) at the FY2017 level, reduced by 0.6791%, through December 8, 2017. The date was extended by subsequent continuing resolutions, first through December 22, 2017, by P.L. 115-90 ; then January 19, 2018, by P.L. 115-96 ; and February 8, 2018 by P.L. 115-120 . Senate action . On September 7, 2017, the Senate Committee on Appropriations reported its State, Foreign Operations, 2018 bill ( S. 1780 ), with a total of $51.35 billion in discretionary and mandatory funding for FY2018 ($6.2 billion more than the FY2018 request), including $20.79 billion for OCO (the same as FY2017 enacted). As compared with the request and the House bill, the Senate bill included 42% more OCO funds. OCO funds were significant in negotiating the final consolidated bill because of the potential for sequestration. The Senate SFOPS total funding level was $11.1 billion (22%) more than the Administration request and $3.8 billion (7%) more than the House bill. Supporting comparatively strong funding levels for SFOPS, the Senate committee report ( S.Rept. 115-152 ) referred to the President's SFOPS proposed reductions for FY2018 as "unjustified cuts" and stated that "battlefield technology and firepower cannot replace diplomacy and development." The report also included statements that would limit the Administration's discretion with respect to foreign affairs programs, such as setting minimum levels for Foreign Service and Civil Service positions that the appropriations are intended to support, and restates the Congressional Budget and Impoundment Control Act of 1974 (CBICA; title X of P.L. 93-344 ) that "limits the authority of the administration to reduce or withhold funding provided in the law by action or inaction." House action . On July 24, 2017, the House Appropriations Committee reported H.R. 3362 ( H.Rept. 115-253 ), a FY2018 SFOPS proposal that would have provided $35.50 billion for enduring funds and $12.02 billion for OCO, totaling $47.52 billion. While the bill would have provided $7.3 billion more than the President's request, it represented a $10 billion (17%) decline compared with FY2017 total enacted. Overall, the House committee's bill proposed $1.24 billion (3%) less for enduring funds than the FY2017 enacted budget and $8.8 billion (42%) less for OCO funds. Compared with the Senate bill, the House funding levels would have been $3.8 billion (7%) less. The House Appropriations committee report stated the following: "Military power alone cannot solve all the [challenges and emerging crises throughout the world], especially over the long term. Advancing United States national interests also requires effective diplomatic engagement and foreign assistance." At the same time, the committee recognized resources are limited, and it supported steps to reduce waste, inefficiency, and duplication, and to press other nations to do more (see Table 2 ). On September 14, 2017, the House approved a consolidated appropriations bill for FY2018, H.R. 3354 , which incorporated the text of H.R. 3362 in the SFOPS section, Division G. BBA of 2018 . On February 9, 2018, Congress passed the Bipartisan Budget Act of 2018 (BBA, H.R. 1892 ; P.L. 115-123 ), which continued government funding through March 23, 2018; raised both defense and nondefense discretionary spending limits for FY2018 and FY2019; and extended direct spending reductions through FY2027. The act eased the FY2018 budget process and prevented a breach of the BCA spending limits by raising the overall revised discretionary spending limits from $1.069 trillion for FY2017 to $1.208 trillion for FY2018. It raised the defense cap by $80 billion to $629 billion and the nondefense cap (including SFOPS) by $63 billion to $579 billion for FY2018. On March 23, 2018, Congress passed the Consolidated Appropriations Act, 2018 ( H.R. 1625 ; P.L. 115-141 ), which provided FY2018 funding through September 30, 2018. Division K of the act―State, Foreign Operations, and Related Programs (SFOPS)―included a total of $54.18 billion, about 6% less than the FY2017 SFOPS funding. The Trump Administration's FY2018 budget request reflected a departure from past Administration budget proposals for the Department of State, Foreign Operations, and Related Programs (SFOPS). Discussion of some key changes follows. The Administration proposed to cut funding for the State Department and Related Agency category by 27% from FY2017 actual levels, to $13.20 billion. Base funding would have decreased under the Administration's proposal by 19%, while OCO funding would have decreased by 41%. Cuts were proposed in areas including Capital Security Cost Sharing (CSCS) and Maintenance Cost Sharing (MCS) program contributions, contributions to international organizations, contributions for international peacekeeping activities, and educational and cultural exchange programs. Among the top-line accounts, the Diplomatic and Consular Programs (D&CP) account, the State Department's main operations account, would have declined by 15% to $8.26 billion had the Administration's proposal been enacted. Additionally, the Embassy Security, Construction, and Maintenance (ESCM) account would have totaled $1.14 billion, a 62% decrease from the FY2017 actual level. Other noteworthy reductions in the proposal included significant cuts in "Related Programs" accounts, which fund a number of nongovernmental institutions (see Table 3 ). For example, the FY2018 request sought to end direct appropriations for the Asia Foundation and the East-West Center (the State Department said in its request that these organizations would remain eligible to compete for federal grant funding opportunities and receive private sector contributions). The request also looked to cut the direct appropriation for the National Endowment for Democracy by 39% from the FY2017 actual level (see Table 3 ). However, P.L. 115-141 maintained direct appropriations to all three of these entities that were equal to the direct appropriations provided to each of them in FY2017. H.R. 3362 , the House committee bill, would have provided $15.52 billion in new appropriations for the State Department and Related Agency category (not reflecting rescissions of prior year funds). This was approximately 18% more than requested and 15% less than FY2017 actual funding. About 27% of the State Department and Related Agency funding would have been designated for OCO. The appropriations report accompanying the committee bill made note of ongoing Administration efforts to reorganize the Department of State, asserting that "it is essential that Congress be provided detailed information regarding any reorganization plan prior to its implementation." The Senate committee bill, S. 1780 , would have provided $15.69 billion in new appropriations for the State Department and Related Agency Category. This comprised approximately 19% more than the Administration's request and 14% less than FY2017 actual funding. In addition, the Senate measure would have provided around 1% more funding than the House committee bill. If enacted, S. 1780 would have designated approximately 25% of the State Department and Related Agency funding contained therein for OCO. Like the House committee report, the Senate committee report accompanying S. 1780 addressed efforts to reorganize the Department of State. The report expressed concern that "the process by which the Department of State and USAID intend to reorganize lacks clarity" and that "the administration has a predetermined outcome for the reorganization or redesign." P.L. 115-141 provided $16.22 billion for the Department of State, international broadcasting, and related agencies. This was 11% less than the FY2017 funding level and 23% above the Administration's request. Of these appropriated funds, $12.04 billion were provided for the enduring budget and $4.18 billion were provided for OCO. The FY2018 enduring budget funds were 7% above the FY2017 actual funds, while FY2018 OCO funds were 39% below the FY2017 actual level. Section 7081 of this law provides that funds appropriated for the Department of State may not be used to implement a reorganization or redesign without consultation with Congress. The Worldwide Security Protection (WSP) request within D&CP is the primary source of funding for DS. DS's responsibilities include but are not limited to developing and implementing security programs to protect all personnel at every U.S. diplomatic mission; protecting the Secretary of State, the U.S. Ambassador to the United Nations, and foreign dignitaries below the head-of-state level who visit the United States; investigating passport and visa fraud; conducting personnel security investigations; and issuing security clearances. Under the Administration's proposal, funding for WSP would have declined 19% from the FY2017 actual level of $4.64 billion to $3.76 billion. Excluding FY2017 supplemental funding, this proposal marked an increase of 1%. The Department of State maintained that congressional action to fully fund WSP with "no-year" appropriations created an ample pipeline of unobligated funds. It added that a large share of the difference between the FY2018 request and FY2017 figure owed to nonrecurrent OCO expenditures. However, the department cautioned that the increasing percentage of recurring DS operations at overseas facilities funded in the WSP account through OCO may present future year challenges, as it anticipated that OCO funding would be significantly reduced in the years ahead. With regard to non-OCO funds, the Administration's $871 million request for DS funds through WSP comprised a $46.4 million net decrease reflecting "prior-year efficiencies" and did not make mention of future efficiencies to be realized. H.R. 3362 and S. 1780 would have each appropriated a total of $3.76 billion for WSP, which was equal to the Administration's request. The proportions of enduring funds ($1.38 billion) and OCO funds ($2.38 billion) provided in each bill also mirrored the Administration's request. Both bills would have maintained the status of WSP as a no-year appropriation for both OCO and non-OCO funds, meaning that the Department of State could carry forward any balance of unobligated FY2018 appropriated funds for expenditure in subsequent fiscal years. The FY2018 appropriation for WSP provided in P.L. 115-141 was also identical to the Administration's request in terms of the overall appropriation, the proportions of enduring and OCO funds, and the maintaining of WSP as funded exclusively through no-year appropriations. The ESCM account is the primary source of funding for OBO. OBO's responsibilities include but are not limited to setting the department's priorities for the design, construction, acquisition, maintenance, and use of diplomatic mission properties. One key funding area within ESCM is the Worldwide Security Upgrades (WSU) allocation, which is used in part to meet the Department of State's share of obligations to the CSCS and MCS programs. Like WSP, Congress has provided no-year appropriations for ESCM and, by extension, WSU. The Administration's $1.14 billion request for ESCM constituted a 62% decrease relative to the FY2017 actual figure of $3.01 billion. However, the department intended to draw on its balance of unobligated funds to increase actual ESCM total direct obligations from an estimated $2.19 billion in 2017 to $2.29 billion in 2018. Within ESCM, the department intended to carry forward $618.4 million in funds that Congress previously appropriated for WSU in FY2017 to meet its FY2018 CSCS and MCS obligations. The department maintained that these carry-over funds and requested new funds totaling $337.7 million for this purpose for FY2018, and additional funds provided through Machine Readable Visa (MRV) fees would have been sufficient to meet its required share of contributions to CSCS and MCS. According to the department, other agencies with overseas staff under Chief of Mission authority would have contributed an additional $1.1 billion, bringing total contributions to $2.2 billion, which is the annual level the Benghazi Accountability Review Board recommended. H.R. 3362 would have appropriated a total of $2.31 billion for ESCM, or approximately 103% more than the Administration's FY2018 request. While the Administration did not request any OCO funds for the ESCM account, H.R. 3362 would have provided $71.78 million for OCO. With regard to WSU, the bill would have provided $1.49 billion, or over $1.1 billion more than what the Administration requested. The appropriations report accompanying H.R. 3362 noted that the committee recommendation did not include the Administration-requested authority to use prior year funds to augment its CSCS contribution for the Department of State. The committee instead recommended that the department obligate no less than $956.152 million made available for ESCM in this legislation for its CSCS and MCS obligations. As with WSP, the funds provided under ESCM would have comprised a no-year appropriation. S. 1780 would have provided a total of $2.06 billion for ESCM. This was approximately 80% more than the Administration's FY2018 request and 11% less than the House committee bill. Despite appropriating less total funds for ESCM than the House committee bill, S. 1780 would have designated far more ($158.82 million, compared to $71.78 million in the House committee measure) for OCO. Within this amount, the Senate committee measure provided $1.30 billion for WSU, or over $900 million more than the Administration's request. The appropriations report accompanying S. 1780 included funding recommendations for several programs and activities funded by ESCM, including $1.12 billion for CSCS and MCS obligations. This indicated that, as with the House committee measure, the Senate bill conflicted with the department's intended approach of using prior-year funds to account for a significant proportion of its FY2018 CSCS and MCS contributions. Among other provisions, the appropriations report also called for making available at least $160.5 million of MCS program funds for the compound renovation project at Embassy Moscow and $32 million of such funds for an American Center at Embassy Moscow. As in the House committee bill, all funds provided under this measure would have comprised no-year appropriations. Like the House committee measure, the ESCM appropriation within P.L. 115-141 provided a total of $2.31 billion. While the ESCM appropriation and the House committee measure appropriated identical funds for OCO ($71.78 million), P.L. 115-141 provided a slightly smaller proportion of the broader enduring appropriation ($1.48 billion) for WSU than was provided in the House bill ($1.49 billion). However, the sum of the overall ESCM appropriation ($2.42 billion) in P.L. 115-141 and the House committee measure was identical. The overall appropriation for ESCM was 23% less than the FY2017 actual level for this account. The explanatory statement accompanying this law, as did the appropriations report accompanying S. 1780 , provides $1.12 billion for the State Department's CSCS and MCS obligations, in effect rejecting the department's aforementioned intent to use prior-year funds to meet a large share of its FY2018 contributions. However, the explanatory statement did not provide prescriptive funding levels for capital projects in Russia, requiring instead that the Secretary of State consult with the committees on appropriations regarding funding directives for diplomatic facilities in that country. Within the Department of State and Related Agency category, funds are provided to international organizations through the Contributions to International Organizations (CIO) and Contributions for International Peacekeeping Activities (CIPA) accounts. In previous years, requests for these accounts have included itemized lists of intended U.S. contributions to international organizations and international peacekeeping activities. However, the department did not clarify how much it intended to contribute to individual entities in FY2018. Therefore, its FY2018 request included aggregate figures divided only into enduring and OCO requests. CIO . The Administration's request for the CIO account totaled $996.43 million, a 27% decrease from the FY2017 actual level of $1.36 billion. The department stated that inherent in this request was the expectation that organizations to which the United States contributes would cut costs and distribute funding burdens more evenly across member states. The budget request noted that the department would lead an interagency review of U.S. contributions to international organizations, adding that priority would be given to organizations that "most directly support U.S. national security interests" and "American prosperity." The request also provided three means through which the department was considering significantly reducing U.S. contributions to international organizations: (1) reducing the levels of international organizations' budgets, including through cooperating with key allies that have supported previous efforts to limit budget growth; (2) reducing the U.S. assessment rate; and/or (3) possibly not paying U.S. assessments in full. H.R. 3362 would have provided $1.17 billion for CIO, a 17% increase relative to the Administration's FY2018 request and a 14% decrease from the FY2017 actual figure. The appropriations report stated the committee's expectation that the Secretary of State prioritize payments for organizations whose work promotes human health and international security, which the committee said included the North Atlantic Treaty Organization (NATO) and the International Atomic Energy Agency (IAEA). It added that the appropriation for this account is intended to ensure adequate resources for such organizations. S. 1780 would have provided $1.45 billion for CIO. This amount was an approximately 45% increase compared to the Administration's FY2018 request, a 7% increase relative to the FY2017 actual figure, and a 24% increase from the House committee measure. The appropriations report noted "the importance of United States engagement with international organizations, including the United Nations, the Organization for Economic Cooperation and Development, and the World Trade Organization" and stated the committee's view that "fully meeting U.S. commitments to such organizations, combined with robust engagement to promote transparency and accountability to member states, is important to U.S. security and economic interests." The report also called on the Secretary of State to provide a cost-benefit analysis of each contribution made to an international organization receiving $5 million or less in the most recent report of U.S. contributions to international organizations. The committee stated that such analysis shall include information regarding "(1) the extent to which the U.S. contribution and the mission of such organization align with the U.S. national interest; (2) the efficacy and cost effectiveness of the operations and programs conducted by such organization; and (3) whether the organization conducts or funds programs and activities similar to other organizations included in the report, and the extent of any such overlap." The $1.47 billion appropriation for CIO in P.L. 115-141 was 8% higher than the FY2017 actual figure, 25% higher than the House committee measure, and 1% higher than the Senate committee measure. Of the funds appropriated, $1.37 billion was provided for the enduring budget. An additional $96.2 million was provided for OCO, which was identical to the proposed OCO sums in the House and Senate committee measures and the Administration's request. In lieu of the cost benefit analysis reporting requirement called for in the Senate bill report, the explanatory statement requires the Secretary of State to inform Congress of the current tools available to the Department of State and others to prioritize and assess the value of contributions to international organizations, and to provide any recommendations for the development of more effective tools and methods. CIPA. The Administration's request for CIPA totaled $1.20 billion, a 37% decrease from the FY2017 actual level of $1.91 billion. The department asserted that because the United States would not have an opportunity to achieve a reduction in its U.N. peacekeeping assessment rate until December 2018, reduced U.S. funding had to be achieved through reductions in overall U.N. peacekeeping budget levels or reduced U.S. contributions. The department added that while U.N. peacekeeping missions help achieve U.S. government objectives, these missions must be implemented in a more effective manner, enabling them to better "address conflicts, support political solutions, and meet the needs of the people they are intended to help." The request also included a call to other permanent members of the U.N. Security Council to join the United States in a strategic review of each peacekeeping mission, and more equitable mission cost sharing among U.N. member states. H.R. 3362 would have provided $1.50 billion for CIPA. This would have been a 25% increase relative to the Administration's FY2018 request and a 22% decrease from the FY2017 actual figure. The appropriations report noted that the committee recommendation provided the resources necessary to fund the assessed cost of peacekeeping missions at the statutory level of 25%. It also stated the committee's concern about the scope, duration, and costs of U.N. peacekeeping missions and supported U.S. efforts to bring down costs while maintaining U.S. interests and international security. The Senate committee measure, S. 1780 , would have provided $1.38 billion for CIPA. This figure constituted an approximately 16% increase compared with the Administration's request, a 27% decrease from the FY2017 actual figure, and an 8% decrease from the amount that would have been provided under H.R. 3362 . As with the House committee measure, the appropriations report for S. 1780 stated that the bill provided sufficient funds for contributions equal to the 25% statutory limitation on such contributions. P.L. 115-141 provided an appropriation of $1.38 billion for CIPA. This marked a reduction of 28% from the FY2017 actual figure and an increase of 16% relative to the Administration's FY2018 request. While the total amount provided for CIPA through P.L. 115-141 is very close to that provided through the Senate measure, P.L. 115-141 provides $20,000 less than what would have been provided had the Senate committee measure been enacted. Of this appropriation, more was provided for OCO ($967.46 million) than was offered in the House committee measure ($965.91 million) and the Senate committee measure ($602.34 million). However, the enduring appropriation ($414.62 million) was lower than the Senate committee measure ($779.76 million) and the House committee measure ($529.91 million). As with the appropriations reports accompanying the House and Senate committee measures, the explanatory statement accompanying this law states that sufficient funds are provided for United States contributions to peacekeeping missions at the statutory level of 25%. The Administration's FY2018 budget request for the Educational and Cultural Exchange Programs account totaled $285 million, a 55% reduction from the FY2017 actual level of $634.14 million. The department noted that these programs help build strategic relationships and networks between American citizens and people in other countries to advance U.S. foreign policy goals. According to the Department of State, the FY2018 request was intended to be more narrowly targeted toward specific foreign policy goals, avoid duplication, and focus on "core programs" including the Fulbright program. The request called for federal funding for the Fulbright program to total $125.6 million, a 48% reduction from the FY2017 actual level of $240 million. H.R. 3362 would have provided $590.9 million for Educational and Cultural Exchange Programs, including no less than $236 million for the Fulbright program. This marked a 107% increase relative to the Administration's FY2018 request and a 7% reduction compared to the FY2017 actual level. It also included language provided in past appropriations laws requiring that any substantive modifications from the prior fiscal year to programs funded by this act under this heading shall be subject to prior consultation with, and the regular notification procedures of, the Committees on Appropriations. S. 1780 would have provided $634.14 million for Educational and Cultural Exchange Programs, which was equal to the FY2017 actual figure. Furthermore, it marked an increase of 123% relative to the Administration's request and 7% more than the House committee measure. Of these funds, S. 1780 set aside no less than $240 million for the Fulbright program. Unlike H.R. 3362 , S. 1780 provided that a portion of the Fulbright awards from the Eurasia and Central Asia regions shall be designated as Edmund S. Muskie Fellowships. Similar provisions designating a portion of Fulbright awards as such have been included in recent appropriations bills, as enacted. Like the House committee bill, this measure included language requiring the department to engage with the Committees on Appropriations prior to enacting substantive modifications from the prior fiscal year to programs funded under this heading of this act. P.L. 115-141 provided a slight increase in the level of funds appropriated for the Educational and Cultural Exchange Programs account; the appropriation of $646.14 million marked a 2% increase relative to the FY2017 actual figure and an increase of 127% relative to the Administration's request. Of this amount, not less than $240 million was set aside for the Fulbright Program, which is identical to the amount set aside in the Senate committee measure. Like both the House and Senate committee measures, it included language requiring consultation with Congress prior to substantive modifications from the prior fiscal year to programs funded by the act. It also provided, like that Senate committee measure, that a portion of Fulbright Awards be designated as Muskie Fellowships. The Foreign Operations accounts fund a range of activities encompassing bilateral economic aid, humanitarian assistance, security assistance, and export promotion programs. Together with two international food aid accounts appropriated through the Agriculture appropriation (P.L. 480 Title II Food for Peace and the McGovern-Dole Food for Education accounts), Foreign Operations accounts comprise the foreign assistance component of the international affairs budget. For FY2018, the Administration requested $27.05 billion for Foreign Operations, about 31% less than the FY2017 enacted funding level. Of this total, $7.95 billion was designated as OCO (29%). The House committee bill, H.R. 3362 , included $33.46 billion in new appropriations for Foreign Operations (not reflecting rescissions of prior year funds), about 24% more than requested and 15% less than the FY2017 enacted funding. About 24% of the Foreign Operations funding would have been designated as OCO. The Senate committee bill, S. 1780 , included $35.66 billion in new appropriations for Foreign Operations (not reflecting rescissions of prior year funds), about 32% more than requested and 10% less than the FY2017 enacted funding. About 47% of the Foreign Operations funding would have been designated as OCO. P.L. 115-141 , the Consolidated Appropriations Act, 2018, was enacted on March 23 and included $37.99 billion for Foreign Operations accounts. This was 4.0% less than the FY2017 funding level and 40.4% above the funding level requested by the Administration. Of that total, $7.84 billion, or about 21%, was designated as OCO. Table 4 shows Foreign Operations and foreign aid funding (foreign operations plus food aid) by major categories for FY2016, FY2017, and the FY2018 request, House and Senate legislation, and enacted funding. Every major category of foreign assistance would have been reduced from FY2017 levels under the FY2018 request. Bilateral economic assistance and humanitarian assistance (not including food aid) would both have been reduced by about a third overall from FY2017 levels, and multilateral aid cut about 30%. Security assistance and USAID administrative accounts would have been subject to proportionately lighter cuts (-24% and -14%, respectively). Several accounts would have been merged, eliminated, or funded only to cover close-out expenses, as discussed below. The House bill would have reduced funding compared to FY2017 in every category as well, though the cuts would generally have been less than those proposed in the budget request. An exception was multilateral assistance, for which the House bill included $877 million, a 58% cut from the FY2017 appropriation and 41% less than the budget request. The Senate committee proposal would have provided more funding than requested by the Administration, but less than enacted for FY2017, in every aid category. Most notably, the bilateral assistance funding in the Senate bill would have exceeded the Administration's request by 40%. The Senate funding levels also exceeded the House funding for every aid category except for security assistance. The final appropriation, P.L. 115-141 , increased humanitarian assistance by 15% over for 2017 levels, maintained almost level funding for USAID Operations and security assistance, and cut bilateral economic assistance by about 12% and multilateral aid by 11%. Food aid funded through the agriculture appropriation was increased by 15%. Under the FY2018 request, foreign assistance funding levels would have declined in every region compared to FY2017, with proposed cuts ranging from 60% in Europe and Eurasia to 23% in the Near East/North Africa. The proportional share of aid for each region would not have changed significantly, though the Near East would have replaced Africa as the top regional recipient of foreign assistance, as aid to Africa would have declined by 37%. Aid to the East Asia and Pacific region would have been cut 52% from FY2017 estimates, while aid to South and Central Asia would have been cut by about 30% and Western Hemisphere by 36%. The request numbers, however, did not include humanitarian assistance, which may have altered the regional breakdown once allocated. The FY2018 budget request would have continued to emphasize strategic allies in the Middle East (Israel, Egypt, and Jordan); ongoing U.S. military, development, and reconstruction activities in Afghanistan; and major global health and development partners in Africa. Iraq would have rejoined the top-10 list, even while receiving less assistance than in FY2017. Among top aid recipients, most would have received less assistance than they were allocated in FY2017. A few countries would have received more aid under the FY2018 proposal than in the FY2017 allocation, including Chad, Lesotho, Swaziland, Malaysia, Turkey, Libya, Syria, and Yemen. Table 5 compares country allocations for the top 10 aid recipients in FY2017 to those that would have been top recipients under the FY2018 request. The House committee bill did not provide comprehensive information on regional and country allocations, but did provide specific allocations for certain countries, including Israel ($3.10 billion), Egypt ($1.457 billion), Jordan ($1.28 billion), and Colombia ($336 million). The bill also provided $615 million for the U.S. Strategy for Engagement in Central America. The Senate committee bill and report specified assistance levels for many countries and regional funds, and country allocation for many accounts. Top recipients would have included Israel ($3.10 billion), Afghanistan ($2.22 billion), Jordan ($1.50 billion), Pakistan ($1.41 billion), Egypt ($1.082 billion), Ukraine ($421 million), Colombia ($391 million), and West Bank/Gaza ($258 million). The Senate bill also included $600 million for the U.S. Strategy for Engagement in Central America and $500 million for the ISIS Relief and Recovery Fund to assist ISIS-liberated communities in the Middle East and North Africa. The final FY2018 appropriation did not specify country and regional allocations for the most part, but did include funding directives for some countries, including Israel ($3,100 million), Jordan (not less than $1,525 million), Egypt (up to $1,412.5 million), Colombia (not less than $391.3 million), and Ukraine (not less than $420.7 million). The law also included up to $615 million for the U.S. Strategy for Engagement in Central America. The Trump Administration sought several changes within the context of the FY2018 Foreign Operations budget. They included consolidating some bilateral foreign assistance programs, eliminating some programs/entities, and zeroing out funding for the P.L. 480 and McGovern-Dole foreign food aid programs. Under bilateral economic assistance, the Administration proposed to eliminate the Development Assistance (DA), Economic Support Fund (ESF), Assistance to Europe, Eurasia, and Central Asia (AEECA), and Democracy Fund (DF) accounts and replace them with a new Economic Support and Development Fund (ESDF) account. The Administration cited "improved ability to assess, prioritize and target development-related activities in the context of broader U.S. strategic objectives" as the reason for consolidation. Authorization language to clarify the authorities under which the new account would operate was not requested. The proposed funding level for ESDF, $4.938 billion, was more than 40% below the FY2017 funding for the accounts it would have replaced. Thirty-eight countries that received DA, ESF, or AEECA in FY2016 would have no longer received funding from these accounts or from ESDF under the FY2018 request. The International Organizations & Programs (IO&P) account, which funds U.S. voluntary contributions to many U.N. entities, including UNICEF, U.N. Development Program, and U.N. Women, would also have been zeroed out. Budget documents suggested that some unspecified activities currently funded through IO&P could have received funding through the ESDF. The House committee bill maintained the ESF, DA, AEECA, and DF accounts, rejecting the proposed merger into an ESDF account and noting that the management review then underway within the State Department and USAID should inform future account changes. The bill did not include funding for the IO&P account, but the committee noted that a contribution to UNICEF could be made through the Global Health Programs account. The Senate committee rejected the requested account mergers entirely, noting in their report that "the establishment of the ESDF account has not been justified," and used the same foreign operations accounts as were used for FY2017. Funding for the IO&P account would have increased by 7% under the Senate proposal compared to FY2017 funding. P.L. 115-141 also rejected the proposed account mergers and eliminations. The FY2018 enacted appropriation used the same Foreign Operations accounts as the FY2017-enacted appropriation. The FY2018 request proposed the elimination of the following entities funded through foreign operations line items: Inter-America Foundation (IAF) U.S.-Africa Development Foundation (USADF) Overseas Private Investment Corporation (OPIC) Trade and Development Agency (TDA) The Administration justified the proposed eliminations on the basis of fiscal responsibility and prioritizing security investments. In each of these cases, funds were requested only for the orderly close-out of activities in FY2018. Neither the House nor the Senate committee bills proposed the elimination of any of these agencies, though the House bill proposed large reductions for IAF and USADF (-50% compared to FY2017 funding). The final FY2018 appropriation funded all of these entities at levels similar to FY2017. Unlike previous Administrations, the Trump Administration did not identify sector-specific initiatives in its foreign assistance budget request. Rather, the request cited "priority areas" around which the budget request was formulated, including advancing U.S. national security, asserting U.S. leadership, fostering U.S. economic interests, and ensuring accountability to U.S. taxpayers. Despite this stated priority framework, aid sectors that have long made up the bulk of U.S. foreign assistance would have continued to do so under the request. Foreign assistance in the global health, humanitarian, and security sectors together would have comprised about 70% of the foreign aid budget request for FY2018, compared to 67% of FY2017 enacted funding. The Administration requested $6.48 billion for global health programs in FY2018, a 26% reduction from the FY2017 funding level of $8.72 billion, and authority to redirect $322.5 million in prior year Ebola emergency funds to malaria and health security activities in FY2018. Every health subcategory would have been reduced from the FY2017 enacted level: HIV/AIDS ($4,975 million, -17%). The request would have eliminated funding implemented by USAID and provided $1.1 billion to the Global Fund. Maternal & Child Health ($749.6 million, -8%). The request was level with FY2016 funding. Malaria ($424 million, -44%). The requested reprogramming of prior year Ebola funding would have brought malaria funding to FY2016 levels. Tuberculosis ($178.4 million, -26%). Family Planning and Reproductive Health ($0, -100%). The request would have eliminated assistance for family planning and reproductive health services ($524 million in FY2017). Nutrition ($78.5 million, -37%). Other . The request specified no funding allocation for vulnerable children ($23 million in FY2017) or for neglected tropical diseases ($100 million in FY2017), and would have reduced funding for pandemic/emerging health threats by 47% from the FY2017 enacted level (though seeking to use $72.5 million in previously authorized Ebola funds for unspecified health security activities). Overall, the Administration explained the reduction in global health aid as reflecting an effort to realign all foreign assistance with U.S. national security goals and to encourage other donors and partner countries to devote greater resources and political commitment to global health efforts. The House committee bill included $8.321 billion for global health, which was 4.6% less than the FY2017 enacted funding level and 28.4% higher than the Administration's request. It would have continued funding for most health subsectors at a level similar to FY2017. The primary exception was reproductive health and family planning, for which the bill did not specify a GHP allocation but specified in general provisions that no more than $461 million in the bill (including from other accounts) may have been used for reproductive health and family planning, about 20% less than funding for this purpose in FY2017. The House committee bill would also have reduced funding for global health security, compared to FY2017, and did not specify a funding level for neglected tropical diseases. The bill authorized the requested reprogramming of previously appropriated Ebola emergency funds for malaria and global health security programs. The Senate committee bill included $8.59 billion for global health, which was 1.5% less than the FY2017 enacted funding level, 32.6% higher than the Administration's request, and 3.2% higher than the House proposal. It also proposed to reprogram $120 million in prior year funds to support malaria and tuberculosis programs. With these reprogrammed funds included, the bill would have continued funding for HIV/AIDS, nutrition, and malaria programs at the FY2017 funding level and slightly boosted allocations for maternal and child health, family planning and reproductive health, and tuberculosis programs compared to FY2017. P.L. 115-141 included $8.69 billion for global health programs in FY2018, a decrease from FY2017 funding of 0.8% and 34% more than the Administration request. The allocations specified in the statement of conferees were identical to the FY2017 allocations, with the exceptions of an increase of 1.8% for maternal and child health programs, an 8.3% increase for tuberculosis programs, and a 49% decrease for global health security/emerging threats. The Trump Administration's FY2018 budget request for humanitarian assistance totaled $5.25 billion, which was roughly 44% less than the FY2017 appropriated amount ($9.44 billion—a record high) and about 20% of the total FY2018 foreign aid request. Humanitarian responses to the Syria and Iraq crises and the threat of famines in Yemen, East Africa, and Nigeria were cited as priorities. The request included humanitarian assistance in only two accounts: $2.746 billion for the Migration and Refugee Assistance (MRA) account and $2.508 billion for the International Disaster Assistance (IDA) account. It provided zero funding for the Food for Peace (P.L. 480, Title II) and Emergency Refugee and Migration Assistance (ERMA) accounts. The request also included broad OCO transfer authority (see Table 6 ). Compared to the FY2017 appropriated amounts, the FY2018 request would have decreased MRA by 18% and IDA by about 39% (accounting for a required transfer of funds from IDA to P.L. 480, Title II). State Department officials indicated that they expected significant carry-over of previously appropriated funds into FY2018 due to the increased allocations and late enactment of the FY2017 appropriations. They also suggested that the proposed funding reduction assumed that other donors would shoulder an increased share of the overall humanitarian assistance burden worldwide. The request continued a trend of annual humanitarian assistance requests being consistently and significantly lower than prior year appropriations. P.L. 480, Title II . The FY2018 request provided no funding for the P.L. 480 Title II (Food for Peace) account funded through the Agriculture appropriation, which provides in-kind food aid from U.S. farmers. Instead, the request allocated $1.1 billion within the IDA account for emergency food assistance. Funding food aid entirely through IDA, many believe, could improve program efficiency and flexibility by avoiding the commodity purchase and cargo preference requirements applied to P.L. 480. However, with P.L. 480 Title II funded at $1.766 billion in FY2017 (including the $300 million transfer from IDA), the $1.1 billion earmark for emergency food assistance within IDA for FY2018 would have been a cut of about 38%. The House committee bill included $5.931 billion in humanitarian accounts, 24% less than the FY2017 enacted level and 13% more than the Administration's request. Like the request, the House committee bill did not include funding for the ERMA account. However, the House agriculture appropriations committee bill, H.R. 3268 , disregarded the requested elimination of the P.L. 480 Title II account, proposing a funding level of $1.4 billion for FY2018. Including P.L. 480, House committee legislation provided $7.33 billion for humanitarian aid, which was 21% less than FY2017 funding and almost 40% more than the Administration requested. The Senate SFOPS committee bill included $6.294 billion in humanitarian accounts, which was about 20% less than the FY2017 enacted level, 20% more than the Administration's request, and 6% more than the House proposal. The Senate committee bill did not zero out the ERMA account and instead provided $50 million, level with FY2017 funding. The Senate agriculture appropriations committee bill, S. 1603 , also disregarded the requested elimination of the P.L. 480 Title II account, providing $1.60 billion for the program for FY2018. Including P.L. 480, Senate committee legislation provided $7.89 billion for humanitarian aid, which is 15% less than FY2017 funding, 50% more than the Administration's request, and about 7% more than the House committee bill. P.L. 115-141 included a total of $9.405 billion of humanitarian assistance, a 0.9% reduction from FY2017 funding and 78% more than requested ( Table 6 ). The legislation increased IDA funding by about 4%, and P.L. 480 Title II by 20%, compared to FY2017. MRA funding is slightly lower than the FY2017 level (-0.2%), and only $1 million was appropriated for ERMA, a 98% reduction from FY2017, with no explanation provided in the statement of conferees. The FY2018 security assistance request totaled $7.093 billion, a 24% reduction from the FY2017 enacted funding level and about 26% of the total foreign aid request. The International Narcotics Control and Law Enforcement (INCLE) account would have been reduced by 33%; Nonproliferation, Antiterrorism, Demining and Related (NADR) by 30%; and International Military Education and Training (IMET) by about 9%. In each of these cases, the Administration described the proposed reductions as concentrating resources where they offered the most value and U.S. national security impact. The Foreign Military Financing (FMF) account would have been reduced by 19% compared to FY2017 enacted funding, with 95% of the request allocated to four countries: Israel ($3.1 billion), Egypt ($1.3 billion), Jordan ($350 million), and Pakistan ($100 million). These countries comprised 85% of FMF funding in FY2016. The remaining $200.7 million would have been for a global account to be allocated as necessary, on a grant or loan basis, to meet pressing security challenges. It is unclear what the terms of any FMF loans would have been. This approach was justified as providing the department with additional flexibility and could have potentially greatly reduced the number of countries receiving FMF assistance (from 56 in FY2016). The Peacekeeping Operations (PKO) account, which is primarily used to support a U.N. logistical support operation in Somalia as well as U.S. training and equipment for African militaries, would have seen the biggest reduction under the request, down 54% from FY2017 enacted funding, though the figure is distorted by funds for the U.N. Support Office in Somalia ($474 million in FY2017) being requested through the Contributions to International Peacekeeping Activities (CIPA) rather than PKO account, which happens every year. No funds were requested for the African Peacekeeping Rapid Response Partnership and the Security Governance Initiative (which totaled $114 million in FY2017), but PKO-funded counterterrorism assistance to African countries would nonetheless have increased under the proposal. The House committee bill would have provided $8.756 billion in security assistance accounts, which was about 7% less than the FY2017 appropriation and 23% more than the Administration's request. Every account would have seen cuts from the FY2017 funding level. In contrast with the Administration's request, which specified FMF allocations to four countries, the House committee bill specified the allocation of FMF funding to 21 countries and three regional funds, and did not include the requested authority for FMF loan assistance on a global basis. The Senate committee bill included $8.293 billion for security assistance, about 12% less than the FY2017 funding. Cuts would have been applied to all accounts except for International Military Education and Training (IMET), which would have been level funded. Total security assistance in the Senate committee bill was 17% more than the Administration request and about 5% less than the House committee level. The bill rejected the proposed Global Fund within the FMF account, as well as the proposed shift of FMF assistance from grants to loans. The accompanying report detailed FMF allocations to 54 countries and several regional funds. P.L. 115-141 appropriated $9.025 billion for security assistance in FY2018, about 3% less than the FY2017 funding. Compared to FY2017, INCLE funding increased by 9%, IMET funding was almost level, and NADRE (-10%), FMF (-13%) and PKO (-18%) funding declined. Neither the appropriations bill nor the statement of conferees mentioned an FMF global fund or the use of FMF for loans, but FMF allocations for FY2018 were specified for at least 23 countries. Foreign assistance is categorized in the Congressional Budget Justification by the objectives and program areas of the Foreign Assistance Framework, which identifies funding by purpose across multiple foreign aid accounts. Funding for all program areas (except Program Design and Learning, which would have been level funded at $1 million) would have been cut under the FY2018 budget proposal compared to the FY2017 funding. Select examples of possible interest to Congress, listed in the order they appear in the framework, included the following: Counterterrorism, $315.4 million (-36%) Counternarcotics, $373.9 million (-25%) Rule of Law & Human Rights, $429.9 million (-48%) Education, $509.1 million (-50%) Trade & Investment, $113.7 million (-16%) Agriculture, $499.8 million (-41%) Environment, $185.3 million (-71%) Disaster Readiness, $120.3 million (-45%) The House committee bill did not detail its foreign assistance proposal in accordance with the Foreign Assistance Framework categories, but specified funding levels for several aid categories that are comparable to categories in the framework, including Democracy Programs ($2,309 million), Counterterrorism ($359 million), Basic Education ($800 million), Higher Education ($235 million), Food Security and Agricultural Development ($1,001 million), Water and Sanitation ($400 million), Biodiversity Conservation ($265 million), and Microenterprise and Microfinance ($265 million). Major sector allocations in the Senate committee bill included Democracy Programs ($2,309 million), Food Security and Agricultural Development ($1,001 million), Basic Education ($500 million), Environment Programs ($893 million), Water and Sanitation ($400 million), Microenterprise and Microfinance ($265 million), and Higher Education ($235 million). P.L. 115-141 specified funding levels for a number of assistance sectors and objectives, including Education ($1,035 million, including $800 million for basic education), Environmental Conservation ($483 million), Food Security and Agricultural Development ($1,001 million), Microenterprise ($265 million), Water and Sanitation ($400 million), and Democracy Promotion ($2,309 million). Appendix A. SFOPS Appropriations, FY2017-FY2018 Appendix B. International Affairs Budget The International Affairs budget, or Function 150, includes funding that is not in the Department of State, Foreign Operations, and Related Programs appropriation: foreign food aid programs (P.L. 480 Title II Food for Peace and McGovern-Dole International Food for Education and Child Nutrition programs) are in the Agriculture Appropriations, and the Foreign Claim Settlement Commission and the International Trade Commission are in the Commerce, Justice, Science appropriations. In addition, the Department of State, Foreign Operations, and Related Programs appropriation measure includes funding for certain international commissions that are not part of the International Affairs Function 150 account. Appendix C. Glossary
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Nearly six months after the start of FY2018, the 115th Congress enacted the Consolidated Appropriations Act, 2018 (H.R. 1625; P.L. 115-141, signed March 23, 2018), which provided FY2018 funding for the Department of State, Foreign Operations, and Related Programs (SFOPS). Division K of the act―State, Foreign Operations, and Related Programs (SFOPS)― provided a total of $54.18 billion, including Overseas Contingency Operations (OCO) funds and rescissions. This represented a decrease of 6.1% from the FY2017 actual funding level. Of the total, $16.22 billion (not including rescissions) was for the Department of State, international broadcasting, and related agencies, a reduction of 10.7% as compared with FY2017 levels, and $37.99 billion (not including rescissions) was enacted for foreign operations, 4% below the FY2017 funding level. President Donald J. Trump submitted his FY2018 budget request to Congress on May 23, 2017. The request sought $40.25 billion (-30% compared with FY2017 enacted) for SFOPS, including Overseas Contingency Operations (OCO) funds. Of this total, $13.20 billion (-27% compared with FY2017 enacted) would have been for Department of State Operations and related programs. For Foreign Operations, the FY2018 request included $27.05 billion (-31% compared with FY2017 enacted). The total OCO funds in the request amounted to $12.02 billion (-42% below FY2017 enacted, including the FY2017 supplemental; excluding the supplemental, it would have been -21%). The OCO designation has the important feature of not counting against the discretionary spending limits imposed by the Budget Control Act of 2011 (P.L. 112-25). Prominent issues in the SFOPS request included, among others, reductions in annual appropriations for diplomatic security, contributions to international organizations and international peacekeeping, and educational and cultural exchange programs; a proposal to consolidate several bilateral foreign aid programs into one new account called the Economic Support and Development Fund (ESDF); proposed elimination of some foreign operations entities, such as the Trade and Development Agency and the Inter-American Foundation; and a 44% reduction in humanitarian assistance, including a zeroing out of the P.L. 480 (Food for Peace) foreign food aid program. On July 24, 2017, the House Committee on Appropriations reported H.R. 3362, the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018. The bill would have provided $47.5 billion in discretionary and mandatory funding for FY2018, including $12.02 billion for OCO (the same as requested). The text of H.R. 3362 was later incorporated into a consolidated spending bill, H.R. 3354, which passed the House on September 14, 2017. The total House funding level reflected a $7.3 billion (+18%) increase over the Administration request. On September 7, 2017, the Senate Committee on Appropriations reported S. 1780 with a total of $51.35 billion in discretionary and mandatory funding for FY2018, including $20.79 billion (the same as the FY2017 enacted level) for OCO. This bill would have provided 42% more OCO funds than either the request or the House bill. The Senate SFOPS total funding level was $11.1 billion (22%) more than the Administration request and $3.8 billion (7%) more than the House bill. On September 7 and 8, 2017, the Senate and House respectively passed the Continuing Appropriations Act, 2018, and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (H.R. 601; P.L. 115-56). As signed by the President on September 8, 2017, the act provided government funding (a continuing resolution, or CR) at the FY2017 rate, reduced by 0.6791%, through December 8, 2017. Subsequent CRs amended that date first to December 22, 2017, then to January 19, 2018, and then February 8, 2018. On February 9, 2018, Congress passed the Bipartisan Budget Act of 2018 (BBA, H.R. 1892; P.L. 115-123), which continued government funding through March 23, 2018; raised discretionary spending limits for FY2018 and FY2019; and extended direct spending reductions through FY2027. The act eased the FY2018 budget process and prevented a breach of the BCA spending limits by raising the overall revised discretionary spending limit from $1.069 trillion for FY2017 to $1.208 trillion for FY2018. It raised the defense cap by $80 billion to $629 billion and the nondefense cap (including SFOPS) by $63 billion to $579 billion for FY2018. (For more detail on defense FY2018 budget issues, see CRS Report R44866, FY2018 Defense Budget Request: The Basics.) This is the final update of this report.
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The Preventing Sex Trafficking and Strengthening Families Act ( H.R. 4980 , P.L. 113-183 ) is an omnibus bill, including child welfare and child support provisions. As enacted the bill seeks to ensure that child welfare agencies are responsive to particular issues for children and youth in foster care or those who otherwise have contact with the child welfare system, including identifying and determining appropriate services for child sex trafficking victims; supporting "normalcy" for children in foster care; and improving opportunities for older children in foster care to establish permanent connections and make a successful transition to adulthood. The law also reauthorizes two child welfare programs: Adoption Incentive Payments (for three years, FY2014-FY2016) and the Family Connection Grants program (for one year, FY2014). The child support provisions in the bill are intended primarily to increase the effectiveness of the Child Support Enforcement (CSE) program where a noncustodial parent lives in a foreign country. The bill also includes additional child support provisions to improve CSE operations by tribal governments, support standardized data exchange, and require electronic withholding of child support. Development of the bill's provisions was informed by input from multiple Congressional hearings and roundtables featuring the perspective of foster youth, foster parents, state child welfare agency administrators, private agencies, social service providers, and youth and child welfare advocates. Both the House Ways and Means and Senate Finance Committee also solicited and received public comments on draft versions of the legislation. The final bill ( H.R. 4980 ), which passed the House of Representatives by voice vote (under suspension of the rules) on July 23, 2014, and the Senate, by unanimous consent on September 18, 2014, represented a compromise between multiple bills acted on by the House of Representatives and the Senate Finance Committee earlier in the 113 th Congress. President Obama signed the bill into law on September 29, 2014, as P.L. 113-183 . This report begins with an overview and topical summary of the provisions of H.R. 4980 , as enacted, and follows this with a review of the Congressional Budget Office (CBO) cost estimate for H.R. 4980 and the legislative origins of the enacted bill. As enacted, the Preventing Sex Trafficking and Strengthening Families Act ( P.L. 113-183 ) responds to concerns about sex trafficking of children in foster care, including responding to those who run away from that care and those who otherwise come into contact with the child welfare agency; encouraging "normalcy" for children in foster care; supporting successful transitions to adulthood for older children in foster care; ensuring strong, permanent families for children who enter or are at risk of entering foster care; and improving child support enforcement activities. The law establishes new requirements for state child welfare agencies, state child support enforcement agencies, and the U.S. Department of Health and Human Services (HHS) which administers federal programs providing funding to those agencies. Overall, the law addresses five basic topics: Addressing sex trafficking of children who are served by the child welfare agency and children who run away from foster care . The law requires state child welfare agencies to develop and implement procedures that respond to concerns about sex trafficking of children in foster care (including those who are not in foster care but are served by the agency), to separately develop protocols to locate and serve children who run away from foster care, to report information about victims of sex trafficking and those who run away from foster care to various entities; and directs HHS to provide information on the numbers of sex trafficking victims identified by state child welfare agencies, establish a national advisory committee concerning sex trafficking of children in the United States, and prepare a report on children who run away from foster care. " N ormalcy" for children in foster care. The law requires changes to state licensing laws intended to enable and ensure foster caregivers use a "reasonable and prudent parenting standard" when determining foster children's participation in age-appropriate social, extracurricular and other enrichment activities; requires state child welfare agencies to provide training on the standard for foster caregivers; and directs HHS to provide technical assistance to states on this issue. S uccessful transitions to adulthood for older children in foster care . For children in foster care under the age of 16, the law prohibits the use of the permanency plan "another planned permanent living arrangement" as an alternative to seeking reunification, adoption, legal guardianship, or placement with a fit and willing relative; requires state child welfare agencies to continue efforts to find permanent connections for youth age 16 or older who are assigned APPLA as their permanency plan; requires state child welfare agencies to involve children in foster care at age 14 or older in their own case and permanency planning and to inform these children of certain rights, including their right to specified key document (e.g., birth certificate, driver's license) when they are "aging out" of foster care. Extension of c hild welfare programs and other changes to support strong and permanent families for children . The law extends funding authorization for the Adoption Incentives Payment program for three years and revises the incentive payments to include incentives for achieving permanence via legal guardianship; extends funding for Family Connection grant program for one year; requires states to spend an amount equal to at least 30% of certain adoption assistance "savings" for services to strengthen families, including provision of post-adoption supports; ensures that children receiving federal guardianship assistance with a legal relative guardian can continue to do so if that guardian becomes ill or incapacitated and the child is placed with a previously named successor guardian; requires state child welfare agencies to notify the parent(s) of siblings of children who are entering foster care; and directs HHS to report on the number of children who are placed in foster care as a result of a legal guardianship or adoption that has been disrupted or has dissolved. Improv ed child support collections . The law provides for implementation of the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance (and any other related treaties) to increase effectiveness of child support collections in cases where noncustodial parents live in foreign countries; seeks to improve child support collections involving tribal governments; requires state child support enforcement agencies to adopt certain data standardization measures and to implement electronic withholding of child support payments; and directs HHS to report on additional measures to improve child support enforcement. These provisions have various effective dates, mostly ranging from the date of enactment to one or more years after that date as described below. The Preventing Sex Trafficking and Strengthening Families Act ( P.L. 113-183 ) includes new provisions in child welfare law that are designed to respond to sex trafficking of children in foster care or who are otherwise involved in the child welfare system. The experiences of children who enter foster care or are served in foster care, including those who run away from foster care, may place them at higher risk to become a victim of sex trafficking. Some but not all state child welfare agencies have begun to craft specific responses to this concern. At the same time, little definitive information on the scope of sex trafficking among children served by the child welfare agency is available. The provisions enacted in response to these concerns apply to state child welfare agencies and to HHS, which through the Children's Bureau (located within the HHS, Administration for Children and Families, ACF) administers federal funding provided to state child welfare agencies. P.L. 113-183 draws from Section 103 of the Trafficking Victims Protection Act (TVPA) to define a "sex trafficking victim" as an individual subject to the "recruitment, harboring, transportation, provision, or obtaining of a person for the purposes of a commercial sex act" or who is a victim of a "severe form of trafficking in persons" in which "a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform the act is under 18 years of age." P.L. 113-183 amends the federal foster care program (authorized in Title IV-E of the Social Security Act) to require state child welfare agencies to develop and implement procedures to identify, document in agency records, and determine appropriate services for certain children or youth who are victims of sex trafficking, or at risk of being such victims. The procedures need to ensure relevant training for caseworkers and must be developed in consultation with state and local law enforcement, juvenile justice systems, health care providers, education agencies, and organizations with experience in dealing with at-risk children and youth. P.L. 113-183 provides that these procedures are to be developed within one year of the bill's enactment and implemented within two years of that date. The law further requires state child welfare agencies to report to law enforcement authorities immediately, or in no case later than 24 hours, after they receive information about child or youth victims of sex trafficking. This reporting provision is effective beginning no later than two years after the bill's enactment and applies to information received about any child or youth described below as part of the required "applicable population." Additionally, within three year of the law's enactment, state child welfare agencies are required to annually report to the HHS the total number of children and youth who are sex trafficking victims. The procedures to identify, document in agency records and determine services for victims of, or those at risk of, sex trafficking must apply to all children in the care, placement, or supervision of the state child welfare agency, including c hildren who are in foster care and under age 18 (or up to any age under 21, if the state has elected to serve such older youth with Title IV-E foster care assistance); children (under age 18) who are not in foster care but for whom the agency has an open case file; youth (up to age 21, or 23 in limited circumstances) who are receiving services under the Chafee Foster Care Independence Program (CFCIP); and children who run away from foster care, provided they have not reached the age at which the state ends Title IV-E assistance (or have not been formally discharged from care). In addition, a state may elect to use these procedures to identify individuals up to the age of 26 who are victims, or at risk of becoming victims, of sex trafficking, without regard to whether the youth was ever in foster care. Separately, P.L. 113-183 requires each state child welfare agency (as part of its Title IV-E plan) to develop protocols for (1) expeditiously locating any child missing from foster care; (2) determining the primary factors contributing to the child running away (or otherwise going missing from care) and responding to those factors in the current and subsequent placements; (3) learning about the child's experience while away from care, including determining if the child is a possible victim of sex trafficking; and (4) reporting any related information as required by HHS. These protocols are to be developed and implemented within one year of the law's enactment. P.L. 113-183 further requires state child welfare agencies to report information it receives on missing and abducted children and youth to the National Center on Missing and Exploited Children (NCMEC) and to law enforcement authorities for inclusion in the FBI's National Crime Information Center (NCIC) database. These reports must be made immediately (and in no case later than 24 hours) after the information is received. Specifically this information must be reported if the information concerns a missing or abducted child or youth who is in foster care (including children who run from care), not in care but is being served by the child welfare agency otherwise, or is receiving services under the Chafee Foster Care Independence Program. State child welfare agency reporting on missing and abducted children and youth must begin no later than two years after the law's enactment. P.L. 113-183 adds a new section to Title XI of the Social Security Act requiring HHS, within two years of enactment of the law, to establish the National Advisory Committee on Sex Trafficking of Children and Youth in the United States. Duties of the committee include (1) advising the HHS Secretary and the Attorney General on policies to improve the nation's response to sex trafficking; (2) developing best practices and recommendations for states to combat sex trafficking of children and youth; (3) providing notice (in consultation with the National Governors Association, the HHS Secretary and the Attorney General) to state governors and child welfare agencies concerning these best practices and recommendations and of the committee's plan to evaluate a state's implementation efforts; and (4) reporting on each state's implementation efforts. Although the committee is required to terminate no later than five years after its establishment, HHS is required to continue to operate and update, as necessary, a website displaying state best practices, recommendations, and evaluation of state-by-state implementation of recommendations. HHS must appoint all members of the advisory committee in consultation with the Attorney General and the National Governors Association. The committee must be composed of no more than 21 members, at least one of whom must be a former victim of sex trafficking and two of whom must be state governors (one Republican and one Democrat). The Administration for Children and Families (ACF), within HHS, must provide all necessary support for the committee, which must meet at least twice each year at the call of the HHS Secretary. The law also requires the committee to submit interim and final reports of its work to Congress, HHS, and the Attorney General. The law also specifies requirements related to the committee's administration, meetings, and recordkeeping. The law does not provide specific funding for the committee and members are required to serve without compensation or per diem. Within four years of the law's enactment, HHS must annually report to Congress and the public (via the HHS website) the total number of children and youth who are reported by state child welfare agencies as victims of sex trafficking. The law also includes requirements on collecting national data for children in foster care to indicate whether a child in foster care was identified as a victim of sex trafficking and, if so, whether he or she became such a victim before entering foster care or while in foster care. P.L. 113-183 further directs HHS to provide a report to Congress summarizing information on children who run away from care and their risk of becoming victims of sex trafficking; state efforts to provide specialized services including foster care or other housing for children who are victims of sex trafficking; and state efforts to ensure children in foster care form and maintain long-lasting connections with caring adults. The report is to be submitted by HHS no later than two years after the law's enactment. To write this report, HHS must use relevant information reported by states under the Adoption and Foster Care Analysis and Reporting System (AFCARS), as well as information gathered under state protocols for responding to children who run from foster care. The Preventing Sex Trafficking and Strengthening Families Act seeks to ensure that children in foster care have the opportunity to participate in activities that are appropriate to their age and stage of development. Children who are in foster care have been removed from their families of origin, most often due to abuse or neglect, and a court has given the state child welfare agency the responsibility to place them in a foster care family or other setting where they will be safe. Some child welfare stakeholders, including foster youth and some foster parents, have raised concerns that current state child welfare agency policies limit opportunities for children in foster care to participate in "normal" and age appropriate activities due to policies that prioritize the child's physical safety above all other considerations. P.L. 113-183 adopts a number of provisions to respond to these concerns and generally, these provisions will be effective one year from the date of the bill's enactment. P.L. 113-183 adds definitions to the Title IV-E foster care program for the "reasonable and prudent parent standard" and, a related term "age or developmentally-appropriate." The reasonable and prudent parenting standard is to be used by foster caregivers when determining whether to allow children in foster care to participate in extracurricular, enrichment, cultural, and social activities (such as sports teams, field trips, overnight events and related transportation). It is defined to include "careful and sensible" parental decisions that take into account the child's safety and best interests while also encouraging the child's emotional and developmental growth. "Age or developmentally-appropriate" activities generally refers to activities that are accepted as suitable for children of the same chronological age or level of maturity for the child. The law stipulates that if any of these "age-related activities" have implications relative to a child's academic curriculum, nothing in Title IV-B or Title IV-E must be construed as authorizing an officer or employee of the federal government to mandate, direct, or control (1) a state or local educational agency, or (2) a school's specific instructional content, academic achievement standards and assessments, curriculum, or program of instruction. Under P.L. 113-183 , state child welfare agencies must provide training to prospective foster parents on children's developmental stages and on how to apply the reasonable and prudent parenting standard when determining whether a foster child's participation in extracurricular and other activities is age- or developmentally-appropriate. Additionally, HHS is to provide technical assistance to states on best practices to assist foster parents in applying the reasonable and prudent parent standard in a manner that protects a child's safety, allows children to experience normal and beneficial activities, and considers (but does not necessarily make determinative) the concerns of the child's biological parents. Further, to help ensure legal or regulatory barriers to applying the standard are removed, states must revise their licensing standards for foster family homes and child care institutions to ensure that (1) foster parents are permitted to apply the reasonable and prudent parenting standard, and (2) any contract with a child care institution providing foster care stipulates that the institution will designate a caregiver who is onsite and authorized to apply the reasonable and prudent parenting standard (and who is provided with training in use of this standard in the same manner as training is provided to foster parents). Further, the licensing standards must address appropriate liability concerns with regard to foster parents and private entities contracted with the state in applying the reasonable and prudent parenting standard. The law separately amends the Chafee Foster Care Independence Program to permit states to spend program funds for the purpose of ensuring that any child who is expected to remain in foster care until age 18 has the opportunity to participate in age- or developmentally-appropriate activities. Beginning with FY2020, the law increases the annual mandatory funding authorization for this program from $140 million to $143 million annually. Apart from the new requirements on child sex trafficking and "normalcy," the Preventing Sex Trafficking and Strengthening Families Act ( P.L. 113-183 ) makes a number of changes—primarily to the current law requirements laying out specific case planning and permanency planning activities that state child welfare agencies must ensure occur for children in foster care—intended to ensure that youth who are in foster care, make a successful transition to adulthood. Many of these requirements apply without regard to the reason a child eventually exits foster care. Child welfare advocates have called for these changes in an attempt to increase support to young people while in care and leaving care. In general, and unless otherwise noted below, these provisions regarding a successful transition to adulthood are effective one year from the date of the law's enactment. Foster care is considered a temporary living arrangement to ensure a child's safety and well-being. Under current law, state child welfare agencies are required to ensure every child has a court-approved and annually reviewed "permanency plan" (i.e., a strategy to allow the child to exit foster care to a permanent family). Generally, a child's permanency plan must be to reunite with his or her parents, or to be placed for adoption, with a legal guardian, or with a "fit and willing" relative. If, however, a state can document for a court a "compelling reason" that none of those permanency plans are possible or appropriate then the court may establish "another planned permanent living arrangement" (APPLA) as the child's permanency plan. The APPLA designation was added to the law by the Adoption and Safe Families Act (ASFA, P.L. 105-89 ). In that law, Congress sought to strengthen the permanency planning requirements in child welfare policy and to end "long-term" foster care that resulted from a lack of state effort or planning for permanency. As part of this, the addition of "APPLA" to the law appears to have been intended to ensure that deliberate thought and reasoning preceded any long-term stay for a child in foster care. Children who are assigned "APPLA" as a permanency plan may live in any kind of foster care setting and are likely to "age out" of care. Responding to concerns about misuse or overuse of APPLA and the resulting lack of permanent connections for these children in foster care, P.L. 113-183 prohibits states from making APPLA the permanency plan for any child in foster care who is under the age of 16. Accordingly, states must always be working to find a permanent family outside of foster care for any child in care at age 16 or younger. For states this provision is generally applicable one year after the law's enactment. For children under the responsibility of a tribe, tribal consortium, or tribal organization (either directly or under the supervision of the state), this provision is not effective until three years after the enactment date. Additionally, P.L. 113-183 requires that if a child is assigned a permanency plan of APPLA, the state must meet additional requirements for the child as part of the child's annual permanency hearing and, separately, as part of the periodic review (every six months) of a child's status in foster care. These requirements are designed to ensure that the state child welfare agency continues to look for a permanent family for children with an APPLA designation, that the court continues to revisit whether APPLA is an appropriate permanency plan for the child, and that the child is consulted about his/her desired permanency outcome. The requirements also seek to ensure that these children have the ability to participate in age- or developmentally-appropriate activities and that their foster home or child care institutions are following the reasonable and prudent parenting standard. P.L. 113-183 requires that any child in foster care who is age 14 or older must be consulted in the development of, and any revisions to, his/her case plan and permanency plan. Further, it permits the child to choose up to two members of the case and permanency planning teams (subject to state disapproval of any individual that it has good cause to believe would not act in the child's best interest). One of the child-selected individuals may be the child's advisor and advocate for application of the reasonable and prudent parenting standard. Additionally, P.L. 113-183 provides that the case plan for any child in care at age 14 or older must have a description of services and programs that will help the child transition to successful adulthood included in his or her case plan (and that these must be reviewed at each annual permanency hearing for the child). (A similar requirement concerning necessary services and programs for a youth is included in current law. However, it applies only to children "as appropriate" who are age 16 or older and references services and programs related to "independent living.") P.L. 113-183 also requires that the case plan for any child in foster care at age 14 or older must include a document listing the foster child's rights with respect to (1) education, health, visitation, and participation in court proceedings concerning the child; (2) provision of certain identification documents and information, if leaving foster care at age 18 or older; and (3) the right to be safe and avoid exploitation. The case plan must also include an acknowledgement signed by the child noting that he/she was given a copy of the list of rights, and that they were explained to him/her in an age-appropriate manner. Additionally, for a child in care at age 14, the state child welfare agency must, annually and free-of-charge, provide the child with any credit report pertaining to the child and help resolve any inaccuracies. (The credit report provision currently applies to youth in care at age 16 or older.) For any child who is being discharged from foster care due to his or her age (i.e., at age 18 or any age up to age 21 if the state provides Title IV-E foster care up to that older age), the state must provide the following documents or information (1) an official or certified copy of the child's U.S. birth certificate; (2) a social security card issued by the Commissioner of Social Security; (3) health insurance information, (4) a copy of the child's medical records, and (5) a driver's license or state-issued identification card (meeting the requirements of the REAL ID Act). The law only requires that the state provide a given document if the child is eligible to receive it. Under P.L. 113-183 , HHS is required to submit a report on state implementation of requirements to allow children age 14 or older to select two members of their case and permanency planning teams, including a description of best practices. Separately, beginning with the report covering FY2016, HHS is required to include in its annual report to Congress (known as Child Welfare Outcomes ) state-by-state data concerning children placed in group or institutional settings (including certain information about children with APPLA as their permanency plan) and on pregnant and parenting teens. HHS must consult with states and organizations interested in child welfare and to take into account requests from Members of Congress when selecting other issues to be analyzed and reported on—using adoption and foster care data reported by states via AFCARS and data from the National Youth in Transition Database (NYTD)—as part of the annual Child Welfare Outcomes report. The Preventing Sex Trafficking and Strengthening Families Act ( P.L. 113-183 ) extends certain child welfare programs, and makes other changes that are designed to encourage children's placement in a permanent family and to ensure they have strong families. P.L. 113-183 continues incentives to states for increased adoptions from foster care by revising and extending Adoption Incentives Payment for three years (FY2014-FY2016). Effective October 1, 2014, the law renamed these payments as "Adoption and Legal Guardianship Incentive Payments." The law revises the categories for which states may earn incentive payments, expanding them to include exits from foster care to legal guardianship and placing additional focus on states' ability to appropriately move children age 9 or older to permanent homes via adoption or guardianship. Additionally, it provides that incentive payment amounts are to be based on improvements a state makes in the rate (or percentage) of children moving to adoption or guardianship in a performance year rather than simply an increase in the number of adoptions. Specifically, the law revises the current award categories as follows. It retains an award category for improving foster child adoptions (all ages) and provides an incentive payment of $5,000 for each such adoption attributed to an improved rate; adds a new award category for foster child guardianships (all ages) and provides an incentive payment of $4,000 for each such guardianship attributed to an improved rate; adds a new award category for adoptions and foster child guardianships of children ages 9 through 13 years (defined as " pre-adolescent" adoptions and guardianships ) and provides an incentive payment of $7,500 for each pre-adolescent adoption or guardianship attributed to an improved rate; and adds a new award category for adoptions and foster child guardianships for children ages 14 or older (defined as " older child" adoptions and guardianships ) and provides an incentive payment of $10,000 for each older child adoption or guardianship attributed to an improved rate. The new "pre-adolescent" and "older child" adoption and guardianship categories would effectively replace the current "older child" award category, which refers to children nine years of age or older and applies only to adoptions. Further, the award category tied to children under age nine who are determined by their state to have special needs would be eliminated. Finally, with regard to the incentive structure, in any year that funds appropriated for adoption and/or guardianship incentive payments exceed what is earned by states, HHS is required to award the remaining funds to states where the average time it took a child to move from foster care to a finalized adoption was less than 24 months. Each "timely adoption state" (as determined by HHS) is to be paid an equal share of the remaining funds. The law phases in the new incentive structure as follows: incentive payments announced at the end of FY2014 (for adoptions completed in FY2013) are to be determined based on the incentive structure that was in the law just prior to enactment of P.L. 113-183 ; incentive payments announced in late FY2015 (for adoptions or guardianships completed in FY2014) are to equal one half of any amount a state would have earned under that older incentive structure and one half based on the new incentive structure. Incentive payments announced in late FY2016 (for adoptions or guardianship completed in FY2015) are to be based entirely on the new incentive structure. P.L. 113-183 permits states up to 36 months from the month they receive any incentive payment to use those funds (as opposed to 24 months) and stipulates that states must use any incentive payments they receive to supplement, not to supplant, any current spending of federal or non-federal dollars for child welfare activities authorized in any program under Title IV-B or Title IV-E of the Social Security Act. Since 1980, the federal government has offered support to states for provision of ongoing adoption assistance to eligible children who are determined by their state to have "special needs" and who are removed from families with very low incomes. In 2008, Congress adopted provisions designed to remove (over time) the income test requirement as part of determining eligibility for this federal assistance and it stipulated that states must reinvest in child welfare purposes any savings to the state from this change in federal eligibility rules. At that time the Congressional Budget Office estimated significant additional federal spending under this program due to this change in eligibility rules, with the largest increases in federal support to states under this program beginning in FY2014 (and continuing through FY2018 when the new eligibility rules will be fully phased in). P.L. 113-183 revises prior law requirements concerning calculating any state savings resulting from this change in federal policy and the use of any resulting savings to the state. The new provisions require states to use a methodology specified, or approved, by HHS to calculate any savings. Further, states must annually report to HHS on the methodology used to calculate any savings, the amount of any identified savings, and the use of those savings. In addition, states are required to spend no less than 30% of any identified savings to provide post-adoption services, post-guardianship services, and services to support and sustain positive permanent outcomes for children who might otherwise enter foster care. Finally, of that 30%, no less than two-thirds must be spent for post-adoption and post-guardianship services. P.L. 113-183 requires HHS to post information from states regarding calculation and makes these requirements concerning adoption assistance savings effective as of October 1, 2014. Effective with its enactment, the law amends the guardianship assistance provisions of the Title IV-E program. This program provides reimbursement under Title IV-E on behalf of eligible children who leave foster care for placement in a legal guardianship with a relative. The law provides that if the relative legal guardian of a child who is receiving Title IV-E kinship guardianship assistance dies or is incapacitated, the child continues to be eligible for this assistance so long as he or she is placed with a successor legal guardian. The law further stipulates that for eligibility to continue, the successor legal guardian must have been named in the Title IV-E kinship guardianship agreement that was earlier entered into between the state child welfare agency and the child's previous relative legal guardian. P.L. 113-183 amended the Title IV-E requirement that states "exercise due diligence" to identify grandparents and other adult relatives of children being removed from parental custody and to provide those relatives notice of the child's removal from his/her parent(s), as well as of the options the grandparent or other adult relative has for participating in the child's care or placement. Specifically, the law now requires that states identify and provide this notice to a parent of a sibling of a child—provided that the parent has legal custody of the sibling. Further, for purposes of the federal foster care program, the law defines "sibling" to mean an individual recognized as a "sibling" under the state's law, or an individual who would be defined as a sibling except for the legal termination or other disruption of parental rights. P.L. 113-183 appropriates $15 million to continue Family Connection Grants for one year (FY2014). Under the Family Connection Grants program, established in FY2009, public child welfare agencies (state, local or tribal), and non-profit private organizations may seek federal funding to help children—whether they are in foster care or at-risk of entering foster care—connect (or reconnect) with birth parents or other extended kin. Specifically, the funds must be used to establish or carry out kinship navigator programs, intensive family finding efforts, family group decisionmaking policies, and residential family treatment programs. To "promote increased knowledge on how best to ensure strong, permanent families for children in foster care," P.L. 113-183 requires HHS to issue new regulations providing for collection of data from state child welfare agencies concerning children who enter foster care after having been previously adopted or placed in a legal guardianship. Child support orders require noncustodial parents to fulfill their financial responsibility to their children by contributing to the payment of childrearing costs. The Child Support Enforcement (CSE) program, authorized in Title IV-D of the Social Security Act, is administered at the federal level by the Office of Child Support Enforcement, within ACF at HHS. The program provides support to state child support enforcement agencies to help custodial parents obtain child support through locating noncustodial parents, establishing paternity and child support obligations, and enforcing child support obligations. It often is difficult to enforce child support obligations in cases where the custodial parent and child live in one country and the noncustodial parent lives in another country. The child support provisions in P.L. 113-183 primarily seek to ensure that the United States is compliant with any multilateral child support treaties and make other changes that are intended to improve the ability of the CSE program to collect child support in cases where a noncustodial parent lives in a foreign country. The new law makes limited other changes to the CSE program intended to increase child support collections, including collections handled by tribal governments. Although the CSE program has procedures for international enforcement of child support, the federal Office of Child Support Enforcement (OCSE) only has bilateral agreements with 15 countries. Moreover, although individual states have the authority under the CSE program to recognize child support orders from other countries and generally do so, many countries do not reciprocate. The Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance is a multilateral agreement that contains procedures for processing international child support cases that are intended to be uniform, simple, efficient, accessible, and cost-free to U.S. citizens seeking child support in other countries. The Convention offers the U.S. the opportunity to join a multilateral treaty, saving the time and expense that would otherwise be required to negotiate bilateral agreements with individual countries around the world. Many provisions of the Convention are drawn from the U.S. experience with the Uniform Interstate Family Support Act (UIFSA), which is currently in effect. In fact, most cases under the Convention are expected to be handled in the United States in accordance with UIFSA, which, pursuant to the 2008 amendments includes procedures for handling interstate cases as well as international cases. The Senate provides advice and consent with regard to treaty obligations entered into by the United States. On September 29, 2010, the Senate approved the Resolution of Advice and Consent regarding the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance (referred to in this report as "the Convention"). At that time the OCSE outlined the following additional steps that must occur before the Convention can enter into force for the United States: (1) Congress must adopt, and there must be enacted, implementing legislation for the Convention; (2) pursuant to the implementing legislation, all states must enact the 2008 version of the Uniform Interstate Family Support Act (UIFSA) by the effective date noted in the legislation; and (3) the President must sign the "instrument of ratification" for the Convention (essentially a letter that verifies the treaty is in effect in the United States). P.L. 113-183 includes provisions to implement the Convention and any other U.S. treaty obligations associated with any multilateral child support convention to which the United States is a party. Further it requires states to adopt the 2008 amendments to the UIFSA verbatim to ensure uniformity of procedures, requirements, and reporting forms. Both of these steps are needed to allow the Convention to enter into force in the United States. The Obama Administration has indicated that President Obama will wait until states comply with the new UIFSA requirement before ratifying the Convention. Once the Convention is in force, it applies to cases that involve parents from countries that are party to the Convention. Separately, the law enables the federal income tax refund offset program to be available for use by a state to handle CSE requests from foreign reciprocating countries and foreign treaty countries. Moreover, P.L. 113-183 allows the "central authority" for handling international child support cases in foreign reciprocating countries and foreign treaty countries access to information indicating the state in which a noncustodial parent resides. These changes are intended to ensure collection of child support from noncustodial parents who live in a different country than the custodial parent and child. P.L. 113-183 provides Indian tribes or tribal organizations access to the Federal Parent Locator Service (FPLS) by designating them as "authorized persons." The FPLS is an assembly of systems operated by the Office of Child Support Enforcement (OCSE) within HHS to assist states in locating noncustodial parents, putative fathers, and custodial parties for the establishment of paternity and child support obligations, as well as the enforcement and modification of orders for child support, custody, and visitation. The FPLS is only allowed to transmit information in its databases to "authorized persons," which include (1) child support enforcement agencies (and their attorneys and agents); (2) courts; (3) the resident parent, legal guardian, attorney, or agent of a child owed child support; and (4) foster care and adoption agencies. Separately, P.L. 113-183 allows Indian tribes or tribal organizations that operate a CSE program to be considered a state for purposes of authority to conduct an experimental pilot or demonstration project under the Section 1115 waiver authority of the Social Security Act to assist in promoting the objectives of the CSE program. P.L. 113-183 requires the Secretary of HHS to issue a rule designating standard data exchange elements for (1) any CSE information required by federal law to be electronically exchanged with another state agency and (2) federal reporting and data exchanges required by federal law. The rule is to be developed by HHS in consultation with an interagency workgroup established by the Office of Management and Budget (OMB) and with consideration of state perspectives. To the extent practicable, the data exchange standards required by the rule would need to: (1) incorporate widely accepted, nonproprietary, searchable, computer-readable format (such as the eXtensible Markup Language); (2) contain interoperable standards developed and maintained by intergovernmental partnerships; (3) include federal entities with authority over contracting and financial assistance; (4) be consistent with and implement applicable accounting principles; (5) be implemented in a manner that is cost-effective and improves program efficiency and effectiveness; and (6) be capable of being continually upgraded as necessary. Congress has added similar provisions to allow exchange of data across programs by standardizing the format for exchange. Such programs include income security programs (including the Temporary Assistance for Needy Families (TANF) block grant, child welfare programs authorized in Title IV-B of the Social Security Act, Unemployment Insurance, and the Supplemental Nutrition Assistance Program (SNAP)). P.L. 113-183 requires the HHS Secretary, in conjunction with developing its strategic plan for CSE, to review and provide recommendations for cost-effective improvements to the CSE program. In addition, the Secretary must submit a report to Congress, no later than June 30, 2015, that sets forth policy options for improvements to the CSE program. Among other things, the report must include (1) a review of the effectiveness of state CSE programs, the collection practices employed by state CSE agencies, and an analysis of the extent to which the practices result in unintended consequences or performance issues; (2) options, with analysis, for methods to engage noncustodial parents in the lives of their children through consideration of parental time and visitation with children; (3) a review of state practices under the Passport Denial program used to determine which individuals are excluded from the requirements related to passport denial, including the extent to which individuals are able to successfully contest or appeal decisions; and (4) identification of best practices for determining which services and support programs available to custodial and noncustodial parents are non-duplicative, evidence-based programs that produce quality outcomes, and connecting parents to those services and support programs. Many states still send paper income withholding orders to employers that have to be manually opened, reviewed, and inputted into their payroll system. It is generally agreed that automated systems, including electronic income withholding orders, for the collection and disbursement of child support payments, can significantly reduce costs for employers and also for the states that have to print, enclose, and mail paper income withholding orders. P.L. 113-183 requires states to use automated systems to collect and disburse child support payments via the State Disbursement Unit by transmitting child support orders and notices to employers for income withholding purposes using uniform formats prescribed by the HHS Secretary and, at the option of the employer, using the electronic transmission methods prescribed by the Secretary. P.L. 113-183 includes a Sense of the Congress statement that specifies that (1) establishing parenting time arrangements (i.e., visitation) when obtaining child support orders is an important goal which should be accompanied by strong family violence safeguards, and (2) states should use existing funding sources to support the establishment of parenting time arrangements, including child support incentives, Access and Visitation Grants, and Healthy Marriage Promotion and Responsible Fatherhood Grants. As enacted, H.R. 4980 authorizes expansions in federal support for child welfare programs and activities; however, the Congressional Budget Office (CBO) projects that costs will be more than fully offset by other provisions of the bill, which would reduce overall direct federal spending by $1 million over six years (FY2014-FY2019) and $19 million over 11 years (FY2014 -FY2024). As interpreted by CBO, four provisions of the bill are projected to have costs to the federal treasury over the full cost estimate time frame (FY2014-FY2024). These provisions require data collection and reporting under Title IV-E, including certain reporting on victims of sex trafficking who are in foster care (Section 103) and reporting concerning children entering foster care due to disrupted or dissolved adoptions (Section 208) (projected additional cost: $3 million); add (as of FY2020) $3 million to annual funding for the the Chafee Foster Care Independence program (Section 111(c)) (projected additional cost: $15 million). require certain documents be given to youth leaving foster care due to age (Section 114) (projected additional costs: $4 million); and appropriate $15 million for Family Connection Grant (projected additional cost: $15 million). These projected costs, however, are estimated by CBO to be fully offset by another four provisions of the bill that it projected will save the federal treasury money across the full cost-estimate time frame (FY2014-FY2024). These provisions are allowing continued eligibility under the Title IV-E kinship guardianship assistance program for children placed with a previously identified successor guardian following the death or incapacitation of the child's original relative guardian (Section 207) (projected savings: $7 million); requiring compliance with multilateral child support conventions (Section 301) (projected savings: $1 million), and requiring electronic income withholding under the Child Support Enforcement (CSE) program (Section 306) (projected savings: $48 million). The Preventing Sex Trafficking and Strengthening Families Act ( H.R. 4980 ) was introduced by Representative Dave Camp on June 26, 2014, with Representatives Sander Levin, Dave Reichert and Lloyd Doggett, as co-sponsors. The bill's introduction on June 26, 2014, was jointly announced by Representatives Camp and Levin, along with Senators Wyden and Hatch, and was described as "bipartisan legislation [that] reflects agreements reached between the House and Senate negotiators." On July 23, 2014, the House approved H.R. 4980 by voice vote, under suspension of the rules. On September 18, 2014, the Senate passed the bill by unanimous consent. The bill's three main titles each draw on earlier legislation approved by the overall House or the Senate Finance Committee. The Title I provisions on protecting children at risk of sex trafficking were drawn from the Protecting Youth at Risk for Sex Trafficking Act ( S. 1877 ), introduced by Senator Baucus in December 2013, the provisions of which were the same as included in Title II of the Supporting At-Risk Children Act ( S. 1870 ), as approved by the Senate Finance Committee that same month; and the Preventing Sex Trafficking and Improving Opportunities for Youth in Foster Care Act ( H.R. 4058 ), which was introduced by Representative Reichert in February 2014, reported by the House Ways and Means Committee on May 7, 2014, and passed by the full House (under suspension of the rules and with a voice vote) on May 20, 2014. The Title II provisions, reauthorizing and amending Adoption Incentive Payments, extending Family Connection Grants for one year, and making some related changes, were drawn from the Promoting Adoptions and Legal Guardianships for Children in Foster Care Act ( H.R. 3205 ), which was introduced by Representative Camp on September 27, 2013, and approved by the House (under suspension of the rules and with a voice vote) on October 22, 2013; and the Strengthening and Finding Families for Children Act ( S. 1876 ), introduced by Senator Baucus in December 2013, the provisions of which were the same as those included in Title I of S. 1870 , as approved by the Senate Finance Committee that same month. The Title III provisions focus on improving international child support recovery and the Child Support Enforcement program and were drawn from the International Child Support Recovery Improvement Act of 2013 ( H.R. 1896 ) introduced by Representative Reichert May 8, 2013, and passed in the House (by a vote of 394 to 27) on June 18, 2013; and the Child Support Improvement and Work Promotion Act ( S. 1877 ), introduced by Senator Baucus in December 2013, the provisions of which were the same as those included in Title III of S. 1870 , as approved by the Senate Finance Committee that same month. Concerns addressed in P.L. 113-183 have been at the forefront of a variety of congressional hearings, round tables, and other events held by Congressional committees or caucuses over the past five years. The following list, arranged chronologically, illustrates these activities but is not necessarily exhaustive. In October 2010, the Senate Caucus on Foster Youth, co-chaired by Senators Grassley and Landrieu, issued a white paper that drew on its series of meetings with foster youth and other stakeholders to discuss policy and practice changes that could improve outcomes for children in foster care. Among a wide range of policy options, the white paper discussed restricting the use of another planned permanent living arrangement (APPLA), requiring states to make youth aware of their rights while in foster care, improving access to appropriate social and extracurricular activities, and improving data collection on children in foster care. More recently, the House Ways and Means Subcommittee on Human Resources and the Senate Finance Committee convened hearings and roundtables to review some of these same issues as well as on improvements for collecting child support. In March 2012, the House Ways and Means Subcommittee on Human Resources held a hearing that focused on implementation legislation to ensure U.S. compliance with an international treaty on recovering child support and making improvements to the Child Support Enforcement (CSE) program. In April 2012, the Senate Finance Committee convened a roundtable discussion that focused on a number of issues pertaining to the well-being of children in foster care, including the need to normalize the experiences of foster children and improve permanency for older youth in care. In February 2013, the House Ways and Means Subcommittee on Human Resources held a hearing concerning increasing adoptions out of foster care. Witnesses from various private organizations discussed the importance of achieving permanency for older children or those with other factors making them harder to place and emphasized the importance of pre-adoption training as well as post-adoption services. In February 2013, the Senate Finance Committee held a roundtable discussion entitled, "Child Support Enforcement: Addressing Immediate and Future Challenges for Child Support Enforcement Agencies." The Committee heard a number of recommendations to improve collection and delivery of payments and services to custodial and noncustodial parents. In April 2013, the Senate Committee on Finance held a hearing to consider reauthorization of the Adoption Incentives program, to extend funding for Family Connection Grants and, more broadly, to consider the kinds of changes necessary to make further improvements in the provision of foster care. In May 2013, the House Ways and Means Subcommittee on Human Resources held a hearing to discuss efforts to ensure that children in foster care can have the same experiences as their peers generally. The committee heard from a current foster youth and a foster parent regarding limitations on participation in age-appropriate activities and barriers to exercising parenting judgment for children in foster care, as well as from program administrators and advocates on the ways that states and other jurisdictions are promoting "normalcy" for children in care while balancing concerns for safety and liability. In June 2013, the Senate Finance Committee held a hearing on child welfare's role in preventing and intervening in the sex trafficking of children. Witnesses included representatives from state and local jurisdictions who testified about how the child welfare system is responding to child sex trafficking and coordinating with other entities (i.e., Children's Advocacy Center, juvenile justice system, probation department, medical and mental health professionals) as part of this response. Similarly, in October 2013, the House Ways and Means Subcommittee on Human Resources held a hearing to review the needs of sex trafficking victims and how federal laws and policies might be improved to better ensure the safety of children who are in foster care or those are at risk of entering care. In a field hearing in February 2014, that subcommittee also heard from witnesses about efforts by groups in Washington state to end child sex trafficking, including sex trafficking that involves children in foster care. Both the House Ways and Means Committee and the Senate Finance Committee sought public comment on draft bills to reauthorize the Adoption Incentives program and make other, related changes to child welfare policy. Separately, the House Ways and Means Committee also solicited public comment on a draft bill to address sex trafficking of children in the child welfare system. Many comments from organizations and interested citizens were received and played a part in shaping the final bill. Ultimately, close to 50 advocacy, research, professional, tribal, and other groups offered their support of H.R. 4980 .
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The Preventing Sex Trafficking and Strengthening Families Act (H.R. 4980), an omnibus bill that includes both child welfare and child support provisions, was signed into law on September 29, 2014, as P.L. 113-183. The bill received broad congressional support, passing the House by voice vote (under suspension of the rules) on July 23, 2014, and the Senate by unanimous consent on September 18, 2014. P.L. 113-183 amends the federal foster care program to require state child welfare agencies to develop and implement procedures for identifying, documenting in agency records, and determining appropriate services for certain children or youth who are victims of sex trafficking, or at risk of victimization. State child welfare agencies must also report to law enforcement and the U.S Department of Health and Human Services (HHS), which administers child welfare programs, about such victims. In addition, HHS must establish a national advisory committee on child sex trafficking that must, among other responsibilities, develop policies on improving the nation's response to domestic sex trafficking. P.L. 113-183 also includes provisions to direct child welfare agencies to develop protocols on locating children missing from care. The law also seeks to ensure children in foster care have the opportunity to participate in activities that are appropriate to their age and stage of development. It requires changes in state foster home licensing law to enable foster caregivers to apply a "reasonable and prudent parenting" standard when determining whether a child in foster care may participate in activities; and directs state child welfare agencies to provide training to caregivers on using this standard. Other provisions in the law seek to ensure permanent adult connections for older children and better aid their transition to successful adulthood. Under the new law, states are not permitted to assign a permanency plan of "another planned permanent living arrangement" (APPLA) to any child under the age of 16, and must take additional steps to support permanency for children age 16 or older who are assigned that permanency plan. Further, children in foster care who are age 14 or older must be consulted in the development of, and about any revisions to, their case and permanency plans. They must also be made aware of their rights while in care, including the right to receive critical documents (e.g., birth certificate, Social Security card) when they "age out" of care. P.L. 113-183 separately extends funding authority for Adoption Incentive Payments for three years (FY2014-FY2016). It phases in a revised incentive structure that allows states to earn incentive payments for both adoptions and exits from foster care to legal guardianship, places additional focus on finding permanent homes for older children, and strengthens the way state performance is gauged under the program. The law requires 30% of any state savings (resulting from broadening federal eligibility for adoption assistance) to be used for family strengthening services, including post-adoption services. It also includes provisions to ensure continued federal assistance under the Title IV-E program for eligible children who, following the death or incapacitation of their legal guardian, are placed with previously named successor guardians. Separately, the law appropriates $15 million to continue Family Connection Grants for one year. These grants are intended to strengthen children's connections to their parents and other relatives. The child support provisions in P.L. 113-183 are designed to improve child support collections in cases where the custodial parent and child live in one country and the noncustodial parent lives in another country. It ensures that the United States is compliant with any multilateral child support enforcement treaties and, as part of this, requires states to update their Uniform Interstate Family Support Act (UIFSA) law to incorporate any amendments adopted as of September 2008 by the National Conference of Commissioners on Uniform State Laws. Further, P.L. 113-183 facilitates greater access to the Federal Parent Locator Service (FPLS) by foreign countries and tribal governments as part of improving child support collections. It also requires HHS to submit a report to Congress that includes policy options aimed at improving the CSE program. In addition, P.L. 113-183 includes provisions to support standardizing data exchange of child support-related information, and require electronic processing of income withholding for child support. Effective dates vary by provision of the law. The Congressional Budget Office (CBO) estimated that enactment of H.R. 4980 would reduce overall direct federal spending by $19 million across 11 years (FY2014-FY2024).
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The most important military component of the struggle against violent extremists is not the fighting we do ourselves, but how well we help prepare our partners to defend and govern themselves . National Defense Strategy 2008 The United States is unlikely to repeat another Iraq or Afghanistan —that is, forced regime change followed by nation building under fire—anytime soon. But that does not mean it may not face similar challenges in a variety of locales. Where possible, U.S. strategy is to employ indirect approaches—primarily through building the capacity of partner governments and their security forces—to prevent festering problems from turning into crises that require costly and controversial direct military intervention. In this kind of effort, the capabilities of the United States' allies and partners may be as important as its own, and building their capacity is arguably as important as, if not more so than, the fighting the United States does itself. Secretary of Defense Robert Gates, January 2009 Security force assistance (SFA) is defined by the Department of Defense (DOD) as department activities that contribute to unified action by the U.S. government to support the development of the capacity and capability of foreign security forces and their supporting institutions. It encompasses all activities formerly consolidated under the term "military training and advisory assistance." SFA is intended to be a U.S. means to develop, within a host nation, an enduring capability to establish and maintain security, provide legitimate governance, and foster development programs that address root grievances. Security force assistance is an overarching concept that ties into several interests of Congress, including security assistance, security cooperation, foreign military financing, foreign military sales, foreign affairs, foreign aid, overseas contingency operations, and legislative authorities associated with training foreign forces (Foreign Assistance Act, P.L. 87-195; 22 U.S.C. 2151). (see Figure 6 ). Security force assistance relates to several significant issues in which Congress may have interest and oversight. SFA is considered key to engaging underdeveloped, undergoverned nations in a preventive context linked to counterterrorism strategy. Its basic premise, widely endorsed by analysts and within DOD, is that developing nascent military and governance capabilities in nations that could either stabilize or tip into anarchy prevents the conditions that would devolve into nesting grounds for terrorists. SFA is central to U.S. strategy for ensuring that Afghanistan and Iraq will be responsible for their own future stability and security. The services' ability to provide trainers/advisors to Central Command (CENTCOM) is at the nexus of reconstruction and stability operations in those countries. Congress may want to further consider policies to ensure that allies and coalition forces are contributing to this requirement. Congress may also consider the extent to which the capability that these nations attain through coalition SFA is sustainable and how it will impact future years' budgets. SFA is linked to security cooperation and security assistance efforts through a diverse portfolio of legislative authorities, reporting requirements, and congressional oversight functions. While these authorities provide for significant oversight from several committees, Congress might decide to consolidate these authorities into pooled or multiyear funding intended to expedite a comprehensive and transparent approach. Security force assistance (SFA), in general terms, supports the development of foreign security forces (usually military and law enforcement) so as to meet U.S. national security objectives. SFA spans many types of operations. It can be a component of conventional operations or it can support or be conducted in conjunction with irregular warfare operations, stability operations, security cooperation, and security assistance. Through SFA, foreign forces are trained to operate across the spectrum of conflict—combating internal threats such as insurgency, subversion, and lawlessness, defending against external threats, or serving as coalition partners/peacekeepers in other areas (see Figure 1 ). The resulting forces must possess the capability to accomplish the variety of required missions, with sufficient capacity to succeed and sustain themselves as long as required. SFA may be understood as the security forces equivalent of "teaching a man to fish." Its ultimate goal is to develop security forces that contribute to the legitimate governance of the host nation population. This is done by developing foreign security forces that are competent, capable, committed, and confident, not only in the eyes of U.S. (and potentially coalition) forces and the host nation government, but more critically, in the eyes of that nation's population, as well as in the eyes of prospective opponents. The conduct of SFA is not limited to the Department of Defense. It includes coordinated efforts across the multi-service, interagency, intergovernmental, and multinational spectrum. This is significant in that, while SFA is an overarching approach to meeting the nation's security needs, legislation and oversight for its implementation span several different government agencies and congressional committees (see " How SFA Fits into U.S. Strategy and Administration Policy "). The National Security Council (NSC) will generally provide the initial guidance and clarification of national-level decisions pertaining to SFA. The Department of State (DOS) is generally the lead government agency and assists the NSC in building and carrying out national policies and priorities. The United States Agency for International Development (USAID) carries out nonmilitary assistance programs designed to assist certain less developed nations to increase their productive capacities and improve their quality of life. The Director of National Intelligence (DNI) and the Director of the Central Intelligence Agency (CIA) support the mission in both a national-level advisory capacity and at the regional and country levels through direct support of SFA activities. Although SFA is considered a "whole-of-government" activity, this report focuses primarily on the military aspect of training, advising, and assisting. The Department of Defense is the largest agency with the most resources available to conduct SFA missions. Still, while there have been specific instances (such as Iraq and Afghanistan) in which Congress has given DOD authority to train and equip forces of a specified country, it is important to emphasize that DOD generally trains and equips foreign military forces under State Department Title 22 authority and through State Department programs. Additionally, DOD has frequently encouraged Congress to increase DOS's capacity to conduct the nonmilitary aspects of engagement and capacity building (SFA). (See Figure 2 .) As described earlier, while the U.S. military services (Army, Navy, Air Force, Marines) organize, train, and equip to meet SFA mission requirements, it is the combatant commanders who carry out the operations in their respective theaters. The National Security Strategy outlines the overarching approach for the nation. This is articulated to the regional combatant commanders, who, in turn, develop theater-specific security cooperation plans. Included in these plans are "critical partners," a select group of countries or organizations that directly receive U.S. security cooperation resources because their collaboration or assistance is essential to achieving regional or functional objectives. Additionally, "key supporting partners" are countries or organizations that assist a command in working with critical partners to achieve one or more of the command's strategic end states. They are key supporting partners because they are militarily competent and can complement or supplement U.S. capabilities. National security strategy objectives are overarching in nature and are designed to support broader U.S. government foreign policy. They usually reflect longer-term goals that cannot be achieved in the near or mid-term, and many may exceed the combatant commander's capability to achieve alone. Thus combatant commanders are tasked with establishing achievable, intermediate military objectives that directly and materially contribute to the achievement of the longer-term campaign end states provided in national security objectives. The guidance provided to combatant commanders allows great latitude in how they may construct their campaign plans to achieve these objectives. The initial campaign plans reflect varied approaches, particularly in terms of intermediate military objectives, which range from broad theater objectives to country-specific ones. The U.S. diplomatic mission to a host nation is the coordinator of SFA activities in that country. The diplomatic mission includes representatives of all U.S. departments and agencies physically present in the country. The President gives the chief of the diplomatic mission, normally an ambassador, full responsibility for the direction, coordination, and supervision of all executive branch employees within the mission and host country, except for employees under the command of a U.S. military commander (22 U.S.C. Section 3927). Close coordination by the chief of mission and military counterparts at the respective regional combatant command are a prerequisite for SFA operations that support the host nation's internal defense and development (IDAD) program and U.S. regional goals and objectives. Country teams develop the agenda and objectives for developing the capacity of a host nation's security forces. Before any military training teams set foot in country, their activities are vetted and scrutinized by the embassy. SFA missions are crafted by DOS and DOD counterparts so that the capabilities developed in the host nation are commensurate with the diplomatic goals of the U.S. government. Embassy country teams also ensure that such efforts are coordinated with the security objectives of the host nation receiving the training. (See Figure 3 .) However, some analysts recognize a disconnect in interagency coordination for SFA in the State Department's lack of regional coordination equivalent to that of a military regional combatant commander. Regional bureaus at DOS in Washington, DC, provide policy guidance to embassies but usually do not operate major programs. Nor are regional bureaus in DOS geographically aligned with military combatant commanders. Although guidance to a particular embassy is coordinated within the State Department, it goes directly from Washington to the affected country rather than through a Regional Combatant Command-equivalent organization. The military services provide technical and operational expertise through scaled-to-need groups known as mobile training teams (MTTs). The size of an MTT may range from a half-dozen subject matter experts teaching, for example, Nigerian counterparts how to do C-130 engine maintenance to an Armored Cavalry Regiment of nearly 5000 soldiers deploying under the auspices of an Advise and Assist Brigade (AAB) to work with Iraqi Army counterparts. Historically, responsibility for training, advising, and assisting foreign forces has rested with the U.S. military's Special Operations Forces (SOF). Yet, more recently, the Secretary of Defense, Robert Gates, has said that the organization, training, and mentoring of indigenous armies and police—once the province of Special Forces—is now a key mission for the military as a whole. The practice of assisting militaries of friendly nations has a long history (see Figure 4 ). The Lend Lease Program increased the capacity of the Soviet Union and other Allied countries in the struggle against the Axis in World War II. Simultaneously, allied troops were training Chinese and French North African forces. After the war, the Marshall Plan included establishing a West German professional military. Economic, equipment, training, and advisory support was provided to Greece and Turkey to help stabilize their governments. Although the term "security force assistance" did not yet exist, training, advising, assisting, and equipping post-war South Korea, Japan, and Taiwan were also concrete examples of SFA used with weak post-war states. Supporting weak and failed states through military assistance has been endorsed by Republican and Democratic administrations alike. Efforts to train, advise, and equip foreign forces shifted toward Vietnam and Latin America in the 1950s and 1960s. It was during this time that the special operations community was given primary responsibility for conducting the training portion of the mission. Eventually, arms transfers, economic aid, and collective security began to merge under a program known as "security assistance." Following Vietnam, the United States shifted to a policy of assisting friendly nations, but requiring them to provide the manpower and be ultimately responsible for their own national defense. Such was the case with Lebanon and Panama in the 1980s. Security force assistance played a part in the first Iraq war. U.S. Special Forces teams worked with the Saudi military to train them on the effective and efficient use of modern weaponry and in other technical areas. SOF also trained Saudi naval forces in special warfare. SOF eventually trained about 30,000 coalition troops in 44 subject areas. In the 1990s, the United States provided SFA assistance to former Warsaw Pact nations under the NATO "Partnership for Peace" initiative. Assistance was also given to Colombia under "Plan Colombia" to help stabilize the country during its campaign against the revolutionary Marxist group Fuerzas Armadas Revolucionarias de Colombia (FARC). The premise that weak and failing states pose a national security threat is supported by many audiences. The rationale is that lawlessness, instability, and lack of security or governance in these areas creates conditions ripe for terrorist organizations to function. The conditions in the Mindanao region of the southern Philippines could be considered an example of this. Here terrorist organizations such as the Moro Islamic Liberation Front (MILF), Jemaah Islamiyah, and Abu Sayyaf have sought refuge and sanctuary for their operations in an area of the country where the military and the government have little or limited capability. (See CRS Report RL34194, Terrorism in Southeast Asia , coordinated by [author name scrubbed], and CRS Report RL33233, The Republic of the Philippines and U.S. Interests , by [author name scrubbed]. Also, supporters of SFA argue that the security condition of a destitute populace, disconnected from their subpar security apparatus or government in weak and failing states, could easily evolve into regional security threats. The application of SFA through "the indirect approach" is meant to "to prevent festering problems from turning into crises that require costly and controversial direct military intervention." Some analysts have gone so far as to say that the conditions in weak and failing states pose "the single most critical threat to US national security." The inability of weak and failed states to carry out basic functions—securing their own borders and populations, providing essential civil services and public goods, and maintaining rule of law and governing legitimacy—can spark a range of crises that might undermine U.S. strategic interests involving terrorism, international crime, the proliferation of weapons of mass destruction, limiting U.S. access to vital natural resources, and regional stability. Several regions in Africa, particularly the Sahel and the Horn of Africa, could become such risks in pre-conflict conditions. Here Al Qaeda in the Islamic Magreb (AQIM) seeks sanctuary in outlying regions such as northern Mali and is making inroads with the Nigerian Taliban. (See CRS Report R41473, Countering Terrorism in East Africa: The U.S. Response , by Lauren Ploch.) Risks of regional instability, terrorism, and other forces can also exist in post-conflict conditions, as characterized by the deteriorated conditions in Iraq that followed major combat in Operation Iraqi Freedom. Following the 2003 invasion by the United States, security forces of the Iraqi government dissolved. The inability of Iraq's government to provide security, equitably administer justice, or deliver services led in part to a violent Sunni Arab-led insurgency, Sunni-Shiite sectarian violence, and violent competition among Shiite groups (see CRS Report RL31339, Iraq: Post-Saddam Governance and Security , by [author name scrubbed]). Supporters of a broad SFA strategy emphasize that neutralizing threats posed by state failure is becoming a top national security priority. The National Security Strategies (NSS) put forth by the last three presidential administrations have emphasized this premise. Most recently, the Obama Administration reiterated that "diplomacy and development capabilities must strengthen weak and failing states," that "failing states breed conflict and endanger regional and global security," and that "our military will continue strengthening its capacity to partner with foreign counterparts, train and assist security forces, and pursue military-to-military ties with a broad range of governments." There is an opposing view to the assumption that weak and failed states pose a threat to U.S. national security interests. This view points to the ambiguity of defining a "weak state" or a "failed state." It further suggests that these states almost never produce threats to national security and that efforts to strengthen them squander resources on threats that exist primarily in the minds of policymakers. Other critics are concerned that the oversight and use of a failed state's security forces are much more critical than their capabilities. How a weak or failed state's security force is used—as an instrument to provide security or as a repressive instrument linked to human rights violations—is a more driving concern. That is to say, aside from the fiscal and material resources, building partner capacity "is a human and institutional development activity, with the training of forces and the development of competent command, control, and governance institutions at its core." In this understanding, the investment in building foreign security forces for at-risk states is of limited return without equivalent commitment to reinforcing other necessary government functions. The DOD Quadrennial Defense Review (QDR) of 2006 called for a transformation of military approaches to meet the new strategic environment. Part of this transformation was a shift "from major conventional combat operations—to multiple irregular, asymmetric operations" and further "from the U.S. military performing tasks—to a focus on building partner capabilities." The QDR stated that "[b]uilding partnership capacity and strengthening alliances to defeat terrorist networks is an example of how the United States can strengthen freedom of action at the strategic level." It further stated: Maintaining a long-term, low-visibility presence in many areas of the world where U.S. forces do not traditionally operate will be required. Building and leveraging partner capacity will also be an absolutely essential part of this approach, and the employment of surrogates will be a necessary method for achieving many goals. Working indirectly with and through others, and thereby denying popular support to the enemy, will help to transform the character of the conflict. In many cases, U.S. partners will have greater local knowledge and legitimacy with their own people and can thereby more effectively fight terrorist networks. Setting security conditions for the expansion of civil society and the rule of law is a related element of this approach. In the years that followed the 2006 QDR, the services' efforts to develop resident capabilities to train foreign faced confusing terminology and were exacerbated by a lack of clarity and conceptual agreement regarding policy. The lexicon of terms surrounding security force assistance has been called confusing, duplicative, contradictory, or completely lacking. It includes, among other terms, "train advise assist" (TAA), "security assistance" (SA), "security cooperation" (SC), "irregular warfare" (IW), "building partnerships" (BP), "building partnership capacity" (BPC), and "foreign internal defense" (FID), none of which are synonymous or mutually exclusive. The lexicon has been characterized as an "[u]nnecessarily created confusion within the DOD by ignoring more than fifty years of experience and doctrine related to the challenges faced by the post-Cold War world and after the events of September 11, 2001." For the most part, training, advising, and assisting partner nations' military forces (SFA) have been a subset of policy related to irregular warfare. However, following the release of the 2006 QDR, DOD policy on the subject has been disjointed in its presentation as to what specifically constitutes irregular warfare. For example, in describing policy priorities, Secretary Gates has described the DOD commitment as "10 percent for irregular warfare, about 50 percent for traditional, strategic and conventional conflict, and about 40 percent dual-purpose capabilities." This statement did not clarify what was considered an irregular warfare resource (budgetary program, organization, or military unit). More recently, OSD has described irregular warfare primarily by two lines of effort: (1) to prevent, deter, disrupt, and defeat non-state actors, as well as state actors who pose irregular threats, and (2) to enhance a local partner's legitimacy and influence over a population by addressing the causes of conflict and building the partner's capacity to provide security, good governance, and economic development (see Figure 5 ). The term "irregular warfare" has tended to limit congressional discussion and understanding to those kinetic activities associated with counterinsurgency. The policy of emphasizing training, advice, and assistance to foreign forces was reiterated and endorsed by the incoming Obama administration and Secretary of Defense Gates in the 2010 QDR. However, the 2010 QDR tried to remove some of the confusion over terminology in that it did not use the term "irregular warfare." Rather, it underscored the indirect approach by making " Build the security capacity of partner states " a priority qualifier for rebalancing U.S. defense forces and security force assistance the vehicle by which capacity building would be accomplished. It identified SFA as "the most dynamic" of security cooperation activities in upcoming years and described SFA missions as "'hands on' efforts, conducted primarily in host countries, to train, equip, advise, and assist those countries' forces in becoming more proficient at providing security to their populations and protecting their resources and territories." (See Appendix D .) The QDR also directly linked SFA training activities to partner nations' ability to participate in peacekeeping operations, stability operations, and counterterrorism operations. It stated, "SFA activities can help enable host-country participation in coalition stability operations and multilateral peacekeeping operations that improve regional security. Working in conjunction with other U.S. government agencies and allied military forces to strengthen the security institutions of partner nations will be a crucial part of U.S. and allied efforts to defeat terrorist groups around the world." Although the review is intended to address DOD issues beyond current operations, the QDR spoke to SFA as the mechanism for success in current contingency operations. When referring to training Afghan and Iraqi security forces, it said, "U.S. forces have been training, advising, and assisting Afghan and Iraqi security forces so that they can more effectively uphold the rule of law and control and defend their territories against violent non-state actors. In these contested environments, partnered counter insurgency (COIN), in which Afghan and Iraqi units operate in tandem with U.S. forces, is an effective way to train and advise forces while conducting combat operations against insurgents." The QDR also instructed the services to strengthen and institutionalize general purpose force capabilities for security force assistance. Specifically, it cited the need to add personnel to train-the-trainer units. It called for several distinctive areas of training: "enhancing language, regional, and cultural abilities; strengthening and expanding capabilities for training partner aviation forces, as well as capacities for ministerial-level training; and creating mechanisms to facilitate more rapid transfer of critical materiel." Regarding the interagency process, the QDR indicated how DOD and DOS would further integrate coordinated efforts to cross-functional authorities (e.g 1206 funding, see " Section 1206 (Global Train and Equip) Authorities ", page 38) and mutually supporting roles. "Working with interagency partners and with Congress, DOD is also exploring how to improve the ways in which security assistance funds are authorized and overseen within the executive branch to enhance their effectiveness in supporting national security goals." The priority to continue training, advising, and assisting partner nations (i.e., SFA) is also reflected in the 2010 Quadrennial Defense Review Independent Panel (QDRIP). The panel made a number of recommendations for structural and cultural changes in both the executive and legislative branches, which it considered necessary for each branch to play its role in protecting enduring U.S. interests. Included in the QDRIP's report was the following finding regarding security force assistance. The realities of today's security challenges have revealed the institutional weaknesses of the existing security assistance programs and framework . If unchanged, the United States will fail in its efforts to shape and sustain an international environment supportive of its interests. [emphasis added] As a result, the panel made the following recommendation to increase the efficiency of security force assistance / building partner capacity: Seek authority to establish pooled funding mechanisms for selected national security missions that would benefit from the Comprehensive Approach, including security capacity building, stabilization, and conflict prevention . [emphasis added] Under the section entitled "International Security and Assistance Reform," the QDRIP endorsed the policy of SFA. Yet it did not focus only on fragile and weak states. It went further to identify the second-order effects of training near-peer nations and allies, so as to have synergistic coalition capability for training, advising, and assisting on the lower end of SFA engagement: vii. Continue efforts at Building Partnership Capacity , recognizing that these efforts have several complementary aspects. [emphasis added] 1. Low-end institution building in post-conflict/failing states 2. Developing high-end capacity of our traditional allies [which entails not only security assistance reform but also, as part of acquisition reform, to build in sharing our defense products with our allies from the outset (requiring export control reform and national disclosure policy reform)]. Put another way, we need a "build to share" policy from the outset. 3. Viewing rising powers as potential partners that offer us opportunities for collaboration as well as potential challenges. On October 27, 2010, the Department of Defense released Department of Defense Instruction (DODI) 5000.68, "Security Force Assistance." It established policy and assigned responsibilities for SFA across the Department of Defense, including preparation of DOD personnel, operational planning for SFA, and conduct of SFA. The DODI attempted to provide some clarity to the aforementioned conflicting terminology. A significant portfolio of authorities is associated with SFA. Most notably, the DODI differentiates SFA from Security Cooperation (SC) and Security Assistance (SA) which are codified in legislation, primarily in the Foreign Assistance Act and the Arms Export Control Act. Security force assistance, the instruction states, is an overarching policy approach to building the capacity of partner states. Unlike other restrictive terms such as SA (Title 22 programs only) or SC (DOD only), SFA is intended to enable all the agencies and organizations involved in security capability and capacity development to coordinate, synchronize, and integrate all their foreign security force developmental activities to avoid gaps and to increase efficiency and effectiveness of those efforts. The DODI also attempts to described the relationships between existing legislation and the overarching SFA policy. Specifically, it says: SFA contributes to the DOD role in USG [U.S. government] security sector reform (SSR) initiatives. SFA is a subset of DOD overall security cooperation (SC) initiatives . Other SC activities, such as bilateral meetings or civil affairs activities dedicated to the non-security sector, provide valuable engagement opportunities between the United States and its partners, but fall outside the scope of SFA. Security assistance programs are critical tools to fund and enable SFA activities, which contribute to a host country's defense. The portion of SFA oriented towards supporting a host country's efforts to counter threats from subversion, lawlessness, and insurgency, is a subset of foreign internal defense. [emphasis added] In February 2011, the Obama Administration provided to Congress the 2012 budget request. Included in the Defense section of the request was the following segment, which reiterated the premise of building partner capacity. Providing assistance to develop foreign countries' security capabilities is an essential element of U.S. strategy in Iraq and Afghanistan and of the overall national security strategy. The Administration is committed to funding these security sector assistance programs in an effort to maintain and develop allies' capability to prevent terrorist threats, to the United States and other countries, which originate from abroad. Further, by assisting the development of other countries' abilities to combat terrorism, these investments reduce the need for greater U.S. involvement in the future. In both Iraq and Afghanistan, the strategy of the United States is to create conditions for withdrawal from these countries and leave an environment wherein these nations can provide for their own security. Critical to this strategy is the degree to which U.S. and allied forces can train and equip Iraqi and Afghan security forces to a point where they are self-sufficient. While there are many notable examples of SFA by troops serving across the globe, the immediate focus for developing the force is to meet the pressing needs in Afghanistan and Iraq. In February 2009, President Obama announced that a National Security Council review had been completed. As result of this review, the Administration decided to pursue a new strategy to end the war in Iraq through a transition to full Iraqi responsibility. The first part of this strategy included a removal of combat forces from Iraq. The resulting contingent left in Iraq would carry out three distinct functions: training, equipping, and advising Iraqi security forces, conducting targeted counterterrorism missions; and protecting ongoing civilian and military efforts within Iraq. Similarly, on March 27, 2009, the President outlined a new strategy for Afghanistan and Pakistan. In it, he emphasized the policy of training Afghan forces so as to have them eventually maintain their own security. [W]e will shift the emphasis of our mission to training and increasing the size of Afghan security forces, so that they can eventually take the lead in securing their country. That's how we will prepare Afghans to take responsibility for their security, and how we will ultimately be able to bring our own troops home. For three years, our commanders have been clear about the resources they need for training. And those resources have been denied because of the war in Iraq. Now, that will change. The additional troops that we deployed have already increased our training capacity. And later this spring we will deploy approximately 4,000 U.S. troops to train Afghan security forces. For the first time, this will truly resource our effort to train and support the Afghan army and police. Every American unit in Afghanistan will be partnered with an Afghan unit, and we will seek additional trainers from our NATO allies to ensure that every Afghan unit has a coalition partner. We will accelerate our efforts to build an Afghan army of 134,000 and a police force of 82,000 so that we can meet these goals by 2011—and increases in Afghan forces may very well be needed as our plans to turn over security responsibility to the Afghans go forward. The core goal of the U.S. strategy is to disrupt, dismantle, and defeat al Qaeda. SFA is a means to the President's objective of transitioning to Afghan responsibility. International forces are predominantly focused on ensuring the security of the indigenous population as they build the capacity within the Afghan forces and government to transition. NATO Training Mission Afghanistan (NTM-A) was established to plan and implement authorized and resourced capacity building of the Afghan National Security Forces (ANSF), in recognition of the full scope of the International Security Assistance Force (ISAF) mission and importance of ANSF growth. Lieutenant General William B. Caldwell IV, commander of NTM-A, told a collective audience of ISAF allies that if the training mission in Afghanistan is not resourced with adequate trainers, transition will be delayed. Stating that "[t]actical gains on the battlefield will not be enduring without a self-sustaining Afghan Security Force," Caldwell urged his NATO counterparts to provide additional trainers to conduct the capacity-building mission. He made the analogy that "developing the Afghan National Security Force is transition." Subsequently, the Armed Services Committees have urged the highest levels of DOD to push NATO to continue to provide trainers. In correspondence with the Armed Services Committees, Caldwell highlighted the recent accomplishments of and need for an "Afghan surge." This refers to a dramatic increase in the size and capability of the ANSF, in contrast to a surge of coalition ISAF forces. Both, the majority and minority parties in Congress endorsed this point. In terms of measuring the success of security force assistance in Afghanistan, NATO aims to increase the number of Afghan security forces from 256,000 to 306,000 by October of this year. In the past year, the Afghan army and police have more than doubled in size compared to any previous year's average, reaching almost 64,000 personnel. The administration is considering a proposal to grow the Afghan army by 35,000, which would bring total Afghan security force levels to 378,000 by the end of 2012. These additional forces are meant to add important enablers--logistics, engineering, and intelligence and others--to reinforce and sustain the transition of responsibility to the Afghan security forces. Yet General James Mattis, the commander of U.S. Central Command, raised the question of whether an ANSF of this proposed size would sustain enduring capabilities over time. However, he did indicate that the quality of the Afghan forces has increased, thus helping to reduce attrition, enhance recruitment, and contribute to sustainability. (See Figure 8 .) The increase in the size of the ANSF is not without its critics. According to one report by the Center for Strategic and International Studies (CSIS), a "chronic failure" of U.S. training efforts is: the inability to properly structure efforts to create true partners once new units complete the formal training process and provide the proper quality and number of mentors, partner units, enablers, and efforts to integrate higher level command structures. Far too often the US has also sought to rush new battalion sized combat elements into service to meet its own short term needs without considering the resulting problems in quality, force retention, and host country perceptions of the result. Expediency has led to fundamentally misleading ratings of unit war-fighting capability like the CM rating system, using up half prepared forces in combat, and major leadership and retention problems. This analysis emphasizes quality over quantity and cautions against ignoring the impact of Afghan cultural needs, regional and ethnic differences, family and tribal structures, and the real-world "friction" that affects force development. Another analysis by the International Crisis Group underscores the strategic importance of developing the ANSF. Yet it describes the SFA attempt to develop a unified national military in service of a civilian government as a quixotic effort hampered by the tendency to create militias in a bid to insulate the state from internal and external threats. The ANSF is depicted as seeped in Soviet-style, over-centralized and top-heavy command and control structures, with army combat readiness undermined by weak recruitment and retention policies, inadequate logistics, insufficient training and equipment, and inconsistent leadership. One of the primary tools Congress has approved and funded to conduct SFA in Afghanistan is the Afghanistan Security Forces Fund (ASFF). The ASFF allows the Secretary of Defense, with the concurrence of the Secretary of State, to transfer DOD operations and maintenance funds to the Commander, Combined Security Transition Command—Afghanistan (CSTC-A), to provide equipment, supplies, services, training, facility and infrastructure repair, renovation, construction, and funding to the security forces of Afghanistan. Congress requires the Secretary of Defense to submit to the congressional defense committees a report summarizing the details of any obligation or transfer of funds from the ASFF during a fiscal year quarter. DOD considers the ASFF critical to the building of the ANSF's capabilities and to the ANSF's eventual assumption of security responsibilities. General Mattis, the CENTCOM commander, has said, "Above all, we rely on the ASFF to enable the eventual full transition of security tasks to a robust, trained ANSF capable of preventing the resurgence of insurgent safe havens in Afghanistan." The Afghan Security Forces Fund (ASFF) budget directly supports funding to grow, train, equip, and sustain the ANSF. In December 2009, Congress appropriated $6.6 billion for the ASFF. An additional $2.6 billion was appropriated in the Supplemental Appropriations Act of Fiscal Year (FY) 2010. The 2011 NDAA approved $11.6 billion for train-and-equip programs in Afghanistan, which is equivalent to the Administration's request (see Figure 9 ). Congress stated that funding is "critical for to (sic) help bring stability to Afghanistan and will allow the U.S. and our allies to transition the responsibility for security to the ANSF so we can bring our troops home." President Obama's budget request for FY2012 includes substantial resources to continue supporting the training of Afghan forces to ideally bring closer the point where Afghan troops will bear the major responsibility for their nation's security (see Figure 10 ). The FY2012 Administration budget request for ASFF, presented in February 2011, totaled $12.8 billion. The security force assistance effort in Afghanistan addresses a significant disparity between the cost to sustain the Afghan security forces and the cost of the continued deployment of U.S. forces to the area. Estimates to sustain an autonomous ANSF range from $2 billion to $6 billion annually , compared to an estimated $8 billion a month ($96 billion annually) to maintain 98,000 American troops in Afghanistan along with the rest of the 30,000-40,000 coalition forces that cost several billion dollars per month. Yet analysis also estimates total Afghan GDP at $29.8 billion and total Afghan government revenue at $1 billion. NATO has estimated that that the Afghan state may not be able to sustain the overall cost of maintaining the ANSF until 2040 or later. Despite SFA efforts to create an autonomous Afghan security force, some analysts see a requirement to have to fund half the Afghan budget with long-term military aid, similar to the relationships the United States has with Israel, Egypt, and Jordan. In Iraq, on August 31, 2010, the U.S. transitioned from combat and counterinsurgency activities to a more limited focus on training and advising the Iraqi Security Forces, conducting targeted counterterrorism operations, and providing force protection for U.S. military and civilian personnel and facilities. Central to this strategy is that coalition forces are building the capacity of indigenous forces, forging relationships with local leaders, and preventing attempts by the Taliban to reintroduce themselves into the area. According to the DOD justification for the FY2011 Overseas Contingency Operations Iraq Security Forces Fund (ISFF): The Iraq Security Forces Fund (ISFF) is required to enable Iraqi Security Forces (ISF) to reach minimum essential capabilities (MEC). MEC will allow the ISF to maintain internal security with police forces in the lead and defense forces in support while building foundational capabilities for the Iraqi military forces to provide external defense prior to US forces departure 31 December 2011. Revenue shortfalls due to low oil prices caused severe challenges in equipping forces across the Government of Iraq (GoI). The tightening fiscal environment has forced Iraq to pass a 2009 budget that set spending 25% below its original proposal and sacrificed numerous initiatives. The GoI budget has negatively affected equipping, sustaining and training the ISF throughout 2009. The Ministry of Interior (MoI) has improved training capacity, but still suffers from poor facilities and recruiting shortage. The Ministry of Defense (MoD) faces significant logistical and sustainment challenges in addition to the recruiting shortfall. Although oil prices have risen slightly since the final 2009 budget was passed, Iraq has exhausted a significant portion of its available fiscal reserves in 2009 and is projected to have greater financial shortages into the foreseeable future. The total FY2011 budget request for ISFF was $2.0 billion (see Figure 11 ). The FY2011 NDAA approved $1.5 billion for programs in Iraq, $500 million less than the request. Yet, the difference is still an increase over the initial Senate mark of $1.0 billion as Congress displayed skepticism toward Iraq's contribution to its own security efforts. The final bill requires that the Iraqi government pay 20 percent of the cost of many types of equipment. The NDAA also fences $500 million of ISFF authorized funds until the Secretary of Defense certifies "that the Iraqi Security Forces are committed to sustaining and maintaining their forces." The FY2012 Administration budget request, presented in February 2011, did not include any request to fund the ISFF. Rather, the priority for the administration is shifting to the establishment of the Office of Security Cooperation-Iraq (OSC-I). OSC-I is anticipated to begin operating in June of this year and to be fully operational by this October. OSC-I would become the cornerstone of the long-term mission to build partner capacity with the ISF. Additionally, the OSC-I would ensure the continuation of the military-to-military relationships that advise, train, and assist Iraqi Security Forces. The Iraqi Security Forces Fund and equipment transfer provisions are envisioned to operate through FY2011, with follow-on increasing emphasis on International Military Education and Training (IMET; see Glossary) and other traditional security force assistance programs, as well as authority to transfer equipment from Department of Defense stocks. Although it is not typically considered to be directly affiliated with SFA, Security Cooperation, or Security Assistance, the Commanders' Emergency Response Program (CERP) is another resource approved by Congress to provide military assistance in Iraq and Afghanistan. It enables local U.S. commanders in the two countries to respond to urgent humanitarian relief and reconstruction requirements within their areas of responsibility by carrying out programs that will immediately assist the indigenous population. CERP has been described as an invaluable tool for commanders to influence local populations and to counter Taliban propaganda and influence. CERP was originally funded with seized Iraqi assets, but Congress later appropriated U.S. funds for the purpose. Authorized and appropriated annually, CERP is not applicable to missions outside Iraq and Afghanistan. The FY2011 NDAA authorized a total of $500 million for CERP: $100 million for CERP in Iraq, half of the Administration's request, and $400 million for CERP in Afghanistan, $700 million less than the Administration's request. The reduction in Afghan CERP is offset by a new $400 million Afghan Infrastructure Fund. Additionally, the FY2011 NDAA prohibits using Afghan "CERP funds in excess of $20 million to fund any project, including any ancillary or related elements of the project." A 2008 GAO report called attention to CERP's ambiguity in defining "small-scale" and "urgent" projects, the difficulty in monitoring projects to see that they are completed to specification, and the need for greater visibility with command and DOD leadership as to the scale and extent of work being undertaken. Subsequently, the FY2009 National Defense Authorization Act included enhanced approval and reporting requirements for the program. Recently, however, legislators have highlighted the "continuing practice of using CERP to fund large-scale projects, particularly in Afghanistan, which is inconsistent with CERP's purpose of enabling commanders to carry out small-scale projects designed to meet urgent humanitarian relief and reconstruction requirements that directly benefit the local people." Congress has also reiterated that it wants Iraq to shoulder more of the rebuilding costs. CERP is not used for the training, equipping, or operating costs of Afghan and Iraqi security forces. Yet, used in parallel with SFA, CERP provides military commanders a bridge between the development of indigenous civilian and military capabilities. Another means to conduct security force assistance with specific relevance outside of Iraq and Afghanistan are the Global Train and Equip / Section 1206 authorities. This mechanism is widely endorsed by regional combatant commanders for conducting security force assistance effectively within the legislative restrictions for training foreign forces (see page 61 " Do Legislative Authorities Restrict Conducting SFA? "). One combatant commander has said, "Congressional 1206 authority is the only partner capability/capacity building tool that we have to address urgent or emergent needs in the region." Section 1206 of the 2011 National Defense Authorization Act (NDAA) provides the Secretary of Defense with authority to train and equip foreign military and foreign maritime security forces. The Department of Defense (DOD) values this authority as an important tool to train and equip military partners. Funds may be obligated only with the concurrence of the Secretary of State. Thus far, DOD has used Section 1206 authority primarily to provide counterterrorism (CT) support. These funds may also be used to train and equip foreign military forces for military and stability operations in which U.S. forces participate. The 2011 NDAA authorizes Section 1206 for one year through FY2012. The authorization bill provided $350 million, compared to an Administration request of $500 million. It also included a provision that raises the ceiling to $100 million (up from $75 million) of Section 1206 funds available for "building the capacity of foreign military forces to participate in or support stabilization operations in which the United States Armed Forces are a participant" (e.g., training coalition partners—Polish, Romanian, Ukrainian, etc—that participate in Iraq and Afghanistan). In February 2011, the Obama Administration's 2012 budget request included continuation of the 1206 authority and reiterated the $500 million level of funding: In addition to these programs, which are directly related to completing the mission in Iraq and combat operations in Afghanistan, the Budget provides $500 million for DOD's global military "train and equip" assistance programs. DOD uses these programs to fund counterterrorism training in a variety of countries. DOD also uses these programs to develop the internal counterterrorism capability of Yemen, which is critical to the Administration's goal of defeating al Qaeda in the Arabian Peninsula. Congress has not yet codified Section 1206 into permanent authority. One issue is whether this capability should be placed with other train and equip authorities under the State Department. In recent testimony before the House Armed Services Committee, DOD suggested that the 1206 authority "money should probably be in the State Department to start with." Congress requires an annual report to provide oversight and visibility of 1206 activities to preclude the potential misuse of security assistance by nations targeted for assistance. In July 2010, the Government Accountability Office reported that the 1206 program was being employed in a manner commensurate with the intent of Congress and was generally consistent with U.S. strategic priorities related to combating terrorism and addressing instability. However, GAO noted that "the long-term viability of Section 1206 projects is threatened by (1) the limited ability or willingness of partner nations to support new capabilities, as 76 percent of Section 1206 projects are in low- or lower-middle-income countries, and, (2) U.S. legal and policy restrictions on using FMF (foreign military financing) and additional Section 1206 resources for sustainment." GAO recommended that DOD estimate sustainment costs and seek funding commitments from partner nations, and that it seek guidance from Congress on how to sustain projects. DOD concurred. The most recognizable counterterrorism efforts are direct action missions against Al Qaeda leadership, as seen in the reporting of drone strikes in Afghanistan and Pakistan. It is not the intent of this report to discuss these kinetic operations. Nevertheless, the Secretary of Defense has stated, "Arguably the most important military component in the War on Terror is not the fighting we do ourselves, but how well we enable and empower our partners to defend and govern their own countries." The inability of weak or failed states to provide for their own internal security potentially creates within them a sanctuary for terrorist organizations such as Al Qaeda to operate, if not with impunity, then at least with greater freedom and less scrutiny. The U.S. military focus is increasingly on the search for small cells of terrorists and on building the capacity of U.S. partners. DOD's emphasis in SFA is, in part, to give partner countries capabilities to deter and prevent terrorist activities and training. Counterterrorism includes actions taken directly against terrorist networks and indirectly to influence global and regional environments and render them inhospitable to terrorist networks. The framework for the U.S. Special Operations Command Concept Plan 7500, Department of Defense Global War on Terrorism Campaign Plan , identifies two approaches consisting of efforts applied directly against the enemy and actions applied indirectly to influence the global environment. These are referred to as direct and indirect approaches. SFA is a primary piece of the indirect approach. Through training partner nations to be capable of their own security, the United States "enables partners to combat violent extremist organizations (VEOs)" (see Figure 12 ). SFA enables partners to conduct operations against terrorists and their organizations as well as to shape and stabilize their environments in order to erode the capabilities of terrorist organizations and degrade their ability to acquire support and sanctuary. The premise of weak/failed state linkage to terrorism has its skeptics. Some analysts believe the common denominator for terrorist activity is not state failure. Rather, they argue, terrorist attacks are carried out by extremists claiming social or religious affiliations that have no linkage to geography. Thus, safe havens are not necessarily geographical but social. This argument points out that several regions identified in the upper tier of state weakness (such as Haiti, Congo, Burundi, Zimbabwe, and Myanmar) are not havens for terrorists. This position further holds that the biggest terrorist threat to the homeland is posed by European radicals, who are able to travel to America more freely than those that reside in weak or failed state. In testimony before the House and Senate Armed Services Committees, Secretary of Defense Gates, service chiefs, and regional combatant commanders have been asked what steps are being taken to build a larger pool of SFA-oriented trainers within the services. The challenge for the services has been to facilitate the organizing, training, and equipping of their own forces to meet this demand. The special operations community has historically organized, trained, and equipped forces for this mission, and the conventional services are still standardizing their training methods and supporting organizations. There have been increases in training, in the number of individuals trained, and in organizational commitment. Still, a significant challenge for the services will be providing continuity of effort, because their task-organized training is for a limited time, as compared to the long-term commitment of SOF. For example, a service member individual assigned to a conventional unit may be tasked to deploy as a trainer in his or her area of expertise (e.g. a logistician, an air traffic controller, a civil engineer or a helicopter pilot). Then he or she will attend the training provided by the service before deployment. Afterward, the individual will return to his or her own unit and resume functioning in a traditional capacity. The "training" skill is not a permanent characteristic the soldier maintains proficiency in. A reason for this is the degree of resources that would be required to maintain a standing capability. SOF personnel train for years in this field, and it is the mission for which they are inherently responsible (see " U.S. Special Operations Forces (SOF) and Security Force Assistance "). To develop the same degree of fidelity in the conventional forces could require a significant increase in time and money. The responsibility for conducting security force assistance has long resided with the special operations community. The U.S. Special Operations Command (SOCOM) was established in 1987, and the U.S. Code ( Title 10 , Subtitle A , Part I , Chapter 6 , Section 167) identified foreign internal defense (FID) as a special operations activity. SOF receive extensive training to conduct this mission and are the most highly qualified to do so. Under DOD, SOCOM has been given the responsibility of being the overall "joint proponent" for SFA. In this capacity, they serve as lead for the development of joint doctrine, training, and education relevant to SFA activities conducted within a host country from the individual to the service level. SOCOM recommends the most appropriate forces for meeting SFA requirements validated by geographic combatant commanders. U.S. SOF are uniquely appropriate to conduct SFA for several reasons. They are extensively trained, well led, flexible, and adaptable. They can adjust quickly to meet the needs of the country they are assisting. In addition to expert proficiency in their military combat skills, SOF are trained to have a regional area of expertise. SOF not only participate in the host nation's military training activities. They excel at SFA because they have also learned to respect the customs, may speak the language, and often participate in a host nation's special cultural activities and functions. SOF units may find themselves spending the majority of their careers in the same geographic theater. In conducting SFA, SOF provide continuity with their counterparts in host nation militaries because of long-standing relationships between individuals and units. In testimony before the Senate Armed Services Committee, the SOCOM commander, Admiral Eric Olson, emphasized the importance of SFA and the indirect approach. Direct and indirect approaches must be carefully balanced. While the direct approach is often necessary and has immediate impact, it essentially creates time for the indirect approach to achieve lasting outcomes through other means. Security Force Assistance (SFA) remains a highlight of USSOF indirect action. SFA is a collaboration engine for the Command to include: security cooperation, security assistance, foreign internal defense, internal defense and development, and security sector reform. SFA enhances the military capabilities and capacities of our allies and partners via training, advising, assistance, and—as authorized—equipping and supporting foreign military and security forces. Further in the testimony, Admiral Olson presents SFA as an element of the command's mechanism for counterterrorism. Through direct action, we deter, disrupt and defeat terrorist threats across the globe. In tandem, indirect action creates and sustains environments to empower longer term success.... As we remain prepared for urgent, bold and decisive action, we recognize that it is high-quality, low-profile, long-term engagement that fosters trust and enables essential partnerships. In this regard, we should measure success by how well we have prepared others to face their security challenges, not by what we do for them. SOCOM has expressed concern over its ability to adequately resource the SFA mission. SOF have a unique capability to conduct SFA. Yet, despite their enhanced skills, SOF are "low-density/high-demand" assets. Their skills are in high demand and there are not enough of them to accomplish all the SFA missions. About 85% of deployed SOF are directly engaged in operations in Afghanistan and Iraq. Admiral Olson emphasized the limitations of the mission due to limited numbers and a high operations tempo within SOF, despite recent growth in the overall personnel for the command. Even with a charge to grow the SOF force quickly, demands have exceeded resources. "As we have essentially doubled our force over the last nine years [and] tripled our budget over the last nine years, we have quadrupled our overseas deployments over the last nine years," Admiral Olson said. He cautioned about the "frayed edges" of the force given current commitments. The Armed Services Committees have concurred that the demand for such forces and their unique skills will continue to outpace supply for the foreseeable future. Olson gave the following details about increased SOF operations tempo: We saw 100,000 American troops come out of Iraq; we only saw about 500 special operations [members] as part of that.... We grew a battalion in the 5th Special Forces Group in 2008, and it's deployed. We grew a battalion in 3rd Special Forces Group in 2009, and it's deployed.... We grew a battalion in the 10th Special Forces Group, and it is preparing to deploy. Over the next two years, we'll grow battalions in 1st Group and 7th Group.... We've been able to deploy 36 additional [operational detachments A, or "A-teams"], and frankly, if you're on a 1-to-1 deployment ratio, which is the very most that you can sustain ... as you grow 36 ODAs, you should deploy no more than 18. But the demand has gone up close to 50 in that time. Though SOF are considered the "gold standard" for conducting SFA, the time, talent, and funding required to develop this level of capability cannot easily be afforded to conventional forces that carry out similar missions. Nevertheless, the growing appetite for SFA missions cannot be met using only SOF forces. This is why conventional forces (also referred to as general purpose forces or GPF) are assuming responsibility for more SFA activities. GPF have been in the SFA business for a long time, especially in technical training (i.e., security assistance missions and Technical Assistance Field Teams (TAFT)). What is new in recent years is using GPF to do basic training and advisory duties in the current large numbers. There is historical precedence, however, for large GPF advisory missions (e.g., there were nearly 10,000 conventional advisors in South Vietnam in 1964). Additionally, the SOCOM commander has expressed the importance that U.S. SOF be used primarily to train partner nations' SOF and that they refrain from training in basic military skills in which conventional forces can instruct. I'd like to see special operations get in the business of training foreign special operations forces a little bit more, and in the business of training new recruits in a foreign country how to march in straight lines and shoot on seven-meter ranges a little bit less. But I think the reality is that, given the skills to which special operations trains, the global demand will still be mostly for us. I can't predict a balance, but I do think that the demand for special operations, globally, will continue to go up. Some notable recent SFA missions by U.S. SOF that have elicited congressional interest include the training of counterterrorism forces in Yemen, development of indigenous SOF forces in Iraq and Afghanistan, training of the Frontier Corps in Pakistan, training of forces in Mali against the illicit trafficking of weapons, drugs, and people, and training of armed forces of the Philippines to counter Muslim insurgent groups in Mindanao. With the establishment of a Marine Corps component within SOCOM in 2006, the Marines' foreign military training units (FMTUs), which had been formed to conduct foreign internal defense, were transferred and then designated as the Marine Special Operations Advisor Group (MSOAG). In April 2009, MSOAG was redesignated as the Marine Special Operations Regiment with the 1 st , 2 nd , and 3 rd Marine Special Operations Battalions (MSOB) as subordinate units. The newly designated 3 rd MSOB incorporated the structure and personnel from MSOAG's former companies. Marines and sailors of the MSOR train, advise, and assist friendly host nation forces—including naval and maritime military and paramilitary forces—to enable them to support their governments' internal security and stability, counter subversion and reduce the risk of violence from internal and external threats. The 1 st Marine Special Operations Battalion was activated on October 26, 2006, and is headquartered at Camp Pendleton, California. When fully manned, it consists of four Marine Special Operations Companies (MSOCs). The 2 nd and 3 rd Marine Special Operations Battalions are headquartered at Camp Lejeune, NC. Each MSOC is to be task-organized with personnel uniquely skilled in special equipment support, intelligence, and fire support. The Marine Corps special operations community is the newest of SOCOM's components, and SFA is still considered an evolving capability for them. Naval Special Warfare Command conducts training of foreign forces through its foreign internal defense program. According to SOCOM, however, Naval Special Warfare Forces are primarily organized, trained, and equipped for direct action and special reconnaissance missions. As such, Naval Special Warfare Forces do not have units specifically dedicated to training foreign forces. However, in addition to providing basic and advanced instruction and training in maritime special operations to U.S. military and government personnel, the Naval Special Warfare Center provides the same training to members of select foreign armed forces. In 2006, the commander of SOCOM assigned Naval Small Craft Instruction and Technical Training School (NAVSCIATTS) the following new mission: NAVSCIATTS conducts Foreign Internal Defense (FID) in support of Combatant Commanders in accordance with Commander, United States Special Operations Command, priorities using Mobile Training Teams (MTTs) and in-residence training to prepare partner nation forces to conduct small craft operations in riverine or littoral environments. [emphasis added] On December 19, 2008, Naval Special Warfare Command shifted NAVSCIATTS from the Naval Special Warfare Center to Naval Special Warfare Group-4 (NSWG-4) for its SFA component. NAVSCIATTS is located in the riverine and littoral training areas of the John C. Stennis Space Center near Bay St. Louis, Mississippi. NAVSCIATTS has trained more than 6,000 students from over 55 partner nations. According to NSWG-4, NAVSCIATTS has been conducting security force assistance since 1963 to prepare partner nation forces to conduct small craft operations in riverine and littoral environments, as well as to develop and sustain professional and personal relationships. U.S. Army Special Forces Command identifies foreign internal defense operations (a component of security force assistance—see Figure 7 ) as Special Forces' main peacetime mission. These activities are designed to help friendly developing nations by working with indigenous military and police forces to improve their technical skills, increase understanding of human rights issues, and help with humanitarian and civic action projects. Each of the seven Special Forces Groups is regionally oriented to support one of the war-fighting regional combatant commanders. Special Forces Groups are currently located at Fort Bragg, NC; Fort Campbell, KY; Fort Carson, CO; and Fort Lewis, WA. Additional Special Forces battalions are in Okinawa, Japan, and Panzer Kaserne, Stuttgart, Germany. In 2011, the 7th Special Forces Group (currently at Fort Bragg) will relocate to Eglin Air Force Base, FL. There are also two National Guard Special Forces Groups located in Alabama and Utah, with subordinate units based in 19 states. Approximately 1,400 soldiers are assigned to each group. The 12-man ODA (Operational Detachment Alpha), or "A" Team, is the basic operating element of a Special Forces group. It is largely made up of noncommissioned officers (NCOs). Each team member has a specific function, ranging from operations and intelligence to weapons, engineering, medical duties, and communications. The advanced training for each specialty can take six months or longer and includes small-unit tactics; languages; and survival, evasion, resistance and escape. The ODA itself may specialize in an infiltration skill or a particular mission-set, such as military freefall, combat diving, mountain warfare, maritime operations, or urban operations. Within Air Force Special Operations Command, the 6th Special Operations Squadron (6th SOS) is a combat aviation advisory (CAA) unit. Its mission is to assess, train, advise, and assist foreign aviation forces in airpower employment, sustainment, and force integration. Squadron advisors help friendly and allied forces employ and sustain their own airpower resources and, when necessary, integrate those resources into joint and combined (multinational) operations. Squadron training and advisory capabilities in the employment arena include airpower applications, tactical employment, and mission planning. Tactical flying activities include fixed and rotary-wing operations for combat search and rescue, close air support and airlift/aerial delivery (infiltration, exfiltration, resupply, and air drop). Assistance in the sustainment arena includes aviation maintenance, supply, munitions, ground safety, life support, personal survival, air base defense, command and control, and other sustainment functions supporting combat air operations. Assistance to the theater combatant commands includes assessments of foreign aviation capabilities, liaison with foreign aviation forces, and assistance in theater air campaign planning for combined operations. The 6 th SOS currently has 218 personnel assigned, which includes 12 Operational Aviation Detachment (OAD) Teams. Currently, it takes 12-18 months to train and mission-qualify a 6 th SOS member. The training starts at the U.S. Air Force Special Operations School and transitions to training within the unit. The squadron has seen significant growth and is projected to double in size to approximately 500 people. The squadron conducts SFA operations by working "with, through, and by" host nation aviation forces from the ministerial to the tactical unit level. "With, through, and by" describes the process of interaction with foreign security forces that initially involves training and interacting "with" the host nation forces. The next step is advising, which may include advising in combat situations (acting "through" the forces). The final phase is achieved when foreign security forces operate independently (act "by" themselves). A popular and efficient method for SOF to conduct SFA has been through the Joint Combined Exchange Training (JCET) program. JCETs are unique to SOF and allow U.S. forces to train side by side with counterparts from a partner nation. Title 10 of the U.S. Code describes special operations forces training with friendly foreign forces. It says that the purpose of the training "shall be to train the special operations forces of the combatant command." Hence, training for foreign forces is a lower priority than training for U.S. forces. The SFA skill sets taught to partner nations' forces through the JCET program are tailored to tactical-level combat readiness. Combat commanders convey that the JCET program is a means to support regional stability throughout the theater. Other than combat skills, training that could occur in JCETs might include humanitarian assistance operations, disaster assistance/relief operations, and civic assistance projects. These projects are touted as constructive interactions among foreign military and civilians and U.S. SOF. Congress has scrutinized SOF's conduct of SFA via the JCET program. This resulted primarily from some high-profile instances during the 1990s, particularly in Indonesia. In these cases, the partner nation forces that had been trained by U.S. SOF counterparts were shown to have employed the skills they learned in repressive or brutal fashion in suppressing internal and civil disturbances. The program was also criticized for conflicting senses of purpose within the executive branch. In some instances, the State Department made evaluations of nations' human rights record. However, these inspections, and subsequent vetting or condemnation, were not commensurate with the list of nations that were being trained. As a result, Congress enacted legislation to bring JCET more into alignment with policies and to establish more stringent oversight. The Leahy Amendment to the Department of Defense FY1999 Appropriations Act ( P.L. 105-262 ) prohibited the U.S. military from training with human rights abusers (unless the prohibition is waived by the Secretary of Defense). Since then, federal law has barred U.S. forces from offering assistance to foreign military units if there is evidence that they have gone unpunished after committing human rights violations. (See section below on " Leahy Amendment .") Additionally, in an effort to increase congressional oversight of the program, the relevant section of the U.S. Code was amended to add a reporting requirement to Congress: Reports.— Not later than April 1 of each year, the Secretary of Defense shall submit to Congress a report regarding training during the preceding fiscal year for which expenses were paid under this section. Each report shall specify the following: (1) All countries in which that training was conducted. (2) The type of training conducted, including whether such training was related to counter-narcotics or counter-terrorism activities, the duration of that training, the number of members of the armed forces involved, and expenses paid. (3) The extent of participation by foreign military forces, including the number and service affiliation of foreign military personnel involved and physical and financial contribution of each host nation to the training effort. (4) The relationship of that training to other overseas training programs conducted by the armed forces, such as military exercise programs sponsored by the Joint Chiefs of Staff, military exercise programs sponsored by a combatant command, and military training activities sponsored by a military department (including deployments for training, short duration exercises, and other similar unit training events). (5) A summary of the expenditures under this section resulting from the training for which expenses were paid under this section. (6) A discussion of the unique military training benefit to United States special operations forces derived from the training activities for which expenses were paid under this section. The Obama Administration is trying to achieve a diplomatic balance with regard to using JCETs for SFA. Training with Western-leaning Muslim nations such as Indonesia is linked to U.S. efforts to counter terrorism (see " SFA and Counterterrorism "). Radical groups linked to al Qaeda, such as Jemaah Islamiyah and Abu Sayyaf, have targeted Indonesia and used its territory as a staging ground for attacks elsewhere. Jemaah Islamiyah's October 2002 attack in Bali killed 202, including American tourists. Furthermore, engaging with Indonesia is seen by some analysts as an effort to counter China's rise. Yet members of the Senate continue to express concern regarding Indonesian human rights abuses. The "Leahy Amendment" was first enacted as part of the 1997 Foreign Operations Appropriations Act (FOAA). The amendment, sponsored by Senator Patrick Leahy of Vermont, prohibited provision of Foreign Operations appropriations assistance to foreign security force units implicated in gross human rights violations, unless the Secretary of State determines that the host government is taking effective measures to bring those responsible to justice. Initially the law was narrowly focused on the Department of State's International Narcotics Control and Law Enforcement program, but it was expanded in 1998 to include all security assistance programs using FOAA funds. Additionally, recurring language in the annual National Defense Appropriations Act (NDAA) applies Leahy requirements to NDAA-funded training. (For more information, see CRS Report RL30034, Joint Combined Exchange Training (JCET) and Human Rights: Background and Issues for Congress , by [author name scrubbed].) The Army has identified SFA as one of four primary activities for which the service is responsible. The Chief of Staff of the Army, General Casey, has highlighted this responsibility in testimony before the House and Senate Armed Services Committees. He has stated: [T]he Army must engage to help other nations build capacity and to assure our friends and allies. Through security force assistance, we can increase the capacity of other nations' military and police to uphold the rule of law, ensure domestic order, and deny sanctuary to terrorists—thereby helping avoid future conflicts that might otherwise develop. American Soldiers are currently deployed to Central America and the Balkans, building the capacity of indigenous security forces. Additionally, the Army has established an Army Service Component Command for U.S. Africa Command to assist partner nations and humanitarian organizations in Africa. Over the past two years, the Army has reconfigured itself to conduct SFA. The 2010 posture statement (previous paragraph) of outgoing Chief of Staff of the Army (CSA) General George W. Casey contrasts with his 2008 position, when he said; "I'm just not convinced that anytime in the near future we're going to decide to build someone else's army from the ground up," and further, "to me, the 'advisory corps' is our Army Special Forces—that's what they do." Additionally, during his confirmation testimony before the Senate Armed Services Committee, the presumptive new CSA, General Martin Dempsey, said he anticipated that there will be a future ongoing requirement for SFA-tasked brigades to carry the role of building partner capacity beyond Iraq and Afghanistan. Yet, he indicated, it is too early to tell if general purpose force brigades will be regionally aligned to carry out future advise-and-assist missions. The Army has organized to conduct SFA via the modular design of the brigade combat team (BCT). Army forces are task-organized, trained, and equipped for the SFA mission through the cyclical process of force generation. Elements are organized from within the brigade with the required size and skill sets for each mission. Each BCT has over 250 commissioned officers and over 1,000 NCOs of sergeant rank and above, providing a large base of trainers and advisors. Afghanistan and Iraq are examples where the army uses modular brigades augmented and adapted for SFA as the base organization for providing SFA. Instead of trying to design exactly the right unit for every situation, the versatility of Army modular organizations is leveraged by tailoring them for the mission. According to the Army, lessons from these deployments so far indicate that the brigade is a viable basis for large-scale SFA to build capacity at the individual and unit levels. Nevertheless, some analysts do not agree with the strategy of leveraging BCTs to fulfill the training and advising role. These critics believe that the Army should have dedicated training units to conduct the mission. Army service component command staffs have also expanded to include a 20-person section responsible for coordination between the command, country teams, security cooperation organizations, geographic combatant command staffs, Special Operations Command elements, and Army headquarters. This staff is the nexus for assigning SFA missions and assessing their effectiveness. Army training for SFA-type missions includes an emphasis on regional language expertise and core cultural skills. Professional training and specific mission-tailored training are delivered by various specialist organizations, notably 162 Brigade in Fort Polk, LA. Additionally, the Army has established the U.S. Army Training and Doctrine Command Culture Center at Fort Huachuca, AZ, and a force modernization proponent for SFA at the Combined Arms Center at Fort Leavenworth, KS, to further institutionalize its ability to deliver SFA. According to the Navy, SFA plays a key role in support of the Navy's strategic imperatives by fostering and sustaining cooperative relationships through increased capacity-building, thus preventing or containing local disruptions before they have a larger impact. According to some analysts, this preemptive SFA engagement strategy implies a focus on smaller, frailer nations, consistent with "emphasis on building partnership capacity and security cooperation to minimize emerging transnational challenges . " The Cooperative Seapower Strategy presses U.S. naval forces past merely being deployed forward to engaging forward, in a proactive sense, to enhance and minimize the conditions that generate conflict and instability in the first place. One analysis of the Navy's indirect approach highlights that a proactive engagement will increase dependence on maritime assets, but foresees a continued reliance on the special operations community for SFA as the Navy begins to train for this mission. According to the Navy, the Maritime Civil Affairs and Security Training (MCAST) Command SFA Detachment mans, trains, equips, and deploys sailors to establish and enhance relations between military forces, governmental and nongovernmental organizations, and the civilian populace. MCAST defines its mission as follows: In support of the Combatant Commander (COCOM) Theater Security Cooperation Plan (TSCP), MCAST Command, Security Force Assistance Detachment (SFA Det) will deliver maritime expeditionary core capability training and instruction in the areas of small boat operations, maritime interception, weapons, maritime expeditionary security, maintenance, professional development, and skill sets external to NECC. This mission will be carried out by teams of SFA Det personnel with the subject matter expertise to train foreign audiences at a basic to intermediate level. Navy general purpose forces (GPF) are allocated to SFA activities through the Global Force Management (GFM) process. These forces receive pre-deployment training designed to support their assigned task. GPF conduct the full range of military operations, including maritime security, counter-proliferation, security cooperation, security force assistance, stability, maritime interdiction, counterinsurgency, and humanitarian assistance/disaster relief (HA/DR) missions. The Navy conducts SFA using three methods: (1) fleet and regional training and exercises, (2) enduring rotational deployments, and (3) fleet and expeditionary operations. The cooperative engagements include topics such as small boat operations and tactics, maritime combat operations, weapons handling, antiterrorism and force protection, maintenance and construction, and officer and non-commissioned officer professional development and leadership. While no single command is dedicated specifically to SFA, the following Navy commands are heavily engaged in SC and SFA activities: Naval Expeditionary Combat Command Maritime Civil Affairs and Security Training Command Naval Education and Training Security Assistance Field Activity Navy International Programs Office Naval Small Craft Instruction and Technical Training School Navy Reserve Maritime Partnership Program The Marines measure the appetite for how many building partnership capacity activities (i.e., SFA) are needed as it is communicated to them from regional combatant commanders (e.g., CENTCOM and European Command (EUCOM) commanders). They want a forward presence engaging partner nations and allies in order to shape relationships and deter violence. General Michael W. Hagee (Commandant of the United States Marine Corps, 2003–2006) has said, "If we can do much better in 'phase zero,' better prepare foreign militaries to handle their own situations, maybe we won't have to do phases one, two and three." Operating on General Hagee's premise, the Marines created a Security Cooperation Marine Air-Ground Task Force (SC-MAGTF). This is built around a Marine infantry battalion. It includes personnel and materiel specifically tailored for SFA operations and allows them to build a force to meet the requirements of the combatant commanders. If the requirement is to go into a specific country to train its military, provide humanitarian support, dig wells, provide medical and dental support, or just engage to develop a relationship, the Marines will organize for the task. Some aspects of the SC-MAGTF training missions are similar to those of special operations forces, such as the Army's Special Forces detachments (Green Berets) and the Marine Special Operations Advisor Group. They will help advise foreign militaries, but the advisory missions conducted by special operations forces tend to be more complex, reflecting capabilities that exceed the capacity of general-purpose forces. Yet the current deployment commitments in Iraq and Afghanistan will limit the Marines from meeting their goal of training a wider contingent of the Corps to conduct SFA. The approach is dependent upon the drawdowns in the Middle East because they draw resources away from the SC-MAGTF effort. Recently, underscoring that the SC-MAGTF concept has evolved to reflect the organizational, mission, and doctrinal characteristics of a special purpose MAGTF, the Marines decided that the "Security Cooperation MAGTF" would be renamed "Special Purpose Marine Air Ground Task Force-Security Cooperation (SPMAGTF-(Security Cooperation))." Hence, the moniker "SPMAGTF-(Security Cooperation)" now describes MAGTFs stood up specifically to engage in theater security cooperation activities. Additionally, units other than MAGTFs that conduct theater security cooperation will be called security cooperation task forces/detachments/teams as appropriate. The Marine Corps Training and Advisory Group (MCTAG) coordinates Marine Corps security force assistance (SFA) and security cooperation (SC) efforts; provides conventional training and advisor support to host nation security forces (HNSF), or to U.S. general purpose forces (GPF) partnering with HNSF; and provides planning assistance to Marine forces in developing and executing partner nation training programs in order to build partner capacity in support of combatant commander SFA/SC objectives. The MCTAG was developed to fill the gap in standardizing advisor training that occurred when the Corps' foreign military training units (FMTUs), later designated Marine Special Operations Advisor Group (MSOAG), moved to the Marine component of Special Operations Command. A subset of SFA in developing indigenous forces is the building of a partner nation's aviation capacity. The recent establishment in 2010 of the U.S Air Force's Air Advisor Academy is designed to train airmen to carry out these missions effectively in a manner similar to that of the 6 th Special Operations Squadron, a unit dedicated to conducting foreign internal defense (see previous section on special operations forces " Air Force Combat Aviation Advisors "). Training at this academy includes language and cultural awareness courses, along with combat survival training. Additionally, the Air Force is investing in a small inventory of light mobility and light attack aircraft to use in training partner nations. A study chartered by Air Force headquarters stated that "[t]he security, stability, and economic development of a nation in the early 21 st century are inextricably linked to its aviation resource capacity and capability." A common characteristic of underdeveloped and undergoverned regions is a lack of transportation infrastructure (roads, bridges, etc). For example, although it is nearly the size of Texas, Afghanistan has only 1/12 the miles of roads (approximately 13, 000 miles), and of these, only 13% are paved surfaces. This, combined with rugged, mountainous terrain, makes aviation capacity essential to projecting influence and establishing legitimacy for government services. A partner nation's aviation capacity, developed through SFA, can project the influence of that nation's government through such high-payoff learned skills as medical evacuation and search and rescue. Additionally, aviation allows nascent military forces, such as the Afghan National Army and its ISAF allies, to avoid maneuvering with trepidation in and around improvised explosive devices (IEDs). A partner nation's military aviation capacity also includes supporting activities that contribute to economic development and trade that may not include a partner nation owning any aircraft. Again using Afghanistan as an example, aviation capacity provides transportation and economic flexibility to a landlocked country. Yet there are constraints to developing aviation capacity. Because fragile states are also typically characterized by lower literacy and education rates, training in aviation skills can be challenging, as this technically centered enterprise may require a greater education level than exists in the forces receiving the training. Additionally, aviation resources can be expensive to acquire, operate, and maintain. The cost to own, operate, and maintain a single C-130 could be more than the gross national product of some lower-tier partner nations. DOD uses the term "right tech" to underscore the importance of training, advising, and assisting partner nations in aircraft that are transferable, affordable, modular, and interoperable within the absorptive capacity of that nation. The Air Force goal is to help partner nations develop an aviation enterprise that contributes to the partner nation's security and to its government's legitimacy and stability, to thwart terrorist networks, drug cartels, and criminal organizations and prevent lethal threats emanating from fractured or failing states. General Norton Schwartz, the Chief of Staff of the Air Force, gave examples in his 2010 posture statement of the Air Force's SFA strategy: The Air Force continues to seek opportunities to develop partnerships around the world, and to enhance long-term capabilities through security cooperation. In the USCENTCOM AOR, deployed Airmen are working with our Afghan and Iraqi partners to build a new Afghan National Army Air Corps and Iraqi Air Force to strengthen the ability of these nations to uphold the rule of law and defend their territories against violent, non-state actors.... In FY11, we will expand our capabilities to conduct building partner capacity (BPC) operations with partner air forces. Past experience has shown us that we are more effective trainers when we operate the same platforms as our partners. Additionally, in a message delivered to all of the members of the U.S. Air Force, General Schwartz listed "Partner with the Joint and Coalition Team to Win Today's Fight" as one of five priorities to guide the direction of the Air Force. The Air Force will always be an integral part of Joint and Coalition operations. As we look ahead, we are likely to encounter more sophisticated hybrid adversaries and situations requiring enhanced integration across multiple domains. In irregular warfare and anti-access / area denial environments, the Air Force must continue to build partnerships with other air forces to bolster international cooperation, sustain powerful, global forces for stability, and ensure access to the global commons. Included in the areas for executing this agenda were these activities directly linked to training partner nations: Enhance our ability to train, advise, assist and integrate partner air forces, institutionalize Air Advisor training, and stand up an Air Advisor Academy. Develop and field the Light Attack/Armed Reconnaissance Aircraft (LAAR) and Light Mobility Aircraft (LiMA) to allow training with a broader array of aviation partners. Build stronger international air force cooperation, interoperability, and mutual support. In February 2010, Secretary Gates highlighted that an institutional challenge within the Pentagon is that DOD's various partner capacity and security assistance functions are scattered among different staff and headquarters elements of the military. Yet he singled out the Air Force, where "most of these functions—from foreign military sales to training exchanges—are grouped under one civilian executive—the equivalent of a three-star general—to better coordinate and integrate them with larger goals and national strategy. This more integrated and consolidated approach makes better sense for the department, and for the government as a whole." The Deputy Undersecretary of the Air Force for International Affairs (SAF/IA) is the Air Force proponent for SFA. SAF/IA has outlined its role in support of the Air Force's strategic engagement imperatives, as described in its Global Partnership Strategy: This strategy utilizes a capabilities-based approach to identify the specific ways and means to utilize in relations with a specific country in support of the CCDR objectives. This strategy establishes ends necessary to organize, train, and equip the USAF to address the importance of building partnerships. These ends are for the USAF to: Establish, sustain, and expand Global Partnerships that are mutually beneficial. Provide global partners the capability and capacity necessary to provide for their own national security. Establish the capacity to train, advise, and assist foreign air forces, while conducting partnership activities using USAF Airmen with the appropriate language and cultural skills. Develop and enhance partnership capabilities to ensure interoperability, integration, and interdependence, as appropriate. The Air Force has emphasized that success in SFA occurs through people, not equipment. In 2007, with an increase in the requirement for U.S. trainers in Iraq and Afghanistan, the CSAF directed Air Education and Training Command (AETC) to conduct pre-deployment training for airmen (referred to as "air advisors") en route to Iraq and Afghanistan. The number of students went from 136 in the first year of operation to 675 students per year in 2010. The air advisor course supporting current CENTCOM SFA requirements through the 321 st and 438 th Air Expeditionary Wings has transitioned into a permanent capability providing advisor training for global SFA requirements. Training is conducted at Joint Base McGuire/Dix/Lakehurst, NJ, and includes (1) core knowledge, (2) language, region, and culture skills, and (3) field craft (survival training, convoy training, etc). Many of those deploying with this training are not aviators but rather "Agile Combat Support" (ACS). To increase assistance to less-developed nations, specific Air Force ACS and aviation experts are trained in basic and advanced training techniques. Those training partner nation counterparts in a flying capacity receive air advisor training and may go on to specified flight training (depending on the aircraft in which they will instruct) at one of seven flight training locations (five stateside, two overseas). Currently the New Jersey training facility is used on a temporary basis for the Air Advisor Academy. A permanent basing facility has yet to be determined through the Air Force basing process. Initial operating capacity is expected in 2011, with full operating capacity in 2014. Moreover, the number of students is expected to increase to between 1,500 and 2,000 students per year. Given force structure constraints, the Air Force intends to take advantage of existing organizations (for somewhat different purposes) by slightly altering their procedures. Contingency response groups, originally organized to open airfields as an expeditionary capability, represent an example of this opportunity. With a focus on increased language skills and regional orientation, these groups could relate very easily to nascent Air Force partners. Air Force contingency response forces (two stateside wings and two overseas groups) include a wide variety of skill sets, from civil engineers, to medics, to air traffic controllers. The Air Force has regionally aligned its GPF contingency response forces and assigned a secondary mission supporting SFA. The leadership within contingency response forces has unanimously lauded the decision to assign them a formal role within the broad Air Force SFA portfolio. They described their core airfield opening functions (aerial port, mobile command and control, and maintenance) as perfect building blocks for the nascent air infrastructures of many nations with whom the United States desires closer relationships. Yet they have expressed concerns over their ability to support traditional (air base opening) missions and engagement missions concurrently, given historically low manning rates (near 70%). According to the Air Force, the Light Mobility Aircraft (LiMA) and the Light Attack Armed Reconnaissance Aircraft (LAAR) are two new programs intended to provide specific SFA capabilities. They would allow the United States to engage with a wider range of allies and partners, providing both kinetic and non-kinetic training capability for current and future operations. Under standard operations, LiMA forces would deploy in conjunction with a contingency response group's forces. These units will have the lead in training and advising partner nations in the development of an air mobility capability. The LiMA program is intended to enable the United States to perform lower-cost airlift operations to and from austere areas, working in concert with other nations that have limited capacity and capability to perform aviation functions. Within its own inventory, the Air Force currently lacks a light airlift capability that is affordable, easily deployable, and maintainable. The LiMA is also intended to be capable of operating from austere, short, or unimproved landing surfaces. This program is intended to enable conventional (GPF) units to increase their ability to work effectively with a wider range of partner nation air forces. The LiMA program plans to acquire 15 aircraft beginning in FY2011, with planned initial operations beginning in FY2012. The LAAR platform should be used to train U.S. aviators and support personnel (ACS) advisors on light attack tactics, techniques, and procedures so that they, in turn, are able to assist other nations in developing or improving their capability to operate similar platforms. The LAAR program plans to acquire 12 aircraft beginning in FY2012, with planned initial operational capability in FY2013. Full operational capability is scheduled for mid-FY2014. The Administration's FY 2011 budget request included $65.7 million in procurement for the LiMA program. There is no projected procurement beyond this initial lot. The Administration's FY2012 request also included $158.5 million in procurement for the LAAR program. It indicated a projected requirement of $106.6 million in procurement for FY2013. The concept of operations for these aircraft has received considerable interest. At the center of the discussion is whether these aircraft and their associated personnel will be used strictly for the training of other nations' aviation capacity, or whether they will also be used as part of the joint force to support U.S. forces. This is especially contentious for the LAAR aircraft, where proponents believe such assets should provide a close air support capability for ground forces. The Air Force believes that close air support is currently being adequately provided by existing force structure (other aircraft currently in the inventory). Additionally, some analysts believe that investing in these aircraft and personnel to conduct SFA or building partner capacity is a misguided effort. The argument goes that, with further constraints on the defense budget in terms of dollars and manpower, resources would be better allocated to recapitalizing and modernizing existing Air Force aircraft. Further, it says, failure to prioritize a U.S. technological advantage in assets, with newer fighters, bombers, and tankers, will position the nation to "fight the last war" instead of the next. The Inter-American Air Forces Academy (IAAFA) is located at Lackland AFB, San Antonio, TX. It provides professional training and education to partner nations' aerospace forces, through global military-to-military engagement focused on Southern Command (SOUTHCOM) SFA. IAAFA graduates an average of 800 students a year. It also provides training classes in Spanish for partner nations' air forces. English-language training for foreign aviation units is especially important, as English is the international language of aviation. The Defense Language Institute English Language Center (DLI/ELC) provides English-language training to members of foreign armed forces. Although DLI is under the operational control of the U.S. Air Force, it is a Department of Defense agency providing services to numerous and varied customers under U.S. security assistance programs. For some of these customers, services include teaching international students general- or special-purpose English; others are trained to be English instructors and school administrators. Increasingly, DLI provides in-country consultations through training detachments and teams. It also develops curriculum that can be used in partner nations to meet their specific needs. Aviation assets provide flexibility and help legitimize fragile states in that they allow government services to function in remote areas. Some of the biggest obstacles to developing aviation capacity are in the area of supporting infrastructure. Airfields, runways, and significant ground-based support are required for most fixed-winged aircraft. Hence, less-developed countries that cannot invest in such infrastructure often use rotary wing aircraft (helicopters) to operate from, and get into and out of, rural areas. An example of this is the wide employment of the MI-17 helicopter throughout the world, including in Iraq and Afghanistan. In 2005, DOD began procuring Russian-made MI-17s to build rotary-wing capabilities in Iraq, Pakistan, and Afghanistan. The decision to operate MI-17s was controversial programmatically and politically. During budget hearings, the Secretary of Defense and Secretary of the Army were questioned about decisions to procure MI-17s. Congressional concerns have included a lack of defined requirements, no consideration for other U.S. airframes, delays and rising costs in procurement efforts, multiple services conducting procurements, and a relative sense of mismanagement of efforts with regards to MI-17s within DOD. Most notably, Congress has expressed significant "Buy American" concerns about supporting the Russian helicopter industry with nearly $1 billion of U.S. taxpayer dollars. As a result, the Secretary of Defense directed an internal study to assess DOD's enduring operational and SFA requirements for non-standard rotary wing platforms and to develop long-term acquisition, training, and management recommendations. After a comprehensive review of how much capacity the consolidated combatant commanders needed to enhance partners' rotary wing capabilities through SFA, the study concluded that there is a steady demand to support at least 39 countries of strategic importance through 2016. Eighty percent of these countries are categorized by the department as urgent priorities for building partner capacity. The review also identified that at least 50% of the inventory of rotary wing platforms in these priority countries are made up of MI-variant platforms. To adequately support rotary wing SFA within these countries, the study recommended that DOD should be prepared to provide materiel assistance, individual training, and unit training on rotary wing platforms (primarily MI-17s), while also considering the opportunities for DOD to transition partner nations to a U.S.-sourced helicopter solution when and where appropriate. The study also found several other issues with respect to training with MI-17s. These include the concern that the demand for DOD to provide unit training to enhance partners' rotary wing capabilities is greater than DOD's capacity. The study identified that air crews needed for DOD to provide individual training on these platforms include approximately 43 U.S. pilots and 100 partner nation pilots per year. Last, the study assessed management practices regarding acquisition, sustainment, airworthiness, and training. DOD took several steps as a result of the findings of this study, including (1) an evaluation of U.S.-made platforms as alternatives (or additives) to the MI-17 for the Afghan Air Force, (2) institutionalized MI-17 training, with $45 million in the budget for establishing this training (the Army would be the lead, at Fort Rucker), and (3) updated Army authorities, responsibilities, and funding to manage the program. The study highlights that where building partner nation rotary wing capabilities benefits U.S. strategy, DOD should be prepared to provide resources to develop those capabilities. The study was well received by DOD leadership, which has briefed congressional defense committees. SFA (security assistance and security cooperation) programs are governed by U.S. statute. The primary laws with application to SFA are the Arms Export Control Act (AECA) (as amended), the Foreign Assistance Act (FAA) (as amended), and various sections of Titles 10 and 22 of the U.S. Code. (See Figure 13 .) Some analysts have described these authorities as disjointed, fragmented, cumbersome, and not finely tuned to address overseas needs or U.S. national security interests. Further, the obstacles to successful implementation of SFA are largely the same today as when the FAA was enacted as a "remedy" to the nation's lacking unity of effort in 1961. This dilemma was summed up by DOD in its 2010 Quadrennial Defense Review as "a limited ability to sustain long-term efforts." It has consistently been an issue raised by combatant commanders in congressional hearings (see Appendix A ). In a 2009 memorandum to the National Security Council, DOD described what it considered to be several deficiencies in the existing authorities: shortfalls and earmarks in funding that impede flexibility; foreign military financing (FMF) funding essentially unchanged from 1991 to 2008; budget-to-execution timelines (~ 3 years) that are not responsive to a changing security environment; security assistance framework designed for building long-term relationships against a Cold War adversary; uncertainty about what capacity-building Title 10 and Title 22 programs are appropriate in the ambiguous area between war and peace (Lebanon, Yemen, Southern Philippines); the lack of multiyear funding and authorities available to combatant commanders to support building partner capacity (i.e. SFA) missions. Secretary Gates underscored that current authorities create missed opportunities for the United States to conduct capacity building in at-risk locations, opportunities that are often filled by other nations, such as China. "All the while, other countries that do not suffer from such (legislative) encumbrances have been more quickly funding projects, selling weapons, and building relationships." As an example of the disparate U.S. government efforts to support SFA, an analysis by the Government Accountability Office (GAO) cited difficulties in Africa Command (AFRICOM), which stated that it had access to 15 different funding sources to fund its activities in FY2009. This complex matrix of legal constraints affected the timely execution of capacity-building missions. AFRICOM essentially "disinvited two-thirds of the intended participants for activities at the last minute because it was discovered that certain funding sources could not be used to support the participants." Another analysis done by the GAO used the example of Thailand, the Philippines, and Indonesia, where U.S. assistance was provided through at least 12 programs and activities managed by State, DOD, and Justice. The study pointed out that execution of these programs is hampered because of a lack of continuity at the strategic level across government agencies. The "U.S. government lacks an integrated national security assistance strategy covering all U.S. training and assistance provided to foreign security forces." Critics of expanded authorities to conduct the training of foreign forces bring up several points. The most frequently heard criticism is the seemingly expansive role of DOD serving as the lead in implementing foreign relations through SFA. Critics caution against reliance on a military-centric approach to international capacity building. This position also highlights the disparity in resources between DOD and DOS and encourages significant investment in the latter as opposed to expanding the authorities of the former. A 2007 report to Senate members of the Committee on Foreign Relations highlighted the expanded growth in Department of Defense authorities in the foreign assistance field since 2001. The report had the following recommendations: Foreign assistance functions and authorities should not be migrating to the Department of Defense due to inadequate executive branch requests for funding in the proper budget account. The Secretary of State should streamline security assistance decision-making to make certain that there is ready flexibility and means to address emerging threats and unexpected opportunities. Insufficient funding for foreign assistance in the civilian agency budgets reinforces a migration of foreign aid authorities and functions to the Department of Defense. Congress, in cooperation with the executive branch, should undertake an overhaul of the Foreign Assistance Act. Too often, Members of Congress narrow their foreign aid focus to favorite or least-favorite countries, specific NGOs or programs, and other unique enthusiasms that end in earmarks or reporting requirements in appropriations bills. The executive branch must provide detailed justifications for its requests and a sound strategic rationale for its priorities in order to stave off congressional directives. Congressional leadership should find floor time for a foreign aid authorization bill as a routine matter at least every two years. Members of Congress should agree on reprogramming levels below which decisions can be made at the embassy level without requiring legislative branch notifications. Nevertheless, Congress provided DOD with an opportunity to explicitly spell out what is needed to facilitate building partner capacity. As part of the 2010 National Defense Authorization Act, Congress directed under Section 1204 that DOD provide a "Report on Authorities to Build the Capacity of Foreign Military Forces and Related Matters." As of the writing of this CRS report, a final report from DOD to meet this requirement had not been completed. (See Appendix B .) One potential means for revised authorities was recently introduced. Both the Department of State and the Department of Defense have endorsed a new Global Security Contingency Fund (GSCF) that is intended to pool resources and expertise between the two departments and allow them to respond quickly as new challenges emerge. This three-year pilot pooled fund is intended to be used to build partner capacity, prevent conflicts, and prepare for emerging threats. Described as an initiative that would "incentivize interagency collaboration through a new business model," it is intended to "provide a more agile and cost effective way to reduce the risk of future conflicts by allowing our government to respond to unforeseen needs and take advantage of emerging opportunities to help partners secure their own territories and regions." The GSCF proposal was introduced in a memorandum to the Secretary of State entitled "Options for Remodeling Security Assistance Authorities." This proposal is modeled after a similar effort recently employed in the United Kingdom. This approach is intended to structure funding mechanisms and approval processes to reflect the importance of security sector activities to both DOD and DOS and to offer incentives for collaboration across the national security structure. It is also intended to provide impetus for future steps toward national security budgeting. In supporting the proposal for pooled funding, the Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen urged, "We should not allow bureaucratic resistance to trump operational effectiveness when security sector assistance is essential to our national strategy of helping others secure and defend themselves." This fund coincides with a State Department reorganization, as outlined in the 2010 Quadrennial Diplomacy and Development Review (QDDR). The GSCF would be affiliated with the Bureau of Conflict and Stabilization Operations (formerly the Coordinator for Stabilization and Reconstruction). The QDDR (see Appendix C ) emphasizes the priority of interagency coordination, while still leveraging DOD's resources: "We must more effectively work with the Defense Department, which has unparalleled logistical, operational, and personnel capacities to operate in complex crisis situations and the capacity and knowledge to help countries build effective, responsible military forces under civilian leadership." The QDDR also states: "The Department of Defense is uniquely positioned to stop violence, create conditions of security, and build the military capacity of foreign nations." One section of the QDDR appears to give tacit endorsement for the GSCF proposal, and another directly endorses it. Each department would seek funding within its own budget to contribute to the pooled funds. Both the State Department and the Defense Department would contribute to these funds, and no project could move forward without the approval of both agencies. The initial request for the program is for $50 million to be appropriated in whole or in part to either the State Department or DOD. The proposal also includes a request for authority to transfer an additional $450 million into the fund from either department if needed. The GSCF is not intended to replace the 1206 and 1207 programs, which have leveraged interagency coordination for implementation. These authorities provide training and equipment to partners for counterterrorism operations or for stability operations in which U.S. forces are a participant, including Afghanistan (see " Security Sector Legislation Beyond ASFF and ISFF "). However, if the three year pilot program proves successful, 1206 could be supplanted by the GCSF. The GSCF would expand the scope of foreign security force organizations that could receive training to include the justice sector (e.g., law enforcement, prisons, rule of law programs), when the Secretary of State, in consultation with the Secretary of Defense, determines that conflict or instability in a region challenges the existing capability of civilian providers to deliver such assistance. This approach would require a request for authorities and funding from Congress. Legislation would be required to establish funding pools in the U.S. Treasury. Additionally, DOD and State would both need to seek authority to provide funding to the pool as well as seeking their own appropriations for this purpose. This funding could be drawn from existing accounts or identified as a separate funding requirement with a dedicated appropriation each year. The request for authority would also likely include a mechanism for each department to add to the pool if a departmental priority needs to be addressed in the near term. Under current committee structure, this approach would require broad oversight from several committees. This scrutiny would mirror current oversight of the 1206 and 1207 programs. This process has provided more transparency to Congress than is typical in most DOD programs. However, one analysis conducted by Stimson Center considers the necessary degree of congressional coordination to be an insurmountable task. An option for Congress could be a more transformational approach. This would include creating in both the House and the Senate a select committee to oversee these funds (notionally referred to as Select Committees on Security Capacity Building, Stabilization, and Conflict Prevention). Moreover, the proposal could establish a new title of the U.S. Code , separate from DOD's Title 10 or State's Title 22, under the oversight of these two select committees (notionally referred to as "Title 51"). The intent would be to codify this process into a law with cross-cutting responsibility beyond a single committee's jurisdiction or section of U.S. Code . Those that endorse the GSCF proposal point out several issues. Among them are the availability of personnel and resources, the efficacy of streamlined authorities, and the move toward an overarching SFA effort as part of national security sector reform. The most commonly heard endorsement is that while the State Department holds overarching responsibility for determining engagement strategies and capability development for foreign nations, it is more often than not military resources that are available and accessible to conduct interaction, capability development, and relationships with our allies and partner nations. One analysis of the proposal also points out that, in an area of tightening fiscal budgets, it is unlikely that there will be a huge shift in resources from DOD to State and USAID, but it is likely that there will be ways to spend these resources together, with State and USAID in the lead. One analysis sees the GCSF as part of a greater unified effort to coordinate an overarching security agenda. The fund is seen as one effort that is combined with the State Department's reorganization and a consolidated DOD/DOS Overseas Contingency Operations (OCO) budget. Some hold that pooling the resources of DOD and State undermines the authorities and responsibilities inherent in each of these organizations. While the security assistance authorities within the Department of Defense have expanded since 9/11, some attest that this has eroded the tradition of State Department leadership in aligning security assistance with America's foreign policy priorities. They argue that a program such as the GSCF would in essence grant the Secretary of Defense a veto over foreign policy decisions made by the Secretary of State. Further, it could misalign the role of the Defense Department in policymaking and the contribution of security assistance to America's delicate diplomatic balance. Proponents of this position believe a more appropriate option for Congress would be to amend Section 506 of the Foreign Assistance Act. Such an amendment would authorize the president to direct the drawdown of resources from any agency of the government to provide assistance elsewhere. Currently, this authority does not explicitly include security assistance. Opponents of the GSCF proposal also argue that providing some of the funding through defense (armed services) committees is a conflict of interest and that doing so contradicts the importance of conflict prevention through diplomatic and development efforts rather than military ones. Those who endorse this stance contend that funding lines should remain distinct and that further efforts should be directed toward the State Department's Complex Crises Fund. The overarching concept of security force assistance raises several questions for congressional consideration. Are the services' efforts to organize, train, and equip (and corresponding resource budgets) sufficient to conducting SFA? Are dedicated GPF units, similar to SOF, for conducting SFA more suitable. Is the premise of training indigenous forces in Afghanistan the correct methodology for establishing stability or is a smaller presence dedicated to eradicating the Taliban more appropriate? Are current legislative authorities sufficient to conduct SFA? And if the GSCF is endorsed, how will effective oversight be ensured across committees? What future steps will be taken to ensure a coordinated approach to capacity building between DOS and DOD? Combatant Commanders' Testimonies: Authorities to Conduct SFA Combatant Commanders' Requests for Revisions to Authorizations In testimony before the Armed Services Committees, the position of the Global Combatant Commanders has consistently been that the current authorizations for conducting SFA are counter to effective security cooperation efforts. In Africa Command (AFRICOM) , where SFA is considered essential to stability and counter-terrorism strategies, the commander testified: Our ability to sustain forward progress toward our long-term goals in Africa is dependent on several factors that enable our efforts. Some, such as limits on authorities, present us with challenges where we seek assistance. Others, such as interagency integration, present opportunities for growth and development of new or improved programs and activities that we wish to sustain. Sustaining our long-term security cooperation programs and activities in Africa requires flexible, multi-year authorities. Existing authorities are designed to support the conduct of individual short-term activities or long-term programs, but do not support the transition from the former to the latter. They are also insufficiently responsive to changing conditions, such as when train and equip efforts initiated in response to emergent threats highlight the need for long-term capacity building. We encourage dialogue on ways to streamline or modify legislative authorities to enable sustained security engagement with our African partners, ranging from train and equip programs that respond quickly to changing conditions to long-term partner capacity-building, especially in countering violent extremism. Similarly, the European Command (EUCOM) commander testified: Through these training efforts, EUCOM enabled partner nations in making contributions to the effort in Afghanistan. However, we require expanded long-term authorities and funding to enhance and continue these efforts. Operationally, we must continuously strive to find flexible authorities and funding mechanisms to build the capacity of those partner nations willing to fight side-by-side with us. This has become increasingly important because of the recent surge in activities in Afghanistan and the need to get our Allies and partners more involved. Your continued support and expansion of authorities like NDAA Section 1206, particularly allowing their use for partner nation forces deploying to Iraq and Afghanistan, has been absolutely pivotal in enabling our strategic efforts in the European theater. The Pacific Command (PACOM) commander testified: We face challenges in building partner capacity under the current patchwork of authorities and programs designed to support our Security Assistant efforts. Unfortunately these (security assistance) programs have not evolved much since the end of the Cold War. As reported by the QDR, these security assistance programs are constrained by a "patchwork of authorities, persistent shortfalls in the resources, unwieldy processes and a limited ability to sustain such undertakings beyond a short period of time." I agree with this description and fully support the Administration's efforts to reform and enhance these important programs as essential to maintaining, and, in some cases, regaining our competitive edge. I hope you will support the Administration efforts in this regard. Congressional 1206 authority is the only partner capability/capacity building tool that we have to address urgent or emergent needs in the region. In Central Command ( CENTCOM), authorities are unique in that there is specific legislation addressing training activities with Afghanistan, Iraq, and Pakistan. Nevertheless, General David Petraeus also identified the legislative obstacles to effective security force assistance. While these programs are reasonably successful in meeting needs in a peacetime environment, we support the reformation of the security assistance programs and processes described in this year's Quadrennial Defense Review to create new, more responsive, long term mechanisms for developing our partner nations' security capacity. Additionally, in the face of enduring conflict in the region, we look to expanded special authorities and multi-year appropriations to quickly meet the emerging needs of counterterrorism, counterinsurgency, and Foreign Internal Defense/Security Force Assistance activities. Multi-year programs-of-record that provide training, equipment, and infrastructure for our partner nations' security forces enabled our successes in Iraq and are of prime importance if we are to achieve comparable progress in Afghanistan and Pakistan. These critical programs include the Iraq Security Forces Fund, the Afghanistan Security Forces Fund, the Pakistan Counterinsurgency Fund, and the Cooperative Defense Program. Additionally, in his 2011 guidance, the Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, conveyed a similar theme to the Joint Staff: Our engagement across the globe would be greatly enhanced by wholesale reform of security sector assistance. Our security assistance is designed for another era: authorities are inflexible, resources are insufficient, and processes are too cumbersome for addressing today's security challenges. The laws and regulations surrounding security assistance are one of the major barriers to better and more substantial partnerships and a pooled-resources approach to foreign assistance. We must better coordinate resources that are dedicated to the cause of national security, and ask Congress to reform these authorities. National Defense Authorization Act for Fiscal Year 2010, Section 1204 Report on Authorities to Build Partner Capacity SEC. 1204. REPORT ON AUTHORITIES TO BUILD THE CAPACITY OF FOREIGN MILITARY FORCES AND RELATED MATTERS. (a) REPORT REQUIRED.—Not later than March 1, 2010, the President shall transmit to the congressional committees specified in subsection (b) a report on the following: (1) The relationship between authorities of the Department of Defense to conduct security cooperation programs to train and equip, or otherwise build the capacity of, foreign military forces and security assistance authorities of the Department of State and other foreign assistance agencies to provide assistance to train and equip, or otherwise build the capacity of, foreign military forces, including the distinction, if any, between the purposes of such authorities, the processes to generate requirements to satisfy the purposes of such authorities, and the contribution such authorities make to the core missions of each such department and agency. (2) The strengths and weaknesses of the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.), the Arms Export Control Act (22 U.S.C. 2171 et seq.), title 10, United States Code, and any other provision of law relating to training and equipping, or otherwise building the capacity of, foreign military forces, including to conduct counterterrorist operations or participate in or support military and stability operations in which the United State Armed Forces are a participant. (3) The changes, if any, that should be made to the provisions of law described in paragraph (2) that would improve the ability of the United States Government to train and equip, or otherwise build the capacity of, foreign military forces, including to conduct counterterrorist operations or participate in or support military and stability operations in which the United State Armed Forces are a participant. (4) The organizational and procedural changes, if any, that should be made in the Department of Defense and the Department of State and other foreign assistance agencies to improve the ability of such departments and agencies to conduct programs to train and equip, or otherwise build the capacity of, foreign military forces, including to conduct counterterrorist operations or participate in or support military and stability operations in which the United State Armed Forces are a participant. (5) The resources and funding mechanisms required to ensure adequate funding for such programs. (b) SPECIFIED CONGRESSIONAL COMMITTEES.—The congressional committees specified in this subsection are the following: (1) The Committee on Armed Services, the Committee on Foreign Affairs, and the Committee on Appropriations of the House of Representatives. The Committee on Armed Services, the Committee on Foreign Relations, and the Committee on Appropriations of the Senate. State Department's Quadrennial Diplomacy and Development Review, Referral to Pooled Funding Civil-Military collaboration, particularly in countries characterized by conflict or instability, initiatives and programs jointly developed by teams of State, USAID, and Department of Defense personnel are generally more effective. Where appropriate, we will work in joint civilian and military teams and develop innovative mechanisms for civil-military collaboration, such as shared funding or pooled funds.... Pooled funding. As we work toward comprehensive solutions to the challenges described above, State and USAID will pursue innovative mechanisms to facilitate unified planning and implementation of missions that cut across agencies, programs and budgets, and that require the integration and cohesion of military and civilian power. We are currently exploring the creation of a 3-year joint pilot pooled fund between State, USAID, and Department of Defense for security and justice sector and stabilization assistance. The creation of a pooled funding mechanism would provide needed flexibility and resources in situations in which the confluence of several security challenges, such as armed conflict, terrorist activities or organized crime, converge with state fragility. In such circumstances, a coordinated and holistic assistance response across the security and justice sector is necessary, requiring State and USAID to work in complete synchronization with the Department of Justice, Department of Defense, and other agencies. Pooled funding would help overcome the limitations of current authorities and resource shortfalls, by allowing for the integration of military and civilian assets in planning and implementing comprehensive assistance programs. In this way, it would facilitate the design of assistance programs based on the comparative advantages of each agency in a particular situation, instead of the current allocation of funding between agencies. Pooled funding would embody the principle of shared responsibility, with a dual key decision model and an interagency staff, through which our agencies would work together to identify requirements and develop programs, taking advantage of the diverse expertise of State, USAID, the Department of Defense, and other agencies. Defense Department's 2010 Quadrennial Defense Review, SFA References Build the Security Capacity of Partner States : Since the United States assumed the role of a leading security provider after the end of World War II, DOD has worked actively to build the defense capacity of allied and partner states. Doing so has also given the U.S. Armed Forces opportunities to train with and learn from their counterparts. These efforts further the U.S. objective of securing a peaceful and cooperative international order. Security cooperation activities include bilateral and multilateral training and exercises, foreign military sales (FMS) and financing (FMF), officer exchange programs, educational opportunities at professional military schools, technical exchanges, and efforts to assist foreign security forces in building competency and capacity. In today's complex and interdependent security environment, these dimensions of the U.S. defense strategy have never been more important. U.S. forces, therefore, will continue to treat the building of partners' security capacity as an increasingly important mission. Within the range of security cooperation activities, the most dynamic in the coming years will be security force assistance (SFA) missions: "hands on" efforts, conducted primarily in host countries, to train, equip, advise, and assist those countries' forces in becoming more proficient at providing security to their populations and protecting their resources and territories . In order to ensure that improvements in partner security forces are sustained, the Department must seek to enhance the capabilities and capacity of security institutions, such as defense ministries, that support fielded forces.... [emphasis added] As we place greater emphasis on building the capacity of our partners, our efforts will continue to be informed by our long-term determination to foster human dignity. This commitment is manifested in human rights vetting and other controls that shape our efforts to train, equip, advise, and assist foreign forces and partner security institutions. America's efforts to build the capacity of our partners will always be defined by support for healthy civil-military relations, respect for human dignity and the rule of law, promotion of international humanitarian law, and the professionalization of partner military forces. These SFA activities can help enable host-country participation in coalition stability operations and multilateral peacekeeping operations that improve regional security. Working in conjunction with other U.S. government agencies and allied military forces to strengthen the security institutions of partner nations will be a crucial part of U.S. and allied efforts to defeat terrorist groups around the world. Terrorist groups seek to evade security forces by exploiting ungoverned and undergoverned areas as safe havens from which to recruit, indoctrinate, and train fighters, as well as to plan attacks on U.S. and allied interests. Where appropriate, U.S. forces will work with the military forces of partner nations to strengthen their capacity for internal security, and will coordinate those activities with those of other U.S. government agencies as they work to strengthen civilian capacities, thus denying terrorists and insurgents safe havens. For reasons of political legitimacy as well as sheer economic necessity, there is no substitute for professional, motivated local security forces protecting populations threatened by insurgents and terrorists in their midst. U.S. forces have been training, advising, and assisting Afghan and Iraqi security forces so that they can more effectively uphold the rule of law and control and defend their territories against violent non-state actors. In these contested environments, partnered counter insurgency (COIN), in which Afghan and Iraqi units operate in tandem with U.S. forces, is an effective way to train and advise forces while conducting combat operations against insurgents. These partnered host-nation units have the advantage of knowing the terrain, language, and local culture. Partnering with U.S. forces in return allows them to train and learn by doing.... U.S. forces have been training, advising, and assisting Afghan and Iraqi security forces so that they can more effectively uphold the rule of law and control and defend their territories against violent non-state actors. In these contested environments, partnered counter insurgency (COIN), in which Afghan and Iraqi units operate in tandem with U.S. forces, is an effective way to train and advise forces while conducting combat operations against insurgents. These partnered host-nation units have the advantage of knowing the terrain, language, and local culture. Partnering with U.S. forces in return allows them to train and learn by doing.... Key QDR initiatives to support this mission area include the following: Strengthen and institutionalize general purpose force capabilities for security force assistance. All four Services provide specialized training to individuals and groups deploying abroad to train and advise the security forces of partner nations. In anticipation of the growing role of security force assistance in U.S. defense strategy and operations, the Army, Navy, Air Force, and Marine Corps will add more than 500 personnel to their train-the-trainer units for general purpose forces. The Air Force will also expand its regionally oriented contingency response groups (CRGs). The intention is for these units to steadily grow to the point at which their staffs can sustain specialized expertise in regions and countries of greatest importance and regularly detach experts to accompany units deploying to training missions abroad. In addition, the Air Force will field light mobility and light attack aircraft in general purpose force units in order to increase their ability to work effectively with a wider range of partner air forces.... [emphasis added] Building the defense capacity of allies and partners and ensuring that the U.S. Armed Forces are able to effectively train and operate with foreign militaries is a high-priority mission. As the emphasis on developing the capability of indigenous security forces in Afghanistan and Iraq reflects, conducting security force assistance (SFA) operations is an increasingly critical element of building partnership capacity. In anticipation of the growing role of security force assistance in U.S. strategy and operations, the Department is institutionalizing general purpose force capabilities for security force assistance; enhancing language, regional, and cultural abilities; strengthening and expanding capabilities for training partner aviation forces, as well as capacities for ministerial-level training; and creating mechanisms to facilitate more rapid transfer of critical materiel....
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Historically, the U.S. military's Special Operations Forces (SOF) have had primary responsibility for training, advising, and assisting foreign military forces. Today, although this mission has not been completely relegated to conventional forces, the National Security Strategies of the current and previous administrations direct the U.S. military services (Army, Navy, Air Force, Marines) to organize, train, and equip themselves to carry out these activities on a larger scale with conventional (non-SOF) forces. This responsibility in its broad sense of building the capacity of partner states has been termed "security force assistance" (SFA). SFA ties into several interests of Congress, including security assistance, security cooperation, foreign military financing, foreign military sales, foreign affairs, foreign aid, overseas contingency operations, and legislative authorities associated with training foreign forces (Foreign Assistance Act, P.L. 87-195; 22 U.S.C. 2151). Of significant interest to Congress in the near term is the ability of U.S. military forces to train their counterparts in Afghanistan and Iraq. The Obama Administration position, endorsed for the most part by Congress, is that developing competent forces in these countries is pivotal to coalition mission success and to protecting U.S. national interests. SFA is part of the U.S. strategic goal of having Iraq and Afghanistan responsible for their own security. Congress has supported the Department of Defense's agenda for training Afghani forces; however, some Members are skeptical of the new Iraqi government's commitment to developing its own security forces. Each of the military services has undertaken to organize, train, and equip themselves for SFA. However, while SOF have units specifically dedicated to a long-term role in SFA, the conventional forces services do not. Each of the services does have Security Cooperation and Security Assistance organizations that are dedicated to SFA activities, although they do not have SFA in their titles. The services also standardize training for deploying forces to support combatant commanders in their SFA mission. This effort to "train the trainers," although an object of consistent inquiry in congressional hearings, has been endorsed in testimony by combatant commanders. Along with its role in the current Afghanistan and Iraq wars, SFA is directly linked to counterterrorism strategy and is key to engaging underdeveloped and undergoverned nations (often referred to as "weak or fragile states") in a preventive national security strategy. Regional combatant commanders apply this preventive strategy through authorities provided in the National Defense Authorization Act (NDAA). The SFA authorizations in the NDAA are often criticized as being disjointed and cumbersome, creating significant challenges to effective SFA employment. The Departments of Defense and State have presented a proposal for pooled funding to alleviate some of these challenges. The proposed Global Security Contingency Fund would be a shared resource requiring authorization by both departments. This would be similar to the temporary authorization known as "1206 global train and equip" authorization. The training, organizing, and equipping of U.S. forces to conduct SFA competes for scarce fiscal and personnel resources among the services. Some critics of SFA attest that committing to this capability within the services detracts from their ability to conduct traditional combat roles. Others suggest that building the security capacity of weak and failed states is a misguided effort. This report provides the following elements: An overview of the SFA rationale, focused primarily on Department of Defense support for and relations with foreign security forces. Description of the possible employment of U.S. conventional forces and platforms in support of the SFA mission (see "SFA in Current and Previous National Security Strategies"). Exploration of current operations in Afghanistan and Iraq (see "SFA Linkage to Iraq and Afghanistan Strategies"). Resident training capability in U.S. forces as a tool for geographic combatant commanders. Issues Congress may consider ("Do Legislative Authorities Restrict Conducting SFA?") The report summarizes congressional reaction to SFA proposals and provides a detailed account of the issues raised by SFA concepts and programs. A glossary is also provided (see Glossary, page 57).
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Congress has been interested in the use of year-round schools for several decades. In April 1972, the House of Representatives, General Subcommittee on Education of the Committee on Education and Labor held a hearing on the "year-round school concept." Since that time, various bills have been introduced to support the use of year-round schools. This report provides background information about year-round schools, specifically what they are, how prevalent they are today, state policies on year-round schooling, what recent research says about year-round schooling, and the arguments for and against this approach. In general, year-round schools are schools that reorganize a traditional school year without allowing for any extended breaks in instruction (e.g., 10 week summer vacation). Rather, the days usually included in summer break are redistributed to create regular breaks throughout the year. This is sometimes referred to as operating on a "balanced calendar." According to the National Association for Year-Round Education (NAYRE), schools primarily offer year-round education on a single track or multi-track. Schools using a single track approach to year-round education provide a balanced calendar for instruction in which summer vacation is shortened with additional vacation days added throughout the school year to create breaks from instruction, which are sometimes referred to as "intersessions." Intersessions may be used by the school to provide remediation or enrichment activities for students. Schools using a single track approach to year-round education often structure their school calendar in one of three ways: 1. 45-15 calendar: 45 days (9 weeks) of instruction, followed by 15 days (3 weeks) of vacation/intersession; 2. 60-20 calendar: 60 days (12 weeks) of instruction, followed by 20 days (4 weeks) of vacation/intercession; or 3. 45-10 calendar: 45 days (9 weeks) of instruction, followed by 10 days (2 weeks) of vacation/intersession. Multi-track year-round education is often used to assist schools that are dealing with capacity issues. By establishing a multi-track system, a school district may be able to avoid having to build a new school or temporary structures (e.g., portable classrooms). A multi-track system is implemented by dividing teachers and students into tracks or groups of similar sizes that each has its own schedule. Students and teachers in a given track follow the same schedule, are in school at the same time, and are on vacation at the same time. Common multi-track calendars include 4 tracks operating on a 45-15 calendar (45 days of instruction, 15 days of vacation/intersession), 60-20 calendar, or 90-30 calendar. A 60-15 calendar is generally used in schools with 5 tracks. For example, if a school that could accommodate 750 students had 1,000 students enrolled, it could divide the students into tracks or groups of 250 students (i.e., 4 tracks). The school could then have three tracks at school at any given time and one track on vacation or intersession. This could enable the school to meet student demand without necessitating expansion of the school facility. While year-round schools have existed in some form since the early 1900s, there was substantial growth in the number of year-round schools from the mid-1980s to 2000. In 1985, there were 410 year-round public schools, serving about 350,000 students. By 2000, the number of year-round public schools had grown to 3,059 schools, serving almost 2.2 million students in 45 states. The number of year-round public schools dropped to 2,936 public schools, serving 2.1 million students, by the 2006-2007 school year. Based on data available from the National Center for Education Statistics (NCES) for the 2011-2012 school year (most recent data available), over the last several years there has again been growth in the number of public schools operating as year-round schools. During the 2011-2012 school year, there were 3,700 public schools across the nation operating on a year-round calendar cycle. This accounted for 4.1% of all public schools in the country. The highest concentration of schools operating on a year-round calendar cycle was in the South (40.5%), followed by the West (24.3%) with equal proportions of these schools in the Northeast and Midwest (16.2% in each region). The majority of schools operating on a year-round calendar cycle are traditional public schools (3,300 schools) compared with 400 charter schools operating on a year-round calendar cycle. In terms of school level, over half (57%, 2,100 schools) of all schools operating on a year-round calendar cycle are elementary schools, 900 are secondary schools, and 600 are combined elementary and secondary schools. Most schools operating on a year-round calendar schedule enroll 200 or more students. In addition, 47% of all schools operating on a year-round calendar schedule had 75% or more of their students eligible for free or reduced-price lunch. Nearly 60% of schools operating on a year-round calendar schedule had at least 50% of their students eligible for free or reduced-price lunch. In 2011, most states required public schools to provide 180 days of instruction each school year. The average number of instructional days per school year for schools with year-round calendar cycles was 189 days during the 2011-2012 school year. This number varied by region of the country, type of school (traditional or charter), school level, and enrollment. The most recent data on state policies on year-round schools were compiled by the Council of Chief State School Officers (CCSSO) for the 2008 school year. Of the states for which information was available, 17 states had a policy on year-round schools. In addition, 30 states reported that they had school districts in their states with year-round schools. Some states specified the number of districts within the state that had year-round schools operating. Of the states reporting a specific number of districts, most reported that five or fewer school districts had year-round schools. However, in some states, the number of school districts with year-round schools constituted a majority of the school districts in the state (e.g., Delaware). As part of their survey responses, some states provided their definitions of year-round schools. These definitions are varied as illustrated below. Arkansas: A year-round school must meet the state requirement for the minimum number of school days between July 1 and June 30 of each school year and have no vacation, including summer vacation, last more than six weeks. Oklahoma: A year-round school must offer at least 10 months of 4 weeks during which the school is in session and instruction is offered for not less than 180 days. Texas: A year-round school must operate during the "greater part" of 10 months and up to 12 calendar months of the year. The research on the extent to which year-round schools affect student achievement has generally been found to be inconclusive and lacking in methodological rigor. For example, in reviewing the literature on the effects of year-round schooling on student achievement, Cooper et al. concluded that "a truly credible study of modified calendar effects has yet to be conducted." Wu and Stone reached similar conclusions and noted that while "there is a general consensus that [year-round school] has no effect or a small positive effect on student performance, the methodology of many studies had left copious room for more rigorous verification." Their own study of whether year-round schools in California had an effect upon the outcome and growth of schools' Academic Performance Index (API) scores used more sophisticated statistical analyses than prior studies and found that year-round schools failed to affect either measure. Cooper et al. in their meta-analysis of studies on year-round school found that the "cumulative results of past studies is so close to a chance outcome that the argument that poor designs have led to random findings remain plausible." They also note, however, that there is some evidence that suggests that year-round schools may improve academic achievement for economically disadvantaged students. A second aspect of year-round education that researchers have sought to examine is whether year-round schools affect the cost of education. Based on a review of the literature conducted by the Education Commission of the States (ECS), schools operating on multi-tracks experience reduced capital expenditures (i.e., facility costs), but do not tend to achieve savings with respect to operating expenditures (e.g., personnel costs, electricity). However, the savings from capital expenditures outweigh any increases in operating expenditures. It is less clear, however, whether schools operating on a single-track experience cost savings. A more recent study of year-round schools in one setting, Clark County, NV, generally supports the conclusions noted by ECS, finding significant cost savings as a result of the implementation of multitrack year-round schools. The researchers concluded that savings were largest with respect to real estate and operations. Based on reviews of the literature conducted by Cooper et al., Wu and Stone, and ECS, as well as arguments put forth by proponents of year-round education, including NAYRE, and opponents of year-round education, including the Coalition for the Traditional School Year and Summer Matters, this section provides an overview of some of the arguments made in favor of or against year-round education. The use of year-round schools can prevent the loss of learning over the summer, which may be a particular problem for children with special educational needs (e.g., English learners) and addresses the uneven effects of the summer break on students based on socioeconomic status. Using a modified school calendar creates opportunities to provide remediation and enrichment activities to students during the school year rather than waiting to provide these activities during summer school. Proponents of year-round education often argue that the use of a balanced calendar increases student achievement, but as previously discussed, the research in this area is inconclusive. There may be cost savings realized when operating multitrack year-round schools, particularly with respect to capital expenditures. The use of a balanced calendar could help to prevent staff burnout by providing more frequent breaks for staff. In addition, teachers could choose to substitute teach during breaks to earn additional money while providing students with a teacher with greater knowledge of the curriculum than a substitute teacher that did not regularly work at the school. The initial implementation of a year-round school program may be costly due to a variety of factors including preparing a facility to serve students for more months during a calendar year. Opponents of year-round education note that while year-round schools may not have a negative effect on education, the data on its positive effects are inconclusive. Instead of changing school calendars, they argue that the focus should be on issues such as effective teaching and parent involvement. Operating on a year-round schedule may require paying more staff (e.g., administrative staff and maintenance workers) on 12-month contracts instead of 9-month contracts, thereby increasing operational costs. In addition, staff may experience burnout, particularly principals who are managing buildings that are now occupied by students for the entire calendar year. Families may find it difficult to have their children on different schedules if year-round schooling is not offered districtwide or if their children end up on different tracks in a multitrack school. There may be a lack of opportunities for older students to have summer jobs, and there may be complications related to student participation in extracurricular activities over breaks. Concerns are also raised about year-round schooling by organizations (e.g., amusement parks, campgrounds) that could potentially be adversely affected economically by a change in the school calendar. It may be difficult to conduct large maintenance projects and may require doing routine maintenance at night or on the weekends, which may incur overtime costs. Several disadvantages related specifically to multitrack year-round schools are cited, including possible difficulties in offering remediation if space is an issue, lack of convenience for teachers who may not have a regular classroom in which to keep their teaching materials, and disrupted communication and training among staff as a portion of the staff is always out of the school.
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In general, year-round schools are schools that reorganize a traditional school year without allowing for any extended breaks in instruction (e.g., 10-week summer vacation). Rather, the days usually included in summer break are redistributed to create regular breaks throughout the year. While year-round schools have existed to some extent since the early 1900s, there was substantial growth in the number of year-round schools from the mid-1980s to 2000. In 1985, there were 410 year-round public schools, serving about 350,000 students. By 2000, the number of year-round public schools had grown to 3,059 schools, serving almost 2.2 million students in 45 states. During the 2011-2012 school year, there were 3,700 public schools across the nation operating on a year-round calendar cycle. The research on the extent to which year-round schools affect student achievement has generally been found to be inconclusive and lacking in methodological rigor. There is some consensus that year-round schooling has no effect or a small positive effect on student performance; however, the quality of the studies that led to these findings has been questioned. There are various pros and cons raised in relation to year-round schools. Among the arguments in favor of this calendar approach are stemming the loss of learning over the summer, creating opportunities during the school year to provide remediation and enrichment activities, and cost savings. Among the arguments against the year-round school approach are the costs associated with the initial implementation of a year-round school, the greater need to focus instead on other aspects of education (e.g., effective teaching and parent involvement), scheduling difficulties for families if year-round schools are not implemented districtwide or if their children end up on different schedules within the same school; the lack of opportunities for older students to have summer jobs; and issues related to student participation in extracurricular activities while on breaks.
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RS21868 -- U.S.-Dominican Republic Free-Trade Agreement Updated January 3, 2005 On August 5, 2004, representatives of the United States, the Dominican Republic, and five Central American countries signed a regional free-trade agreement(DR-CAFTA) among their countries. The United States first had concluded a free-trade agreement with the CentralAmerican countries (CAFTA) in January2004. Later, on March 15, 2004, the United States and the Dominican Republic announced that they had concludeda bilateral trade agreement that from theoutset of negotiations was intended to be integrated into (or "docked onto") CAFTA. (8) The USTR described the outcome at the time: "With its integration intothe CAFTA, the Dominican Republic has assumed the same set of obligations and commitments as Costa Rica,Honduras, El Salvador, Guatemala, andNicaragua. As with the Central American countries, individual market access schedules were negotiated with theDominican Republic for goods, agriculture,services, investment and government procurement." (9) Under the agreement reached with the Dominican Republic FTA, 80% of U.S. exports of non-agricultural products would become duty-free immediately, withremaining duties phased out over 10 years. (10) U.S.sectors that would have immediate duty-free access include information technology products, agriculturaland construction equipment, paper products, wood, pharmaceuticals, and medical and scientific equipment. U.S.autos and auto parts would be able to enterduty-free after five years. More than half of U.S. agricultural exports would receive duty-free treatment immediately, including corn, cotton, wheat, soybeans, many fruits and vegetables,and processed food products. Tariffs would be phased out on most agricultural products within 15 years and on allagricultural products by 20 years. Beef,pork, poultry, rice, and dairy products would become duty-free under tariff-rate quotas. Most U.S. agriculturalproducers support the agreement. For example,the U.S. Grains Council announced that, in partnership with the National Grain Sorghum Producers and the NationalCorn Growers Association, it"...applaud[s] the successful negotiations..." of the FTA. (11) An official with the Grocery Manufacturers of America said the Dominican Republic "'...is a greatmarket for food, agriculture, and beverage products,'...[and] an excellent potential market for U.S. beer, snack foods,pet food, nuts, and breakfast cereals." (12) The sugar provisions in the agreement with the Dominican Republic do not seem as controversial as those reached with the Central American countries. Thecontinuing precedent of market-opening, however, worries the U.S. sugar industry. The tariff-rate quota (TRQ) onsugar for the Dominican Republic wouldincrease by 10,000 metric tons the first year, increase by 2% annually for years 2-15, then increase by a smalleramount in perpetuity. The tariff on above-quotaimports would not change. Dale Hathaway, a senior fellow at the National Center for Food and Agriculture Policy,said the increase in the DominicanRepublic's cap on sugar was "not significant." (13) The U.S. Sugar Industry Group argued, however, that more imports from the Dominican Republic couldjeopardize the stability of domestic prices, which would help neither country. (14) Textiles and apparel from the Dominican Republic would become duty-free and quota-free immediately, if they met the agreement's rules of origin, whichinclude general rules for all signatories and specific rules for each country. As with the other CAFTA parties, theDominican Republic would be allowed to useinputs also from Mexico or Canada to meet cumulation requirements for apparel or clothing. The American TextileManufacturers Institute, which representsU.S. textile producers, said that CAFTA could lead to reduced U.S. employment in the textile industry. (15) The American Apparel and Footwear Association(AAFA), which represents the North American apparel industry and its suppliers, said however, "...because manyU.S. companies maintain production-sharingrelationships with the [Dominican Republic], swift implementation of the [FTA] will likely have a positiveeconomic impact in the United States...." (16) An unresolved issue would be apparel made under co-production arrangements with Haiti. CBTPA benefits expire the earlier of: (1) September 30, 2008; or(2) the date on which the FTAA or another FTA as specified enters into force between the United States and aCBTPA beneficiary country ( P.L. 106-200 ,Section 211). Thus, if the FTA between the Dominican Republic and the United States enters into force, articlesco-produced by Haiti and the DominicanRepublic might no longer qualify under CBTPA. The Administration said it would work with the Congress so thatHaiti could continue to be eligible underCBTPA for apparel with inputs from the Dominican Republic. (17) The Dominican Republic signed on to the principles and standards under CAFTA's chapter on intellectual property rights with its own transition periods formeeting certain obligations. In late 2003, the International Intellectual Property Alliance (IIPA), a coalition of tradeassociations representing copyrightindustries, called broadcast piracy in the Dominican Republic "...the worst in the entire hemisphere." (18) As part of the bilateral FTA, the DominicanRepublicsigned two side documents committing it to act against broadcast or cable piracy. U.S. industry advisors want theU.S. Government to monitor vigilantly theimplementation of the side documents and the agreement. (19) The USTR also expressed uncertainty, saying the FTA "...will require the Dominican Republic toupgrade considerably the level of intellectual property protection...." (20) On government procurement, cross-border trade in services, financial services, and investment, the Dominican Republic signed on to the general principles ofeach CAFTA chapter but negotiated its own list of specific concessions. For example, in the chapter on governmentprocurement, all signatories, including theDominican Republic, would accept general principles such as national treatment and transparency, but eachsignatory would observe these principles only withrespect to its own negotiated list of agencies and its own thresholds for contract amounts covered by the chapter. Similarly, the chapters on cross-border tradein services, financial services, and investment include general principles such as nondiscriminatory treatment, butthey have their own negotiated lists ofservices that are exempt from the general principles. The Dominican Republic acceded to almost all of the other provisions concluded in the CAFTA, including the chapters on labor and the environment. Underthose chapters, CAFTA parties agreed they would enforce their domestic labor and environmental laws but wouldretain the right to exercise discretionregarding investigations and related matters. They recognized that it is inappropriate to weaken labor andenvironmental laws to encourage trade, and agreed toensure access to judicial proceedings. The text would establish governmental labor and environmental committeesto oversee implementation, and other bodieswould do further cooperative work. The labor and environment chapters link to a dispute process under which, ifa party wins a labor or environmentalcomplaint, the losing party could be assessed monetary damages. The U.S. Trade Representative says that the FTA with the Dominican Republic "...will ensure effective enforcement of domestic labor laws, establish acooperative program to improve labor laws and enforcement, and build the capacity of the Dominican Republic tomonitor and enforce labor rights." (21) TheU.S. Department of State, however, has recognized that there have been widespread problems with putting workerrights into practice, even though theConstitution of the Dominican Republic and its 1992 Labor Code provide for broad worker rights. (22) Representatives of the AFL-CIO and theDominican laborgroup Consejo Nacional de Unidad Sindical (CNUS) have called for further reform of Dominican laws, effectiveenforcement provisions that allow for tradesanctions, and protection against trade law violations. (23) Human Rights Watch reports that women "...who become pregnant are routinely fired from jobsandshut out of employment in the Dominican Republic's export-processing sector," and such abuse of workers wouldbe allowed to continue, because CAFTAdoes not prohibit workplace discrimination. (24) Workers' groups also fear the loss of protections under current U.S. unilateral trade programs such as CBI. (25) The Dominican Republic also acceded to other chapters of CAFTA, including dispute settlement, trade remedies, electronic commerce, andtelecommunications. These chapters would establish a process for resolving disputes, set out rules for safeguards,keep transmission of digital productsduty-free, and ensure certain standards affecting suppliers of telecommunications services. There are also chapterson customs administration, technical barriersto trade, sanitary and phytosanitary measures, and transparency of laws and regulations. The Agreement wouldestablish a Committee on Trade CapacityBuilding. In the last months of 2004, a newly passed tax in the Dominican Republic made that country's participation in the FTA tenuous. In September 2004, theDominican Republic enacted a revenue measure to meet conditions for a loan by the International Monetary Fund. The revenue measure included a 25%increase in the tax on soft drinks with high-fructose corn syrup. U.S. trade officials warned that the 25% taxthreatened the FTA that the two countries justsigned. Senate Finance Committee Chairman Grassley warned that the tax would jeopardize Senate support for theagreement. (26) Representative Rangel,Ranking Member on the House Ways and Means Committee, however, called the Administration's threat to dropthe Dominican Republic from the tradeagreement "inappropriate and unfortunate." (27) TheDominican Republic responded to the opposition by repealing the 25% tax in the last days of 2004. It is uncertain when the Administration might submit implementing legislation for DR-CAFTA to the Congress. Regardless of when legislation might beintroduced, it is expected to be controversial.
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On March 15, 2004, the United States and the Dominican Republic concluded a draftfree-trade agreement tointegrate the Dominican Republic into the earlier signed Central American Free-Trade Agreement (CAFTA). Thefinal agreement (DR-CAFTA) was signed byall parties on August 5, 2004. The Dominican Republic would have its own market access provisions, but wouldaccept the rest of the CAFTA framework. Legislation to implement DR-CAFTA might be considered in the 109th Congress. This report willbe updated as developments occur.
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Increasing dependence on foreign sources of crude oil, concerns over global climate change, and the desire to promote domestic rural economies have raised interest in renewable biofuels as an alternative to petroleum in the U.S. transportation sector. However, energy from renewable sources has historically been more expensive to produce and use than fossil-fuel-based energy. U.S. policymakers have attempted to overcome this economic impediment by enacting an increasing number of policies since the late 1970s, at both the state and federal levels, to directly support U.S. biofuels production and use. Policy measures have included blending and production tax credits to lower the cost of biofuels to end users, an import tariff to protect domestic ethanol from cheaper foreign-produced ethanol, research grants to stimulate the development of new technologies, loans and loan guarantees to facilitate the development of biofuels production and distribution infrastructure, and, perhaps most importantly, minimum usage requirements to guarantee a market for biofuels irrespective of their cost. This report describes agriculture-based biofuels and the evolution of the U.S. biofuels sector with a focus on the role that federal policy has played in shaping its development. In addition, it highlights emerging issues that are critical to the biofuels sector and of relevance to Congress. Any fuel produced from biological materials—whether burned for heat or processed into alcohol—qualifies as a "biofuel." The term is most often used to refer to liquid transportation fuels produced from some type of biomass. The two principal biofuels are ethanol and biodiesel; however, other fuels such as methanol and butanol could also qualify when produced from a qualifying biomass. Biomass is organic matter that can be converted into energy. Common examples of biomass include food crops, energy crops (e.g., switchgrass or prairie perennials), crop residues, wood waste and byproducts, and animal manure. The term biomass has been a part of legislation enacted by Congress for various programs over the past 30 years; however, its explicit definition has evolved with shifting policy objectives. Over the last few years, the concept of biomass has grown to include such diverse sources as algae, construction debris, municipal solid waste, yard waste, and food waste. The exact definition of biomass is critical, since it determines which feedstocks and resultant biofuels qualify for the different federal biofuels programs. For example, the principal biofuels program in effect as of this report is the Renewable Fuels Standard (RFS), which mandates annual usage rates for four nested categories of biofuels—(1) total renewable fuels, (2) advanced renewable fuels, (3) cellulosic biofuel, and (4) biomass-based diesel. Qualifying biofuels under each category are differentiated by their type of feedstock, the land on which the feedstock is produced (e.g., federal versus private, virgin versus previously cultivated soil, etc.), the production process used both to grow the feedstock and to process it into a biofuel (certain technologies are favored based primarily on environmental considerations), and the estimated amount of greenhouse gas emissions that result from the entire production pathway. The idea of formally defining biomass has evoked criticism. Some argue that by explicitly enunciating qualifying feedstocks, the definition may be excluding new or as-yet-undiscovered feedstocks that may emerge in the future. Also, there appears to be some inconsistency across programs. For example, algae-based biofuels presently do not qualify for inclusion under the RFS cellulosic biofuels mandate, but do qualify for the "advanced other" biofuels mandate, as well as for the cellulosic biofuels tax credit and the depreciation allowance for qualifying cellulosic biofuels plants. These differentiations tend to confuse and may slow or inhibit investments in algae-based biofuels. Ethanol is the principal biofuel produced in the United States ( Figure 1 ). Ethanol, or ethyl alcohol, is an alcohol made by fermenting and distilling simple sugars. As a result, ethanol can be produced from any biological feedstock that contains appreciable amounts of sugar or materials that can be converted into sugar such as starch or cellulose. Sugar beets and sugar cane are examples of feedstock that contain sugar. Corn contains starch that can relatively easily be converted into sugar. Trees, grasses, and most agricultural and municipal wastes are made up of a significant percentage of cellulose, which can also be converted to sugar, although with more difficulty than is required to convert starch. Since its development in the late 1970s, U.S. biofuels output has relied almost exclusively on ethanol produced from corn starch. Small amounts of ethanol have also been produced using sorghum, wheat, barley, and brewery waste. This contrasts with Brazil, the world's second-largest ethanol producer behind the United States, where sugar cane is the principal feedstock. In 2012, the United States and Brazil accounted for 88% of the world's ethanol production. Approximately 13.3 billion gallons of ethanol were produced in the United States in 2012, over 95% from corn starch. Because of concerns over the significant expansion in corn production for use as an ethanol feedstock, interest has grown in spurring the development of motor fuels produced from cellulosic biomass materials. Since these biomass sources do not compete with traditional food and feed crops for prime cropland, it is thought that their use would result in substantially fewer unintended market effects. However, the technology needed for the conversion of cellulose into its constituent sugars before conversion to biofuels, while successful in laboratory settings, is thought to be expensive relative to corn ethanol and has yet to be replicated on a significant commercial scale. Many uncertainties remain concerning both the viability and the speed of commercial development of cellulosic biofuels. After ethanol, biodiesel is the next most significant biofuel in the United States. Biodiesel is an alternative diesel fuel that can be produced from any type of organic-based oil, including vegetable oils, animal fats, and waste restaurant grease and oils. In the United States and Brazil, biodiesel has traditionally been made from soybean oil. In the European Union, rapeseed oil is the primary feedstock, while Canada relies primarily on canola oil. In recent years persistently high vegetable oil prices have pushed biodiesel producers to increase the share of much cheaper animal fats (especially poultry fat) and tropical palm oil; however, soybean oil remains the largest single source of biodiesel feedstock in the United States, with a share of over 56% in 2012. Other biofuels with the potential to play a role in the U.S. market include diesel fuel substitutes and other alcohols (e.g., methanol and butanol) produced from biomass. The value of a biofuel is determined by its end use. Ethanol is primarily used as a substitute for gasoline; however, it has some additional properties (i.e., as an oxygenate and an octane enhancer) that provide value as a gasoline additive. Biodiesel's primary use is as a substitute for petroleum-based diesel transportation fuel; however, biodiesel can also be used as a direct substitute for home heating oil and as a blend in jet fuel. Also, both ethanol and biodiesel may derive additional value as an additive to meet federal usage mandates under the Renewable Fuel Standard (RFS) depending on market conditions. The RFS requires the blending of renewable fuels (including ethanol and biodiesel) in U.S. transportation fuel. The RFS includes specific quotas for total renewable biofuels, as well as nested subcategories for advanced biofuels (i.e., non-corn-starch ethanol), cellulosic biofuels, and biomass-based diesel fuel. The RFS also includes a cap on the eligible volume of corn-starch ethanol. The RFS is administered by EPA. Qualifying biofuels must meet explicit criteria on lifecycle greenhouse gas (GHG) emissions and feedstock production pathways (including restrictions on the land on which feedstocks are produced, feedstock production methods, and the biofuels plant processing technology). Federal policy that mandates the use of a minimum volume of biofuel creates a source of demand that is not based on price, but rather on government fiat. As long as the consumption of biofuels is less than the mandated volume, its use is obligatory. With respect to ethanol, there is no difference to the end user between corn-starch ethanol, sugarcane ethanol, and cellulosic ethanol, although their production processes differ substantially in terms of feedstock, technology, and cost. As a result, all three share the same value determinants. In the presence of government policy, demand for ethanol derives from four potential uses: as an oxygenate additive in gasoline to help improve engine combustion and cleaner burning of fuel; as an additive to gasoline to enhance its octane level and engine performance; as an additive to gasoline at blend ratios of up to 10% ethanol and 90% gasoline (known as E10), to meet federally mandated minimum usage requirements under one of the RFS categories for qualifying ethanol biofuels; or as a substitute for gasoline at ethanol-to-gasoline blend ratios greater than E10. In the presence of government policy, demand for biodiesel derives from the following potential uses: as a substitute for petroleum-based diesel transportation fuel; as a substitute for home heating oil; as a blend in jet fuel; and as an additive to petroleum-based diesel to meet federally mandated minimum usage requirements under one of the RFS categories for qualifying biofuels. Depending on the relationship between the RFS mandate (blending demand) and the available supply (production plus imports) of qualifying biofuels, different RFS biofuels categories may have significantly different valuations, as greater scarcity will lead to greater value. Under the RFS, each gallon of qualifying biofuel has an associated renewable identification number (RIN) that is detached at point of blending and submitted to the EPA as proof of fulfilling that year's RFS usage requirement for a specific biofuel category. When a specific biofuel is blended (or used) in excess of its RFS mandate, the surplus RINs may be sold (ideally to another fuel blender to make up for a shortfall in meeting that blender's own RFS mandate) or stored for use in meeting the following year's RFS mandate. As a result of their tradability, secondary markets for RINs—by RFS category—have developed and gain in importance whenever the supply of a specific biofuel type tightens relative to its RFS mandate. RIN values are nested—since cellulosic and biomass-based diesel RINs can be used to meet their own category as well as the advanced and total categories, they have an inherent premium over advanced and total RINs. Similarly, advanced RINs would have a premium over total RINs. In contrast, when the supply of a specific biofuels category exceeds its mandated usage volume, the associated "nested" value will diminish. In volumes above the RFS total renewable mandate, biofuels use is no longer obligatory and it must compete directly in the marketplace with its petroleum-based counterpart. As a result, once they have met their RFS blending mandates, fuel blenders, seeking to maximize their profits, are very sensitive to price relationships between petroleum-based fuels and biofuels. This is particularly important for ethanol since it contains only about 68% of the energy content of gasoline. As a result, value-conscious consumers could be expected to willingly pay only about 68% of the price of gasoline for ethanol. From 2006—when the RFS was first introduced—through 2011, both ethanol production capacity, supply (production and imports combined), and consumption have easily exceeded the federally mandated usage levels ( Figure 2 ). As a result, ethanol's marginal value during that period was as a transportation fuel (rather than as an additive), where it competed directly with gasoline. However, economic conditions changed substantially in 2012, driven largely by the severe drought that summer, and the RFS has played a larger role in driving ethanol use. As for biodiesel, which is significantly more expensive to produce than its petroleum-based counterpart, biodiesel's use has been driven almost entirely by federal policy—i.e., the RFS biomass-based diesel and the biodiesel production tax credit (described below). An important valuation concern for U.S. ethanol consumption in 2013 is the emergence of the so-called "blend wall" as a constraint on domestic consumption of ethanol in sufficient volumes to satisfy the RFS mandate. Ethanol-gasoline blends of up to 10% ethanol are compatible with existing vehicles and infrastructure (fuel tanks, retail pumps, delivery infrastructure, etc.). All automakers that produce cars and light trucks for the U.S. market warranty their vehicles to run on gasoline with up to 10% ethanol (E10); however, automakers have been reluctant to offer such warranties for higher ethanol blend ratios. As a result, the 10% blend ratio represents an upper bound (sometimes referred to as the "blend wall") to the amount of ethanol that can be introduced into the gasoline pool given the current automobile fleet and fuel delivery infrastructure. In 2012, ethanol accounted for nearly a 10% share of blended gasoline sold in the United States ( Figure 1 ). In 2013, the RFS mandates for non-advanced ethanol of 13.8 bgals will likely exceed the blend wall (estimated at approximately 13 bgals by CRS based on EIA data). Supplementing actual ethanol blending with carry-over RINs (estimated at 2.6 bgals) will likely be sufficient to satisfy the 2013 RFS; however, surmounting the blend wall could prove more difficult in 2014. Because of this infrastructure constraint, ethanol production in excess of the blend wall will have limited value in the domestic market unless it is consumed at higher blending ratios in flex-fuel vehicles (FFVs) or exported into the international market. Several events contributed to the startup and growth of U.S. ethanol production in the late 1970s. First, the global energy crises of the early and late 1970s provided the rationale for a federal policy initiative aimed at promoting energy independence from foreign crude oil sources. In response, the U.S. Congress established a partial exemption for ethanol from the motor fuels excise tax (legislated as part of the Energy Tax Act of 1978). All ethanol blended in the United States—whether imported or produced domestically—was eligible for a $0.40 per gallon tax credit. In 1980, an import duty for fuel ethanol was established by the Omnibus Reconciliation Act of 1980 ( P.L. 96-499 ) to offset the domestic tax credit being applied to foreign-sourced ethanol. As U.S. ethanol production began to emerge in the 1980s, ethanol became recognized as a gasoline oxygenate. The Deficit Reduction Act of 1984 raised the ethanol tax credit to $0.60 per gallon. Based on its oxygenate characteristic, provisions of the Clean Air Act Amendments of 1990 (CAAA90) favored ethanol blending with reformulated gasoline (RFG). One of the requirements of RFG specified by CAAA90 was a 2% oxygen requirement, which was met by blending "oxygenates," including methyl tertiary butyl ether (MTBE) and ethanol into the gasoline. Ethanol was the preferred oxygenate in the Midwest where it was produced, while MTBE—a petroleum derivative—was used in almost all RFG outside of the Midwest. In addition to CAAA90 oxygenate requirements, a tax credit for small ethanol producer was established in 1990 (Omnibus Budget Reconciliation Act of 1990; P.L. 101-508 ) as a $0.10 per gallon supplement to the existing ethanol tax credit, but limited to the first 15 million gallons of ethanol produced by ethanol producers with production capacity below 30 million gallons per year. Aided by these events, the U.S. ethanol industry steadily grew during its first two decades—rising from an estimated 175 million gallons in 1980 to 1.8 billion gallons in 2001, when ethanol production was using about 7% of the U.S. corn crop. The first decade of the 2000s experienced a substantial increase in federal involvement in the U.S. biofuels sector. In FY2001, the Bioenergy Program began making payments from the U.S. Department of Agriculture's (USDA's) Commodity Credit Corporation (CCC) to eligible biofuel producers—ethanol and biodiesel—based on any year-to-year increases in the quantity of biofuels produced. The Bioenergy Program was instituted by USDA because the program's principal goal was to encourage greater purchases of eligible farm commodities used in the production of biofuels (e.g., corn for ethanol or soybean oil for biodiesel). The executive order creating the Bioenergy Program was followed by a series of legislation containing various provisions that further aided the U.S. biofuels industry. The first of these new laws—the Biomass Research and Development Act of 2000 (Biomass Act; Title III, P.L. 106-224 )—contained several provisions to expand research and development in the area of biomass-based renewable fuel production. The 2002 farm bill ( P.L. 107-171 ) included several biofuels programs spread across three separate titles—Title II: Conservation, Title VI: Rural Development, and Title IX: Energy (the first-ever energy title in a farm bill). Each title contained programs that encouraged the research, production, and use of renewable fuels such as ethanol, biodiesel, anaerobic digesters, and wind energy systems. In addition, Section 9010 of Title IX codified and extended the Bioenergy Program and its funding by providing that $150 million would be available annually through the CCC for FY2003-FY2006. The Healthy Forests Restoration Act of 2003 ( P.L. 108-148 ) amended the Biomass Act of 2000 by expanding the use of grants, contracts, and assistance for biomass to include a broader range of forest management activities. It also expanded funding availability of programs established by the Biomass Act and the 2002 farm bill, and it established a program to accelerate adoption of biomass-related technologies through community-based marketing and demonstration activities, and to establish small-scale businesses to use biomass materials. The American Jobs Creation Act of 2004 ( P.L. 108-357 ) contained a provision (Section 301) that replaced the existing tax exemptions for alcohol fuels (i.e., ethanol) with an excise tax credit of $0.51 per gallon. This act also extended the small ethanol producer tax credit. In addition to a growing list of federal and state policies, the U.S. biofuels industry received an additional boost in the early 2000s with the emergence of water contamination problems associated with underground MTBE storage tanks in several locations scattered throughout the country. MTBE was thought to be a possible carcinogen and, as a result, posed serious health and liability issues. In 1999, California (which, at the time, consumed nearly 32% of the MTBE used in the United States) petitioned the U.S. Environmental Protection Agency (EPA) for a waiver of the CAAA90 oxygenate requirement. However, California's waiver request was denied by the EPA in mid-2001 since the EPA determined that there was sufficient ethanol production available to replace MTBE. By 2003, legislation that would phase out or restrict the use of MTBE in gasoline had been passed in 16 states, including California and New York (with a combined 40% national MTBE market share). Between October 1, 2003, and January 1, 2004, over 43% of MTBE consumption in the United States was banned. According to the EIA, the state MTBE ban would require an additional demand for ethanol of 2.73 billion gallons in 2004. With the legislative boosts and the MTBE phase-out, investments in the biofuels sector began to show results. The number of plants producing ethanol grew from 50 on January 1, 1999, to 81 by January 1, 2005. Concomitantly, U.S. ethanol production began to accelerate, rising to 3.9 billion gallons by 2005 and using over 14% of the nation's corn crop ( Table 1 ), up from 1.8 bgals and 7% of the corn crop in 2001. On the heels of the large MTBE phase-out that occurred in 2004 and the surge in ethanol demand, two major events coincided in 2005 to produce extremely favorable economic conditions in the U.S. ethanol sector that persisted through most of 2006. These events included the following. The Energy Policy Act of 2005 (EPACT; P.L. 109-58 ) was signed into law on August 8, 2005. EPACT contained several provisions related to agriculture-based renewable energy production, including biofuels research and funding, expansions of existing biofuels tax credits and creation of new credits, and the creation of the first-ever national minimum-usage mandate, the Renewable Fuels Standard (RFS1; Section 1501), which required that 4 billion gallons (bgals) of ethanol be used domestically in 2006, increasing to 7.5 bgals by 2012. In August and September 2005, Hurricanes Katrina and Rita struck the Gulf Coast region causing severe damage to local petroleum importing and refining infrastructure, putting them off-line for several months, and driving gasoline prices sharply higher. Meanwhile, corn prices remained relatively low at about $2 per bushel, creating a period of extreme profitability for the ethanol sector. The combination of high ethanol prices and relatively low corn prices that began in late 2005 and persisted through 2006 and into 2007 created a period of "unique" profitability for the U.S. ethanol industry ( Figure 3 ). At that time, a 40 million gallon nameplate ethanol plant costing approximately $60 million could recover its entire capital investment in less than a year of normal operations. In addition, the establishment of the first RFS—by guaranteeing a market for new ethanol production—removed much of the investment risk from the sector. As a result of this "perfect storm" of policy and market events, investment money flowed into the construction of new ethanol plants, and U.S. ethanol production capacity (either in existence or under construction) more than doubled in just four years, rising from an estimated 4.4 bgals produced in 81 plants in January 2005 to 10.6 bgals produced in 170 plants by January 2009. The ethanol expansion was almost entirely in dry-mill corn processing plants. As a result, corn's role as the primary feedstock used in ethanol production in the United States continued to grow. In 2006, corn use for ethanol nearly matched U.S. corn exports at about 2.1 billion bushels. In 2007, U.S. corn exports hit a record 2.4 billion bushels; however, by then corn-for-ethanol use had jumped to over 3 billion bushels. For the first time in U.S. history, the bushels of corn used for ethanol production would be greater than the bushels of corn exported ( Table 1 and Figure 4 ). In light of the rapid expansion of the U.S. biofuels industry, the RFS1 mandate was outgrown in 2006—the same year it was first implemented ( Figure 2 ). On December 19, 2007, Congress dramatically raised the "bar" by passing the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ). EISA superseded and greatly expanded EPACT's biofuels mandate relative to historical production ( Figure 5 ). The expanded RFS (referred to as RFS2) required the use of 9 bgals of biofuels in 2008 and expanded the mandate to 36 bgals annually in 2022. The new mandate had some provisos, foremost of which was that only 15 bgals of annual RFS-qualifying biofuels could be ethanol from corn starch. As a result, all increases in the RFS mandate from 2016 onward must be met by advanced biofuels (i.e., non-corn-starch biofuels) and no less than 16 bgals must be derived from cellulosic feedstock in 2022. In addition, the new mandate established by EISA carved out specific volume requirements for biomass-based diesel fuels. Meanwhile, prices for many agricultural commodities—including nearly all major U.S. program crops—started a steady upward trend in late 2006. Then, in early 2007, the upward trend for commodity prices turned into a steep rise. By mid-2008 market prices for several agricultural commodities had reached record or near-record levels ( Figure 6 ). In particular, both corn and crude oil hit record high prices in both spot and futures markets, thus symbolizing the growing linkage between U.S. field crops and energy markets. The upward rise in the price of corn in 2007 and early 2008 sucked the profits out of the U.S. biofuels sector and put the brakes on new investment ( Figure 3 ). It also fueled a "food-versus-fuel" debate about the potential for continued expansion in corn use for ethanol to have unintended consequences in other agricultural and environmental markets. While most economists and market analysts agreed that the dramatic price rise of 2008 was due to factors other than biofuels policy, they also are nearly universally agreed that the strong, steady growth in ethanol demand for corn has had an important and sustained upward price effect, not just on the price of corn, but in other agricultural markets including food, feed, fuel, and land. By mid-2008, the commodity price rise had completely reversed itself and turned into a near free-fall, coinciding with the global financial crisis that broke in late 2008. The extreme price volatility created many difficulties throughout the marketing chain for agricultural buyers and sellers. The experience of $7.00-per-bushel corn, albeit temporary, shattered the idea that biofuels were a panacea for solving the nation's energy security problems and left concerns about the potential for unintended consequences from future biofuels expansion. The 2008 farm bill (Food, Conservation, and Energy Act of 2008; P.L. 110-246 ) extended and expanded many existing biofuels programs. In particular, Title XV ("Trade and Tax Provisions") extended the biofuels tax incentives and the tariff on ethanol imports, although the tax credit for corn-starch ethanol was reduced to $0.45 per gallon. But in the wake of the commodity market price run-up of early 2008, the new farm bill also re-emphasized EISA's policy shift towards research and development of advanced and cellulosic bioenergy in an effort to avoid many of the unintended consequences of relying too heavily on major field crops as the principal biomass feedstock. In addition, it established a new tax credit of $1.01 per gallon for cellulosic biofuel. Like the 2002 farm bill, it contained a distinct energy title (Title IX) that covers a wide range of energy and agricultural topics with extensive attention to biofuels, including corn starch-based ethanol, cellulosic ethanol, and biodiesel. Energy grants and loans are provided through initiatives such as the Bioenergy Program for Advanced Biofuels to promote the development of cellulosic biorefinery capacity. The Repowering Assistance Program supports increasing efficiencies in existing refineries. Programs such as the Rural Energy for America Program (REAP) assist rural communities and businesses in becoming more energy-efficient and self-sufficient, with an emphasis on small operations. Cellulosic feedstocks—for example, switchgrass and woody biomass—are given high priority both in research and funding. The Biomass Crop Assistance Program (BCAP), the Biorefinery Assistance Program, and the Forest Biomass for Energy Program provide support to develop alternative feedstock resources and the infrastructure to support the production, harvest, storage, and processing of cellulosic biomass feedstocks. Title VII, the research title of the 2008 farm bill, contains numerous renewable-energy-related provisions that promote research, development, and demonstration of biomass-based renewable energy and biofuels. One of the major policy issues debated prior to the passage of the 2008 farm bill was the impact of the rapid, ethanol-driven expansion of U.S. corn production. This issue was made salient by the dramatic surge in commodity prices experienced in 2007 and early 2008. In partial consideration, the enacted bill requires reports on the economic impacts of ethanol production, reflecting concerns that the increasing share of corn production being used for ethanol contributed to high commodity prices and food price inflation. However, funding authority for Title IX bioenergy programs was fairly limited—about $1 billion in mandatory funding and only slightly more than $100 million in discretionary funding was actually available during the life of the 2008 farm bill (FY2008-FY2012). In addition, all of the major Title IX bioenergy programs expired at the end of FY2012 and lacked baseline funding going forward. The 2008 farm bill (including Title IX) was extended through FY2013 by the American Taxpayer Relief Act (ATRA; P.L. 112-240 ). However, all major bioenergy provisions of Title IX—with the exception of the Feedstock Flexibility Program for Bioenergy Producers—have no new mandatory funding in FY2013 under the ATRA farm bill extension. By 2009, more than half of all U.S. gasoline contained some ethanol (mostly blended at the 10% level or lower). However, national gasoline transportation fuel consumption peaked in 2007 at about 142.5 bgals and has been steadily declining—driven by a weak economy and improving passenger vehicle fuel economy. In 2010 U.S. ethanol consumption reached an estimated 12.9 billion gallons (bgals), which was blended into roughly 138 bgals of gasoline—this represents about 9.3 % of annual gasoline transportation demand on a volume basis. Meanwhile, robust economic growth in major global markets in 2010 and early 2011 (including China, India, Brazil, and other parts of Asia and the Middle East) reinvigorated international consumer demand and, when coupled with a weak U.S. dollar and events that occurred in international feed grain markets—drought in Russia, Kazakhstan, and the Ukraine in 2010, plus strong Chinese demand for corn and feedstuffs—contributed to record U.S. agricultural export values in 2010 and 2011 and helped to push commodity prices, especially corn, upward again. By 2010, U.S. ethanol production consumed 40% of the U.S. corn crop and surpassed corn-for-feed use for the first time in history ( Figure 4 ). Combined strong demand from export markets and ethanol contributed to near historic low ending stock projections (relative to expected demand) for U.S. corn and soybean for 2010 and 2011. These market conditions helped to spur another surge in agricultural commodity prices starting in mid-2010 ( Figure 6 ), thus spreading the effects of rapidly expanding ethanol production and corn demand across several other sectors of the U.S. economy as well. In addition to expanding domestic production of biofuels, there has been some interest in expanding imports of sugar-based ethanol—usually produced from sugar cane in Brazil—to help satisfy the RFS for advanced biofuels. U.S. sugar-ethanol imports peaked at 660 million gallons in 2006 (including 434 million from Brazil). Market factors in 2010-2012—U.S. ethanol production approaching the "blend wall", high international sugar prices, lower-than-expected sugarcane output in Brazil, and a weak U.S. dollar—resulted in the United States becoming a net exporter of ethanol during those years ( Figure 7 ). In early 2012, high market prices and nearly ideal springtime planting conditions across much of the United States led to substantial and extensive early corn planting. On June 12, 2012, USDA projected U.S. corn plantings of 95.9 million acres—the most since 1937. Normal weather patterns were expected to produce a record 2012 corn harvest of 14.8 billion bushels, which in turn would lead to a build-up in U.S. corn ending stocks in 2013 of nearly 2 billion bushels (up 111% year-to-year), and a 2012/2013 season-average corn price of $4.60/bushel (down 25%). A record harvest and return to low corn prices were eagerly anticipated by both the ethanol and livestock industries. However, in mid-June, an extensive swath of the Central and Southern Plains and much of the Corn Belt were hit by a combination of extreme heat and dryness that produced what was referred to as a "flash drought." By August 2012—just two months after its optimistic forecast of May—USDA had completely reversed its outlook from one of abundance to one of shortage. USDA lowered its forecast for U.S. corn production to 10.8 billion bushels (a 27% drop of 4 billion bushels from its May forecast), corn price projections were raised sharply to $8.20 per bushel (up 78%), and stocks of feed grains and soybeans were forecast to approach historic low levels relative to demand by the end of 2012/2013 crop year (i.e., at the end of summer 2013). Market prices for ethanol were not able to keep up with escalating production costs (primarily for corn) and negative production margins resulted in the idling of several ethanol facilities ( Figure 3 ). As a result, U.S. ethanol production in 2012 declined to 13.3 billion gallons—the first decline in production since 1996, when then-record corn prices temporarily set back ethanol production. The outlook for low corn supplies until the 2013 corn harvest in the September-November period is expected to dampen ethanol production in 2013 as well, possibly reducing it below the 2012 level. Despite waning ethanol production, RFS mandates for biofuel use continued to grow in 2013 to 16.55 bgals of total biofuels, including 2.75 bgals advanced biofuels and a residual 13.8 bgals for corn ethanol. In contrast, national transportation consumption of gasoline-type fuels, which had hit its peak in 2007 at about 142.5 bgals, was projected at slightly under 131 bgals in 2013, with an implied ethanol blend wall of about 13 bgals. The price for renewable identification numbers (RINs) for basic renewable ethanol (D6)—as reported from thinly traded markets —soared from under $0.05 per gallon during most of 2012 to over $1.00 per gallon in early March 2013. As a result, the RIN values for a fuel blender blending 1 million gallons of E10 (using 100,000 gallons of ethanol) in 2012 might have been $5,000 based on an average ethanol RIN price of about $0.05. The hypothetical value implied for that same volume at $1 per RIN would be $100,000. The rapid RIN price increase is linked to the impending collision of the RFS mandates and the ethanol blend wall, which, without rapid expansion of the E15 or E85 markets, will likely require the use of accumulated RIN stocks for mandate compliance in 2013 and 2014. In addition to the ethanol blend wall, the expanded RFS2 is likely to play a dominant role in the development of the U.S. biofuels sector, but with considerable uncertainty regarding spillover effects in other markets and on other important policy goals. The rapid expansion of U.S. corn ethanol production and the concomitant dramatic rise in corn use for ethanol—USDA estimates that over 40% of both the 2011 and 2012 U.S. corn crops was used for ethanol production—has provoked questions about its long-run sustainability and the possibility of unintended consequences in other markets as well as for the environment. Policymakers and the U.S. biofuels industry also are confronted by questions regarding the ability to meet the expanding RFS mandate for biofuels from non-corn sources such as cellulosic biomass materials, whose production capacity has been slow to develop, or biomass-based diesel, which remains expensive to produce owing to the relatively high prices of its feedstocks. It is widely believed that the ultimate success of the U.S. biofuels sector will depend on its ability to shift away from traditional row crops such as corn or soybeans for processing feedstock, and toward other, cheaper forms of biomass—such as prairie grass or algae—that do not compete with traditional food crops for land and other resources. Recent federal biofuels policies have attempted to assist this shift by focusing on the development of a cellulosic biofuels industry. However, the speed of cellulosic biofuels development remains a major uncertainty, since new technologies must first emerge and be implemented on a commercial scale. The uncertainty surrounding the development of such new technologies and their commercial adaptation has been a major impediment to the flow of much needed private-sector investment funds into the cellulosic biofuels sector. As of April 8, 2013, U.S. ethanol production was underway or planned in 210 plants located in 28 states based primarily around the central and western Corn Belt, where corn supplies are most plentiful ( Table 2 and Figure 8 ). Existing U.S. ethanol plant capacity was estimated at 14.763 billion gallons per year (BGPY), with another 0.158 BGPY of capacity under construction (either as new plants or expansion of existing plants). Thus, total annual U.S. ethanol production capacity in existence or under construction was about 14.9 BGPY, well in excess of the 13.8 bgals RFS2 corn-starch ethanol residual quota for 2013 ( Figure 2 ). Iowa is by far the leading ethanol-producing state, with a 30% share of total U.S. output. The top six Corn Belt states of Iowa, Nebraska, Illinois, Minnesota, South Dakota, and Indiana account for nearly 75% of national production ( Table 2 ). On a national level, actual operating capacity of 13.2 BGPY represents about 89% of nameplate capacity. This is because several states, including Nebraska, Minnesota, Indiana, Kansas, Ohio, and the "other" category of states, are operating substantially below their nameplate capacity, suggesting that poor industry profitability has been widespread across the country, primarily due to high feedstock cost and limited availability. Biodiesel can be produced from any animal fat or vegetable oil (such as soybean oil or recycled cooking oil). Historically, most U.S. biodiesel was made from soybean oil. As a result, U.S. soybean producers and the American Soybean Association (ASA) are strong advocates for greater government support for biodiesel production. However, with the rise in soybean prices since 2007 ( Figure 6 ), biodiesel producers have aggressively shifted to cheaper vegetable oils and animal fats (especially poultry fat), such that by 2011 nearly 44% of U.S. biodiesel production was estimated to be based on sources other than soybean oil. In recent years, many ethanol production facilities have added technology to remove corn oil from distillers grains and solubles, thus generating an additional income stream to help offset depressed profit margins. The corn oil produced by this "end-stream" technology is typically not suitable for the food industry. Instead, the main uses of this added corn oil has been as an energy supplement in livestock and poultry rations, and for biodiesel production. According to the National Biodiesel Board (NBB), biodiesel is nontoxic, biodegradable, and essentially free of sulfur and aromatics. In addition, it works in any diesel engine with few or no modifications and offers similar fuel economy, horsepower, and torque, but with superior lubricity and important emission improvements over petroleum diesel. To date, biodiesel is used almost uniquely as a substitute for petroleum diesel transport fuel. Biodiesel delivers slightly less energy than petroleum diesel (about 92%); however, U.S. biodiesel consumption remains small relative to national diesel consumption levels. In 2012 ( Figure 1 ), U.S. biodiesel consumption represented about 1.5% (in diesel-equivalent units) of national diesel transportation fuel use of about 46.8 billion gallons. Biodiesel is compatible with existing petroleum-based diesel vehicles and infrastructure (fuel tanks, retail pumps, delivery infrastructure etc.) such that biodiesel does not face a blend wall similar to ethanol. As a result, the potential blending pool for biodiesel is significantly larger than just the transportation diesel fuel market. Because biodiesel and diesel fuel are so similar, biodiesel can also be used for the same non-transportation activities—the two largest of which are home heating and power generation. In 2012, 53.2 billion gallons of diesel fuel were used for heating and power generation by residential, commercial, and industry, and by railroad and vessel traffic, bringing total U.S. diesel fuel use to nearly 106.7 billion gallons (including 46.8 billion gallons of transportation fuel use and 6.8 billion gallons of residual fuel oil). Fuel blenders and consumers are very sensitive to price differences between biodiesel and petroleum-based diesel. The price relationship between vegetable oils and petroleum diesel is the key determinant of profitability in the biodiesel industry—about 7.5 pounds of vegetable oil are used in each gallon of biodiesel. Since late 2010, soybean oil prices have averaged over $0.50/lb. such that the vegetable oil feedstock component of biodiesel has cost over $3.75/gal. Additional processing and marketing costs likely push wholesale biodiesel prices into the $4.50/gal. to $5.00/gal. range compared with petroleum diesel wholesale prices of $3.05/gallon during that period. As a result, the biodiesel industry has depended on federal support—especially the production tax credit and the RFS for biomass-based diesel—for its economic survival. The U.S. biodiesel industry did not emerge until the late 1990s. In 1999, U.S. biodiesel production was still less than 1 million gallons. Bioenergy Program payments provided an initial impetus for biodiesel plant investments from 2001 through 2006. The American Jobs Creation Act of 2004 ( P.L. 108-357 ) created the first ever federal biodiesel tax incentive—a federal excise tax and income tax credit of $1.00 for every gallon of agri-biodiesel (i.e., virgin vegetable oil and animal fat) that was used in blending with petroleum diesel; and a $0.50 credit for every gallon of non-agri-biodiesel (i.e., recycled oils such as yellow grease). The distinction between biodiesel from virgin and recycled oils was eventually removed ( P.L. 110-343 ; October 3, 2008), and all biodiesel qualified for the credit of $1.00 per gal. Starting in late 2005 through 2006, the U.S. biodiesel industry received a major economic boost from the same series of market and policy developments described for ethanol—i.e., high petroleum prices and low agricultural commodity prices. Soybean oil prices were still relatively low priced during the 2000 through 2006 period, when they averaged $0.21/lb. (this compares with an average of nearly $0.44/lb. since 2007). The Energy Policy Act of 2005 extended the biodiesel tax credit and established a Small Agri-Biodiesel Producer Credit of $0.10 per gallon on the first 15 million gallons of biodiesel produced from plants with production capacity below 60 million gallons per year. Biomass-based diesel (BBD) was not part of the initial biofuels RFS1 mandate under the Energy Policy Act of 2005, but was included as a distinct category in the RFS2 created under EISA of 2007. While most of this mandate is expected to be met using biodiesel, other fuels, including renewable diesel, algae-based diesel, or cellulosic diesel, would also qualify. Starting in mid-2007, the U.S. biodiesel industry suffered from unfavorable market conditions as prices for vegetable oil rose relative to diesel fuel (the monthly average wholesale price for soybean oil in Decatur, Illinois, hit $0.62/lb. in June 2008, implying a per-gallon cost of $4.65 for biodiesel). Most biodiesel plants continued to operate into 2008 in hopes of either higher diesel prices or lower vegetable oil prices, and the industry produced then-record output of an estimated 678 million gallons ( Figure 9 ). However, the financial crisis of late 2008 and the ensuing economic recession weakened demand for transportation fuel, and petroleum prices (including diesel fuel) fell sharply in the second half of 2008. Starting in 2007 and 2008, U.S. biodiesel producers (relying heavily on the $1/gallon production tax credit) were able to take advantage of a favorable price relationship vis-à-vis the European Union (EU)—which also had domestic policies that encouraged biodiesel consumption—and profitably exported substantial volumes of U.S.-produced biodiesel to the EU. As a result, U.S. biodiesel exports soared to a record 677 million gallons in 2008. However, in March 2009, the EU imposed anti-dumping and countervailing duty tariffs on imports of U.S. biodiesel that effectively shut down U.S. biodiesel exports to the EU and cut in half a major supply outlet for U.S. biodiesel producers ( Figure 10 ). As a result, the U.S. biodiesel industry experienced several bankruptcies and some loss of capacity during 2009. U.S. biodiesel production in 2009 fell to 516 million gallons, down 24% from 2008. The unfavorable economic conditions for biodiesel production extended into 2010 and were made worse by the expiration of the biodiesel tax credit at the end of 2009. The tax credit was eventually renewed on December 17, 2010 ( P.L. 111-312 ), and made available retroactively to all 2010 biodiesel production; however, the extended delay and poor market conditions contributed to substantially reduced U.S. biodiesel production of 343 million gallons in 2010. During 2010, the U.S. biodiesel industry saw 52 out of 170 operating plants stop operations while many others scaled back on production. The renewal of the tax credit and the expanded RFS2 biodiesel usage mandate of 800 million gallons in 2011 revived the industry and spurred record production of 967 million gallons in 2011 ( Figure 9 ). Once again both the biodiesel tax credit ($1.00/gallon) and the small agri-biodiesel producer credit ($0.10/gallon on the first 15 million gallons) expired at the end of 2011, but were extended through 2013 by P.L. 112-240 , which retroactively applied the extension to fuel produced in 2012. In addition to the retroactive tax credit, biodiesel production in 2012 was supported by the RFS2 biodiesel mandate, which grew to 1 billion gallons in 2012. U.S. biodiesel production eclipsed the previous year's record with an output of 969 million gallons in 2012. Two factors are expected to support biodiesel production at or above 1.28 billion gallons starting in 2013 and going forward: first, the RFS2 biodiesel mandate for 2013 has been proposed at 1.28 billion gallons by EPA; second, the RFS2 for advanced biofuels (for which biodiesel is a qualifying fuel) grows even faster, with 2.75 billion gallons in 2013 rising to 21 billion gallons by 2022. Although cellulosic biofuel was originally envisioned to fill most of the advanced biofuel mandate, slow progress in commercial production to date suggests that biodiesel may be used to meet at least a portion of the advanced biofuel mandate in the future. If this projected outcome were to be realized, it would likely have a profound impact on vegetable oil markets, as biodiesel production would be expected to consume an increasingly larger share of available supplies. As mentioned earlier, the primary feedstock for biodiesel includes both vegetable oils and animal fats, both of which are produced over a greater geographic area than corn. As a result, biodiesel plants are more widely dispersed across the United States than are ethanol plants ( Table 3 ). As of January 2013, there were 110 companies in the United States with the potential to produce biodiesel commercially that were either in operation or idled, with total annual production capacity (within the oleo-chemical industry) of 2.1 billion gallons per year. Because many of these plants also can produce other products such as cosmetics, estimated total capacity (and capacity for expansion) is far greater than actual biodiesel production. The unfavorable economic conditions of 2009 and 2010, coupled with the delays in extending the biodiesel tax credit first in 2010 and then again in 2012, and finally the run-up in soybean and product prices in 2011 and 2012, all contributed to a substantial shake-up in the biodiesel industry. Many plants situated in the heart of corn and soybean country dropped out of business, while new plants sprang up in locations near alternate vegetable or animal oil sources. As a result, the U.S. biodiesel industry is more diversified and less centralized than the ethanol industry. Unlike ethanol, where the top six producing states account for 75% of national capacity, the top six biodiesel-producing states achieve only a 58% share, thus demonstrating the more widespread nature of U.S. biodiesel production capacity. A key determinant of the demand for biofuels as a transportation fuel is the size and fuel economy of the U.S. vehicle fleet, and the adequacy of the infrastructure (e.g., pipelines, storage tanks, service pumps) that delivers transportation fuel to consumers at the retail level. According to the Department of Energy (DOE), 73% of U.S. transportation fuel is consumed as gasoline or gasoline blends ( Figure 1 ), with the remainder consumed as diesel fuel. Gasoline blends and diesel fuel, for the most part, require different infrastructure for delivery to the retail market. In addition, vehicle motors are designed to operate with either gasoline or diesel, but not both. The U.S. Department of Transportation (DOT) estimated that there were 250.2 million registered passenger vehicles (including trucks, buses, and motorcycles) in the United States in 2011, down slightly from 254.2 million in 2009. Included in the fleet of passenger vehicles are more than 14 million flex-fuel vehicles (FFVs), which are capable of operating on the standard 10% ethanol and 90% gasoline (E10) blends as well as higher ethanol blends up to 85% ethanol and 15% gasoline (E85). Because of its physical properties, pure ethanol cannot be used in the same infrastructure used to deliver retail gasoline. Nor can ethanol be used in standard automobile engines at high blend ratios, because ethanol tends to make the engine run at a higher temperature than standard reformulated gasoline. In addition, the presence of ethanol can be corrosive on rubber and plastic parts in the car engine. In contrast, biodiesel is very similar in nature to petroleum diesel and does not have the same infrastructure limitations. Prior to October 2010, the amount of ethanol that could be blended in gasoline for use in standard vehicle motors without modification was limited to 10% by volume (E10), by guidance developed by the EPA under the Clean Air Act, and certification procedures for fuel-dispensing equipment. In addition, most vehicle warranties did not cover any motor damage resulting from use of ethanol blends above 10%. In the past, only flex-fuel vehicles (FFVs) have been capable of using higher ethanol blends. As a result, this 10% blend has represented an upper bound (sometimes referred to as the "blend wall") to the amount of ethanol that can be introduced into the gasoline pool. If most or all gasoline in the country contained 10% ethanol, this would allow only for roughly 13 billion gallons, far less than the RFS mandates for 2013 onward. For ethanol consumption to exceed the so-called blend wall and meet the RFS mandates, increased consumption at higher blending ratios is needed. For example, raising the blending limit from 10% to a higher ratio such as 15% or 20% would immediately expand the "blend wall" to somewhere in the range of 20 billion to 27 billion gallons. The U.S. ethanol industry is a strong proponent of raising the blending ratio. The blend wall problem is made more acute by substantial revisions in EIA's projections of U.S. transportation fuel consumption rates since the RFS was first passed into law in 2007 ( Figure 11 ). At that time, EIA estimated that U.S. transportation consumers were using about 145 billion gallons of gasoline (including ethanol) per year, but that consumption would grow strongly to 176 billion gallons of gasoline by 2022—as a result, RFS mandated biofuels would represent about 19% of annual gasoline consumption. By 2013, EIA had substantially lowered its fuel consumption outlook—partly due to sustained high petroleum prices, the prolonged effects of the 2008 financial crisis on consumer incomes, and significantly higher fuel economy standards on new vehicles. Instead of growth, EIA projects gasoline consumption to fall to about 120 billion gallons by 2022, thus causing the RFS mandate's share of the gasoline transportation fuel market to grow to nearly 20% of annual consumption (in gasoline-equivalent gallons). On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to the EPA for a waiver from the then-current Clean Air Act E10 limit and an increase in the maximum allowable concentration to 15% (E15). After substantial vehicle testing, the EPA issued, first a partial waiver (October 2010) for gasoline that contains up to a 15% ethanol blend (E15) for use in model year 2007 or newer passenger vehicles (including cars, SUVs, and light pickup trucks). Then after further testing, on January 21, 2011, EPA expanded the eligible passenger vehicle pool to include model years 2001 through 2006. However, EPA also announced that no waiver would be granted for E15 use in model year 2000 and older light-duty motor vehicles, as well as in any motorcycles, heavy duty vehicles, or non-road engines. This later restriction opens up the possibility of "mis-fueling"—that is, using higher ethanol blends in vehicles not appropriate for the EPA 15% blend waiver. According to the Renewable Fuel Association (RFA), the approval of E15 use in model year 2001 and newer passenger vehicles covered 62% of passenger vehicles on U.S. roads at the end of 2010. These EPA rulings would appear to have expanded the eligible vehicle pool for ethanol blends greater than 10%. However, two factors prevent a blend wall expansion to 15%. First, U.S. automakers have not yet extended vehicle warranties to cover any motor damage resulting from use of ethanol blends above 10%. Second, the fact that a portion of currently active passenger vehicles are not eligible for E15—i.e., model year 2000 or older—both limits ethanol retail delivery opportunities and raises the cost of delivery, thus inhibiting retailer adoption. Two additional options to resolving this bottleneck exist, but appear to be long-run alternatives. The first is to increase the use of ethanol in flex-fuel vehicles (FFVs) at ethanol-to-gasoline blend ratios as high as E85. However, increased E85 use would involve substantial infrastructure development, particularly in the number of designated storage tanks and E85 retail pumps, as well as a further expansion of the FFV fleet to absorb larger volumes of ethanol. According to the Renewable Fuels Association (RFA), more than 14 million FFVs were on the roads in 2012, representing over 5% of U.S. passenger vehicles. However, not all FFV owners have access to (or choose to use) E85 retail pumps. As of early 2013, over 3,000 retail stations in the United States offered E85 (2% out of 142,000 stations). Most E85 fueling stations are concentrated in the midwestern states near the current ethanol production heartland ( Figure 12 ). In addition, at blend ratios above 10%, ethanol must compete directly with gasoline as a transportation fuel. For ethanol to operate primarily as a gasoline substitute, it must be priced competitively with gasoline on an energy-content or miles-per-gallon basis. A second alternative is to expand use of processing technologies at the biofuel plant to produce biofuels in a "drop-in" form (e.g., butanol) that can be used by existing petroleum-based distribution and storage infrastructure and the current fleet of U.S. vehicles. However, more infrastructure-friendly biofuels generally require more processing than ethanol and are therefore more expensive to produce. Federal biofuels programs have proven critical to the economic success of the U.S. biofuels industry, primarily ethanol and biodiesel, whose output has grown rapidly in recent years. Initially, federal biofuels policies were developed to help kick-start the biofuels industry during its early development, when neither production capacity nor a market for the finished product were widely available. Federal policy played a key role in underwriting the initial investments in biofuels production capacity as well as in helping to close the price gap between biofuels and cheaper petroleum fuels. During the rapid growth period of 2006-2011, U.S. biofuels production and supporting federal budget outlays grew concomitantly. Federal support for biofuels production peaked in 2011, when an estimated $7.7 billion of direct support—including tax credit expenditures ($7.3 billion) and 2008 farm bill Title IX outlays (approximately $300 million)—was incurred. Federal outlays in 2012 are estimated sharply lower, at about $1.3 billion, due to the expiration of several biofuels tax credits. The trade-offs between benefits to farm and rural economies, as opposed to large federal budget costs and the potential for unintended consequences, have led to emergence of both proponents and critics of the government subsidies and mandates that underwrite biofuels production. Oversight and implementation of federal biofuels policies is spread across several government agencies, but the primary responsibility lies with EPA, USDA, and DOE. As the number, complexity, and budgetary implications of federal biofuels policies have grown, so too has the number of proponents and critics. Proponents of government support for agriculture-based biofuels production have cited national energy security, reductions in greenhouse gas emissions, and raising domestic demand for U.S.-produced farm products as viable justifications. In many cases, biofuels are more environmentally friendly (in terms of emissions of toxins, volatile organic compounds, and greenhouse gases) than petroleum products. In addition, proponents argue that rural, agriculture-based energy production can enhance rural incomes and expand employment opportunities, while encouraging greater value-added for U.S. agricultural commodities. In contrast, critics argue that, in the absence of subsidies, current biofuels production strategies can only be economically competitive with existing fossil fuels at much higher petroleum prices, or if significant improvements in existing technologies are made or new technologies are developed. Until such technological breakthroughs are achieved, critics contend that the subsidies distort energy market incentives and divert research funds from the development of other renewable energy sources, such as solar or geothermal, that offer potentially cleaner, more bountiful alternatives. Still others question the rationale behind policies that promote biofuels for energy security. These critics question whether the United States could ever produce sufficient feedstock of starches, sugars, or vegetable oils to permit biofuels production to meaningfully offset petroleum imports. Critics from the petroleum industry argue against the economic costs associated with the imposition of biofuels blending requirements. Finally, some (particularly environmental watchdog groups) argue that the focus on development of alternative energy sources undermines efforts for greater conservation to reduce energy waste. Many biofuels-related policy debates occur along geographic lines. For example, Midwest corn- and ethanol-producing states are major proponents of federal policy support, whereas many residents of the East and West Coast urban states perceive expensive biofuel usage mandates as being forced upon them while their access to cheaper Brazilian sugar-cane ethanol was, for many years, limited by an import tariff. Another source of biofuels policy conflict has emerged between the major users of corn. Livestock producers have seen their feed costs escalate with the growth in biofuels corn demand and are highly critical of further federal biofuels support. Most of the biofuels policies developed and funded by Congress are subject to oversight and periodic reauthorization. For most of the past three decades, three types of federal programs have provided the core support for the U.S. biofuels industry: blending and production tax credits to lower the cost of biofuels to end users, an import tariff to protect domestic ethanol from cheaper foreign-produced ethanol, and volume-specific usage mandates to guarantee a market for biofuels irrespective of their cost. In addition, the biofuels industry has been supported by several indirect policies in the form of research grants to stimulate the development of new technologies, and grants, loans, and loan guarantees to facilitate the development of biofuels feedstocks as well as market and distribution infrastructure. Various tax credits and other incentives have been available for the production, blending, and/or sale of biofuels and biofuel blends ( Table 4 ). Tax credits vary by the type of fuel and the size of the producer. Because of their budgetary cost, the tax credits are rarely extended for more than a year or two at a time. As a result, they routinely require congressional action to be extended. On December 31, 2011, most biofuels blending and production tax credits expired, with the exception of the cellulosic biofuels production tax credit, which was set to expire at the end of 2012. The American Tax Payer Relief Act of 2012 ( P.L. 112-240 ) extended both the producer and small producer tax credits for biodiesel, renewable diesel, and cellulosic biofuels through 2013 and retroactively for 2012. Prior to 2012, most imported ethanol was subject to a most-favored-nation duty set of $0.54 per gallon of ethanol (for fuel use) and a 2.5% ad valorem tariff. The stated goal of the import tariff was to offset the ethanol blending tax credit which was also available for foreign-produced ethanol. However, the fixed $0.54-per-gallon most favored-nation duty (identified by 9901.00.50 and 9901.00.52 of the Harmonized Tariff System (HTS)) expired on December 31, 2011. The 2.5% ad valorem tariff (2207.10.60 of the HTS) does not expire but is permanent until or unless the HTS code itself is changed. In most years the tariff was a significant barrier to direct imports of Brazilian sugarcane ethanol. However, some Brazilian ethanol could be brought into the United States duty-free if it was dehydrated (reprocessed) in Caribbean Basin Initiative (CBI) countries. Up to 7% of the U.S. ethanol market could be supplied duty-free in this fashion; historically, however, ethanol dehydrated in CBI countries has only represented about 2% of the total U.S. market. As described earlier, the RFS requires the blending of renewable fuels (including ethanol and biodiesel) in U.S. transportation fuel. The RFS is administered by EPA. Under the RFS, fuel blenders are required to blend an increasing amount of renewable fuel in the national transportation fuel supply. This requirement increases annually from 9 billion gallons (bgals) in 2008 to 36 bgals in 2022, of which only 15 bgals can be ethanol from corn starch. The remaining 21 bgals are to be so-called "advanced biofuels"—fuels produced from non-corn-starch feedstocks—of which 16 bgals are to be from cellulosic biofuels, 1 bgals from biomass-based diesel, and 4 bgals from other biofuels (most likely imported sugar-cane ethanol from Brazil). Qualifying biofuels must meet explicit criteria on lifecycle greenhouse gas (GHG) emissions and feedstock production pathways (including restrictions on the land on which feedstocks are produced, feedstock production methods, and the biofuels plant processing technology). Several additional biofuels programs have been created to provide various grants, loans, and loan guarantees in support of research and development of related technology, as well as support for biofuels infrastructure development. Many of these programs reside in the energy title (Title IX) of the 2008 farm bill ( P.L. 110-246 ). Federal programs also require federal agencies to give preference to bio-based products in purchasing fuels and other supplies. Cellulosic plant investment is further facilitated by a special depreciation allowance created under the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ). Also, several states have their own incentives, regulations, and programs in support of renewable fuel research, production, and use that supplement or exceed federal incentives. In addition to direct and indirect biofuels policies, the U.S. biofuels industry benefits from U.S. farm programs in the form of price and income support programs (i.e., marketing loan benefits and the counter-cyclical payment program) and risk-reducing farm programs (e.g., Acreage Crop Revenue Election (ACRE), Supplemental Revenue Assistance Payments (SURE), federal crop insurance, and disaster assistance), which encourage greater production and lower prices than would occur in the absence of federal programs in a free-market equilibrium. As a result, agricultural feedstocks are both lower-priced and more abundant than without federal farm programs. This helps lower production costs for the U.S. biofuels sector, and makes U.S. biofuels more competitive with foreign-produced biofuels. Most of the federal biofuels tax credit provisions, as well as the import tariff on foreign-produced ethanol, have short legislative lives and require frequent extension. The primary energy-related issue for the next farm bill is the expiration of program authority at the end of FY2013 and the current lack of mandatory funding going forward for all major energy-related provisions of Title IX. In addition, the appearance of substantial redundancy across renewable energy programs at USDA and DOE, the slow development of the U.S. cellulosic biofuels sector, and concerns about the emerging spillover effects of increasing corn use for ethanol production are issues that are likely to emerge during the next farm bill debate. Many provisions of the 2008 farm bill expired at the end of FY2012, but were extended through FY2013 by the American Taxpayer Relief Act (ATRA; P.L. 112-240 ). Authority for Title IX biofuels policy provisions contained in the 2008 farm bill ( P.L. 110-246 ) also were extended through FY2013, and are expected to be reviewed as part of the next farm bill debate. However, all major bioenergy provisions of Title IX—with the exception of the Feedstock Flexibility Program for Bioenergy Producers—have no new mandatory funding in FY2013 under the ATRA farm bill extension. Although most of the bioenergy programs are reauthorized for FY2013, their mandatory funding expired at the end of FY2012. If policymakers want to continue these programs under either the 2008 farm bill extension or in the next farm bill, they will need to pay for the program with offsets. The 2008 farm bill authorized $1.1 billion in mandatory funding for energy programs, including $320 million for the Biorefinery Assistance Program, $300 million for the Bioenergy Program for Advanced Biofuels, and $255 million for the Rural Energy for America Program (REAP). The Biomass Crop Assistance Program (BCAP) was authorized to receive such sums as necessary (i.e., funding is open-ended and depends on program participation), although Congress eventually put limits on mandatory funding of $552 million in FY2010, $112 million in FY2011, and $17 million in FY2012. None of the major farm-bill energy programs have baseline funding after FY2012. As a result, the federal budget rules require new revenues or offsetting cuts in order to extend them beyond FY2012. While most ethanol tax credits and the import duty on foreign fuel ethanol expired on December 31, 2011, the cellulosic biofuel tax credit and the various biodiesel tax credits do not expire until December 31, 2013. Both the cellulosic biofuels and biodiesel industries can be expected to lobby actively for extension of their tax credits. However, a tight federal budget combined with lack of progress in developing commercial production of cellulosic biofuels are likely to work against an extension. At $1.00 per gallon, the biodiesel tax credit is projected to cost at least $1.28 billion in tax expenditures in 2012, whereas the cellulosic biofuels tax credit is projected to cost about $14 million. Investors have been slow to invest in what so far is a commercially unproven technology—the conversion of cellulosic biomass to biofuels. Development of the cellulosic biofuels industry hinges on the effective use of new feedstocks. The Biomass Crop Assistance Program (BCAP) was created under the 2008 farm bill to facilitate the development of those new feedstocks and kick-start the cellulosic biofuels industry. BCAP (via USDA's CCC) provides financial assistance in two forms: (1) to support the establishment and production of eligible crops for conversion to bioenergy in selected areas, and (2) to assist agricultural and forest land owners and operators with collection, harvest, storage, and transportation (CHST) of eligible material for use in a biomass conversion facility. While BCAP is in the early stages of implementation, concerns regarding eligibility, funding, and sustainability continue to be discussed. These issues could shape future congressional action on the program in the context of budgetary measures and possible reauthorization in the next farm bill. In particular, BCAP does not include "baseline" budget spending beyond FY2012. Based on current budgetary requirements, the authorizing committees could potentially need to secure offset funding if BCAP were to be reauthorized in the next farm bill. This could prove difficult given tight budgetary constraints and the more recent and higher projections of the program's cost compared to its initial cost estimates. The current federal biofuels programs continue to inspire strong sentiments from both advocates and detractors. Several Members of Congress have introduced bills that would either strengthen or reduce (and even eliminate) certain features of current programs. As administrator of the RFS program, the EPA is responsible for identifying renewable fuel production pathways and pathway components that can be used in producing qualifying renewable fuel under the RFS program. The EPA is also responsible for announcing the RFS mandate levels for each year based on an evaluation and determination of the estimated production capacity (both domestic and international) of the various biofuels types. If it appears that the production capacity will be insufficient for a particular biofuel category—e.g., cellulosic biofuels—then EPA may announce a waiver of the original statutory RFS mandate for that category (and possibly other nested categories) to a reduced level. In addition, EPA may entertain RFS waiver petitions regarding potential economic hardship related to meeting a particular RFS mandate category. The RFS mandates the use of over 16.55 bgals of biofuels in 2013. The mandate grows to 20.5 bgals of biofuels use by 2015. By 2022, 36 bgals of biofuels must be consumed under the RFS. Each year EPA must review the likelihood of outyear biofuel production meeting or failing to meet required RFS usage levels, and adjust the mandates accordingly. EPA's biofuels standards for each upcoming year are announced on a preliminary basis in the spring of the preceding year, when EPA issues a notice of proposed rulemaking, and on a final basis by November 30 of the preceding year, when EPA issues a final rule. The EPA has already waived the original RFS2 mandate for cellulosic biofuels for each of the first three years (2010, 2011, and 2012) and has proposed waiving it for a fourth year (2013). The likelihood of future EPA waivers could deter capital investments in the sector and make future waivers become a self-fulfilling prophecy. The likelihood of meeting RFS mandates for traditional biofuels hinges both on the "blend wall" and on the slow emergence of a national infrastructure needed to facilitate the distribution and use of the growing mandated biofuel volumes. Even if the expansion of the blending ratio to 15% for model year 2001 and newer passenger vehicles were to actually occur (presently an unlikely prospect due to infrastructure limitations mentioned earlier), the higher blend wall of approximately 20 to 21 bgals would become a real barrier to expanded biofuels use by 2015. Under EISA, EPA is responsible for evaluating whether a renewable fuel meets the specific GHG reduction threshold assigned to its RFS category. Determining compliance with the thresholds requires a comprehensive evaluation of renewable fuels on the basis of their lifecycle emissions. The concept of "lifecycle emissions" encompasses an evaluation of GHG emissions along the entire pathway of a biofuel from the production, harvesting, and marketing of its feedstocks to the processing and distribution of the biofuel, including any significant indirect emissions such as emissions from land uses changes that might result from changes in crop patterns due to the various biofuels incentives (as explicitly required in Section 201, P.L. 110-140 ). More specifically, some have expressed a concern that expanded field crop production in the United States for ethanol production has led to commodity price increases that, in turn, have induced increased land cultivation in other countries, and as a result, have increased net global GHG emissions. The measurement of indirect land use changes (ILUC) is necessarily inexact because so many potential activities and countervailing forces are involved. As a result, inclusion of ILUC as part of the EPA's lifecycle GHG reduction analysis has been controversial. Initially, EPA's lifecycle GHG reduction models proved very sensitive to assumptions regarding the extent of indirect land use changes, and suggested that some standard biofuels may not be eligible for inclusion under the RFS. EPA models were updated prior to the final RFS rule (February 2009) using newer data and produced more inclusive results. For example, corn-starch ethanol was determined to achieve a 21% reduction in GHG emissions compared to the gasoline 2005 baseline, thus just surpassing the 20% reduction threshold. EPA models for estimating land use changes and other life-cycle factors involved in GHG emissions are continually re-evaluated as new or better data, methods, or analytical techniques become available. The nature of the future changes to EPA models, and their potential to include or exclude certain biofuels, remains a critical aspect of the RFS mandates and the U.S. biofuels industry's ability to meet the mandates. On April 2, 2007, in Massachusetts v. EPA (549 U.S. 497 (2007)), the U.S. Supreme Court determined that GHGs are air pollutants covered under Section 202(a) of the Clean Air Act. The Court held that EPA must determine whether or not emissions of GHGs from new motor vehicles cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision. This court ruling allows EPA to regulate GHGs without further congressional action, and could bring into play the issue of indirect land use changes, given their alleged GHG emissions effects, which may put all ethanol production in question. On June 11, 2010, a Senate resolution ( S.J.Res. 26 ) that would have blocked EPA from using the Clean Air Act to regulate GHGs was defeated (53-47). Prior to the vote, on June 8, 2010, the White House had issued a statement saying that if S.J.Res. 26 reached the President's desk (i.e., passed both chambers of Congress), President Obama would veto it. In January 2007, then-Governor Schwarzenegger established a Low Carbon Fuels Standard (LCFS) by executive order for California. The executive order directed the state's Secretary for Environmental Protection to coordinate the actions of the California Energy Commission, the California Air Resources Board (CARB), the University of California, and other agencies to develop protocols for measuring the "life-cycle carbon intensity" of transportation fuels. Under the LCFS, CARB proposed reducing emissions of GHGs by lowering the carbon content of transportation fuels used in California. The LCFS established performance standards that fuel producers and importers must meet each year starting in 2011. Unlike the RFS, which groups biofuels into four categories, the LCFS evaluates each fuel on its own demonstrated level of lifecycle GHG emissions. The LCFS requires that biofuels demonstrate lower lifecycle GHG than the fossil fuels that they replace. For corn ethanol, carbon intensity is lowered by using natural gas instead of coal as a processing fuel, substituting biomass for natural gas or coal, and selling DDGS wet instead of dry. For biodiesel and renewable diesel, carbon intensities can be lowered dramatically by using tallow or recycled cooking oils instead of soybean oil. As part of its LCFS modeling effort, CARB includes an estimate of the indirect land use changes (ILUC) impact of grain-based ethanol. Largely because of the ILUC value assigned to corn-starch ethanol, most midwestern ethanol production did not qualify for use as a transportation fuel under California's LCFS. This result has important implications for how or whether the federal RFS mandates can be met for the nation as a whole, since California is the largest state (39 million people), the largest consumer of gasoline (over 11% of national highway fuel use), and a major ethanol consumer of approximately 1.5 billion gallons annually. The ILUC inclusion sparked considerable reaction from biofuel proponents because the measurement of indirect cross-country effects can be highly ambiguous. In late 2010, CARB adopted a resolution to integrate the latest ILUC research into the LCFS regulation. On November 9, 2011, CARB published an updated list of CARB-approved biofuel production facilities that included 22 ethanol plants in Iowa, 21 plants in Nebraska, 12 plants in South Dakota, and 11 plants in Minnesota among the 111 newly added biofuel-plant pathways. On November 26, 2012, CARB published a "Final Regulation Order" describing the LCFS compliance schedule and carbon intensity lookup table for various fuel pathways. On December 24, 2009, several ethanol groups (including RFA and Growth Energy) filed a lawsuit asserting that the California LCFS violated the U.S. Constitution by seeking to regulate farming and ethanol production practices in the United States under the "commerce clause," which leaves regulation of interstate commerce to the federal government. On December 29, 2011, a U.S. district judge ruled that California's LCFS law did violate the U.S. Constitution's commerce clause and issued an injunction halting enforcement of California's LCFS. The judge ruled that CARB had failed to establish that there are no alternative methods to advance its goals of reducing GHG emissions to combat global warming. After an initial request for a stay of injunction by CARB was denied, a second request for a stay of injunction, while CARB appeals the original ruling, was filed with the Ninth District Court of Appeals and was granted as of April 23, 2012, allowing CARB to continue enforcement of the LCFS until a ruling on the appeal is made. U.S. ethanol exports surged to a record 1.2 billion gallons in 2011 ( Figure 7 ), driven in part by blending wall limits, but also motivated in part by a sharp fall-off in Brazil's ethanol exports due to high international sugar prices and a below-average sugarcane harvest. The top three destinations for U.S. ethanol exports in 2011 were Brazil (33%), Canada (25%), and the European Union (EU) (24%)—all three of which had their own national biofuels usage mandates. Large U.S. ethanol exports are problematic for two reasons—first, they run counter to the often-cited policy goal of national energy security, and second, they may conflict with biofuels policy goals in other countries, leading to trade disputes. EU policy has promoted renewable energy use, along with GHG reductions and energy conservation, for much of the past decade. As a result, EU policy support has engendered a substantial domestic renewable energy industry. As part of a "Renewable Energy Directive" adopted by the European Parliament on December 17, 2008, the EU established a 20-20-20 plan that calls for a 20% reduction in GHG emissions compared to 1990 levels, a 20% increase in renewable energy use (with a 10% share specifically in the transport sector), and a 20% reduction in overall energy consumption. As part of the 20-20-20 plan, the EU also adopted a mandate for renewable content in transportation fuels of 5.75% in 2010, rising to 10% by 2020. On October 17, 2012, the EU revised its policy proposal to state that the use of food-based biofuels to meet the 10% renewable energy target in transportation fuels of the Renewable Energy Directive will be limited to 5%. After the surge of ethanol imports from the United States in 2011, an association of European ethanol producers, ePURE, claimed that the blending tax credit—the $0.45 per gallon incentive known as VEETC—then available to U.S. biofuels blenders represented a subsidy, and that the importation of "subsidized" U.S. ethanol was hurting EU biofuel producers. As a result ePURE requested an anti-dumping (AD) and countervailing duty (CVD) investigation. On November 25, 2011, the EU initiated an investigation into whether U.S. exporters sold ethanol at unfair prices and were backed by subsidies in violation of international trade rules to the detriment of EU biofuels producers. At issue is a European allegation that international ethanol traders were exporting E90 (90% ethanol blends) to Europe to take advantage of the EU's lower tariff on such blends as well as the tax incentive for ethanol blending in the United States. In response to the EU anti-dumping investigation, the Renewable Fuels Association (RFA) pointed out that the ethanol tax credits (most of which expired on December 31, 2011) were not made available to U.S. ethanol producers, but "to gasoline blenders, marketers, and other end users." After a 15-month investigation into a number of U.S. ethanol producers, the EU concluded that U.S. domestic policies aiming to encourage clean energy constitute an illegal subsidy and lead to artificially low-priced imports being "dumped" on the EU market. On February 28, 2013, the European Commission announced that it will impose a five-year anti-dumping duty of 9.5% on all imports of bioethanol from the United States into the 27-nation bloc. In 2009, when similar complaints were lodged against U.S. biodiesel exports, the EU imposed duties of 40% for a five-year period on biodiesel imports originating from the United States. In response, on April 29, 2013, a bipartisan group of U.S. senators asked the U.S. Trade Representative (USTR), Demetrios Marantis, to investigate the EU decision and consider the possibility of filing a World Trade Organization (WTO) challenge to the European Commission's decision. The potential implications of an ethanol trade dispute between United States and the EU are unclear. However, the imposition of an import tariff will likely limit U.S. ethanol exports to the EU. Given the emergence of the blend wall as a constraint on U.S. ethanol consumption, combined with relatively tight ethanol supplies on the world market (following two years of successive poor Brazilian sugar crops—2011 and 2012) and biofuels usage mandates in several major fuel consuming nations, the United States may seek international markets for surplus domestic supplies, thus keeping the issue in front of policymakers.
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Since the late 1970s, U.S. policymakers at both the federal and state levels have authorized a variety of incentives, regulations, and programs to encourage the production and use of agriculture-based biofuels—i.e., any fuel produced from biological materials. Initially, federal biofuels policies were developed to help kick-start the biofuels industry during its early development, when neither production capacity nor a market for the finished product was widely available. Federal policy (e.g., tax credits, import tariffs, grants, loans, and loan guarantees) has played a key role in helping to close the price gap between biofuels and cheaper petroleum fuels. Now, as the industry has evolved, other policy goals (e.g., national energy security, climate change concerns, support for rural economies) are cited by proponents as justification for continuing or enhancing federal policy support. The U.S. biofuels sector responded to these government incentives by expanding output every year from 1980 through 2011 (with the exception of 1996), with important implications for the domestic and international food and fuel sectors. Production of the primary U.S. biofuel, ethanol (derived from corn starch), has risen from about 175 million gallons in 1980 to nearly 14 billion gallons in 2011. U.S. biodiesel production (derived primarily from vegetable oil), albeit much smaller, has also shown strong growth, rising from 0.5 million gallons in 1999 to a record 969 million gallons in 2012. Despite the rapid growth of the past decades, total agriculture-based biofuels consumption accounted for only about 8% of U.S. transportation fuel consumption (9.7% of gasoline and 1.5% of diesel) in 2012. Federal biofuels policies have had costs, including unintended market and environmental consequences and large federal outlays (estimated at $7.7 billion in 2011, but declining to $1.3 billion in 2012 with the expiration of the ethanol blender's tax credit). Despite the direct and indirect costs of federal biofuels policy and the relatively small role of biofuels as an energy source, the U.S. biofuels sector continues to push for federal involvement. But critics of federal policy intervention in the biofuels sector have also emerged. Current issues and policy developments related to the U.S. biofuels sector that are of interest to Congress include Many federal biofuels policies require routine congressional monitoring and occasional reconsideration in the form of reauthorization or new appropriations. The 10% ethanol-to-gasoline blend ratio—known as the "blend wall"—poses a barrier to expansion of ethanol use. The Environmental Protection Agency (EPA) issued waivers to allow ethanol blending of up to 15% (per gallon of gasoline) for use in model year 2001 and newer light-duty motor vehicles. However, the limitation to newer vehicles, coupled with infrastructure issues, could limit rapid expansion of blending rates. The slow development of cellulosic biofuels has raised concerns about the industry's ability to meet large federal usage mandates, which in turn has raised the potential for future EPA waivers of mandated biofuel volumes and has contributed to a cycle of slow investment in and development of the sector. In 2012, the expiration of the blender tax credit, poor profit margins (due primarily to high corn prices), and the emerging blend wall limitation have contributed to a drop-off in ethanol production and have generated considerable uncertainty about the ethanol industry's future.
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Congress has expressed interest in federal programs and activities addressing tsunami detection, warning, research, education, and outreach because of the tsunami hazard to the United States, particularly to Pacific Northwest, Northern California, Alaska, and Hawaii, as well as regions of the Caribbean and Atlantic coastline. The Japanese tsunami of March 11, 2011, illustrated the potential for damage and loss of life posed by a potential tsunami in the Pacific. A fault system off the northwestern United States, called the Cascadia Subduction Zone, is similar to the fault system responsible for the 2011 Japanese tsunami disaster. Oregon, Washington, Northern California, Hawaii, and Alaska all face some risk if the Cascadia fault ruptures. Congress passed the Tsunami Warning, Education, and Research Act of 2017 as Title V of P.L. 115-25 , on April 4, 2017; President Trump signed the bill into law as P.L. 115-25 on April 18, 2017. Title V of P.L. 115-25 amends P.L. 109-479 , Title VIII, the Tsunami Warning and Education Act, which was enacted on January 12, 2007. The new law does not make fundamental changes to the federal government's tsunami activities, which include tsunami forecasting and warning, mitigation, and research, as well as other tsunami-related activities. However, it does broaden the purposes of the federal activities, increasing focus on tsunami research, promoting community resilience to tsunami hazards, and refining requirements for standards and guidelines to improve education and outreach activities and tsunami mapping and modeling. The new law authorizes appropriations of $25.8 million per year for FY2016 through FY2021. An ongoing question for the U.S. tsunami program and related activities is whether Congress will appropriate funds matching the amounts authorized in P.L. 115-25 to carry out the existing program as well as the new activities and priorities in the law. Another challenge is how Congress should evaluate the effectiveness of the program. A perennial issue for NOAA is keeping its constellation of Deep-Ocean Assessment and Reporting of Tsunami (DART) buoys operational, and the new law specifies a goal of keeping at least 80% of the buoy system operational at all times. More generally, because Title V of P.L. 115-25 adds an emphasis on research throughout the program, a future question is how well research results are incorporated into tsunami resilience, education, warning, and other activities. Also, damaging tsunami events are relatively rare for the United States, so it is difficult to assess the overall effect of tsunami program activities on an annual basis. If a large and damaging tsunami were to strike the United States, an additional challenge for Congress would be to sort out how effective the program was at reducing the amount of damage and the number of injuries and fatalities. In addition, the bill repeals P.L. 109-424 , the Tsunami Warning and Education Act, also passed by the 109 th Congress. P.L. 109-424 was signed into law by President George W. Bush on December 20, 2006, and is nearly identical to P.L. 109-479 . P.L. 115-25 removes any potential for ambiguity by repealing one of the existing laws. This report provides a section-by-section comparison of text quoted from P.L. 115-25 and P.L. 109-479 , shown in Table 1 , with some brief comments from the Congressional Research Service (CRS) pointing out selected changes and how those changes affect P.L. 109-479 and the tsunami activities it authorized (far right column of Table 1 ). The table is organized so that the same or most similar sections, and parts of sections, are in the same row or rows. The CRS comments generally address the sections or parts of sections in the same row of the table.
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The National Oceanic and Atmospheric Administration's (NOAA's) National Weather Service (NWS) manages two tsunami warning centers, which monitor, detect, and issue warnings for tsunamis. The NWS operates the Pacific Tsunami Warning Center (PTWC) at Ford Island, HI, and the National Tsunami Warning Center (NTWC) at Palmer, AK. The tsunami warning centers monitor and evaluate data from seismic networks and determine if a tsunami is likely based on the location, magnitude, and depth of an earthquake. The centers monitor relevant water-level data, typically with tide-level gauges, and data from NOAA's network of Deep-Ocean Assessment and Reporting of Tsunami (DART) detection buoys to confirm that a tsunami has been generated or to cancel any warnings if no tsunami is detected. In the 114th Congress, the House passed legislation amending U.S. tsunami activities (H.R. 34) and the Senate passed similar legislation (Title V of H.R. 1561). However, the 114th Congress did not enact a final version of the legislation. The 115th Congress passed the Tsunami Warning, Education, and Research Act of 2017 as Title V of P.L. 115-25 on April 4, 2017. The bill was signed into law on April 18, 2017. Title V of P.L. 115-25 amended P.L. 109-479, Title VIII, the Tsunami Warning and Education Act, which was enacted on January 12, 2007. The new law does not make fundamental changes to the federal government's tsunami activities, which include tsunami forecasting and warning, mitigation, and research, as well as other tsunami-related activities. However, it does broaden the purposes of the federal activities, increasing focus on tsunami research, promoting community resilience to tsunami hazards, and refining requirements for standards and guidelines to improve education and outreach activities as well as tsunami mapping and modeling. The new law authorizes appropriations of $25.8 million per year from FY2016 through FY2021. An ongoing question for the U.S. tsunami program and related activities is whether Congress will appropriate funds matching the amounts authorized in P.L. 115-25 for NOAA to carry out the tsunami program. Another challenge is how Congress should evaluate the effectiveness of the program. Because Title V of P.L. 115-25 adds an emphasis on research, a future question is how well research results are incorporated into tsunami resilience, education, warning, and other activities. More generally, if a large and damaging tsunami were to strike the United States, an additional challenge for Congress would be to sort out how effective the program was at reducing the amount of damage and the number of injuries and fatalities. This report compares the enacted legislation text with P.L. 109-479, Title VIII, section by section, with brief comments on selected comparisons about how changes in P.L. 115-25, Title V, affect P.L. 109-479, Title VIII, and the authorized tsunami activities.
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T hree agencies in the Department of the Interior (DOI) share responsibility for managing the nation's ocean energy resources, which cover approximately 1.7 billion acres on the U.S. outer continental shelf (OCS). The Bureau of Ocean Energy Management (BOEM) administers offshore energy leasing; the Bureau of Safety and Environmental Enforcement (BSEE) oversees offshore operational safety and environmental responsibility; and the Office of Natural Resources Revenue (ONRR) manages public revenues from federally regulated offshore and onshore energy projects. BOEM, BSEE, and ONRR receive appropriations in the annual Interior, Environment, and Related Agencies appropriations bill. Aggregate and program-level appropriations shape the resources available to the agencies for conventional and renewable energy leasing, inspections, spill preparedness, environmental enforcement, planning, research, and revenue collection and disbursement, among others. This report discusses FY2017 appropriations for the three agencies, including the Obama Administration's funding request for each agency and subsequent congressional action. The 114 th Congress did not enact full-year Interior appropriations for FY2017. Continuing funds were provided through April 28, 2017, by two continuing resolutions (CRs; P.L. 114-223 and P.L. 114-254 ). The CRs generally provide funding at the FY2016 level, minus an across-the-board reduction of less than 1%. The 115 th Congress is faced with addressing the ocean energy agencies' appropriations for the remainder of FY2017. BOEM manages U.S. offshore oil and gas leasing, renewable energy development, and marine mineral leasing, with a mission to balance national interests in energy supply and environmental protection. BOEM's responsibilities include developing a five-year offshore oil and gas leasing program, managing oil and gas lease sales and marine mineral agreements, reviewing exploration and development plans, facilitating renewable energy development on the OCS, conducting resource evaluations and economic analysis, and performing environmental reviews, among others. BOEM's operations are funded both by discretionary appropriations under the agency's Ocean Energy Management account and by the authority to expend offsetting collections derived from a portion of OCS rental receipts and cost recovery fees. The initial discretionary appropriation for each fiscal year is reduced by the amount of eligible receipts and fees that are collected, so that the final amount appropriated to BOEM is the net of those collections. For FY2017, the Obama Administration requested total appropriations of $175.1 million for BOEM, of which $94.9 million would be derived from offsetting collections, for a net appropriation of $80.2 million ( Table 1 ). BOEM's total available funding under the request would be $4.3 million higher (+2.5%) than the FY2016 total. This reflects an increase of $6.0 million (+8.0%) in BOEM's net requested appropriation from Congress, along with BOEM's estimate of fewer offsetting collections than in FY2016 (1.7% less in offsetting collections). On July 14, 2016, the House passed its Interior appropriations bill, H.R. 5538 , with total appropriations of $169.3 million for BOEM, offset by the rental receipt and fee collections described above, for a net appropriation of $74.4 million. The House's total appropriation was $1.6 million less than the FY2016 enacted total and $5.8 million less than the Obama Administration's request. Comparing the net appropriations after offsets, the House's amount was $0.1 million more than the FY2016 enacted net appropriation and $5.8 million less than the request. On June 16, 2016, the Senate Appropriations Committee reported its Interior appropriations bill, S. 3068 . The Senate committee bill contained total appropriations of $169.6 million for BOEM, offset by the rental receipt and fee collections described above, for a net appropriation of $74.6 million. The total appropriation was $1.3 million less than the FY2016 enacted total and $5.6 million less than the Obama Administration's request. Comparing the net appropriations after offsets, the Senate committee amount was $0.4 million more than the FY2016 enacted net appropriation and $5.6 million less than the request. The 114 th Congress did not enact full-year Interior appropriations for FY2017, and continuing funds were provided through April 28, 2017, under the CRs ( P.L. 114-223 and P.L. 114-254 ). The CRs generally provide funding at the FY2016 level, minus an across-the-board reduction of less than 1%. BOEM's appropriations are contained in a single budget account, titled Ocean Energy Management. Within this account, the Conventional Energy budget activity funds development and administration of the agency's oil and gas leasing program, including the development of forward-looking five-year leasing plans. In November 2016, BOEM published its oil and gas leasing program for 2017-2022, which includes 1 lease sale in the Alaska region and 10 sales in the Gulf of Mexico. Appropriations for the Conventional Energy activity also go toward BOEM's administration of lease sales under the current oil and gas leasing program for 2012-2017. Other BOEM Conventional Energy activities include managing existing leases, reviewing exploration and development/production plans, administering risk management and financial responsibility programs, evaluating ocean resources, mapping the OCS, and administering the Marine Minerals Program, among others. A different budget activity under the Ocean Energy Management account, the Renewable Energy activity, supports BOEM's management of renewable ocean energy resources under Section 388 of P.L. 109-58 , the Energy Policy Act of 2005. Under this activity, BOEM has planned and conducted wind energy lease sales in the Atlantic and has issued 12 commercial wind energy leases offshore (in Delaware, Maryland, Massachusetts, New Jersey, New York, Rhode Island, and Virginia). The Block Island Wind Farm off of Rhode Island began regular operations in December 2016, marking the first commercial wind production in U.S. waters. BOEM has identified wind, wave, and ocean current energy as offering the greatest potential among renewables for OCS development in the foreseeable future, and it has issued research leases and grants for hydrokinetic energy research and testing projects under the Renewable Energy activity. Other responsibilities include data collection and stakeholder engagement related to renewable energy efforts. BOEM's Environmental Assessment budget activity (referred to in agency budget documents as Environmental Programs) supports BOEM's responsibilities for assessing the environmental impacts of ocean energy activities and providing environmental safeguards. BOEM coordinates with BSEE in managing OCS environmental programs. Under the National Environmental Policy Act of 1969 (NEPA), as well as the Outer Continental Shelf Lands Act (OCSLA) and other statutes, BOEM must conduct environmental assessments of proposed ocean activities such as geological and geophysical (G&G) exploration, five-year leasing programs, lease sales, exploration plans, and development and production plans. For example, BOEM studied the environmental impacts of G&G seismic surveys in the Atlantic Ocean and approved such surveys in summer 2014. This budget activity also supports BOEM's collaboration with other research agencies to develop scientific knowledge of the OCS. BOEM's Executive Direction budget activity covers the agency's executive offices, such as the Office of the Director, the Office of Congressional Affairs, and others. The Obama Administration's FY2017 budget request for BOEM proposed funding changes in several areas. Some of the changes related to the agency's offsetting collections, which consist of a portion of OCS rental receipts and cost recovery fees that the agency is authorized to spend. BOEM anticipated an 11% ($4.5 million) decline in its offsetting rental receipts for FY2017, as compared with FY2016. BOEM attributed the anticipated decline to multiple factors, including a reduction in the number of leases being sold in the Gulf of Mexico because the area is maturing and because of the decline in world oil prices, as well as changes in lease terms and a resulting increase in lease relinquishments. Because "this decline in rental receipts is not meaningfully correlated to BOEM's workload," the agency requested that Congress provide direct appropriations of $4.1 million to offset the reduced rental receipts. BOEM further stated that "the projected decline in offsetting rental receipts is expected to continue to present a significant fiscal challenge in the coming years." In addition to requesting direct appropriations from Congress to make up for the projected reduction, the Obama Administration proposed to change the proportion of offsetting rental receipts that go to BOEM and BSEE. Whereas in earlier years BOEM received 65% of the offsetting rental receipts and BSEE 35%, the proposal for FY2017 was for BOEM to receive 70% and BSEE 30%. Separately, BOEM also anticipated a net reduction of $99,000 in its existing cost recovery fees for FY2017. However, BOEM proposed a new cost recovery fee for costs associated with the agency's Risk Management Program. BOEM estimated that this new fee would bring in revenues of $2.9 million for FY2017, so that the agency would have an overall gain of $2.8 million in cost recovery fees. The monies from the new fee would be used to fund continued implementation of the Risk Management Program, including adding staff with specializations in risk assessment and management. Both the House-passed and the Senate committee-reported bills reflected BOEM's anticipated changes to its offsetting collections, including BOEM's estimated reductions in rental receipts and cost recovery fees, its proposed new fee associated with the Risk Management Program, and the change in the proportion of offsetting rental receipts that would go to BOEM and BSEE. However, neither bill provided the level of direct appropriations that the agency had requested to make up for the reduction in offsetting collections. Apart from the changes to offsetting collections, BOEM proposed a number of other funding changes for FY2017: An increase of $1.6 million in the Conventional Energy budget activity to fund special pay authority to attract and retain skilled geophysicists, geologists, and petroleum engineers. The pay rates would accord with special salary rate tables issued for these positions by the Office of Personnel Management (OPM). An increase of $0.9 million across two budget activities (Conventional Energy and Environmental Assessment) for additional staffing. The agency stated that staffing increase was needed to accommodate a growth in the number of deepwater drilling plans BOEM must review and regulatory changes that add to the workload of the plan review process. An increase of $0.2 million across all activities for fixed costs, which are non-programmatic, mandatory costs such as those for employee pay and benefits, workers' compensation, and rent to the General Services Administration. A decrease of $0.4 million in funding for methane hydrate research under the Conventional Energy budget activity to accommodate the higher pay for skilled positions described above. A decrease of $0.4 million for data collection and outreach under the Renewable Energy budget activity, also to accommodate the higher pay for skilled positions described above. The House-passed and Senate committee-reported bills would have provided BOEM with less money in direct appropriations than the agency had requested. The House bill contained lower-than-requested totals for all of four of BOEM's budget activities (Renewable Energy, Conventional Energy, Environmental Assessment, and Executive Direction). The House Appropriations Committee did not specify in its report on the bill whether the specific requested increases were to be funded out of available totals. The Senate committee bill contained BOEM's requested amount for one budget activity—Renewable Energy—and less than requested for the other activities. For the Conventional Energy budget activity, the committee report stated that "the Committee concurs with the agency proposed reductions" but did not comment on the agency's requested increases. BSEE provides oversight of oil and gas exploration, development, and production on the OCS. Its mission is to promote safety, protect the environment, and conserve resources offshore through regulatory oversight and enforcement. BSEE's functions include issuing permits for oil and gas operations, inspecting facilities, developing regulations and standards, conducting research and collecting data on offshore safety, assessing technology, and overseeing industry oil spill prevention and readiness activities, among other responsibilities. Similar to BOEM, BSEE's operations are funded both by discretionary appropriations under the agency's Offshore Safety and Environmental Enforcement and Oil Spill Research accounts and by a portion of OCS rental receipts, cost recovery fees, and inspection fees, which are treated as offsetting collections in the BSEE budget. For FY2017, the Obama Administration requested total appropriations of $204.9 million for BSEE, of which $108.5 million would be derived from offsetting collections of OCS rental receipts, cost recovery fees, and inspection fees, for a net appropriation of $96.3 million (see Table 2 ). The total request was nearly level with the FY2016 enacted total, but because of an estimated drop in offsetting collections, the requested net appropriation was $7.9 million higher (+8.9%) than the FY2016 enacted net amount of $88.5 million. The House Interior appropriations bill, H.R. 5538 , contained total appropriations of $204.9 million for BSEE, offset by rental receipt and fee collections of $96.5 million. The bill also included a rescission of $20.0 million in unobligated balances, which functions as an offset to the total, yielding a net appropriation of $88.3 million. The House's total appropriation for BSEE was $0.2 million more than the FY2016 enacted total and the same as the Obama Administration's FY2016 request. Although the House's total BSEE appropriation was the same as the request, because of different estimations of offsets, its net appropriation was $8.0 million less th an the agency's request and $0.1 million less than the FY2016 enacted net appropriation. The Senate Appropriations Committee's Interior appropriations bill, S. 3068 , contained total appropriations of $204.7 million for BSEE, offset by rental receipt and fee collections of $96.5 million, as well as a $25 million rescission of unobligated balances, for a net appropriation of $83.1 million. The Senate Committee's total appropriation was the same as the FY2016 enacted total and $0.2 million less than the Obama Administration's request. The committee's net appropriation, after offsets, was $5.3 million less than the FY2016 enacted net appropriation and $13.2 million less than the request, reflecting different estimations of offsetting collections. The 114 th Congress did not enact full-year Interior appropriations for FY2017, and continuing funds were provided through April 28, 2017, under the CRs ( P.L. 114-223 and P.L. 114-254 ). The CRs generally provide funding at the FY2016 level, minus an across-the-board reduction of less than 1%. BSEE's funding is appropriated under two budget accounts, Offshore Safety and Environmental Enforcement (OSEE) and Oil Spill Research. Under the OSEE account, the Operations, Safety, and Regulation (OSR) activity supports the agency's development of regulations and safety standards, review and approval of OCS operating permits, inspections of facilities and equipment, oversight of operators' Safety and Environmental Management Systems (SEMS) programs, real-time monitoring of oil and gas drilling, and evaluation of emerging technologies, among other activities. Under this activity, BSEE in July 2016 coordinated with BOEM to issue final safety regulations for Arctic exploratory drilling, and in April 2016, BSEE issued final regulations for blowout prevention systems and well control. Also under the OSEE account, the Environmental Enforcement activity supports BSEE's own compliance with NEPA and other environmental statutes, as well as the agency's oversight and enforcement of environmental compliance by operators on the OCS. The program has pursued more than 200 cases of environmental violations since late 2011. The activities for Administrative Operations and Executive Direction, which are also within the OSEE account, support a range of administrative services as well as BSEE's executive offices. A separate BSEE budget account is for Oil Spill Research. This account funds research and planning for oil spill responses, as well as oversight of operators' spill response plans. It also supports Ohmsett, the National Oil Spill Response Research and Renewable Energy Test Facility. Like BOEM, BSEE anticipated changes to its offsetting collections for FY2017. The agency estimated a drop of $11.5 million in rental receipts for FY2017 as compared to the previous year's collections. BSEE estimated lower cost recovery fees as well (-$2.2 million). The agency estimated an increase of $6.0 million in anticipated inspection fees, based on its proposal for legislative changes to authorize the agency to charge additional fees for repeat visits to certain OCS facilities. However, neither the House nor the Senate Appropriations Committee included this new authorization in its bill, and the committees estimated $12.0 million less in FY2017 inspection fee collections for BSEE than the agency had suggested. Neither bill provided the level of direct appropriations requested by BSEE to address the estimated shortfall in offsetting collections. Both bills included rescissions of unobligated prior-year balances, which function as offsets to the funding in the Interior appropriations bill for the fiscal year in which they are enacted, as discussed above. Separate from the estimated changes to offsetting collections, BSEE proposed other funding changes in its OSEE account, including the following: An increase of $0.5 million across four budget activities (Environmental Enforcement, OSR, Administrative Operations, and Executive Direction) for projected growth in fixed costs such as rent, salaries, and information technology. A decrease of $0.3 million across four budget activities (Environmental Enforcement, OSR, Administrative Operations, and Executive Direction), to be achieved through administrative savings efforts and implementation of new program management models. BSEE, like BOEM, proposed to increase pay levels for certain skilled professionals, as authorized in August 2015 changes to OPM special salary tables. BSEE stated that base funding would be used to support the revised pay rates, resulting in no change to the OSR appropriation from the FY2016 enacted level. The House-passed and Senate committee-reported bills for the most part reflected BSEE's proposed changes, except for those concerning offsetting collections, as discussed above. Additionally, the Senate bill did not reflect BSEE's proposed changes for the OSR account and instead would have provided the same as the FY2016 enacted level. ONRR was established under the DOI Office of the Assistant Secretary for Policy, Management, and Budget to collect, account for, analyze, audit, and disburse revenues from energy and mineral leases on the OCS as well as on federal onshore and American Indian lands. With regard to its disbursement function, in FY2016 ONRR disbursed $6.3 billion in revenues from mineral leases on federal and Indian lands, down from $9.9 billion in FY2015 and $13.4 billion in FY2014. Of the FY2016 total, approximately $2.8 billion came from leasing and production activity on the OCS. The revenue amounts disbursed fluctuate annually, based primarily on the prices of oil and natural gas, and have averaged about $10 billion per year for onshore and offshore production combined over the last five years (FY2012-FY2016). Sources of ONRR receipts include royalties, bonus bids, and rents for all leasable minerals including oil, natural gas, coal, and others. ONRR distributes revenues under various authorities. Revenues from onshore leases are disbursed to the states in which they were collected, the General Fund of the U.S. Treasury, and the Reclamation Fund based on various statutory formulas. Revenues from offshore leases are allocated among coastal states, the Land and Water Conservation Fund, the Historic Preservation Fund, and the Treasury. ONRR receives and processes approximately 49,000 royalty and production reports monthly. It annually collects royalties on some 32,000 offshore and onshore producing leases and rents on some 29,000 nonproducing leases. ONRR uses an automated liquid verification system and gas verification system to ensure the accuracy of reported offshore production information. The Obama Administration submitted an FY2017 total funding request of $129.3 million for ONRR. There are no offsetting collections proposed for ONRR as there are for BOEM and BSEE. See Table 3 for the FY2017 funding request and ONRR appropriations. ONRR identified three major areas of importance that support its mission to collect, disburse, and verify federal and Indian energy and other natural resource revenue: (1) Financial and Production Management, (2) Audit and Compliance Management, and (3) Coordination, Enforcement, Valuation, and Appeals. The FY2017 request reflected resources proposed for ONRR to assume trust responsibility for the Osage Nation as it does for all other tribes receiving mineral revenue. The Osage Nation is a federally recognized tribe located in Oklahoma. After a 2011 settlement ($380 million), DOI and the Osage Nation agreed to implement programs to strengthen management and improve communication. To date, the Osage oil and gas leasing program operates with support only from DOI's Bureau of Indian Affairs (thus, with no support from the Bureau of Land Management or ONRR). The addition of Osage to ONRR's portfolio would increase the amount of Indian leases under ONRR's management by 82%, or an additional 5,000 new leases and 30,000 producing wells. The Obama Administration's FY2017 request sought $968,000 to fully fund the Osage Trust Accounting program. The Osage Trust Accounting Program received $2.6 million in FY2016. The Obama Administration requested $1.0 million in FY2017 for geospatial information systems (GIS) to improve the effectiveness of ONRR and to better understand the relationship between leases and transportation lines, among other things. The Administration also requested $1.2 million to improve ONRR's audit and compliance function. ONRR's strategic goals include revenue management and royalty reform using ONRR-wide compliance measures. ONRR would like to improve its newly implemented compliance measures to fully reflect all of ONRR's compliance work. A major challenge confronting ONRR is to ensure that its audit and compliance program is consistently effective. Critics contend that less auditing and more focus on compliance review has led to a less rigorous royalty collection system and thus a loss of revenue to the federal Treasury. DOI's Inspector General and the Government Accountability Office (GAO) have made recommendations to strengthen and improve administrative controls of the compliance and asset management program, including adoption of a risk-based compliance approach. In FY2015, ONRR, along with its state and tribal audit partners, closed 110 audits and 667 compliance reviews. Tribes can conduct mineral royalty audits on their tribal land, and states can do so on federal leases within their state boundaries. ONRR has agreements with 10 states and 6 tribes to conduct leasing-compliance activities in their jurisdictions. The House-passed FY2017 Interior appropriations bill, H.R. 5538 , would have supported ONRR's programs at $126.5 million, $2.8 million below the Obama Administration's request and $1.0 million above last year's appropriation. The Senate committee-reported bill, S. 3068 , would have provided $121.8 million for ONRR, $7.6 million below the Administration's request and $3.8 million below the FY2016 appropriation. The 114 th Congress did not enact full-year Interior appropriations for FY2017, and continuing funds were provided through April 28, 2017, under the CRs ( P.L. 114-223 and P.L. 114-254 ). The CRs generally provide funding at the FY2016 level, minus an across-the-board reduction of less than 1%. H.R. 5538 and S. 3068 contained general provisions related to offshore energy. Section 107 of both bills directed the ocean energy agencies to collect nonrefundable inspection fees in FY2017 to be deposited into BSEE's OSEE account and specified fee amounts. Section 108 of both bills authorized the Secretary of the Interior to transfer funds among and between BSEE, BOEM, and ONRR in accordance with reprogramming guidelines related to the earlier departmental reorganization. Both of these provisions are similar to those in previous years' Interior appropriations laws. Section 124 of the House bill would have prohibited the use of funds in FY2017 or any other fiscal year to implement new regulations pertaining to drilling margins or static downhole mud weight in offshore wells. The provision referred to regulatory changes contained in BSEE's April 2016 final rule on offshore well control. The Obama Administration included as part of its DOI budget some legislative proposals that pertained to the ocean energy agencies. One DOI proposal, concerning offshore revenue-sharing payments under P.L. 109-432 , the Gulf of Mexico Energy Security Act of 2006, sought to redirect the payments from their current recipients—the states of Alabama, Louisiana, Mississippi, and Texas—to broad federal natural resource and conservation programs. More than half of the funding would be redirected to a new Coastal Climate Resilience Program for at-risk coastal states, local governments, and communities to prepare for and adapt to climate change. A separate proposed package of federal oil and gas legislation for both offshore and onshore activities included changes such as evaluating minimum royalty rates, adjusting the onshore royalty rate, repealing legislatively mandated royalty relief, providing for shorter primary lease terms, instituting a new fee on nonproducing leases, and making certain changes in revenue collections, among other elements. Congressional action, if any, on such proposals could take place outside of the appropriations process.
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This report discusses FY2017 appropriations for the Department of the Interior's (DOI's) Bureau of Ocean Energy Management (BOEM), Bureau of Safety and Environmental Enforcement (BSEE), and Office of Natural Resources Revenue (ONRR). The three agencies collectively administer federal ocean energy resources covering more than 1.7 billion acres on the U.S. outer continental shelf (OCS). BOEM administers offshore energy leasing, BSEE oversees offshore operational safety and environmental responsibility, and ONRR manages public revenues from federally regulated offshore and onshore energy projects. BOEM, BSEE, and ONRR receive appropriations in the annual Interior, Environment, and Related Agencies appropriations bill. The 114th Congress did not enact full-year Interior appropriations for FY2017. Continuing funds for the ocean energy agencies were provided through April 28, 2017, by two continuing resolutions (CRs; P.L. 114-223 and P.L. 114-254). The CRs generally provide funding at the FY2016 level, minus an across-the-board reduction of less than 1%. The 115th Congress is faced with addressing these agencies' appropriations for the remainder of FY2017. BOEM's and BSEE's operations are funded both by discretionary appropriations from general funds of the Treasury and by the authority to expend offsetting collections derived from a portion of OCS rental receipts and cost recovery fees (and, for BSEE, inspection fees). The initial discretionary appropriation for each fiscal year to each agency is reduced by the amount of eligible receipts and fees that are collected, so that the final amount appropriated to BOEM and BSEE is the net of those collections. ONRR does not receive funding through offsetting collections. For FY2017, the Obama Administration requested total appropriations of $175.1 million for BOEM, $204.9 million for BSEE, and $129.3 million for ONRR. The BOEM total included an estimated $94.9 million in offsetting collections, for a net appropriation of $80.2 million. The BSEE total included an estimated $108.5 million in offsetting collections, for a net appropriation of $96.3 million. The requests for all three agencies represented increases from enacted FY2016 appropriations—a requested increase of 8.0% for BOEM (for the net appropriation after offsets), 8.9% for BSEE (for the net appropriation after offsets), and 3.0% for ONRR. On July 14, 2016, the House passed H.R. 5538, the Department of the Interior, Environment, and Related Agencies appropriations bill for FY2017. On June 16, 2016, the Senate Appropriations Committee reported its version of the bill, S. 3068. Neither bill was enacted. For BOEM, H.R. 5538 recommended total appropriations of $169.3 million, with $94.9 million derived from offsetting collections, for a net appropriation of $74.4 million. S. 3068 recommended total appropriations of $169.6 million for BOEM, with $94.9 million derived from offsetting collections, for a net appropriation of $74.6 million. For BSEE, H.R. 5538 recommended total appropriations of $204.9 million, with $96.5 million derived from offsetting collections, along with a rescission of $20.0 million—resulting in a net appropriation for BSEE of $88.3 million. S. 3068 recommended total appropriations of $204.7 million for BSEE, with $96.5 million derived from offsetting collections and a rescission of $25.0 million, for a net appropriation of $83.1 million. For ONRR, H.R. 5538 contained appropriations of $126.5 million and S. 3068 contained appropriations of $121.8 million.
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The existence of war, terrorism, or other international conflict does not suspend the TakingsClause's protection of private property. (4) Still, severalbroad takings-law principles of particularrelevance to international threats and national security present daunting obstacles for takings claimsin this area. Heightened judicial deference in regulatory takings cases International dangers have consistently prompted courts to extend extra deference to responsive government measures when dealing with regulatory takings claims. ("Regulatory takings claims"are those based on the government's restriction of a property's use , rather than its physical invasionor outright expropriation of the property.) Indeed, the judicial deference is great enough that ourresearch failed to reveal any instance where a regulatory taking claim based on federal governmentaction against an international threat has succeeded. Statements of judicial deference are found in numerous cases rejecting regulatory takings claims against the United States - claims based on (1) the federal government's temporary wartimeshutdown of non-essential gold mines to free up needed mine workers and mining equipment, UnitedStates v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958) ("In the context of war, we have beenreluctant to find that degree of regulation which, without saying so, requires compensation to be paidfor resulting losses of income."); (2) wartime rent controls, Block v. Hirsh , 256 U.S. 135, 157 (1920)("[a] limit in time, to tide over a passing trouble, well may justify a law that could not be upheld asa permanent change"), and Bowles v. Willingham , 321 U.S. 503, 519 (1944) ("A nation which candemand the lives of its men and women in ... war is under no constitutional necessity of providinga system of price control on the domestic front which will assure each landlord a fair return ...."); (3)a federal order during the Arab oil embargo that an oil production company sell oil to a particularrefiner, Condor Operating Co. v. Sawhill , 514 F.2d 351 (Temp. Emer. Ct. App.) (citing Blockv.Hirsh quote, supra ), cert. denied , 421 U.S. 976 (1975); and (4) a federal prohibitionon the exerciseof stock options in a U.S. company by a foreign national with ties to Libya, a nation accused ofsponsoring terrorism, Paradissiotis v. United States , 49 Fed. Cl. 16, 23 (2001) ("It is unfortunate thatplaintiff lost his property outright. The preservation of the national security interest of the UnitedStates nevertheless greatly outweighs plaintiff's loss."), affirmed , 304 F.3d 1271 (Fed. Cir. 2002). (5) The Condor Operating Co . and Paradissiotis decisions demonstrate that heightened judicialdeference is not restricted to international dangers of the traditional-war variety, or even to hostilitiesat all. One element of the general regulatory takings analysis is a balancing of the governmental interest advanced by the challenged government action against the burden imposed on the propertyowner. (6) The foregoing decisions in the internationalconflict and terrorism realms often do notexplicitly link their statements of deference to this broad takings-test factor - but such a relativeweighing is obviously what they are doing. In the case of major threats to the security of the state,the governmental interest is deemed to be so compelling as to be dispositive, or nearly so. Reduced expectations when doing business internationally Another factor in the general regulatory takings test is the extent to which the government's action frustrated the reasonable investment-backed expectations of the property owner-plaintiff. (7) Citing this factor, the courts unanimously have spurned the takings claims of persons whose relations with foreign countries - through contracts, leaseholds, causes of action for compensation,etc. - were frustrated when the United States responded to deteriorating or hostile relations withthose countries. When dealing in foreign commerce, these decisions say, the possibility of changingworld circumstances and U.S. response thereto make any expectation of government noninterference unreasonable . One is charged with awareness that relations between the affected countries mightsour, and that the government might act in a way that interferes with one's property rights. (8) See, e.g.,767 Third Avenue Assocs. v. United States , 48 F.3d 1575 (Fed. Cir. 1995); Chang v. UnitedStates ,859 F.2d 893 (Fed. Cir. 1988); Paradissiotis v. United States , 49 Fed. Cl. 16 (2001), affirmed , 304F.3d 1271 (Fed. Cir. 2002); Abrahim-Youri v. United States , 36 Fed. Cl. 482, 486 (1996), affirmed ,139 F.3d 1462 (Fed. Cir. 1997), cert. denied , 524 U.S. 951 (1998); Rockefeller Center Propertiesv. United States , 32 Fed. Cl. 586, 592 (1995); Belk v. United States , 12 Cl. Ct. 732, 734 (1987), affirmed , 858 F.2d 706 (Fed. Cir. 1988). Most of the just-cited cases involve property interests (e.g., contracts) acquired at a time when the international situation was already foreboding - as in 767 Third Ave. Assocs. with the threat ofethnic strife in Yugoslavia, and in Chang and Paradissiotis with Libyan support ofinternationalterrorism. Or the plaintiffs had chosen to live in a country "where the potential for kidnapping andother terrorist acts existed and the possibility that the United States would have to intervene wasalways present." Belk , 12 Cl. Ct. at 734 (with regard to Iran). However, such pre-acquisitionstormclouds are not a prerequisite for courts to discount the property owner's expectations ofgovernment nonintervention, and deny the taking claim. It is enough that the property interest wasacquired at a time when the President had broad statutory authority to impose measures againstforeign assets in response to international conflicts. (9) 767 Third Ave. Assocs. , 48 F.3d at 1580-1581; Rockefeller Center Properties , 32 Fed. Cl. at 592-594. Benefits accruing to the plaintiff In several cases, courts have rejected the taking claim because the challenged government action also conferred substantial benefit on the plaintiff, even if incidental benefit accrued to the UnitedStates as well. The leading case is YMCA v. United States , 395 U.S. 85, 92 (1969), where no takingwas found when U.S. troops occupied buildings in Panama to protect them from rioters. Accord , Abrahim-Youri v. United States , 139 F.3d 1462 (Fed. Cir. 1997); Belk v. United States ,858 F.2d 706,709 (Fed. Cir. 1988). Deference to government conduct of foreign policy and the President's role as commander in chief / Political question doctrine Yet another recurring hurdle for the taking plaintiff is judicial deference to the President's constitutional role as representative of the federal government in the field of international relations,and his latitude as commander in chief. "Matters intimately related to foreign policy and nationalsecurity are rarely proper subjects for judicial intervention." Haig v. Agee , 453 U.S. 280, 292 (1981). Accord , Regan v. Wald , 468 U.S. 222, 242 (1984). This deference plays out both as to (1)thereviewability of the government action on which the taking claim is based, and (2) as a factor in thetaking analysis itself. Reviewability of the government action on which the taking claim is based. Governmentdeclarations and decisions involving national emergencies, war, and foreign relations are often heldto be outside the judicial reach - generally on "political question" grounds. The classic statement ofthe political question doctrine remains that of Baker v. Carr , 369 U.S. 186 (1962), which recognizedthat only certain types of cases are committed to the judicial branch for resolution. To be beyondjudicial reach under the doctrine, a case must involve at least one of six factors, among them whetherthere is a "a textually demonstrable commitment of the issue to a coordinate political department,or a lack of judicially discoverable and manageable standards for resolving it ...." Id . at 217. Numerous takings claims involving international conflicts have foundered on the political-question shoal. (10) For example, Belk v. United States , 858 F.2d 706 (Fed. Cir. 1988), dealtwith the Algerian Accords, under which the United States and Iran ended the hostage crisis in 1981. Several of the former hostages argued that because the Accords extinguished their causes of actionagainst Iran, the U.S. had taken those causes of action. (11) Though denying their claim on the merits,the court concluded alternatively that review of a policy decision made by the President during aninternational crisis is barred as a political question. "Most, if not all, of [the Baker v. Carr ] concernsare present in this case." Id . at 710. Most recently, the Federal Circuit used the political question doctrine to rebuff a taking claim brought by the owner of a manufacturing plant in the Sudan destroyed by U.S. cruise missiles. El-Shifa Pharmaceutical Industries Co. v. United States , 378 F.3d 1346 (Fed. Cir. 2004). Themissile attack was ordered by President Clinton following bombings of two U.S. embassies in EastAfrica, based on U.S. belief that the perpetrators were associated with al-Qaeda and that the plantwas manufacturing chemical weapons for al-Qaeda. The court found that the Constitution commitsto the President the power to designate enemy property in foreign territory - so, under the first Baker factor, the matter was a nonjusticiable political question. (12) Because the court thus had to accept thatplaintiff's property was enemy property, there could be no taking (see section II). (13) However, thecourt stressed the limited nature of its ruling in two respects. The outcome might have beendifferent, it said, had the plant been located in the United States, (14) or had there been no evidence thatthe President had in fact determined that the plant belonged to an enemy of the United States. Not every case or controversy that touches on foreign relations lies beyond judicial cognizance as a political question. Baker , 369 U.S. at 211. Courts assert that the doctrine is a narrow one, andare aware it offers a tempting refuge for the government defendant. Thus, the political questiondefense was rejected in Langenegger v. United States , 756 F.2d 1565 (Fed. Cir.), cert.denied , 474U.S. 824 (1985), where the taking claim was based on El Salvador's confiscation ofU.S.-citizen-owned land as part of an agrarian reform program encouraged by the United States. Resolution of the case, said the court, required no determination of El Salvador's sovereignty, nordid the plaintiff question the executive's authority or the validity of the expropriation. See alsoRamirez de Arellano v. Weinberger , 745 F.2d 1500 (D.C. Cir. 1984) (en banc) (due process claimagainst U.S. military's occupation of U.S. citizen's property in Honduras to train Honduran armydoes not raise political question), vacated on other grounds , 471 U.S. 1113 (1985). Deference as a factor in the takings analysis itself. In Rockefeller Center Properties v. UnitedStates , 32 Fed. Cl. 586 (1995), the merits of the taking claim were reached. The TreasuryDepartment's blocking of assets pursuant to the International Emergency Economic Powers Act wasfound to further the important public interest in the President's ability to deal with internationalevents. This public interest entered the takings analysis through the "character of the governmentaction" factor, a component of the canonical takings test. (15) No taking was found. The protection extended by the Takings Clause depends first on the legal status of the property'sowner - whether a U.S. citizen, friendly alien, or enemy alien. In the case of friendly aliens, itdepends further on the territorial or extraterritorial location of the property. The law developing inthis area is particularly important in light of the increasing frequency with which congressionalstatutes reach extraterritorial conduct, and with which U.S. offices abroad pursue the fight againstterrorism, drug trafficking, counterfeiters, and corrupt financiers. U.S. citizens The general rule is that the Takings Clause protects the property of U.S. citizens against takings by the United States wherever in the world the property may be located. Ashkir v. United States , 46Fed. Cir. 438, 444 (2000) (collecting cases). An exception is that all property, even that of U.S.citizens, is regarded as enemy property when located in enemy territory (see below, this section). Friendly aliens In the leading case, the property of a friendly alien (a Russian corporation) was held to be protected by the Takings Clause, just as that of U.S. citizens. Russian Volunteer Fleet v. UnitedStates , 282 U.S. 481, 489, 491-492 (1931). Because the alien's property was vessel-constructioncontracts with a New York shipyard, the decision is usually read as restricted to property locatedwithin the United States. (16) RussianVolunteer Fleet also declared that an alien's ability to invokeTakings Clause protection is not dependent on U.S. citizens being entitled to prosecute similarclaims against the alien's government in the courts of that country. Id. at 491-492. (But while theTakings Clause does not demand reciprocity, Congress does, at least when the case is filed in theU.S. Court of Federal Claims. Under 28 U.S.C. section 2502, the United States may be sued in thatcourt only by citizens of foreign governments that afford U.S. citizens the right to sue suchgovernments in their courts.) Russian Volunteer Fleet received judicial gloss in a later decision asking whether the Fourth Amendment's protection against unreasonable searches and seizures applies to property owned bya nonresident alien - but located in a foreign country. United States v. Verdugo-Urquidez ,494 U.S.259 (1990). In holding that the Fourth Amendment does not, the Court surveyed other cases,including Russian Volunteer Fleet , in which it had held that friendly aliens enjoy certain rights underthe U.S. Constitution. Those cases, it clarified, "establish only that aliens receive constitutionalprotections when they have come within the territory of the United States and developed substantialconnections with this country." Id . at 271. But because Verdugo-Urquidez involved theFourthAmendment, and because its holding was not based exclusively on the substantial connectionsprerequisite, its authoritativeness with regard to Russian Volunteer Fleet and the Takings Clauseremained in doubt. (17) Newer case law has grappled with the effect of Verdugo-Urquidez on the Takings Clause, ruling unanimously that the substantial connections rule does apply to alien-filed claims. Given theextraterritorial location of both plaintiffs and their property in these cases, such connections wereheld to be absent, and the takings claims dismissed. Hoffman v. United States , 53 F. Supp. 2d 483(D.D.C. 1999), affirmed , 17 Fed. Appx. 980 (Fed. Cir. 2001) (unpublished). involved Germannationals suing the United States for its refusal to turn over a photographic archive and watercolorspainted by Adolf Hitler, taken from Germany during the allied occupation after World War II. (18) Ashkir v. United States , 46 Fed. Cl. 438 (2000), involved a citizen of Somalia asserting a taking bythe United States, based on the U.S. military's occupation of and injury to his compound inMogadishu in aid of U.N. relief efforts. And Rosner v. United States , 231 F. Supp. 2d 1202 (S.D.Fla. 2002), involved a takings class action by Hungarian Jews who alleged that their valuables,confiscated by the pro-Nazi Hungarian government in 1944, were seized by the U.S. army whilebeing shipped by train to Germany, and never returned. Rosner also stressed that the substantialconnections with the United States must exist at the time of the alleged taking, not later. Notwithstanding the unanimous endorsement of Verdugo-Urquidez in these trial-court decisions, the Federal Circuit recently declined to overrule its own contrary precedent. In Turneyv. United States , 115 F. Supp. 457 (Ct. Cl. 1957), the Circuit's predecessor court had held that U.S.seizure of radar equipment in the Philippines after World War II, owned by a Philippine corporation,was a taking. The court had rejected the government's broad argument that the Takings Clause lacksextraterritorial application. In its recent El-Shifa case, the Federal Circuit characterized Turney ascounseling in favor of applying the Takings Clause extraterritorially despite the absence ofsubstantial connections, placing Turney squarely in conflict with Verdugo-Urquidez. Itexpresslydeclined to resolve this conflict, however, because it did not need to: El-Shifa could be dismissedsolely on political question grounds (see section I). At present, then, the Federal Circuit has not ruled authoritatively on whether there is a substantial-connections prerequisite for takings claims brought by friendly aliens against the UnitedStates. Case law reviewed above, however, suggests that if and when the Circuit does rule, it willendorse its existence. Enemy aliens In contrast with friendly aliens, the property of enemy aliens receives no Takings Clauseprotection wherever the property may be found. Cummings v. Deutsche Bank , 300 U.S. 115, 120(1937); El-Shifa Pharmaceutical Industries Co. v. United States , 378 F.3d 1346, 1355 (Fed. Cir.2004). Under the "rules of war," property of any person located in enemy territory is deemed enemy property, notwithstanding the nationality of the owner. As enemy property, it may be destroyedwithout Takings Clause compensation. Juragua Iron Co. v. United States , 212 U.S. 297, 305-308(1909). Query, however, whether the courts may balk at some confiscations in enemy territory,where the property is owned by a non-enemy national and the confiscation is unrelated to militarynecessity. For example, in Seery v. United States , 127 F. Supp. 601, 605 (Ct. Cl. 1955), the courtexpressed skepticism that the military could use a U.S.-citizen-owned estate in Austria as an officers'club without effecting a taking, even assuming Austria was still enemy territory months afterGermany's surrender. (19) When the United States has moved to freeze or vest assets of hostile foreign nations or nationalsthereof, suspend judicial process initiated by U.S. nationals against such assets, or settle claims ofU.S. nationals against foreign sovereigns and their assets, courts have universally rejected takingsattacks, though with an occasional caution. Freezing of assets Freezing of assets was accomplished, until 1977, under the Trading with the Enemy Act (TWEA). (20) During that time, the TWEA appliedto both wartime and any other period of nationalemergency declared by the President (typically in peacetime). In 1977, Congress enacted theInternational Emergency Economic Powers Act (IEEPA), (21) which removed the national emergencyauthority from TWEA and ensconced it exclusively in IEEPA. At the same time, IEEPA qualifiedthe emergency authority to reach only "any unusual and extraordinary threat, which has its sourcein whole or substantial part outside the United States" and respecting which the President declaresa national emergency under IEEPA. (22) IEEPA also grandfathered existing exercises of nationalemergency authority under TWEA. Both statutes now authorize the President to prohibit, amonga long list of things, "exercising any right ... with respect to ... any property in which any foreigncountry or a national thereof has any interest by any person, or with respect to any property, subjectto the jurisdiction of the United States." (23) As far as reported court decisions reveal, every taking claim based on an asset freezing order under TWEA or IEEPA has failed. The key rationale used by courts has been that the freezing ofassets is merely temporary and not a vesting of title in the United States. See, e.g., Tran Qui Thanv. Regan , 658 F.2d 1296, 1304 (9th Cir.1981). Accord , Global Relief Found.v. O'Neill , 207 F. Supp.2d 779, 802 (N.D. Ill.), affirmed , 315 F.3d 748 (7th Cir. 2002), cert. denied ,124 S. Ct. 531 (2003); Holy Land Found. for Relief and Development v. Ashcroft , 219 F. Supp. 2d 57, 78 (D.D.C. 2002), affirmed , 333 F.3d 156 (D.C. Cir. 2003). Moreover, "temporary" has been loosely construed. Even the passage of considerable time since the freeze was imposed may not raise the taking specter, if hostile relations are equallylongstanding. See, e.g.,Tole S.A. v. Miller , 530 F. Supp. 999 (S.D.N.Y. 1981) (blockage of assetsof Cuban corporation for 18 years effected no taking), affirmed , 697 F.2d 298 (2d Cir. 1982) (table). Query, however, whether the Supreme Court's recent decision in Tahoe-Sierra PreservationCouncil v. Tahoe Regional Planning Agency , 535 U.S. 302 (2002), noting that land-use planningmoratoria may become takings if kept in place long enough, may lead courts to view protractedforeign asset freezes as takings. See Holy Land Found ., 219 F. Supp. 2d at 78 (owner of propertyfrozen eight months may "some day" have a more viable taking claim, citing Tahoe-Sierra ). See also Nielsen v. Sec'y of the Treasury , 424 F.2d 833, 843-844 (D.C. Cir. 1970) (blocking of foreignassets raises taking issue if continued indefinitely). (24) Another rationale cited for ruling against the taking claimant is that the blocked foreign assets may be needed to satisfy present or future claims of U.S. citizens against the foreign country or itsnationals, or to use as leverage in negotiations with the hostile nation. Tole S.A. , 530 F. Supp. 999(discussing cases). "There is no reason," said the Supreme Court, "why [the United States] may not... make itself and its nationals whole from assets here before it permits such assets to go abroad insatisfaction of claims of aliens made elsewhere ...." United States v. Pink , 315 U.S. 203, 228(1942). (25) In a recent case, the U.S. invoked IEEPA to prohibit a Cypriot citizen with Libyan ties from exercising stock options in a U.S. company - owing to Libya's support of terrorism. During thefreeze, the stock options expired, resulting in a total loss to the plaintiff. In finding no taking of theoption contract, the trial court relied particularly on the contingent nature of foreign commerce. Paradissiotis v. United States , 49 Fed. Cl. 16, 22 (2001). On appeal, plaintiff argued unsuccessfullythat the Treasury Department should have permitted him to exercise his stock options and thenretained the proceeds in a blocked, interest-bearing account, and that failure to do so was a taking. 304 F.3d 1271 (Fed. Cir. 2002). Vesting of assets TWEA and IEEPA authorize not only the freezing of foreign assets, but the vesting of such assets. (26) The TWEA vesting authority is availableduring wartime; the IEEPA authority, "when theUnited States is engaged in armed hostilities or has been attacked by a foreign country or foreignnationals." In contrast with the freezing of assets, vesting has the United States actually takingownership of the property, so that it may be "held, used, administered, liquidated, sold, or otherwisedealt with" by the U.S. (27) The Supreme Court hascautioned that "this summary power to seize property which is believed to be enemy-owned is rescued from constitutional invalidity under theDue Process and [Takings] Clauses ... only by those provisions of the act which afford a non-enemyclaimant a later judicial hearing as to the propriety of the seizure." Societe Internationale v. Rogers ,357 U.S. 197, 211 (1958). Suspension of judicial process and executive settlement of claims In the name of foreign policy, the President has considerable authority to suspend judicial process against foreign assets and to settle with foreign nations the claims of U.S. citizens againstthose nations, or their nationals. (28) Theseexecutive powers received considerable judicial scrutinyfor possible takings in the aftermath of the Iranian hostage crisis. (29) The key documents are theIEEPA, under which President Carter blocked removal or transfer of Iranian assets in the U.S. exceptby license, and the Algerian Accords, under which the United States later agreed to substitutebinding arbitration for private litigation against Iran in U.S. courts. Some courts have held that the President's suspension of private claims against Iran presented no ripe taking issue, since plaintiffs might recover fully in arbitration before the Iran-U.S. ClaimsTribunal. See, e.g., American Int'l Group, Inc. v. Islamic Republic of Iran , 657 F.2d 430 (D.C. Cir.1981); Chas. T. Main Int'l, Inc. v. Khuzestan Water and Power Auth. , 651 F.2d 800 (1stCir. 1981). Others have refused to reach the merits on political question grounds. See, e.g., Belk v. UnitedStates , 858 F.2d 706, 710 (Fed. Cir. 1988). Where the taking issue in the case was reached, courts have stated or implied that in a proper case an executive cancellation of private claims by settlement could be a taking. See, e.g.,Langenegger v. United States , 756 F.2d 1565 (Fed. Cir.) (opining that an earlier decision of thecourt, finding no taking based on U.S. settlement of individual claims against China, did not standfor an absolute rule that extinguishment of claims can never be a taking), cert. denied , 474 U.S. 824(1985); American Int'l Group , 657 F.2d at 446. Research reveals no instance, however, where ataking has been found. For example, when the United States, through the Algerian Accords,extinguished causes of action asserted by the former Iranian hostages against the government of Iran,there was no taking. Belk , 858 F.2d 706. Belk pointed out that because the Accordsbrought aboutthe release of the hostages, they received a valuable benefit for the compromise of their claims.Similarly, no taking resulted when the President vacated pre-judgment attachments of Iranian assetsmade pursuant to revocable license. Dames & Moore v. Regan , 453 U.S. 654 (1981). More recently, holders of small claims against Iran asserted a taking based on the United States' espousal and settlement of their claims against that country. Abrahim-Youri v. United States , 139F.3d 1462 (Fed. Cir. 1997), cert. denied , 524 U.S. 951 (1998). The $50 million fund available tothe successful claimants was enough that each claimant received the full amount of principalawarded, but only a third of the interest accrued. No taking of the interest resulted, said the court,because as in Belk , the settlement here sought to benefit the claimants, whose claims had languishedmany years. Moreover, it said, "those who engage in international commerce must be aware thatinternational relations sometimes become strained ...." Id. at 1468. Federal measures against foreign governments may severely frustrate performance underexisting contracts with those governments or their nationals. In asserting takings, disappointedcontract parties cite the fact that contract rights are generally held to be "property" for purposes ofthe Takings Clause, placing them under its protective umbrella. (30) In the international realm,however, takings plaintiffs invariably collide head-on with the contingent nature of expectationswhen contract performance hinges on the maintenance of friendly relations between nations. As afurther obstacle, courts on occasion note the additional takings law precept that the U.S. is held toonly frustrate contract performance, not take a contract right, when its actions incidentally blockperformance under existing contracts. (31) Researchreveals no successful takings claims in this area. See, e.g., Chang v. United States , 859 F.2d 893 (Fed. Cir. 1988) (employment contract); 767 ThirdAvenue Assocs. v. United States , 48 F.3d 1575 (Fed. Cir. 1995) (leasehold contract); Paradissiotisv. United States , 304 F.3d 1271 (Fed. Cir. 2002) (stock option contract). (32) In Chang , for example, U.S. nationals or resident aliens entered into employment contracts with a Libyan oil company in 1985. The following year, the President issued an executive order underIEEPA, declaring a national emergency because of the threat posed by Libyan support ofinternational terrorism. The order declared that "no U.S. person may perform any contract insupport of an industrial or other commercial or governmental project in Libya." Plaintiffs' claim thatthe United States had thereby taken their employment contracts was rejected under the traditionalthree-factor balancing test for regulatory takings. Most pertinent to the international context of thedispute, the court said that persons entering into employment contracts overseas are on notice thatcontract performance turns on the continuation of friendly relations between nations. Indeed,relations between the United States and Libya were deteriorating at the time the contracts wereentered into. In the course of their duties, law enforcement personnel may damage or destroy privateproperty, as a byproduct of pursuing criminal suspects. They may also seize property or bring aboutits forfeiture. Often, the harmed individual is an innocent party, and plainly these make the mostcompelling takings plaintiffs. This area is vast and is only touched upon here. Much of the case law deals with law enforcement by state personnel, where the classic situation involves police damage to the homes orretail stores of innocent parties in the process of breaking down doors or flushing out criminalsuspects. The majority view is that no taking occurs; at most, the state action constitutes a tort. (33) These state cases presumably have relevance to federal law enforcement against terrorists as well. Several federal agencies now combating terrorism have been on the receiving end of takings claims arising out of non-terrorism-related law enforcement. A typical seizure case is Alde, S.A. v.United States , 28 Fed. Cl. 26 (1993), holding that the U.S. Customs Service's seizure and temporarypossession of a private airplane until the court denied forfeiture was not a taking, despite the fact thatwhile in government storage the plane was heavily damaged by hurricane and theft. The court statedabsolutely that "[s]eizures carried out by the Government under its police power are not takings." Id . at 34. Parenthetically, forfeiture of private property, even as regards the interests of innocentowners or co-owners, is also rarely held to be a taking. See, e.g., Bennis v. Michigan , 517 U.S. 1163(1996). The CIA and FBI have been sued for takings where businesses created as fronts ultimately produced financial loss to innocent parties. In Adams v. United States , 20 Cl. Ct. 132 (1990), theCIA created and operated an investment-banking firm for intelligence gathering. The firm eventuallywent bankrupt, and the resulting losses to the firm's customers prompted them to claim a taking. Under the one scenario analyzed by the court that gave rise to a colorable taking claim, the plaintiffs'losses resulted chiefly from market losses, so the CIA was not accountable for any taking, or thelosses were not extensive enough to surmount the takings threshold. And, the character of thegovernment action cut against a taking, since the losses were not claimed to be the direct result ofthe cover operation, hence were purely consequential. A note of caution, however, was sounded by Janowsky v. United States , 133 F.3d 888 (Fed. Cir. 1998), where a business was turned over to the FBI for its use in investigating police corruption. The owner's taking claim, based on the resulting harm to the business, was rejected by the trial courton the ground that the turnover to the FBI had been voluntary. On appeal, the Federal Circuit askedwhether FBI statements to the owner rendered his participation coerced, and remanded to the trialcourt. Impressing private property into public service The courts have long regarded physical occupations and outright expropriations as the most serious sort of government interference with property. Small wonder, then, that takings claims basedon physical takings or expropriations, as opposed to regulatory interferences, have often succeeded- despite the existence of war. The successful claims have arisen where the government, almostalways the military, has impressed private property into public service, rather than destroyed it asan incident of hostilities. "[T]he government does not avoid the Takings Clause by simply using itsmilitary forces as cover for activities that would otherwise be actionable if performed by one of itscivilian agencies." El-Shifa Pharmaceutical Industries Co. v. United States , 378 F.3d 1346, 1356(Fed. Cir. 2004). Merely because appropriating the property aids a war effort, even directly, is notsufficient to deflect the taking claim. The rule that military appropriations must be compensated, at least when not demanded by the immediate needs of battle, is illustrated by the abundant takings decisions on military flights overprivate property. When the interference with the use and enjoyment of such property is sufficientlysevere, courts find takings in both wartime, see, e.g., United States v. Causby , 328 U.S. 256 (1946)(taking resulted from low and frequent flights of military aircraft, during World War II, over chickenfarm), and peacetime, see, e.g., Argent v. United States , 124 F.3d 1277 (Fed. Cir. 1997). A relatedfactual circumstance led to a taking holding in Portsmouth Harbor Land & Hotel Co. v. UnitedStates , 260 U.S. 327 (1922) (if U.S. installed guns not simply as wartime defenses, but tosubordinate adjacent resort to government's right to fire across it at will in peacetime, a servitudehas been taken). A non -military case of wartime appropriation is United States v. Pewee CoalCo. ,341 U.S. 114 (1951), where a taking was found based on the government's seizure and operation ofcoal mines during World War II, to avert a strike. (34) (35) The case law finding compensable expropriation of U.S.-citizen property for use by the military stretches well back to the nineteenth century. See, e.g., United States v. Pacific Railroad , 120 U.S.227, 234 (1887) (noting that "where property of loyal citizens is taken for the service of our armies,"compensation is required); United States v. Russell , 80 U.S. (13 Wall.) 623, 629 (1871)(compensation required where Union Army requisitioned three steamboats to carry freight duringCivil War); Mitchell v. Harmony , 54 U.S. (13 How.) 115 (1852) (compensation required whereArmy took for use the wagons and mules of a merchant who had been forced to follow it intoMexican territory). Discussing Russell and Mitchell , a later court isolated the distinctionbetweencompensable and noncompensable military actions - the former, it said, did not involve "impendingdanger in the context of a hostile confrontation .... Instead, the property ... was requisitioned in amanner much akin to the procurement of goods and services under contract ...." YMCA v. UnitedStates , 396 F.2d 467, 471 (Ct. Cl. 1968), affirmed , 394 U.S. 85 (1969). (36) Destruction of property in connection with actual battle Nearer the thick of battle, even the deliberate destruction of private property by the military is usually noncompensable. A well-settled rule is that the wartime destruction of private property bythe United States to prevent its capture by an advancing enemy is not a taking. United States v.Caltex , 344 U.S. 149 (1952) (Army destruction of oil terminals in Philippines during World War IIto impede advance of Japanese Army); United States v. Pacific Railroad , 120 U.S. 227, 234 (1887)(Union Army destruction of bridges in Missouri during Civil War to impede advance of ConfederateArmy). See also Juragua Iron Co. v. United States , 212 U.S. 297 (1909) (Army destructionof U.S.company's property in enemy territory during Spanish-American War, to prevent spread of yellowfever, is not a taking; all property in enemy territory is enemy property, subject to confiscationwithout compensation). Least surprising, property damage due to battlefield operations is noncompensable. "The destruction or injury of private property in battle, or in the bombardment of cities and towns, and inmany other ways in the war, had to be borne by the sufferers alone as one of the consequences." Caltex , 344 U.S. at 153, quoting Pacific Railroad , 120 U.S. at 234. The noncompensabilityof bothdamage from battlefield operations and destruction to avoid enemy capture is a legal first cousin ofthe common law's recognition that "in times of imminent peril - such as when fire threatened awhole community - the sovereign could, with immunity, destroy the property of a few that theproperty of many and the lives of many more could be saved." Caltex , 344 U.S. at 154.
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Among federal actions dealing with international conflict, wars, and terrorism, direct impingements on private property are common. Besides the obvious ravages of battle, there havehistorically been military occupations and requisitions of property not in the actual theater of war. And, non-military measures may be used against assets, attachments on foreign assets, causes ofaction, and so on. Unsurprisingly, holders of affected property interests have claimed that their property was "taken" and demanded compensation, invoking the Takings Clause of the Fifth Amendment. Thisreport finds that based on case law to date, Takings Clause limits on federal response to internationalthreats are few, but most certainly do exist - mostly when private property is impressed into militaryservice not in the theater of actual war. Successful takings claims in the international area, often involving national security, are made difficult by four principles. First, international dangers have consistently prompted courts to extendextra deference to responsive government measures when resolving regulatory takings claims. Second, courts say that when dealing in foreign commerce, the possibility of evolving worldcircumstances and U.S. response thereto make any expectation of government noninterferenceunreasonable. Third, the benefit accruing to the property owner from the government action mayoutweigh the harm. And fourth, there is deference to the President's constitutional role asrepresentative of the federal government in the field of foreign relations - often expressed as the"political question doctrine." The protection extended by the Takings Clause also depends on the legal status of the property's owner. The property of U.S. citizens gets the most protection; enemy alien property, none; andfriendly alien property somewhere in between, depending on whether the alien has "substantialconnections" with the United States. Takings claims against the freezing and vesting of foreign assets have universally been rejected, though with an occasional judicial caution that an overly protracted freeze might be a taking. Inother areas, government frustration of performance under international commercial contracts appearsto have yielded no successful takings claims, while law enforcement, where physical damage resultsfrom the pursuit of criminal suspects or financial damage results from the operation of frontorganizations, has prompted some judicial concerns and a minority of successful takings claims atthe state level. In sharp contrast with the poor record of takings claims in the above areas, claimants challenging the impressing of private property into military or related government service generallyhave prevailed - wartime or not. Examples include military overflights, seizure and operation ofcoal mines during wartime, and requisitioning of private property. But military destruction ofproperty in connection with actual battle, or to thwart an advancing enemy, is not compensable.
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As Congress continues to deliberate whether and how to address climate change, a key question has been the degree to which humans and natural factors have influenced observed global climate change. Members of Congress sometimes stress that policies or actions "must be based on sound science." Officials in the Trump Administration have expressed uncertainty about the human influence, and some have called for public debate on the topic. To help inform policymaking, researchers and major scientific assessment processes have analyzed the attribution of observed climate change to various possible causes. Scientific assessments of both climate change and the extent to which humans have influenced it have varied in expressed confidence over time but have achieved greater scientific consensus. The latest major U.S. assessment, the Climate Science Special Report (CSSR), was released in October 2017 by the U.S. Global Change Research Program (USGCRP). It stated It is extremely likely [>95% likelihood] that human influence has been the dominant cause of the observed warming since the mid-20 th Century. For the warming over the last century, there is no convincing alternative explanation supported by the extent of the observational evidence. This CRS report provides context for the CSSR's statement by tracing the evolution of scientific understanding and confidence regarding the drivers of recent global climate change. Climate change science can be traced back to the early 1800s. Through the 20 th century, academic institutions, federal and state agencies, foreign governments, and other entities invested significant time and billions of dollars in climate research. This investment has led to substantial advances in empirical observations, atmospheric and ocean physics and chemistry, climate and economic simulation models, statistical methods, and other achievements. As a result, scientists have increased their confidence in their detection and understanding of climate change and attribution of observed changes to their causes. There is now high scientific confidence that the global climate is warming, primarily as a result of increased human-related greenhouse gas (GHG) emissions and other activities . This confidence has evolved from nearly two centuries of research and assessments. This report describes a chronology (in the Appendix ) of 200 years of major scientific statements, selected to represent views at each time, regarding the human and natural contributions to global climate change. The chronology demonstrates how scientific views and confidence in those views evolved over time. That GHGs, including carbon dioxide (CO 2 ), water vapor, and other gases, warm the Earth's climate is not a recent concept. The greenhouse effect, as it is sometimes called, was deduced as early as 1827 with relatively little dispute since the 19 th century among scientists about the role of GHGs: Some level of GHGs in the atmosphere is necessary for maintaining a temperate climate on Earth. Instead, the debate that unfolded involved whether the climate had been warming overall and, if so, to what the changes may be attributable (such as industrial releases of GHGs, volcanoes, solar activity, or other natural variations). (See text box, Human and Natural Influences on Climate .) As indicated by the information presented in Table A-1 , scientists have noted, dating back to early in the 19 th century, both human and natural factors potentially influencing climate. As one scholar observed, "by 1900, most of the chief theories of climate change had been proposed, if not yet fully explored." There were a number of contending theories—including changes in solar energy, the Earth's orbital geometry, volcanoes, the geography of continents, and changes in GHGs—in the late 1800s as the quotations in Table A-1 indicate. Well into the 1900s, the state of the science relating CO 2 concentrations in the atmosphere to the Earth's temperature was primarily theoretical inference. Scientists debated whether increases in CO 2 in the atmosphere due to increasing emissions from fossil fuels would lead to further warming. Since then, a number of factors—including better measurement technologies; development of physics- and empirically based simulation models; more research, review, and revision; and longer series of observations—have improved the foundations of climate science. As a result, scientists have improved quantification of the relationships between observed conditions: 1. Natural and human-related GHG emissions (the latter mostly from fossil-fuel-based energy) to the atmosphere; 2. Increasing GHG concentrations in the atmosphere and changes in other influences on climate (e.g., changes in solar and volcanic activity); 3. Rising global average surface temperature; and 4. Other observed changes in the spatial and temporal patterns of climate. The magnitudes of factors, and therefore their influences on climate, vary over time. With acceleration of human population growth and industrialization since the 19 th century, the factors related to human activities have increased relative to those of natural processes. Increased scientific capacity has made climate change increasingly detectable and attributable to the varying influences over the past two centuries. In the late 1930s, Guy Callendar compiled existing data on atmospheric CO 2 concentrations and regional temperatures. Through imprecise calculations, he showed a correlation between observed increases in both over time. Some scientists considered the correlation merely coincidence. Callendar's calculations provided early quantitative indications of a climate warming as a result of human activity. At the time, however, the relative contribution of human activity compared with natural factors could not be determined. David Keeling later established more consistent and repeatable measurements of atmospheric CO 2 in the 1950s. Keeling's precise measurements provided strong evidence of a connection between increasing human-related CO 2 emissions and the increasing CO 2 concentrations in the atmosphere. The measurements established a quantitative benchmark for later studies examining the linkage between increasing CO 2 concentrations and rising global temperatures. Keeling's concentration data facilitated additional research on the global carbon cycle, the oceans, and the effects of human activities. In the middle of the 20 th century, scientists (and many in the public) recognized that a general warming of the climate had occurred ( Table A-1 ). This was followed by a 30-year period of relatively flat or decreasing global average temperatures from around 1946 to 1977 ( Figure 1 ). Arguably, the apparent change in trajectory heightened scientific uncertainty about the direction of future climate changes and any human influence on them. It coincided with concerns about "global dimming," at least in part attributed to sulfur and particulate pollution, which increased rapidly during that period before leveling off around 1980. Current assessments indicate that the mid-20 th century warming hiatus may have been due to a combination of human (GHG, pollution) and natural influences (solar variability, volcanoes). As temperatures began to rise again in the late 1970s, authoritative scientific assessments performed by various governmental and nongovernmental institutions, supported by an expanding body of peer-reviewed published research, pointed to an emerging consensus regarding a probable human contribution to climate change, primarily due to increasing GHG emissions. The relative role of human versus natural influences became more clear in the early 2000s. Longer series of improved observations (e.g., solar radiation, clouds, land cover change), statistical methods, and computational models enabled more robust analyses and comparisons of research methods and results. Major, collaborative, authoritative assessments—U.S. and international—were established to compile, debate, and consider the strengths or weaknesses of scientific analysis regarding climate change in order to inform policymakers. Table A-2 contains the relevant conclusions regarding human and natural influences on climate change from the major assessments conducted, with those of NAS beginning in 1977, IPCC beginning in 1990, and the USGCRP beginning in 2001. These inclusive assessments underpinned growing scientific confidence that human activities were likely the major cause of the observed global warming since the mid-20 th century. Many factors have contributed to increased scientific confidence in quantifying the human and natural contributions to climate change. Longer records of observational data have provided more evidence of the concordance between higher GHG levels and temperature increases. Satellites have provided important observations of temperatures; atmospheric pollution; and land, snow, and ice cover beginning in the late 1970s. Additionally, improved scientific understanding of atmospheric physics, together with vastly more powerful computers, has led to climate models that better simulate atmospheric and oceanic conditions. Uncertainties in the models remain on how they simulate the effects of clouds, for example, and the model simulations are at smaller scales of space and time. Despite these uncertainties, current climate scientific assessment states high confidence (extremely likely) that human influence is the dominant cause of the observed warming over the past half-century. While the near consensus has developed relatively recently, it has evolved based on increasing confidence through research on scientific concepts established as early as 200 years ago. Future climate outcomes depend on many additional factors, such as the future rates and character of socio-economic development and efforts to curtail the growth of GHG emissions. This appendix contains bibliographic references and quotations regarding scientific understanding of global climate change and the influence of CO 2 , other GHGs, and natural factors on observed and prospective global climate. Because the capacities and methods of science have changed markedly over the past 200 years, the references appear in two tables representing selected scientific literature and national or international scientific assessments. Table A-1 presents representative statements excerpted from key scientific literature from 1827 to 1987 regarding human-related and other contributions to climate change. Sources include selected, widely cited academic papers, government reports, and NAS reports. The table's selections largely precede the establishment of broadly inclusive scientific assessments to compile and assess the weight of scientific evidence. For the period up to 1987, CRS selected key academic scientific papers and reports that were influential to scientific contemporaries during and after their respective times. Scientific assessments began in the mid-20 th century to more systematically and inclusively evaluate the full body of scientific literature on specific topics. Table A-2 compiles the conclusions pertinent to this report from major U.S. and international scientific assessments, beginning in 1977, that address the human contribution to global climate change. The assessments have been produced by the USGCRP, NAS, and IPCC. REVISED
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This CRS report provides context for the Administration's Climate Science Special Report (October 2017) by tracing the evolution of scientific understanding and confidence regarding the drivers of recent global climate change.
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Generally, federal lands may not be taxed by state or local governments unless the governments are authorized to do so by Congress. Because local governments often are financed by property or sales taxes, this inability to tax the property values or products derived from the federal lands may affect local tax bases, sometimes significantly. If the federal government controls a significant share of a county's property, then the revenue-raising capacity of that county may be compromised. Instead of authorizing taxation, Congress usually has chosen to create various payment programs designed to compensate for lost tax revenue. These programs take various forms. Many pertain to the lands of a particular agency (e.g., the National Forest System [NFS] or the National Wildlife Refuge System [NWRS]). The most wide-ranging payment program is called Payments in Lieu of Taxes (PILT). It is administered by the Department of the Interior (DOI) and affects most acreage under federal ownership. Eligible lands consist of those in the National Park System (NPS), NFS, or Bureau of Land Management (BLM); certain lands in the NWRS if they are withdrawn from the public domain; lands dedicated to the use of federal water resources development projects; dredge disposal areas under the jurisdiction of the U.S. Army Corps of Engineers; lands located in the vicinity of Purgatory River Canyon and Piñon Canyon, Colorado, that were acquired after December 31, 1981, to expand the Fort Carson military reservation; lands on which are located semi-active or inactive Army installations used for mobilization and for reserve component training; and certain lands acquired by DOI or the Department of Agriculture under the Southern Nevada Public Land Management Act ( P.L. 105-263 ). However, most military lands, lands under the Department of Energy (which have their own smaller payment program), lands of the National Aeronautics and Space Administration, and lands of the Department of Homeland Security are not eligible for payments under PILT. In FY2016, the PILT program covered 606.9 million acres, or about 94% of all federal land. The Payments in Lieu of Taxes Act of 1976 ( P.L. 94-565 , as amended; 31 U.S.C. §§6901-6907) was passed at a time when U.S. policy was shifting from one of disposal of federal lands to one of retention. The policy meant the retained lands would no longer be expected to enter the local tax base at some later date. Because of that shift, Congress agreed with recommendations of a federal commission that if these federal lands were never to become part of the local tax base, some compensation should be offered to local governments (generally counties) to make up for the presence of nontaxable land within their jurisdictions. Moreover, there was a long-standing concern that some federal lands produced large revenues for local governments, whereas other federal lands produced little or none. Many Members, especially those from western states with a high percentage of federal lands, felt the imbalance needed to be addressed. The resulting law authorizes federal PILT payments to local governments. The payments may be used for any governmental purpose. In addition to the overall structure of the program, specific issues that have been included are payments for Indian or other categories of lands, and tax equivalency, especially for eligible urban lands. Critics of PILT cite examples of what they view as its idiosyncrasies: A few counties that receive very large payments from other federal revenue-sharing programs (because of valuable timber, mining, recreation, and other land uses) also are authorized to receive a minimum payment ($0.37 per acre) from PILT. Although there is no distinction between acquired and public domain lands for other categories of eligible lands, acquired lands of the Fish and Wildlife Service (FWS) are not eligible for PILT. This provision works to the detriment of many counties in the East and Midwest, where nearly all FWS lands are acquired lands. Payments under the Secure Rural Schools (SRS) program require an offset in the following year's PILT payment for certain lands under the jurisdiction of the Forest Service (FS). However, if the eligible lands are under the jurisdiction of the BLM, there is no reduction in the next year's PILT payment. Certain BLM lands (called the Oregon and California Grant Lands) receive payments that do not require an offset in the following year's PILT payment. Some of the "units of general local government" (counties) that receive large payments have other substantial sources of revenue, and some of the counties that receive small payments are relatively poor. In some counties the PILT payment greatly exceeds the amount the county would receive if the land were taxed at fair market value, whereas in others it is much less. Given such issues, and the complexity of federal land management policies, consensus on substantive change in the PILT law has been elusive. Many of the broader issues of federal compensation to counties that were addressed when PILT was created have reemerged over the years. One such issue is the appropriate payment level, which is complicated by erosion of the payments' purchasing power due to inflation. Until about 1994, the full amount authorized under the law's formula generally had been appropriated, with a few exceptions such as sequestration under the Gramm-Rudman-Hollings Act (Title II of P.L. 99-177 ). For many of PILT's first 15 years, counties held that payments effectively were declining because of inflation. A 1994 amendment ( P.L. 103-397 ) was focused on increasing the total payments, building in inflation protection, and making certain additional categories of land eligible. The authorized payment level continued to be subject to annual appropriations. Figure 1 shows a major increase in both the actual and the inflation-adjusted dollars appropriated for PILT from FY1993 to FY2017. The increase in the authorization from the 1990s to the 2000s was not accompanied by a commensurate increase in appropriations. (See Figure 2 .) The growing discrepancy between appropriations and the rising authorization levels led to even greater levels of frustration among many local governments and prompted intense interest among some Members in increasing appropriations. From the first PILT payment in FY1977 to FY2007, payments were provided through annual appropriations. Starting with the FY2008 payment, however, Congress enacted a series of changes to PILT payment funding, including approval of mandatory spending for the payments (see Table 1 ). The 110 th Congress enacted several changes in PILT funding. First, the Continuing Appropriations Act, 2009 ( P.L. 110-329 ), provided funding at the FY2008 level ($228.9 million) through March 6, 2009. This figure would have constituted roughly 61% of the figure estimated for full payment of the FY2009 authorized level. Subsequently, the Emergency Economic Stabilization Act of 2008 provided for mandatory spending of the full authorized level for five years—FY2008-FY2012. (See Figure 2 .) Next, the Moving Ahead for Progress in the 21 st Century Act ( P.L. 112-141 , §100111) extended mandatory spending for PILT to FY2013, without making any other changes to the law. Under the Budget Control Act ( P.L. 112-25 ), PILT was categorized as a nonexempt, nondefense mandatory spending program. As such, it was subject to a 5.1% sequestration of the payments scheduled for FY2013, or $21.5 million from an authorized payment of $421.7 million. For the FY2014 appropriations cycle, Congress faced two basic choices for FY2104 funding: continue the program through an appropriations act, which is constrained by procedural and statutory limits on discretionary spending; or provide funding through some measure other than an appropriations act, which would be treated as mandatory spending. With this choice, funding would be subject to certain budget rules that generally require such spending to be offset. In either case, failure to find an offset would lead to certain procedural hurdles, such as points of order, although Congress sometimes sets aside or waives such points of order. The option for funding through an appropriations act was rejected when PILT funding was not included in the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ), although the Appropriations Committee members expressed support for the program in general. Instead, funding for the program was included in the Agricultural Act of 2014 ( P.L. 113-79 , §12312; H.Rept. 113-333 ; also called the 2014 farm bill), which extended mandatory spending for one year. The bill was a net reduction in mandatory spending and therefore offset the increase due to PILT payments. The PILT provision provided county governments with the full formula amount in summer 2014. The FY2015 payment was paid in June 2015. The Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 , §11), provided $372 million in discretionary spending. The Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act (NDAA; P.L. 113-291 ) included a provision (§3096) for $70 million in mandatory spending for PILT. Of this amount, $33 million was made available in FY2015; the remaining $37 million was to be made available after the start of FY2016 on October 1, 2015, leaving some doubt as to whether the amount should be considered a late payment for FY2015 or an early payment for FY2016. The Continuing Appropriations Act of 2016 ( P.L. 114-53 ) included a provision (§138) clarifying that the October payment was to be considered a supplement for the FY2015 payment. Through sequestration, the additional $37 million was reduced by 6.8%, to $34.5 million. That amount bought the FY2015 total to $439.5 million, or 97.3% of the full formula amount. For FY2016, PILT payments were included in the Consolidated Appropriations Act, FY2016 ( P.L. 114-113 , Division G). The measure provided $452.0 million for PILT, an amount sufficient to provide 98.3% of the full payment of $459.5 million. For FY2017, PILT payments were included in the Consolidated Appropriations Act, FY2017 ( P.L. 115-31 ), which provided $465.0 million for PILT, an amount sufficient to provide 99.7% of the full payment of $465.9 million. These payments were disbursed in June 2017. Calculating a particular county's PILT payment first requires answering several questions: How many acres of eligible lands are in the county? What is the population of the county? What were the previous year's payments, if any, for all of the eligible lands under the other payment programs of federal agencies? Does the state have any laws requiring the payments from other federal agencies to be passed through to other local government entities, such as school districts, rather than staying with the county government? What was the increase in the Consumer Price Index for the 12 months ending the preceding June 30? Each of these questions is discussed below, and the following section describes how the questions are used in the computation of each county's payment. Nine categories of federal lands are identified in the law as eligible for PILT payments: 1. Lands in the National Park System 2. Lands in the National Forest System 3. Lands administered by BLM 4. Lands in the National Wildlife Refuge System (NWRS) that are withdrawn from the public domain 5. Lands dedicated to the use of federal water resources development projects 6. Dredge disposal areas under the jurisdiction of the U.S. Army Corps of Engineers 7. Lands located in the vicinity of Purgatory River Canyon and Piñon Canyon, Colorado, that were acquired after December 31, 1981, to expand the Fort Carson military reservation 8. Lands on which are located semi-active or inactive Army installations used for mobilization and for reserve component training 9. Certain lands acquired by DOI or the Department of Agriculture under the Southern Nevada Public Land Management Act ( P.L. 105-263 ) In addition, if any lands in the above categories were exempt from real estate taxes at the time they were acquired by the United States, those lands are not eligible for PILT, except in three circumstances: 1. Lands received by the state or county from a private party for donation to the federal government within eight years of the original donation 2. Lands acquired by the state or county in exchange for land that was eligible for PILT 3. Lands in Utah acquired by the United States if the lands were eligible for a payment in lieu of taxes program from the state of Utah Only the nine categories of lands (plus the three exceptions) on this list are eligible for PILT payments; other federal lands—such as military bases, post offices, federal office buildings, and the like—are not eligible for payments under this statute. The exclusion of lands in the NWRS that are acquired is an interesting anomaly, and it may reflect nothing more than the fact that the House and Senate committees with jurisdiction over most federal lands did not have jurisdiction over the NWRS as a whole at the time P.L. 94-565 was enacted. The law restricts the payment that a county may receive based on population by establishing a ceiling payment that rises with increasing population. (See Figure 3 .) Counties are paid at a rate that varies with population; counties with low populations are eligible for payment totals at a higher rate per person and populous counties are paid less per person. For example, for FY2017, a county with a population of 1,000 people could not receive a PILT payment of more than $179.15 per person ($179,150 in total); a jurisdiction with a population of 30,000 could not receive a payment over $2.69 million (30,000 people × $89.61 per person). And no county can be credited with a population of more than 50,000, even if its actual population is many times larger. For example, in FY2017, at the authorized payment level of $71.67 per person, a county with a population of 1,000,000 could not receive a PILT payment over $3.58 million (50,000 people × $71.67 per person). Figure 3 shows the relationship between the population of a county and the maximum PILT payment. Federal land varies greatly in revenue production. Some lands have a large volume of timber sales or recreation concessions such as ski resorts, and others generate no revenue at all. Some federal lands have payment programs for state or local governments, and these payments may vary markedly from year to year. To even out the payments among counties and prevent grossly disparate payments, Congress provided that the previous year's payments on eligible federal lands from specific payment programs to counties would be subtracted from the PILT payment of the following year. So for a hypothetical county with three categories of eligible federal land, one paying the county $1,000, the second $2,000, and the third $3,000, then $6,000 would be subtracted from the following year's PILT payment. Most counties are paid under this offset provision, which is called the standard rate . In Figure 4 , the standard rate is shown by the left, sloping portion of the line, indicating that as the sum of the payment rates from other agencies increases, the PILT payment rate declines on a dollar-for-dollar basis. At the same time, Congress wanted to ensure that each county with eligible lands got some PILT payment, however small, even if the eligible lands produced substantial county payments from other agencies. If the county had payments from three federal payment programs of $1,000, $2,000, and $1 million, for instance, subtracting $1.003 million from a small PILT payment would produce a negative number—meaning no PILT payment to the county at all. In that case, a minimum rate applies, which does not deduct the other agencies' payments. In Figure 4 , the flat portion to the right shows that, after the other agencies' payments reach a certain level (over $2.29 per acre in FY2017), the rate of the PILT payment remains fixed (at $0.37 per acre in FY2017). The payments made in prior years that count against future PILT payments are specified in law. Any other payment programs beyond those specified would not affect later PILT payments. These specified payments are shown in Table A-3 . Eligible lands under some agencies (e.g., National Park Service and Army Corps of Engineers) have no payment programs that affect later PILT payments. Counties may receive payments above the calculated amount described above, depending on state law. Specifically, states may require that the payments from federal land agencies pass through the county government to some other entity (typically a local school district) rather than accrue to the county government itself. When counties in a pass-through state are paid under the formula that deducts their prior-year payments from other agencies (e.g., from the Refuge Revenue Sharing Fund [RRSF; 16 U.S.C. §715s] of FWS or the Forest Service [FS] Payments to States program [16 U.S.C. §500]), the amount paid to the other entity is not deducted from the county's PILT payments in the following year. According to DOI: Only the amount of Federal land payments actually received by units of government in the prior fiscal year is deducted. If a unit receives a Federal land payment, but is required by State law to pass all or part of it to financially and politically independent school districts, or any other single or special purpose district, payments are considered to have not been received by the unit of local government and are not deducted from the Section 6902 payment. For example, if a state requires all counties to pass along some or all of their RRSF payments from FWS to the local school boards, the amount passed along is not deducted from the counties' PILT payments for the following year. Or if two counties of equal population in two states each received $2,000 under the FS Payments to States program, and State #1 pays that amount directly to the local school board but State #2 does not, then under this provision the PILT payment to the county in State #1 will not be reduced in the following year but that of the county in State #2 will drop by $2,000. State #1 will have increased the total revenue coming to the state and to each county by taking advantage of this feature. Consequently, the feature of PILT that apparently was intended to even out payments among counties (at least of equal population size) may not have that result if a state takes advantage of this pass-through feature. Each governor is required to report annually to the Secretary of the Interior with a statement of the amounts actually paid to each county government under the relevant federal payment laws. DOI also cross-checks each governor's report against the records of the payment programs of federal agencies. In addition, there is a pass-through option for the PILT payment itself. A state may require that the PILT payment go to a smaller unit of government, contained within the county (typically a school district). In this case, one check is sent by the federal government to the state for distribution by the state to these smaller units of government. The distribution must occur within 30 days. To date, Wisconsin is the only state to have elected to pass through PILT payments. A provision in the 1994 amendments to PILT adjusted the authorization levels for inflation. The standard and minimum rates, as well as the payment ceilings, are adjusted each year. The PILT statute requires that "the Secretary of the Interior shall adjust each dollar amount specified in subsections (b) and (c) to reflect changes in the Consumer Price Index published by the Bureau of Labor Statistics of the Department of Labor, for the 12 months ending the preceding June 30." This is an unusual degree of inflation adjustment; no other federal land agency's payment program has this feature. But as will be shown below, increases in authorization do not necessarily lead to a commensurate increase in the funds received by the counties. With answers to these questions, the authorized payment level for a county can be calculated. ( Figure 5 shows a flow chart of the steps in these comparisons.) Two options are possible; both must be determined for each county, and the payment is the higher of the two alternatives. Alternative A. Which is less : the county's eligible acreage multiplied by $2.66 per acre or the county's ceiling payment based on its population? Pick the lesser of these two numbers. From it, subtract the previous year's total payments for these eligible lands under specific payment or revenue-sharing programs of the federal agencies that control the eligible land. The amount to be deducted is based on an annual report from the governor of each state to DOI. This option is called the standard rate . Alternative B. Which is less : the county's eligible acreage multiplied by $0.37 per acre or the county's ceiling payment based on its population? Pick the lesser of these two. This option is called the minimum provision and is used in counties that received relatively large payments (more than $2.29 per acre for FY2017) from other federal agencies in the previous year. The county is authorized to receive whichever of the above calculations—(A) or (B)—is greater . This calculation must be made for all counties individually to determine the national authorization level. If appropriations are insufficient for full funding, each county receives a pro rata share of the appropriation. For FY2017, the PILT appropriation of $465.0 million was 99.7% of the authorized level of $465.9. Thus, counties received 99.7% of the full formula amount. The standard rate, with its offset between agency-specific payments and PILT payments, still does not guarantee a constant level of federal payments to counties because of the time lag in determining PILT payments. Federal payments for a given fiscal year generally are based on the receipts of the prior year. PILT payments of the following fiscal year are offset by these payments. The combination of specific payments and PILT in the standard rate means that reductions (or increases) in those other payments in the previous year could be offset exactly by increases (or reductions) in PILT payments. However, provided the county's population is not so low as to affect the outcome, PILT payments could not fall below $0.37 per acre for FY2017 (see Alternative B, above), so the full offset occurs only when the other federal payments in the previous year total less than $2.29 per acre (i.e., the maximum payment of $2.64 per acre minus the $0.37 per acre minimum payment from PILT). To illustrate, consider a county whose only eligible federal lands are under FS jurisdiction. If the federal receipts on the FS lands dropped in FY2014 (compared with FY2013), authorized FS payments in FY2015 would fall. Authorized PILT payments will therefore increase to offset the drop—in FY2016. (This example assumes the PILT payment is calculated under the standard rate.) The counties will be authorized to receive at least $2.64 per acre from FS payments and PILT payments combined, but the two payments would not come in the same year. Consequently, if FS payments are falling from year to year, the combined payments in the given year would be less than $2.64 per acre, but if FS payments are rising, the authorized combined payment in the given year would be more than $2.64 per acre. Because of the need for annual data, a precise dollar figure cannot be given in advance for each year's PILT authorization level. Information from all 2,227 counties with eligible land in FY2016 was needed before an aggregate figure for the nation could be calculated for the most recent payment. The FY2016 appropriation contained in P.L. 114-113 was based on an estimate of the authorized amount, and ultimately provided 98.3% of full payment to each county. Although the enactment of six years of mandatory spending put the issue of full funding to rest for a time, county governments show strong support for continuing the mandatory spending feature for PILT. This question of mandatory spending was the biggest issue facing the program from the 112 th through the 114 th Congresses. At the same time, with congressional debate over spending levels in general, support for greater or mandatory spending for PILT in the future may compete with proposals to modify or even eliminate PILT as a means of reducing federal deficits. Congressional interest, after the 1994 revisions to PILT, has focused on the three areas cited above: whether to approve mandatory spending (either temporary or permanent) at the full amount or some fixed level; whether to reduce the program, either through lower discretionary appropriations or by changing the PILT formula; and whether to add or subtract lands from the list of those now eligible for PILT payments. For a relatively small fraction of the federal or even departmental budget, PILT garners considerable attention, especially from local governments: (1) 2,227 counties had lands eligible for PILT payments in FY2016; (2) the average payment per county (many of which are sparsely populated) was $202,784; (3) although some counties with eligible lands received no payment (because they have very few federal lands and PILT makes no payments of less than $100), many received over $1 million and 25 counties received over $3 million. The resulting impact on budgets of local governments helps generate interest despite the small size of the PILT program compared to the federal budget as a whole. As PILT funding reverts to discretionary spending, counties with large federal land holdings may face more fiscal uncertainty. Several more specific issues also are being debated in Congress or within county governments. Among them are the inclusion of Indian or other categories of lands; tax equivalency, especially for eligible urban lands; and payments affecting the NWRS. The inclusion of other lands (e.g., military lands generally or those of specific agencies such as the National Aeronautics and Space Administration) under the PILT program has been mentioned from time to time, and some counties with many acres of nontaxable Indian lands within their boundaries have long supported adding Indian lands to the list of lands eligible for PILT. Their primary arguments are that these lands receive benefits from the county, such as road networks, but Indian residents do not pay for these benefits with property taxes. However, the federal government does not actually own these lands. The complexity of the PILT formula makes it very difficult to calculate the consequences of such a move, either for authorization levels or appropriation levels. Additionally, Congress would have to decide what sorts of Indian lands would be eligible for such payments and a variety of other complex issues. If some categories of Indian lands were to be added to those lands already eligible for PILT, Congress might wish to limit payments to counties with more than some minimum percentage of Indian lands within their borders. Regardless, even a very restrictive definition of Indian lands seems likely to add many millions of acres to those already eligible for PILT. Even if the criteria for eligibility were determined, it still would be difficult to anticipate the effect on authorization levels. To paint an extreme example, if all of the eligible Indian lands were in counties whose PILT payments already were capped due to the population ceiling, inclusion of Indian lands would have no effect on PILT authorization levels. If mandatory spending of the full formula amount were in place, appropriations would go up to fund the newly eligible lands. If PILT payments are discretionary and annual appropriations are less than the authorized level, each county would receive a pro rata share of the authorized full payment level. Individual counties whose eligible acres had jumped markedly with the inclusion of Indian lands might receive substantially more than in the past. Other counties (particularly those with few or no eligible Indian acres) would receive a smaller fraction of the authorized amount as limited dollars would be distributed among more lands. Some observers have wondered whether urban federal lands are included in the PILT program. The response is that urban lands are not excluded from PILT under the current law. For example, in FY2016, the counties in which Sacramento, Chicago, and Cleveland are found, as well as the District of Columbia, all received PILT payments (see Table 2 ), although the property tax on similar nonfederal lands likely would have been substantially greater. Eastern counties, which tend to be small, rarely have both large populations and large eligible acreage in the same county. By contrast, western counties tend to be very large and may have many eligible acres, and some, like Sacramento, may have large populations as well. Furthermore, as the cases of Arlington County and the District of Columbia illustrate, PILT payments are by no means acting as an equivalent to property tax payments. If the 8,482 acres in the District of Columbia or the 27 acres in Arlington County were owned by taxable entities, those acres would result in much more than $22,007 or $0, respectively, in property taxes. Because the formula in PILT does not reflect property taxes, counties such as these might support a revised formula that would approach property tax payments. As noted above, NWRS lands that were withdrawn from the public domain are eligible for PILT, and those that were acquired are not. In addition, the National Wildlife Refuge Fund (NWRF, also called the Refuge Revenue-Sharing Fund, or RRSF) relies on annual appropriations for full funding. For FY2016, payments for NWRF were approximately 23% of the authorized level. For refuge lands eligible for PILT, some or perhaps all of the NWRF payment will be made up for in the following year's PILT payment, but this will not occur for acquired lands because they are not eligible for PILT. Congress may consider making all refuge lands eligible for PILT and/or providing mandatory spending for NWRF, as it has for PILT. Eastern counties could be the largest beneficiaries of such a change, although some western states also may have many NWRS acres that currently are not eligible for PILT. (See Table 3 for selected state examples.) Adding the 9.8 million acres of NWRS lands under the primary jurisdiction of FWS but currently ineligible for PILT would increase PILT lands by about 1.6%. The PILT program, when it was a mandatory spending program, provided a relatively certain flow of funds to recipient jurisdictions. Some observers and policymakers are concerned that using discretionary spending for PILT or the elimination of the program could destabilize the fiscal structure of some jurisdictions receiving PILT payments. Nationally, the relative size of the PILT payments would seem to mitigate the impact and PILT reductions would not seem to have a measurable fiscal impact on most county budgets that receive PILT transfers. Locally, however, the impacts may be greater—in some jurisdictions, perhaps substantially. Reliance on property taxes is important for most counties. Nationwide, in FY2013, local property taxes (for counties, cities, and special districts) comprised roughly 46.8% of own-source revenue or just over $452 billion in total revenues. However, in the same year, the PILT program was very much smaller: the appropriated $400.2 million in PILT payments was less than 0.1% of property tax revenue nationally. For the 25 counties that received over $3 million in FY2016, the government services provided by the county could be adversely affected in the near term (although restructuring the property tax or raising other local fees or taxes could likely compensate for the reduced federal payment). Smaller payments also would be important in low-property-value, low-population counties with relatively greater shares of federally owned land. The first two tables below show the data presented in Figure 1 and Figure 2 . The third shows the agency payments that offset payments under PILT in the following year.
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Under federal law, local governments (usually counties) are compensated through various programs for reductions to their property tax bases due to the presence of most federally owned land. Federal lands cannot be taxed but may create a demand for services such as fire protection, police cooperation, or longer roads to skirt the federal property. Some compensation programs are run by a specific agency and apply only to that agency's land. This report addresses only the most widely applicable program, which is called Payments in Lieu of Taxes (PILT; 31 U.S.C. §§6901-6907) and is administered by the Department of the Interior (DOI); in FY2016, there were 2,227 counties with lands eligible for PILT payments. Eligible lands consist of those in the National Park System (NPS), National Forest System (NFS), or Bureau of Land Management (BLM); certain lands in the National Wildlife Refuge System (NWRS); and several other specified federal lands. Congress has repeatedly debated the level of PILT funding. The authorized level of PILT payments is calculated using a complex formula. No precise dollar figure can be given in advance for each year's PILT authorized level. Five factors affect the calculation of a payment to a given county: (1) the number of acres eligible for PILT payments, (2) the county's population, (3) payments in prior years from other specified federal land payment programs, (4) state laws directing payments to a particular government purpose, and (5) the Consumer Price Index as calculated by the Bureau of Labor Statistics. If the appropriation for PILT funding is less than the full authorized amount, each county receives a prorated payment. Before 2008, PILT was funded through the annual appropriations process. From FY2008 to FY2014, however, Congress approved mandatory spending for PILT at the full formula amount. The FY2015 PILT payment was funded through both discretionary and mandatory appropriations, and the FY2016 PILT payment and FY2017 PILT payment were each funded entirely through discretionary appropriations. In all three of those years, the appropriation for the PILT payment was less than the authorized full funding level, so each county received a prorated payment in those years. Most recently in FY2017, each county received a prorated amount (99.7%) of the full authorized amount. The mechanism for PILT funding thus presents two fundamental options for Congress to consider: provide funding through the annual discretionary appropriations process or through mandatory spending for the full formula amount, whether indefinitely or for a specified period. Discretionary appropriations are constrained by procedural and statutory spending limits and are subject to annual fluctuations that may or may not result in PILT being fully funded. Among other potential impacts, annual appropriations could introduce uncertainty and unpredictability for the counties receiving PILT payments. Approval of mandatory spending for PILT at the full formula amount could ensure a consistent and predictable payment for those counties, at least through the duration of the authorization. However, the legislation still would be subject to certain budget rules that generally require such spending be offset. Since the creation of PILT in 1976, various other changes in the law have been proposed. One proposal has been to include additional lands under the PILT program, particularly Indian lands. Other lands also have been mentioned for inclusion, such as those of the National Aeronautics and Space Administration and the Departments of Defense and Homeland Security. Some counties would like to revisit the compensation formula to emphasize a payment rate more similar to property tax rates. Finally, some have argued that all lands in the NWRS should be eligible for PILT, rather than limiting PILT payments to lands reserved from the public domain while excluding acquired lands from PILT payments.
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This report provides an overview of current U.S.-India security engagement, a topic of interest to the U.S. Congress, where there is widely held and generally bipartisan support for a deepened U.S. partnership with the world's largest democracy, not least on issues of shared security interests. It begins with a brief discussion of the most important U.S. security interests related to India, then moves to a more detailed review of current U.S.-India security engagement in the realm of military-to-military contacts, counterterrorism and intelligence cooperation, and defense trade. Obstacles to deeper cooperation in each of these realms—variously including historical distrust and accompanying Indian wariness, geostrategic considerations, mismatched bureaucracies, and procedural hurdles, among others—are discussed throughout. The report closes with a brief conclusion addressing the outlook for future engagement and discussion of the ways in which congressional action and foreign policy oversight responsibilities can affect both the pace and scope of this engagement. With the lifting of Cold War geopolitical constraints and the near-simultaneous opening of India's economy two decades ago, the world's largest democracy has emerged as an increasingly important player on the global stage. India dominates the geography of the now strategically vital South Asia region, and its vibrant economy, pluralist society, cultural influence, and growing military power have made the country a key focus of U.S. foreign policy attention in the 21 st century. This attention is to some degree motivated by China's longer-standing and more rapid rise, with many analysts viewing U.S. and Indian geopolitical interests as convergent on many fronts, perhaps especially in the area of Asian power balances. Beginning under President George W. Bush, and continuing with President Barack Obama, the U.S. and Indian governments have been seeking to sustain and deepen a substantive "strategic partnership," even as bilateral commercial and people-to-people contacts flourish of their own accord. Secretary of State Hillary Clinton describes the United States "making a strategic bet on India's future" on the assumption that "India's greater role on the world stage will enhance peace and security." As articulated in a late 2011 Pentagon report, The United States and India are natural partners, destined to be closer because of shared interests and values and our mutual desire for a stable and secure world. A strong bilateral partnership is in U.S. interests and benefits both countries. We expect India's importance to U.S. interests to grow in the long-run as India, a major regional and emerging global power, increasingly assumes roles commensurate with its position as a stakeholder and a leader in the international system. In a major October 2012 policy speech, Deputy Secretary of State William Burns declared, [T]here is growing confidence in both our countries about ... a steady convergence of interests and values.... The essence of the vital partnership that we're building lies in a simple truth. For the first time, for both of us, our individual success at home and abroad depends significantly on our cooperation. With this bilateral partnership based on shared values such as democracy, pluralism, and rule of law, numerous economic, security, and global initiatives are underway, among them unprecedented plans for civilian nuclear cooperation. The two countries also inked a 10-year defense framework agreement in 2005 to facilitate expanded bilateral security cooperation. In the new century, large-scale combined military exercises have become commonplace, and bilateral cooperation on intelligence and counterterrorism is increasing. Unprecedented major U.S. arms sales to India are completed and underway; more are anticipated. Enthusiasm and positive trends can be seen in an array of bilateral security-related activities. Evidence of a mind change in India since the Cold War period includes convincing signs that the U.S. military presence in the Indian Ocean Region (IOR) is now widely viewed as being benign. Still, many concerns remain that India is unable and/or unwilling to be the kind of international security actor U.S. leaders would like to see it become. The current coalition government at the federal level, in power since 2004, has lately appeared fragile and often shies from undertaking bold initiatives, given its acute dependence on sometimes mercurial regional allies, and with its stature weakened by multiple corruption scandals. The country's endemic poverty is exacerbated by a wider societal corruption and—despite the growth of a large "middle-class" and booming information technology sector—India's gross domestic product per capita in 2011 was only $3,632, compared to $8,466 for China and $48,442 for the United States. High rates of economic growth seen in India during the 2000s have lately declined even as the population soars, bringing into question whether New Delhi's growing but still relatively paltry resources and military capabilities can continue to increase as projected. At present, the sometimes touted equipment and capabilities of India's armed forces—in particular their ability to project power over air and sea—remain quite modest in comparison with those of China. In a broad sense, there has emerged no consensus in New Delhi about what India can and should seek through its security cooperation with the United States. Those who do offer a set of expectations and demands of the relationship can fail to recognize that, for an American audience, "A viable strategic partnership calls for reciprocity," as flatly put by one senior scholar. Many in Washington were discouraged in 2011 when New Delhi "deselected" two U.S.-built combat aircraft (the F-16 and F/A-18) from consideration for India's planned $11 billion purchase of 126 new frontline planes. No less importantly, Indian leaders continue to demonstrate an aversion to assuming the kinds of new security-related postures and activities the United States seeks for India—their tepid response to the "Arab Spring" is a case in point—and they face domestic electoral calculations that can reinforce this aversion. India's focused effort to maintain "strategic autonomy" is likely to keep progress in U.S.-India security cooperation measured, incremental, and largely bereft of dramatic breakthroughs such as that involving civilian nuclear power. Even recognizing these circumstances, there is widespread, bipartisan support in the U.S. Congress for sustaining and expanding the partnership with India, not least in the areas relevant to U.S. and global security. In funding U.S. foreign aid programs such as Anti-Terrorism Assistance and International Military Education and Training, Congress makes budgetary choices that can directly affect the scope and pace of U.S.-India military-to-military ties and bilateral cooperation in counterterrorism. Congressional oversight powers provide a role in shaping the course of progress in these areas, and Congress has a role in allowing major defense trade with India. In mid-2012, the co-chairs of the Senate India Caucus penned a letter to the Deputy Secretary of Defense strongly urging him to press the Indian government to continue its efforts to improve its defense procurement procedures, as well as to "aggressively pursue co-development or co-production opportunities," which they contend "would prove mutually beneficial not just to the U.S. and Indian defense industries, but also to the long-term relationship of our two militaries." The 21 st century rise of Asia lies at the heart of Washington's revaluation vis-à-vis India. Booming Asian economies—and the accompanying spike in demand for energy resources—have prioritized the region as a key concern for the United States. The United States is increasingly dependent on Asian markets for trade and investment to sustain and grow its own economy. As a result, it seeks to encourage and foster stability across the newly conceived Indo-Pacific region by working with allies and partners to bolster security, widen open markets, and ensure freedom of navigation across the Indian Ocean Region (IOR), from the Persian Gulf to the Straits of Malacca, and extending throughout the western Pacific and East and South China Seas. This region contains Sea Lanes of Communication (SLOCs) that are crucial to Asia's trade with the rest of the world and for the transit of energy resources that fuel Asian economic growth (see Figure 1 ). In this context, geopolitical realignments after 1991—and India's significantly increased economic and military capabilities over the past decade—have dramatically increased India's visibility and potential utility in U.S. security calculations. India is today described as being a defense cooperation "linchpin" in the Obama Administration's strategy of "rebalancing" toward Asia, a strategy that includes "expanding military partnerships" in South Asia. Perhaps the key security concern for Washington in Asia is China's growing military capabilities and assertiveness, and a U.S. strategy that seeks to prevent the emergence of a hegemonic power in Asia. An increasingly assertive and even aggressive Beijing can potentially leverage its military clout in a fractured geopolitical neighborhood to obstruct both the American presence and the realization of U.S. goals in the region. Any U.S. military withdrawal from the Asia-Pacific could seriously undercut Washington's economic and political influence there. The resulting strategy for Washington has been to "pivot" or "rebalance" toward the Asia-Pacific, while strengthening existing alliances and partnerships with countries across Asia. Islamist extremism and militancy have been a growing security threat to the United States in recent decades, peaking with Al Qaeda's attacks of September 2001. South Asia has been a particular focus of U.S.-led counterterrorism efforts. As the largest, most populous and most economically successful country in the region, India has long suffered from Islamist terrorism and is an avid proponent of countering the threat, particularly that emanating from Pakistan. Despite sometimes contrasting policies toward Islamabad, Washington and New Delhi have moved forward rapidly with bilateral counterterrorism cooperation, especially in the wake of the 2008 terrorist attack in Mumbai. The United States and India also share important interests in fostering Afghan stability, and U.S. officials welcome India's role and cooperation in that effort. In championing changes in U.S. law to allow civil nuclear trade with India, the George W. Bush Administration argued that the new arrangements would benefit nonproliferation efforts by better aligning India with global regimes and norms. While this is yet to be realized in any substantive way, a continuing and significant U.S. interest is halting, or at least slowing, the proliferation of nuclear weapons in South Asia, and in mitigating the potential for nuclear war between India and Pakistan. Washington has a long history of encouraging regional restraint in the proliferation of nuclear arms and the systems for their delivery, especially given potential for India-Pakistan conflict to again escalate to the level of open warfare, as it most recently did in 1999. Washington's security planners often identify representative government and open markets as being key facilitators of international stability and, therefore, U.S. security. From this perspective, India is seen as an important example of successful, large-scale democracy, as well as a potential partner in encouraging the spread of liberal political systems. India is also a major emerging global market, one on a steady path toward greater liberalization, and it is projected to play an anchoring role in "New Silk Road" or "Grand Trunk Road" initiatives that seek to increase land-based trade extending from India to Central Asia. Moreover, Washington hopes to enlist New Delhi's stronger voice in support of international human rights norms, particularly in India's own neighborhood. Finally, Washington sees in India—and especially the Indian Navy—an important partner for disaster relief and humanitarian missions in the region. U.S. officials thus find national security interests several relevant in areas beyond traditional military security. Since September 2001, and despite a concurrent U.S. rapprochement with Pakistan, U.S.-India security cooperation has flourished. Both countries acknowledge a desire for greater bilateral cooperation and a series of measures have been taken to achieve this. The India-U.S. Defense Policy Group—moribund after India's 1998 nuclear tests and ensuing U.S. sanctions—was revived in late 2001 and meets annually. In 2005, then-Indian Defense Minister Pranab Mukherjee visited Washington, DC, where the United States and India signed a 10-year defense framework agreement that refers to a "new era" for bilateral relations and calls for collaboration in multilateral operations, expanded two-way defense trade, increasing opportunities for technology transfers and co-production, expanded collaboration related to missile defense, and establishment of a bilateral Defense Procurement and Production Group. While U.S. and Indian officials consistently present an optimistic outlook for this bilateral security relationship, many independent analysts—perhaps in particular those who share the official optimism—counsel patience in Washington and the maintenance of realistic short-term expectations. One expert contends that the considerable potential longer-term benefits to be accrued through cooperation may be put in jeopardy by an American overemphasis on shorter-term goals, such as those related to Iran's nuclear program or to Indian-Pakistani rapprochement. Another suggests that Washington should minimize its short-term expectations for the relationship while taking comfort in the (disputed) notion that the two countries' strategic goals are fundamentally compatible, and that major differences relate only to tactics. In the context of the practical conduct of foreign relations in Asia, a more skeptical observer opines that, "The Indians might quietly coordinate their policies with ours, but will not go beyond that in the foreseeable future, much loose talk of 'natural allies' notwithstanding." Each of these perspectives conceives of U.S.-India security engagement with a representative sense of sanguinity accompanied by cautious realism and emphasis on the long view. Over the past decade, the United States and India have held a series of unprecedented and increasingly substantive combined exercises involving all military services. Such military-to-military relations have been a key aspect of U.S.-India relations in recent years—India now conducts more exercises and personnel exchanges with the United States than with any other country; more than 50 formal events are occurring annually. Navy-to-navy collaboration appears to be the most robust in terms of exercises and personnel exchanges. Convergent strategic interests in maritime security in the IOR largely explain the higher level of contact between the two navies. Moreover, the U.S. and Indian navies have had a longer history of contact than other services, and this is being augmented and routinized at a more rapid pace than the others. Although the respective armies and air forces hold regular dialogues and conduct periodic exercises, it appears that the strategic and logistical thresholds for securing closer cooperation in the air and land realms have yet to be defined to the satisfaction of both parties. Joint U.S.-Indian naval exercises have grown steadily in both scope and complexity in the 21 st century. The two countries conduct one large-scale war-game exercise, codenamed "Malabar," along with multiple smaller training exercises such as "Habu Nag" (naval aspects of amphibious operations), "Spitting Cobra" (explosive ordnance destruction), and "Salvex" (diving and salvage). However, the Malabar exercises, first held in 1992 and conducted three times before the United States imposed proliferation-related sanctions in 1998, are today by far the most high-profile and of the largest scale (they were resumed in 2002). Malabar maneuvers are "designed to advance participating nations military-to-military coordination and capacity to plan and execute tactical operations in a multinational environment." They have variably included Japan, Australia, and Singapore; the 2007 iteration was the most recent to include all five nations. Shortly after that exercise, China sent demarches requesting information on the intent of the multilateral exercise. In subsequent years, Malabar has tended to include third countries only when the exercises are held far from the Indian coast, as in 2009 near Japan. Somewhat averse to multilateral naval exercises, New Delhi reportedly turned down Japan's request to send ships to India for Malabar '12, which was held in April and included elements of the U.S. Seventh Fleet's Carrier Task Force 70 built around the USS Carl Vinson . Some analysts note that since 2007 India has shied from conducting multilateral naval exercises off its own coast, even as it has been willing to send its warships to participate in Pacific waters. U.S. officials familiar with U.S.-India naval ties suggest that New Delhi's circumspect posture should be seen as an expression of caution, meant to signal to Beijing that India's participation in multilateral defense activities is not directed against China. Many analysts agree that the New Delhi government, with its goal of remaining free of constraining alliances and to avoid even the appearance of junior partner status vis-à-vis the United States, generally prefers to conduct multilateral naval exercises in the IOR only under the aegis of U.N. initiatives such as those meant to counter piracy. Nevertheless, U.S. government officials interviewed for this report appeared confident in New Delhi's broad commitment to strengthening navy-to-navy familiarity and non-combat security objectives, despite evident differences in geostrategic approaches. The relationships among flag officers are described as personable, with higher levels of trust than were seen in previous decades. As an example, during his visit to India during Malabar '12, the top U.S. naval officer was invited to board Indian submarines and warships, signaling a new level of comfort for the Indians. Informal contacts between senior officers of both navies have also become more common. While the United States continues to send a significant number its U.S. military officers on training exchanges to India, visits of Indian military officers to the United States are generally more restricted by New Delhi. According to Department of Defense, 198 Indian officers trained in the United States under IMET between FY2008 and FY2012. The "Cope India" exercise is the centerpiece of U.S.-Indian air force cooperation. The focus typically is humanitarian assistance and disaster relief operations. During Cope India '09, more than 110 U.S. and Indian paratroopers conducted jumps in the first known airdrops of IAF personnel from U.S. C-17 and C-130J aircraft. India subsequently acquired similar aircraft from the United States. Since then, U.S. Air Force personnel have provided the IAF training on those transports, as well as on U.S.-supplied P-8I maritime reconnaissance planes, further deepening the extent of cooperation between forces. In 2008, India participated for the first time in the annual multilateral "Red Flag Nellis" air-to-air combat exercise hosted by the United States. The exercise involves interdiction, attack, air superiority, defense suppression, airlift, air refueling, and reconnaissance aircraft. One Indian air force officer said that the exercise was helpful in familiarizing the IAF with U.S. network-centric warfare (India is currently building its own network-centric capabilities). The IAF is also reported to have sent its younger pilots to the United States in order to gain longer-term benefits from training and exposure to a multi-national war-game environment provided by the Nellis base. The IAF is slated to participate in Red Flag in 2013 and possibly will increase the complexity of its participation with the introduction of more fighter jets and airborne warning and air control system (AWACS) platforms; the use of the latter appears not to have been authorized by New Delhi in 2008. American pilots reportedly have been impressed with the skills exhibited by their Indian counterparts. Mock air combat in 2004 saw Indians in late-model Russian-built fighters hold off Americans flying older F-15Cs, and Indian successes were repeated versus U.S. F-16s in 2005 (in both cases the American pilots flew without their best weapons radars and air-to-air missiles). For Red Flag Nellis '08, India debuted its latest Su-30MKIs, pitting them against the new America F-22 Raptor . Historically, the U.S. sale of frontline aircraft to friendly countries has provided the framework for close cooperation between Washington and its defense partners. According to one India analyst, from a strategic perspective, air force-to-air force cooperation is constrained by insufficient collaboration beyond traditional defense trade paradigms used by the U.S. Air Force. In light of India's 2011 decision to not purchase U.S. fighter jets, alternative means of strengthening bilateral air force cooperation, including greater personnel exchanges, may need to be more energetically explored. U.S.-Indian army cooperation is centered around the annual "Yudh Abhyas" ("training for war") exercise, conceived in 2001 and first held in 2004, marking the first joint conventional forces exercise for the United States and India in more than four decades. This exercise has since expanded from company-sized field training to battalion-level, live fire maneuvers, as well as brigade-level command post exercises. Yudh Abhyas '12 saw three American tanks land on Indian soil for the first time ever, along with 200 armored personnel carriers. The previous round, held in India in 2009, was the largest ever and included tanks, combat vehicles, anti-tank missiles, and UAVs. In 2010 during a Yudh Abhyas exercise held in Alaska, the U.S. army also trained visiting Indian forces on the Javelin anti-tank missiles system in which India has shown interest. In general, the exercise focuses primarily on challenges of mutual concern such as counterinsurgency, counterterrorism, and peace-enforcement. Indian army units have also visited the United States for smaller scale exercises. U.S. and Indian special forces soldiers have held at least seven "Vajra Prahar" joint exercises focused on advanced rifle marksmanship, combat marksmanship, close-quarters combat, helicopter insertion, medical evacuation, combined mission planning, and scenario-based missions. Moreover, hundreds of U.S. Special Forces soldiers have attended India's Counter-Insurgency Jungle Warfare School. In addition to the Varja Prahar exercises noted above, the special forces of both countries regularly participate in navy-, army-, and air force-sponsored exercises. Although there are no joint exercises exclusively involving the U.S. Marines, given India's lack of a direct counterpart, New Delhi's interest in developing the capabilities of its amphibious units has led to direct contact between the U.S. Marines and the Indian military through exercises held between other services. In addition, since 2010, company-sized "Shatrujeet" exercises have focused on exchanges in amphibious doctrine and exercises. During the 2010 Habu Nag naval exercise, Indian military officers were able to observe coordination of U.S. Navy and Marine personnel on a forward-deployed U.S. amphibious assault ship. One Indian army colonel reportedly commented that his forces "had learned a lot about the U.S. Marine Corps and how they function and work with the naval element," adding that Indians aspire to learn how the Marines perform landings and facilitate more fluid interaction between their own naval and amphibious elements. Also in 2010, the U.S. Pacific Command (PACOM) and the Indian Integrated Defense Staff (IDS) conducted the inaugural Joint Exercise India (JEI) tabletop exercise in Alaska. This bilateral multiservice exercise was the first of its kind and was seen as a significant step in U.S.-Indian military-to-military cooperation. Among the defense-related pacts Washington has sought to conclude with New Delhi is the Logistics Support Agreement (LSA), which would permit the armed forces of both countries to enjoy reciprocal use of facilities for maintenance, servicing, communications, refueling, and medical care. Such reciprocity has obvious implications for military-to-military cooperation, and some in Washington believe that relevant U.S.-Indian ties will be hamstrung in the absence of an LSA. However, New Delhi is wary of the LSA's provisions, which some there believe could lead to India's being entangled in U.S. military operations in the region. Indian sensitivities have led U.S. officials to downplay the LSA's importance in recent years. During his mid-2012 visit to India, Secretary of Defense Leon Panetta was asked if he had discussed the LSA (and two other outstanding defense agreements) in his meetings with senior Indian officials. The Secretary stated that there had been no such discussion and went on to offer his view that, while the United States and India "might not always agree with regards to the specific agreements that we're discussing," he did not see those disagreements "as barriers to improving our relationship with India." In the absence of a bilateral LSA, special exceptions have been made to provide for India's logistical support for U.S. operations. For example, during Operation Desert Shield/Storm in 1991, U.S. military aircraft were allowed to refuel in Mumbai. This, however, led to considerable domestic political uproar in India, threatening the stability of the incumbent government. Later, in the run-up to Operation Iraqi Freedom in 2003, India publicly stated that the refueling option for U.S. aircraft would not be repeated, reportedly preempting an official request by Washington. During the early stages of Operation Enduring Freedom in Afghanistan, India facilitated coalition ship repairs at its navy yards and naval port calls. It also provided an escort for coalition ships through the Malacca Straits and reportedly offered the United States use of its airbases and airspace in conducting operations (the U.S. alliance with Pakistan made this unnecessary). In another instance of ad hoc logistics cooperation, during 2005-2006 tsunami relief efforts in the IOR, both the U.S. and Indian navies temporarily exchanged communications equipment so as to help coordinate their operations. This trend toward operation-specific exceptions is likely to continue so long as no LSA is concluded. India was among the first (and few) countries to welcome President Bush's mid-2001 call for continued development of ballistic missile defense (BMD) systems. Expanded dialogue on missile defense was among the four issue-areas of the Next Steps in Strategic Partnership framework for bilateral relations at the time, and the 2005 defense pact calls for expanded collaboration on BMD. India is among a handful of countries with an indigenous BMD research and development program; in May 2012, Indian researchers announced their readiness to launch the first phase of their tactical BMD system. The United States remains willing to discuss potential sales to India of missile defense systems. While New Delhi did in 2005 and 2006 request and receive classified briefings on U.S.-Israeli coproduced Arrow and/or Patriot anti-missile systems for limited area use, the Ministry of Defense has not shown interest in procurements to date. Budgetary restrictions and a focus on indigenously developed systems are likely reasons for this. There remain no signs that bilateral engagement on BMD systems has moved beyond a nascent stage. During his mid-2012 visit to New Delhi, Deputy Secretary of Defense Carter reiterated the U.S. view that missile defense is an important area for potential collaboration in the future. He added, however, that "strategic decisions" on BMD—ostensibly to be made mainly in New Delhi—must precede technical discussions. Some Indian commentary on missile defense has counseled against Indian purchases of U.S.-made systems, asserting that these are unlikely to be effective, could be overwhelmed by augmented Chinese and Pakistani missile inventories, and would only increase regional insecurities. U.S.-India cooperation on space issues has remained wholly within the civilian sphere. However, the issue of multilateral codes of conduct for use of space is an emerging security consideration. The 1967 Outer Space Treaty, which includes India as a signatory, does not effectively address more recent developments in the militarization of space. At present, negotiations on use of space in the U.N. Conference on Disarmament appear to be stalled. China and Russia are pushing for an international agreement to ban space weapons. Their proposals do not include a ban on ground-based anti-satellite (ASAT) weapons, which both countries have tested. The European Union is also drafting a space code which is yet to be adopted by member states. One senior analyst suggests that Asian countries such as India and Japan would do best to play a more proactive role in shaping space-use codes, in particular to ensure that they are not "intrusive"—for example, by requiring states to establish national procedures that could constrain policy options—while at the same time establishing legally binding mechanisms to limit or curtail the deployment of weapons in space. The codes under discussion have obvious relevance to the potential deployment of ASAT systems, which India reportedly intends to develop. Overall, military-to-military ties between the United States and India are energetic and growing. Both armed forces are becoming increasingly familiar with their counterparts, while also expanding the scope of their cooperation. The two navies appear to be ahead of other services with regard to the depth and complexity of engagement. Challenges with the pace of military-to-military cooperation appear to involve an overarching disconnect between targets for engagement set through joint bilateral service workshops at the service level and the civilian Indian Ministry of Defense, which has come under criticism for cancelling scheduled exercises without providing adequate explanation. Where possible, New Delhi remains partial to U.N.-endorsed multilateral initiatives over purely bilateral exercises with the United States. Nevertheless, cooperation over the past decade has encouraged professional relationships, varying levels of newfound familiarity across services, and increasing interoperability on common missions such as anti-piracy, counterterrorism, and disaster relief, among others. Although India is cautious not to project an alliance relationship by pursuing extensive interoperability with the U.S. military, the sustained interaction between U.S. and Indian armed forces appears to signal India's commitment to deepening the military-to-military relationship over the middle- and longer-term. Along with military-to-military relations, another major facet of the emerging U.S.-India strategic partnership is greatly increased intelligence sharing and counterterrorism (CT) cooperation. Such engagement predates the September 2001 Al Qaeda attacks and in fact has taken place over a period of decades, but has become far more substantive and, in some respects, routinized in recent years. In 2000, the two governments established a U.S.-India Joint Working Group on Counterterrorism to coordinate bilateral efforts in this realm. In 2002, India and the United States launched the Indo-U.S. Cyber Security Forum to safeguard critical infrastructures from cyber attack. The 2005 "New Framework for the U.S.-India Defense Relationship" listed "defeating terrorism and violent religious extremism" as one of four key shared security interests, and it called for a bolstering of mutual defense capabilities required for such a goal. A bilateral Counterterrorism Cooperation Initiative was formally launched in 2010. CT cooperation is today described by the Obama Administration as a pillar of the bilateral relationship. Historic Indian distrust—rooted mostly in Washington's close engagement with Pakistan's security and intelligence services—has been ameliorated as the U.S. government increasingly concurs with Indian analyses of the terrorist threat posed by Pakistan-based groups and with Indian convictions that Pakistan's main intelligence service is a sponsor of anti-India terrorism and has been complicit in attacks on Indian soil. The United States and India both prioritize terrorism among the security threats facing their citizens and interests. Yet, at a tactical level, Washington and New Delhi have many times failed to coordinate their efforts, owing largely to their divergent geopolitical perspectives, as discussed above. Despite these constraints, some analysts suggest that U.S.-India CT cooperation is among the most resilient components of security cooperation between the two countries, one that is (barring any major unforeseen shifts) bound to grow steadily through diverse mechanisms and contexts for collaboration. The United States and India first engaged CT cooperation during the Cold War. Under the Reagan Administration, Indian intelligence personnel received training in dealing with hostage situations and aviation security. Apart from limited capacity-building exchanges, Washington took some steps to assist New Delhi with the Sikh insurgency in northern India during the 1980s. However, it was not until the mid-1990s that more U.S. support was provided on this front. In 1996, Washington banned fundraising activities of designated terrorist groups, among them two Sikh organizations operating in the United States. Many U.S. and Indian CT analysts contended that the full potential of bilateral cooperation on Sikh terrorism could not be realized due to the political influence of the Sikh community in the United States. Since the early 1990s, CT efforts have evolved as a natural conceptual arena for U.S.-India cooperation. Islamist terrorists began targeting U.S. citizens and interests shortly after the 1989 Soviet withdrawal from Afghanistan. Notable attacks include bombings of the World Trade Center in 1993, U.S. Embassies in Kenya and Tanzania in 1998, and on the USS Cole in 2000. U.S. and Indian counterterrorism officials cooperated closely in addressing the 1995 kidnapping of two American tourists in Kashmir. In 1997, Washington and New Delhi signed a landmark U.S.-India extradition treaty, which led to the U.S. extradition of Sikh militants wanted in India. However, just as joint CT efforts were beginning to gain momentum, the 1998 sanctions on India abruptly ended contacts between the countries' respective counterterrorism establishments, and also curtailed the sale of U.S. counterterrorism equipment to India. The sanctions did not, however, prevent the two governments from establishing a Joint Working Group on Counterterrorism in 2000. The 9/11 attacks simultaneously posed the first test of and opportunity for deepening U.S.-India CT cooperation. On the one hand, the attacks brought into stark relief the clearly common security interests and vulnerabilities that Washington and New Delhi shared. On the other hand, Pakistan reemerged as a key geopolitical facilitator of militarized U.S. policies in Afghanistan. Islamabad had more immediate benefits to offer the United States and it, too, pivoted (under pressure) toward cooperating with Washington, albeit with arguably less pure motives. The key question in New Delhi was which geostrategic facilitator the Americans would choose. Early signals emanating from both Washington and New Delhi suggested that India was well positioned for the role; India's was the first government to offer unconditional support to the United States in dealing with the Afghan Taliban and their Al Qaeda allies. New Delhi offered intelligence on terrorist networks, over-flight rights, refueling and repair of U.S. military aircraft, port facilities in Mumbai and Cochin for U.S. naval vessels, and search-and-rescue missions. President Bush and then-Prime Minister Atal Vajpayee immediately began regular telephone consultations. Yet within days it became clear that a renewed U.S. embrace of Pakistan—and its military regime with a record of supporting Islamist militant groups—was unfolding. New Delhi was frustrated by this development, but there was no lack of understanding Washington's motives. As India's discomfort diffused, the two governments pushed ahead with building their own bilateral CT ties. Some early milestones included the October 2001 signing of a U.S.-India Mutual Legal Assistance Treaty, which provides certain legal privileges related to terrorism-related investigations. Months later, a new U.S.-India Cyber Security Forum was established to safeguard critical infrastructures from cyber attack. In mid-2004, a senior-level U.S. Army delegation visited India's 15 Corps Battle School (CBS) in India's Jammu and Kashmir state with an interest in adopting new training techniques on anti-militancy and unconventional operations for U.S. troops being deployed to Iraq. CT cooperation also expanded to include mutual maritime security efforts for ports and container vessels, as well as the prevention of WMD terrorism. As noted above, the landmark 2005 "framework" for the U.S.-India defense relationship made prominent mention of terrorism as a shared threat. Bilateral initiatives since then have included exchanges of law enforcement best practices, reciprocal visits of senior-level officials, joint military training exercises, and joint approaches in relevant international fora. The FBI's Quantico laboratory has hosted numerous visits by senior Indian forensics experts, and the agency regularly shares best-practices with senior Indian law enforcement officials. The State Department's Anti-Terrorism Assistance (ATA) Country Assistance Plan for India emphasizes critical incident response; post-incident investigation; human rights; border security; international threat finance; extradition and prosecution; and the protection of critical infrastructure, including port, rail, and airport security as strategic objectives. Through the ATA program, State has conducted scores of training courses for more than 2,000 Indian law enforcement officials to date and plans as many as two dozen more for 2013. ATA objectives in India focus on building capacity in critical incident management, infrastructure security, and investigations, as well as promoting Indian law enforcement participation in regional counter-terrorism cooperation. Beyond counterterrorism seminars and training, CIA and FBI personnel have worked in India to help with investigations of terrorist attacks, including a major 2006 bombing in Mumbai, as well as the 2008 attack on the same city. The FBI reported having unprecedented access to evidence and intelligence following the latter incident, interviewing some 70 individuals, including the only surviving attacker, Ajmal Kasab. U.S. know-how in preserving and analyzing forensic evidence was also shared with Indian intelligence officials. FBI forensics experts later provided in-person testimony to the Indian court trying Kasab. The United States and India are also gradually overcoming institutional obstacles to the provision of access to legal detainees. In 2010, after considerable delays that frustrated the Indians, the U.S. Department of Justice granted Indian investigators access to David Headley, an American national of Pakistani descent who had confessed to participating in planning the 2008 Mumbai assault. Then-U.S. Ambassador to India Tim Roemer identified the development as "historic in the nature of security cooperation" and expressed optimism about multiple U.S.-India partnerships in this area. Despite such progress, bureaucratic and political sensitivities have tended to hamper the development of more fluid cooperation. As an example, during the 2012 Strategic Dialogue, Indian External Affairs Minister Krishna raised the issue of India's interest in further access to suspects involved in the Mumbai attacks who are in U.S. custody. While on his late 2010 visit to India, President Obama inaugurated the new Homeland Security Dialogue between the U.S. Department for Homeland Security and the Indian Ministry of Home Affairs. This initiative replaced the Joint Working Group on Counterterrorism begun a decade earlier. Homeland Security Secretary Janet Napolitano subsequently traveled to India in mid-2011 and met with then-Indian Home Minister P. Chidambaram, as well as representatives of private industry, in an effort to promote bilateral counterterrorism and law enforcement cooperation. Agency-to-agency engagements are being fostered on a wide array of relevant issues, including counternarcotics, counterfeit currency, illicit financing and transnational crime, infrastructure security, transportation and trade, coastal security, and large-city policing. Later in the year, the United States further signaled its commitment to supporting India's counter-terrorism efforts by formally designating the Indian Mujahideen, an India-based militant group with links to Pakistan, as a Foreign Terrorist Organization. As of mid-2012, the State Department was reporting that air and sea port, and law enforcement exchange visits to multiple cities in the United States and India have taken place under this initiative. The goal is to share best practices, training, tactics, techniques, and procedures to address terrorist threats. Through the State Department's Anti-Terrorism Assistance programs, courses ranging from bomb blast investigation, critical incident management, and tactical commanders training to cyber investigations and forensics were conducted throughout 2011 and into 2012. Recent meetings on cyber security cooperation discussed the establishment of international norms in cyberspace, as well as internet governance. The State Department further offers that robust operational cooperation continues between the U.S. Computer Emergency Readiness Team (U.S.-CERT) and India's Computer Emergency Response Team (CERT-IN). Bilateral CT and intelligence cooperation is now recognized in Washington and New Delhi as an area ripe with potentially huge dividends to be realized for both countries. Unprecedented successes have been achieved post-2001 and more are expected. Yet constraints and obstacles are not insignificant. Despite progress and deepened bilateral engagement, there appears to be an asymmetry in the willingness of the two governments to move forward: Washington wants more cooperation from India and is willing to give more in return, but officials in New Delhi remain hesitant and their aspirations are more modest. Serious structural impediments to future cooperation also exist in the view of observers in both countries. Chief among these is the fact that, in India, state governments are the primary domestic security actors and there is no effective national-level body with which the U.S. government can engage and coordinate. This authority of individual state governments in maintaining security within their borders further complicates the central government's plans for and progress in reform. India's difficulties with reforming its counterterrorism establishment, and its acute sensitivities about exposing its intelligence structures to foreign governments, pose another significant obstacle to more robust U.S.-India cooperation in the near-term. India is struggling with the institutional reform of its federal counterterrorism apparatus. Recent efforts to reorganize all CT agencies under a new National Counter-Terrorism Center (NCTC) have resulted in entrenched infighting among various agencies. Indian proponents of the creation of an NCTC modeled on the one in the United States became more vocal in 2012, but some observers argue that the U.S. model is unsuited to the Indian context. Then-Home Minister Chidambaram's NCTC proposal was met with opposition primarily because, in its most recent incarnation, the agency would be part of India's Intelligence Bureau (and thus not an independent institution). It would also be granted powers of arrest without prior knowledge of state law enforcement agencies (in most democracies, intelligence agencies do not possess such powers). One longtime analyst contends that a focus on establishing new national-level security institutions misdirects India's limited capabilities and resources, especially when they are to be modeled on those of a country (the United States) that has access to much greater resources and faces a differing threat environment. This observer has called the proposed Indian NCTC "an ill-conceived, redundant and derivative vanity project which aspires to imitate its namesake in the United States without the strength, the sinews, the resources, or the constitutional context that would make such aspirations attainable." Some commentators contend that cooperation has continued to fail to meet its full potential on account of one crucial third state actor of common interest: Pakistan. There is a sense among many in New Delhi that the United States has yet to adequately assure India that its counterterrorism interests will not be undermined by Washington's relationship with Pakistan. By some accounts, U.S. credibility has suffered to the extent that Washington has demonstrated neither sufficient energy nor seriousness in pressuring Pakistan to arrest and convict anti-India militants, including those accused for the 2008 Mumbai attack. As is the case in other areas of cooperation, many counterterrorism experts urge a revision of Washington's and New Delhi's respective expectations in the CT realm so as to establish more realistic goals for both countries. These analysts contend that, so long as the United States and India do not share compatible threat perceptions, CT cooperation will remain limited. There is a further broad sense among both U.S. officials and Indian observers that current efforts to build trust around this issue are genuine, albeit halting. Intelligence sharing remains ad hoc and sporadic, but at the same time is sustained and supported by both sides. Most analysts point to the 2008 Mumbai terrorist attacks as a significant milestone in bilateral CT cooperation, offering both more motivation and more space for collaboration. These same analysts are also quick to point out the persistent constraints, many of which entail non-strategic considerations. These general points are consistently raised by close followers of this aspect of the U.S.-India partnership. For example, during 2011 testimony before a House panel, one U.S. expert listed what he sees as five key challenges to future U.S.-India CT cooperation: (1) Suboptimal alignment of U.S. and Indian bureaucracies , resulting in poor interagency communication and coordination in both countries, and a lack of clarity about issue-area responsibilities; (2) India's limited bureaucratic capacity and its highly centralized and often opaque decision making processes; (3) primary law enforcement role of Indian states ; (4) sometimes divergent views of the terrorist threat itself, related primarily to differing perceptions on the role played by Pakistan; and (5) Indian doubts about the U.S. commitment to CT cooperation due to perceptions that Washington's conduct is not always fully transparent. Assisting with the equipping and training of tactical-level India security personnel is an area ripe for the United States. In the words of one New Delhi authority, "The Indian security-intelligence complex is, in its greatest part, extremely antiquated, and virtually every segment can be improved by external inputs." In short, this entails "outfitting the fighting man," and "short term programs, preferably offered in India and designed to result in the development of specific skills and capabilities across the intelligence-policing spectrum, would be of tremendous use." Another leading Indian nongovernmental expert asserts that Indian law enforcement agencies face many debilitating problems, some of which offer fruitful potential areas for closer U.S.-India collaboration. India's police forces are widely seen as being woefully ill-prepared to deal with CT work, even four years after the devastating Mumbai attack. The poor forensic capabilities of Indian law enforcement seriously hinder CT investigations. India has no national training center for rank-and-file officers (the National Police Academy in Hyderabad trains upper management only); establishment of a national police training center could significantly strengthen police capabilities. Lower-ranking Indian police officers often have the best "ground knowledge" of the working of extremist groups, but this knowledge is rarely transmitted through the mostly high-level U.S.-India CT cooperation seen to date. The U.S. government is considered well poised to provide assistance in each of these areas. Moreover, while many Indian police officers receive training in the United States, few return to training positions in India, meaning much of the imparted knowledge fails to be disseminated in the Indian system. Two additional obstacles include Indian sensitivity to exposing its intelligence personnel to the United States and fears of being treated as a junior partner. The former concerns are closely linked to instances of apparent U.S. efforts to recruit intelligence assets inside India's own institutions. With regard to the latter concerns, one American counterterrorism analyst noted that each conversation with Indian counterterrorism officials is begun ritualistically with an acknowledgement that both sides have much to learn from each other. The intention here is to convey a message of peer engagement. Some Indian analysts are not hesitant to point out that U.S. counterterrorism and counterinsurgency efforts at home and abroad have been less than stellar and fraught with controversy. Examples offered include the "accidental" arrests of the so-called shoe bomber and underwear bomber, warrantless domestic surveillance, and, of course, years-long insurgencies in Iraq and Afghanistan, among others. Whether or not such critiques are justified or tell the whole story, this narrative can form the basis of an argument that the United States is poorly positioned to claim superiority in the CT realm. For its part, New Delhi's own domestic efforts have realized some modest successes—in Kashmir, northeastern states, and against Maoist rebels and terrorist plotters—despite the many acknowledged weaknesses in Indian capabilities and effectiveness. A significant number of analysts, however, express broad satisfaction with the progress of the relationship, even bearing in mind significant constraints and instances of back-sliding. These observers argue that, in light of continuing geopolitical complexities and decades of mistrust between the two governments, reservations should be allowed to thaw gradually and expectations should be kept realistic. At present, the most optimistic observers counsel avoidance of any "rush" to develop this CT and intelligence relationship, and they view the leverage of tactical gains in the short term as best for trust-building, with a secondary focus on the alignment of broad strategic agendas that may never fully match. The issue of U.S. arms sales to India has taken a much higher profile in the new century. New Delhi is undertaking a major military modernization program, with plans to spend some $100 billion over the 7-10 years to update its mostly Soviet-era arsenal. U.S. weapons makers are eager to gain a slice of this lucrative pie, and American companies also see in India a potentially huge new market for sophisticated equipment such as surveillance and detection systems. Increased defense trade may be a means of reviving and/or sustaining what some have perceived as stagnant U.S.-India relations. Still, many Indians continue to be wary of closer defense ties with the United States and are concerned that these could lead to future strings, such as conditionality and/or cutoffs, and perhaps constrain New Delhi's foreign policy freedom in times of conflict. Nevertheless, the value of new and unprecedented major defense sales to India has continued to grow—some $8 billion in deals since 2001—with the United States now offering to sell India some of its most sophisticated military hardware. However, Indian defense purchases from the United States represent only a small percentage of the country's overall purchases over the past decade. A listing of major arms transfers over the past decade is found in Table 1 . The 2005 New Framework for Defense Cooperation was the first step to promote sustained defense trade between the United States and India. Yet efforts to realize the perceived geostrategic benefits, as well immense business potential, of opening a significant new defense trade pipeline from the world's largest arms exporter (the United States) to the world largest arms importer (India) are complicated by myriad legal, political, strategic, historical, and bureaucratic obstacles. Defense trade in the United States and India appears guided by certain distinct considerations in each country. Arms sales by private U.S. firms to foreign countries are heavily regulated by Washington's strategic and national security calculations. Within these broader constraints, Washington seeks to improve bilateral military-to-military relations by enhancing "interoperability" through shared defense platforms. Interoperability allows friendly militaries to better understand one another's operational capabilities, increase military-to-military contact through training and information exchanges on equipment usage and tactics, and communicate with greater ease on the ground. Similar equipment can also provide the basis for broader doctrine and strategic discussions on the deployment of particular systems and act as a force multiplier making cooperation among militaries seamless. The United States is also intent on protecting its most advanced defense technology from being acquired by competitors, especially rivals such as Russia and China. In contrast to other major defense exporters to India for which profit expectations tend to be primary defense sale considerations (for example, Russia and France), defense trade calculations in the United States are more deeply embedded in the country's strategic outlook. Indian defense imports are influenced by more immediate considerations: protecting the country's foreign policy autonomy, enhancing its power projection capabilities, cost, and poor procurement procedures. Foreign policy autonomy, a top priority among New Delhi's defense import considerations, involves procuring reliable defense platforms that are not subject to stringent end-user requirements that can limit the country's operational decisions. India has displayed a long-standing aversion to signing paperwork or agreements that it "perceives will impinge on its sovereignty." More recently, India has stepped up efforts to increase its strategic autonomy by focusing on its domestic defense production capabilities. In 2011, India instituted the Defense Production Policy, which focuses heavily on boosting domestic production through co-production with foreign defense firms. As New Delhi safeguards its autonomy, it is simultaneously attempting to build an arsenal that affords it a reliable land, air and sea based defensive posture. This has led India to seek advanced platforms and technologies that are possessed by major military powers. Despite the country's desire to acquire and produce world-class systems, India's budget tends to prioritize pressing domestic development related allocations over defense. Therefore, low cost, formalized through the "L1," or lowest bidder, system is an important factor in determining the country's foreign defense procurements. A weak, disorganized, and too often corrupt procurement process adds yet another layer of complexity to India's defense trade decisions. Washington's eagerness to pursue advanced technology defense sales to India is no doubt welcome in New Delhi, but is also met with circumspection. Commonly topping the list of concerns offered by observers are U.S. interoperability and technology protection agreements that some Indian officials believe would erode their country's foreign policy autonomy. In particular, Washington's inability to win Indian accession to two major interoperability agreements—the Communication Interoperability and Security Memorandum of Agreement (CISMOA) and the Basic Cooperation and Exchange Agreement (BECA) for Geospatial Cooperation—and its as yet unsuccessful campaign to obtain New Delhi's fullest cooperation on End-Use Monitoring (EUM) of defense sales—have limited the types of advanced technology the United States will share. In short, the CISMOA and BECA agreements allow the transfer of advanced U.S. communication and guidance technologies to signatory states. These technologies can include satellite navigation, secure communications equipment, and synchronized laser guidance systems, among other unique American know-how used by the U.S. military. Specifically, the CISMOA requires purchasers of U.S. defense equipment to ensure that equipment supplied is compatible with other American systems. The BECA provides for mutual logistical support and enables exchanges of communications and related equipment. Washington's efforts to bring the Indians on board with these two pacts have met with considerable resistance. New Delhi has, in fact, forgone acquisition of some advanced U.S. technologies in recent procurements such as the C-130J and P-8I, in part because officials there shy away from entering into any agreements with the United States that could signal a nascent defense alliance. The relatively high visibility of the CISMOA and BECA issue diminished following the delivery of the first C130-J Hercules in early 2011, and American officials have since that time refrained from raising the issue in bilateral meetings. Senior Indian air force officials reportedly contend that their lack of the restricted equipment has not made a significant difference to IAF operational capabilities. India of course has the option of purchasing similar, if less advanced equipment from third countries without signing these kinds of agreements. As noted above, the Obama Administration has expressed a view that failure to bring India on board with these agreements does not necessarily hinder bilateral military-to-military relations. While CISMOA and BECA are required by U.S. law for the sale of certain high technology equipment, End-Use Monitoring agreements (EUMAs) and Enhanced End-Use Monitoring Agreements (EEUMAs) are mandated by the Arms Export Control Act 22 U.S.C. 2785 for the sale of any and all U.S. defense articles and services. In 2009, EUMA negotiations with India overcame a major obstacle and both governments publically agreed on the mandatory requirement of EUM and EEUM agreements with the sale of defense items. Until that time, customized EUMAs were included with each defense sale to India, as both countries were unable to reach an overarching agreement. For example, the EUMA signed for Boeing business jets purchased to transport the Indian Prime Minister and President stipulated that certain defense articles would be detached from the plane and inspected separately if the need arose. While the final 2009 EUMA has not been made public, the solution reportedly allows for the United States and India to predetermine the timing and location of inspections, therefore restricting access of U.S. inspectors to Indian forward operating positions, and so ameliorating a key Indian concern. The EUMA's "customization" is symbolic of an emergent trend in U.S.-India defense relations, with increasing realization from both parties that, for the time being, solutions may most easily be found in such special arrangements. Since 2009, it appears that EUMA and EEUMA inspections have been conducted. EUMA checks, mostly conducted through the State Department's Blue Lantern program, are gradually being regularized. EUMA inspections on India reportedly average a response time much greater than the estimated worldwide average of 45 days, a matter of some frustration for processing officials. In the case of EEUMA checks, primarily handled by the Pentagon's Golden Sentry program, some inspections reportedly have taken place and, barring the USS Trenton incident (see footnote 91 ), cooperation and trust in this area appears to be strengthening, albeit gradually. At this early stage, levels of flexibility are being tested by both parties. The limitations on the sale of advance technology arms sales posed by the EUMA seem to be identified with each proposal and sale. For example, India reportedly has turned down the purchase of U.S.-made Javelin anti-tank missiles in a sale that would come with a co-production offer. Instead, New Delhi is said to have chosen to acquire similar equipment from another country, citing a considerably lower price and the absence of EEUMA requirements as deciding factors. While the signing of the 2009 EUMA constituted an important step for defense trade between the two countries, end-use monitoring will most likely remain an important factor in India's acquisition of defense items from the United States, significantly complicating the task of encouraging high-end sales to India. Since the mid-1980s, India has consistently expressed interest in access to U.S. high-technology goods. U.S. restrictions on the sale of sensitive dual-use equipment to non-NPT signatories (including India), and Washington's 1998 sanctions against New Delhi, curtailed any meaningful technology sharing between the two countries. The 2005 defense partnership agreement and subsequent removal of most Indian defense organizations from the U.S. Department of Commerce Entity List in 2011 has largely eliminated broad licensing restrictions to technology sharing. The U.S. Commerce Department approved more than 99% of India's license requests for dual-use technology in FY2010-2011. The State Department also approves a vast majority of munitions licenses requested from India. U.S. officials appear to be satisfied with India's efforts to protect dual-use technology and to limit its application to non-defense uses. Nonetheless, the potential for leakage of sensitive advanced technology to U.S. rivals remains of significant concern in Washington. Even if India signs CISMOA and BECA in addition to EUM agreements, New Delhi will not be guaranteed license approval for items the U.S. government considers highly sensitive. While most U.S. officials interviewed for this report said they trusted the Indian government, they also added that genuine concerns remained about the safeguards in place to protect technologies from leaking. Some U.S. officials also noted that these technologies were denied not only to India, but to U.S. allies as well, a factor that New Delhi may not adequately appreciate when reflecting upon Washington's reluctance on technology sharing requests. Many Indian analysts suggest that New Delhi is averse to becoming dependent upon the United States to supply its front-line munitions. Indian skepticism about U.S. reliability as an arms supplier is long-standing. The 2011 "de-selection" of U.S.-made F-16 and F/A-18 jets for India's fleet was in part attributed to this strain of leeriness. Many Indians are concerned that, in a time of crisis, U.S. refusal to approve licenses for spare parts of U.S. defense equipment could indirectly, but significantly constrain New Delhi's foreign policy freedom. The 1990 U.S. suspension of fighter jet deliveries to Pakistan is an oft-cited example. India's own bitter experience with the suspension of nuclear fuel supply to its Tarapur reactor in the 1970s has not been forgotten. The sweeping 1998 sanctions on India provide another case in point. More recently, in 2009, a shipment of General Electric engines for India's Shivalik -class stealth warships was frozen pending license approval, causing controversy. The episode sent ripples through the defense community, seemingly justifying critics' claims that the United States was not a reliable defense supplier. According to one Indian analyst, a simple bureaucratic glitch had caused the incident. India's limited faith in U.S. reliability may underlie its decision to favor acquisitions of U.S. transport and reconnaissance platforms, such as the C-130J, P-8I, C-17 Globemaster III and Apache helicopters, rather than more sensitive items. India is also procuring U.S. artillery (M777 howitzers) and various types of missiles, which assume less risk from licensing delays. Washington and New Delhi are taking steps to reduce the mistrust between them. While the United States may not be willing to sell India many highly sensitive technologies at present, it has taken significant strides in closing the trust gap by removing Indian defense subsidiaries from the Entity List and approving the bulk of license requests submitted. The United States is also increasing its efforts to find mutually valuable defense item sales for co-production and technology transfer. For its part, India is cooperating on end-use monitoring requirements, despite its reservations. Barring strategic limits to defense sales, both governments have shown a willingness to work seriously on eliminating barriers to greater levels of trust. Most analysts and U.S. government officials interviewed for this report agreed that the process of trust-building will involve simultaneously nudging forward incremental steps on a wide array of fronts, ranging from high-profile strategic convergence to eliminating mundane bureaucratic obstacles. The United States and India each have convoluted defense trade bureaucracies. A lack of familiarity with one another's respective procurement and licensing procedures further compounds frustration in both countries. Indeed, bureaucratic complexities and unfamiliarity are said to commonly result in missed bilateral defense trade opportunities. In a September 2012 interview, Deputy Secretary of Defense Ashton Carter emphasized a common concern that buyers of U.S. defense items have about U.S. export control procedures: Secretary Gates used to say [there were concerns]; Secretary Panetta does, Secretary of State Clinton [does], and so [there is] tremendous frustration with how arcane the export control system is. And those problems are particularly acute when it comes to India because India and we were separate industrially and technologically for a long time, all during the Cold War. So we are trying to match up how they do things and how we do things. There's no history there. We have to create that history. The Foreign Military Sales (FMS) program is America's government-to-government method for selling U.S. defense equipment. To many U.S. officials and analysts, the FMS system, which directs defense sales through the Department of Defense, is often described as being overly rigid and unsuitable for India's competitive bidding procurement process. Nevertheless, the acceptance of American F-16 and F/A-18 jets into the early rounds of the MMRCA competition signaled that the FMS system could be competitive in India, a matter of some relief to U.S. officials working on the bid. Strict U.S. FMS regulations against making unauthorized deals restrict the ability of U.S. firms to negotiate with Indian procurement officials, thus placing them at a disadvantage relative to those countries willing to propose concessions upfront, even if such concessions are not made in the final sale. Non-U.S. firms can be far more flexible in their negotiations and are known to make promises without first vetting it with their governments. The United States tends to be at further disadvantage when competing in the L1 system. The lowest bidder is the company that provides the specifications listed on the Request for Proposal at the lowest cost. Some analysts suggest that the L1 system does not take into consideration the technological benefits gained at greater expense, typically a strong suit of U.S. defense wares. American defense firms often find it difficult to navigate India's defense procurement environment. Executives have raised concerns about unclear taxation guidelines at the time of sale. In some instances, they reportedly claim the application of retroactive taxes fuels their reluctance to engage India's fluid defense policy environment. India's procurement system is highly favorable to known suppliers; Russia, France, and, more recently, Israel, have robust defense relationships with India of a kind that will take the United States time to build. Personal ties can also play important roles in facilitating deals. Boeing's relative success among U.S. defense firms selling to India seems in part owed to its prior experience with India's commercial aircraft market. Late 2012 saw indications that the FMS process is realizing more consistent success with India's own L1 bidding system. In August, India announced its intention to purchase 22 Boeing AH-64D Apache Longbow attack helicopters for $1.2 billion, having found the Apache superior to the Russian Mi-28N. Two months later, an MOD official stated that Boeing's CH-47F Chinook heavy-lift helicopter had bested a Russian-made competitor in extensive field trials and had been selected for purchase after issuing the L1 bid. Both helicopter sales would come through FMS. "Offsets" are the practice by which the award of contracts by foreign governments or companies is exchanged for commitments to provide industrial compensation. In defense trade, offsets typically include mandatory co-production, licensed production, technology transfer, and foreign investment. Offsets may be direct, indirect, or a combination of both. Direct offsets refer to compensation, such as co-production or subcontracting, directly related to the system being exported. Indirect offsets apply to compensation unrelated to the exported item, such as foreign investment or purchases of goods or services. According to the U.S. Commerce Department's Bureau of Industry and Security, Historically, offsets have served important foreign policy and national security objectives of the United States, such as increasing the industrial capabilities of allied countries, standardizing military equipment, and modernizing allied forces.... However, offsets may be detrimental to the strength of the U.S. defense industrial base, particularly small and medium-sized defense subcontractors. Offsets can displace U.S. subcontractors, enhance foreign competitors and create excess defense capacity overseas. Offsets have become a highly contentious issue in U.S. defense trade with India. Following legal changes in 2005, New Delhi now requires 30% of any defense deal valued at more than Rs3 billion (about $56 million) to be reinvested in the India as a "defense offset." India reportedly has attracted at least $4.27 billion in such offsets over the past five years. Until 2011, offsets were required to be reinvested in the Indian defense industry, which included the defense public sector undertakings (DPSUs) and, more recently, private Indian defense companies. Since 2011, the MOD, in response to foreign supplier and domestic industry pressures, has steadily expanded the range of reinvestment options for offsets. In addition to the Indian defense sector, offsets currently include civil aviation, homeland security, training, technology transfer, and potentially foreign parts purchased by Indian offset partners. Co-production of defense articles with domestic arms producers is a key feature that offsets were originally intended to encourage. Many international arms suppliers claim that ambiguity about what counts as offsets, combined with the poor capacity of the Indian defense sector to absorb billions of offset dollars, and poor administrative policy and oversight by the Indian government, all serve to hinder bilateral defense trade. U.S. firms have also criticized the requirement that at least 74% of related FDI be directed to domestic (Indian) firms as being a major disincentive to fulfilling offset provisions through co-production. Some Indian defense analysts and MOD officials refute these arguments and express concerns that the dilution of offsets to benefit foreign suppliers is compromising the potential for development of the defense sector. They argue that foreign companies are eager to meet their offset requirements easily and cost effectively, while the MOD approves offset proposals smoothly in the interest of facilitating a given sale. Recently, high-level U.S. officials such as Defense Secretary Panetta and Ambassador Powell have weighed in on the offset issue, calling on India to clarify its policy, strengthen its oversight, and raise the controlling stake of foreign companies in defense joint ventures. India is considering a revision of its 74/26 percent defense sector FDI policy; however, progress appears to have stalled at present. The de-selection of U.S. fighter jets in the MMRCA competition sparked a heated debate on the future of U.S.-India defense trade, as well as on the broader U.S.-India relationship. In the run-up to India's April 2011 MMRCA announcement, many U.S. officials and analysts had hoped that the sale of U.S. jets would catalyze a relationship they argued was frustratingly stagnant. A year after U.S. firms were denied a MMRCA bid, the United States appears to have redoubled its efforts to bolster defense trade relations with India. The enthusiasm with which the Pentagon and State Department are pursuing such ties with India has in large part to do with India's growing importance in the context of the U.S. "pivot" toward the Asia-Pacific, or what is sometimes called the "Indo-Pacific." Deputy Defense Secretary Carter summarizes the current U.S. push for defense sales to India: "[O]ur objective, the joint objective we have with the Indians, is to make sure that only our strategic differences—and we'll always have them—and not our bureaucratic impediments, stand in the way of how this relationship can be all that it can be." As a result of this push in defense-trade, U.S. officials now seek mutually beneficial co-production opportunities to demonstrate America's sincere interest in the further development of India's indigenous defense sector. From the American perspective, the willingness to strengthen defense ties with India through defense sales (in addition to other means) does not appear to be waning. Interviews with numerous U.S. officials found a broad consensus on the importance of working closely to remove current obstacles on defense trade, despite enormous frustrations that have accrued over the years. Expectations on what specific types of trade are likely also appear to have been re-calibrated since the loss of the MMRCA deal. India has long expressed an urgent interest in acquiring advanced U.S. technology, including defense technology. Although India's own strategic hesitations and budgetary restrictions have meant only measured acquisition of U.S. defense equipment, many analysts suggest that the expected $10 billion in sales to India over a decade-long partnership is significant. Moreover, the momentum within India to reduce corruption in the defense sector may make America's relatively rigid, yet corruption-free sales procedure more enticing for New Delhi's leaders. The U.S. government and U.S. defense firms are in the process of learning how to operate in a competitive Indian market that has deep trade ties with other foreign arms suppliers. Both the United States and India are actively reforming their defense procurement and licensing practices. Washington and New Delhi are becoming increasingly accustomed to negotiating contracts that reflect one another's strategic and security interests, without reverting to skepticism and mistrust. The verdict is still out on whether U.S. defense companies will be sufficiently incentivized to pursue joint production in India or whether the United States will approve the co-production of advanced technologies. Likewise, it remains to be seen whether India will gain sufficient confidence to buy frontline U.S. platforms or take active steps to signal a closer partnership. Despite these uncertainties, both governments are bracing for the long haul in bilateral defense trade, as they are with the security relationship overall. The new breadth and depth of U.S.-India security engagement detailed in this report constitute a gradual, but steady strengthening of bilateral defense relations over past decade. In notable contrast to the pre-2001 period, this present-day collaboration has endured political and diplomatic highs and lows without any serious suggestion that it be curtailed. As the U.S. government assesses its (deepening) strategic interests across the Asia-Pacific, India's geographic setting has no doubt increased its visibility as an important and potentially major actor. This trend is only hastened by America's "rebalancing" approach to the Asia-Pacific, which is seen to encompass the Indian Ocean region. New Delhi's leaders are mindful of the precariousness of their region's stability, and they arguably appreciate the value of leveraging an American presence in pursuing their strategic goals. Converging U.S. and Indian interests in a fluid geopolitical order have led the two governments to explore myriad new cooperative initiatives, and both are investing considerable time and effort to overcome the sometimes significant obstacles to these. In the latter half of the previous decade, the U.S. Congress took the formal and landmark steps required to amend U.S. nonproliferation and export control laws so as to provide an exception and special status for India in the realm of nuclear and high-technology trade. The changes also served to open doors to both broader and smoother engagements in bilateral security cooperation and defense trade. While the (ostensible) proximate goals of the breakthrough 2008 civilian nuclear deal were to boost India's electricity generating capacity and benefit the U.S. economy through nuclear trade—goals as yet unmet—few observers will dismiss the more far-reaching goal of paving the way for truly strategic cooperation with New Delhi by engendering Indian trust and confidence in Washington as a partner. Although no similar potential breakthrough bilateral initiatives involving U.S. legislation are on the horizon, the role of the U.S. Congress in overseeing the conduct of U.S. foreign relations with India remains important. In years to come, the pursuit of closer security and defense trade ties with India—should it continue as U.S. policy—will entail many hurdles and occasional risks, some of the kind that Washington has not traditionally faced with existing international partnerships and alliances. Sales of technologically advanced weapons to India, in lieu of that country signing certain key defense agreements, are in part symbolic of the exceptional nature of the evolving relationship. To date, officials in both capitals have shown a clear willingness to work as effectively as possible within legal and political constraints they face, with some content to move forward through ad hoc procedures when necessary. At present, difficulties surrounding sensitive issues such as end-use monitoring continue to fester, with both governments operating at what appear to be the margins of their mandates. India's insistence on co-production and technology sharing can undermine the potential for major future opportunities and constrain the scope of those that are manifest. Disagreements in such issue-areas suggest the possible need for more active congressional oversight and potentially even legislation. Congress can also play a role in the progress of military-to-military ties and defense trade with an eye toward encouraging Administration action on U.S. security interests involving India. While the foundation of the U.S.-India security relationship appears to be increasingly stable, and as mutual confidence grows, interested congressional parties can play a role in shaping the extent to which this partnership serves and protects American interests in the 21 st century.
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U.S.-India engagement on shared security interests is a topic of interest to the U.S. Congress, where there is considerable support for a deepened U.S. partnership with the world's largest democracy. Congressional advocacy of closer relations with India is generally bipartisan and widespread; House and Senate caucuses on India and Indian-Americans are the largest of their kind. Caucus leaders have encouraged the Obama Administration to work toward improving the compatibility of the U.S. and Indian defense acquisitions systems, as well as to seek potential opportunities for co-development or co-production of military weapons systems with India. In the 112th Congress, the Senate Armed Services Committee (S.Rept. 112-26) opined that a deepened partnership with India is critical to the promotion of core mutual national interests. The United States and India have since 2004 been pursuing a "strategic partnership" that incorporates numerous economic, security, and global initiatives. Defense cooperation between the two countries remains in relatively early stages of development. However, over the past decade—and despite a concurrent U.S. engagement with Indian rival Pakistan and a Cold War history of bilateral estrangement—U.S.-India security cooperation has flourished. American diplomats now rate military links and defense trade among the most important aspects of transformed bilateral relations in the 21st century. The United States views security cooperation with India in the context of common principles and shared national interests such as defeating terrorism, preventing weapons proliferation, and maintaining regional stability. After initial uncertainty, under President Barack Obama, senior Pentagon officials assured New Delhi that the United States is fully committed to strengthening ties through the enhancement of the defense relationship made newly substantive under President George W. Bush. Many analysts view increased U.S.-India security ties as providing a perceived "hedge" against or "counterbalance" to growing Chinese influence in Asia, although both Washington and New Delhi repeatedly downplay such motives. While a complete congruence of U.S. and Indian national security objectives is unlikely in the foreseeable future, meaningful convergences are identified in areas such as the emergence of a new balance-of-power arrangement in the region. Still, indications remain that the perceptions and expectations of top U.S. and Indian strategic planners are divergent on several key issues, perhaps especially on the role of Pakistan, as well as on India's relations with Iran. Moreover, given a national foreign policy tradition of "nonalignment," Indian leaders are averse to forming any "alliance" with the United States and are clear in their intention to maintain India's "strategic autonomy." Questions remain about the ability of the Indian economy to grow at rates sufficient to improve its security capabilities at the pace sought in both Washington and New Delhi. Despite these factors, U.S. leaders only expect India's importance to U.S. interests to grow steadily, and they foresee India taking on new security roles commensurate with its status as a major power and stakeholder in the international system. This expectation is a key aspect of the Obama Administration's policy of "rebalancing" toward the Asia-Pacific, which is conceived as including the Indian Ocean region. This report reviews the major facets of U.S.-India security relations with a focus on military-to-military contacts, counterterrorism and intelligence cooperation, and defense trade, while also discussing some of the many obstacles to deeper cooperation in each of these areas. The strategic aspects of the bilateral security relationship are in the companion CRS Report R42948, U.S.-India Security Relations: Strategic Issues, by [author name scrubbed] and [author name scrubbed]. U.S.-India relations are discussed more broadly in CRS Report RL33529, India: Domestic Issues, Strategic Dynamics, and U.S. Relations, coordinated by [author name scrubbed].
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In the 1990s, wars and political instability provided an opportunity for Al Qaeda and other terrorist groups to infiltrate the Balkans. However, U.S. and European peacekeeping troops, aid, and the prospect of Euro-Atlantic integration have helped to bring more stability to the region in recent years. Moreover, the September 11, 2001 attacks on the United States underscored for the countries of the region the dangers of global terrorism, and resulted in increased U.S. attention and aid to fight the terrorist threat. In addition, some countries outside of the region, especially Saudi Arabia, which were formerly key sources of terrorists and terrorist financing, have cracked down on Islamic militants, which has in turn had a positive impact on the Balkans. As a result of these factors, many experts currently do not view the Balkans as a key region harboring or funding terrorists, at least when compared to the Middle East, North Africa, South Asia, Southeast Asia, and Western Europe. Nevertheless, experts caution that the region may continue to play a role in terrorist plans, largely as a transit route for terrorists, as well as for bases for attacks in other regions, such as Western Europe. There have also been efforts to recruit people from the region into terrorist groups. Moreover, observers agree that the region's continuing problems leave it vulnerable to terrorist groups in the future. The July 2004 report of the National Commission on Terrorist Attacks Upon the United States (known as the 9/11 Commission) referred to Central and Eastern Europe as a region potentially vulnerable to terrorists, due to significant Muslim populations and weak border controls and security services. This problem may increase if terrorists currently concentrated in Iraq disperse to the Balkans and other regions. Some sources, especially Serbian and Russian experts and officials, have claimed that the Balkans continue to form a more dangerous threat to the United States and neighboring Western Europe than is usually acknowledged. Although large numbers of indigenous Muslims live in the Balkans, due to its poverty and instability the region has not attracted large numbers of Muslim immigrants, who have been an important source of recruits for Islamic extremists in Western Europe. Moreover, opposition to terrorism has been strong among Bosniaks (Bosnian Muslims) and Albanians, the largest indigenous Muslim groups in the Balkans. These groups are generally more secular in outlook than Muslims elsewhere. Most view themselves as part of Europe and are grateful for the perceived U.S. role in defending them against Serbian aggression in the 1990s, and for the continuing U.S. contribution to the security of their countries. Charges of terrorism are often used as political weapons among countries or ethnic groups to try to attract international support for their cause. For example, Serbian and Bosnian Serb politicians often make charges of Al Qaeda training camps in Bosnia and Kosovo in an effort to discredit Bosniaks and Albanians. For their part, Bosniak and Albanian leaders deny the charges and accuse the Serbs of supporting "terrorism" by harboring indicted war criminals. Some observers say that the terrorist threat is in fact much less serious than the region's more pressing problems, such as corruption, poverty, and potential political instability. They say that the international focus on the terrorist threat may divert attention from these more relevant issues. On the other hand, this rivalry between groups and the international focus on terrorism may have some positive aspects. It may push countries in the Balkans to cooperate zealously with the United States on terrorism issues, in hopes of securing U.S. support for their regional goals and Euro-Atlantic integration. In addition, there may be additional political support in the United States and other countries for dealing with the region's problems if they are viewed as a potential source of terrorism. Given these factors, perhaps of greater concern to most experts than the existence of a significant Muslim population in the Balkans is the weakness of government institutions, rampant corruption and poverty. However, despite these difficulties, the countries in the region have provided very good cooperation with the United States in the Global War on Terrorism, according to U.S. officials. Consistent with U.N. Security Council resolutions adopted in the post-9/11 fight against terrorism, these countries have worked with the United States and other countries to arrest or expel terrorist suspects, shut down non-governmental organizations linked with terrorism, and freeze or seize assets of persons and groups suspected of terrorist financing. This report focuses on three countries: Bosnia and Herzegovina, Albania, and Serbia (including Serbia's Kosovo province, which is currently under international supervision). The report deals with the role of Islamic terrorist groups such as Al Qaeda rather than indigenous nationalist groups pursuing local or regional objectives. After the breakup of Communist Yugoslavia, Bosnia and Herzegovina was torn apart by a civil war between Bosniaks (Bosnian Muslims), Serbs, and Croats from 1992 to 1995. The war resulted in the deaths of many thousands of persons and the displacement and impoverishment of large parts of the population. A desperate Bosniak-dominated Bosnian government, facing an international arms embargo and outgunned by breakaway Bosnian Serb forces, accepted the help of Iran, as well as several thousand Islamic radicals, mercenaries, and others. The 1995 Dayton Peace Accords, which ended the conflict, required all foreign forces to leave Bosnia. Most did, but some Islamic radicals remained behind. It is estimated that about 700 to 1,000 former fighters stayed behind in Bosnia after the war and became Bosnian citizens by marrying Bosnian women. Others received citizenship through bribing Bosnian officials. Some Al Qaeda operatives in Bosnia had connections to members of Bosnia's intelligence service, another legacy of Bosniak wartime cooperation with Islamic militants. The experience of the Bosnia conflict has also had an impact on terrorist groups worldwide. Bin Laden and other Al Qaeda figures mention the Bosnian war as a place where Al Qaeda was active, and as an important militant Islamic cause. Terrorist recruiting videos often include footage of combat in Bosnia. In addition to fighters, Bosniaks also received assistance during and after the war from Islamic charities and humanitarian organizations, many of them from Saudi Arabia. Some of these groups served as fronts for Al Qaeda, which used them for planning attacks in Bosnia and elsewhere. In the view of some observers, Saudi Arabian-built mosques at which some extremist foreign and Bosnian clerics continue to preach hatred of the United States and Western countries may enhance terrorist recruiting efforts. According to U.S. officials, the U.S. embassy in Sarajevo and U.S. military bases in Bosnia were subject to several terrorist threats after September 11, 2001. However, Bosnian opposition to terrorism has been broad, despite the still-deep ethnic divide in the country. The United States still enjoys a strong reservoir of support in Bosnia, especially among Bosniaks, for bringing peace to the country and providing post-war aid. The largely secular and European outlook among Bosniaks has caused friction with foreign Islamic extremists. Efforts by the Islamists to recruit Bosniaks into their organizations have met with limited success. Some Bosniaks fear that terrorists will give Bosnia a bad name in Europe, thereby hindering their ability to travel there and setting back Bosnian efforts to join European institutions. On the other hand, some experts are concerned that widespread unemployment among Bosniak youth, coupled with dissatisfaction with U.S. foreign policy, could aid terrorist recruitment. The 2005 State Department terrorism report discusses an Islamist extremist organization called Active Islamic Youth, which is associated with former foreign Islamic fighters in Bosnia. It says that the group engages in outreach activities aimed at Bosnian youth and publishes materials promoting Islamic fundamentalism, religious intolerance, and anti-Western rhetoric. In 2006, a joint U.S.-Croatian intelligence report reportedly said the terrorist groups were attempting to recruit so-called "white Muslims," from Bosnia and other Balkan countries, whose physical appearance might arouse less suspicion in Europe than a person of Middle Eastern appearance. Bosnian officials have offered mixed assessments of this threat: some say that it is a significant concern, while others admit it as a possibility but note that they have no concrete evidence so far for widespread recruiting efforts of this kind. In addition to facing the same problems of poverty and corruption as other countries in the region, Bosnia also suffers from institutional failings that are a result of Bosnia's recent development. The Dayton Peace Accords divided Bosnia and Herzegovina into two semi-autonomous "entities"—the largely Bosniak-Croat Federation and the mainly Bosnian Serb Republika Srpska—with a weak central government. Critics have charged that this structure has stymied Bosnia's efforts to develop effective government institutions. The 2006 State Department Country Reports on Terrorism notes that, while Bosnia's counterterrorism cooperation with the United States was good, the weakness of the Bosnian state "made it vulnerable to exploitation as a terrorist safe haven or as a potential staging ground for terrorist operations in Europe." U.S. and international efforts to strengthen the central government have been resisted by the Bosnian Serbs, who frequently charge the Bosniaks with terrorist ties. In May 2005, Bosnian Serb police chief Dragomir Andan claimed that the terrorists who carried out the March 2004 Madrid bombings had been trained at alleged Al Qaeda camps in Bosnia and Herzegovina. EU police and other officials in Bosnia said that they had seen no evidence to support such charges. Such charges have coincided with an ongoing effort by international officials in Bosnia to put the police, a key pillar of Bosnian Serb leaders' power, under central government control in order to more effectively combat organized crime and terrorism. U.S. officials have lauded Bosnia's efforts in the fight against terrorism. In his 2002 State of the Union Address, President Bush singled out Bosnia specifically for praise for its cooperation with the United States. In January 2002, Bosnia handed over to the United States Bensayah Belkacem, whom U.S. officials believed could be a high-ranking figure in Al Qaeda, as well as five other suspects. The suspects were originally from Algeria, although four gained Bosnian citizenship. All are currently interned at U.S. facilities in Guantanamo Bay, Cuba. The rendition of these men to the United States was sharply criticized by Bosnian legal experts as a violation of the rule of law, as has their continued detention in Cuba. Bosnian prosecutors formally exonerated the men in 2004 after an investigation, and Bosnia formally requested that the four Bosnian citizens be released from U.S. custody in February 2005. The United States has so far rejected Bosnia's request. In cooperation with U.S. investigators, Bosnian authorities have investigated Islamic charities suspected of having ties with Bin Laden. In March 2002, Bosnian police raided Bosnian offices of the Benevolence International Foundation (BIF), which is headquartered in Illinois. Police found weapons, military manuals, a fraudulent passport, photographs of Bin Laden, and other items. BIF leader Enaam Arnaout, who was charged in US courts with concealing his relationship to al-Qaida, received an 11-year sentence, albeit for fraud, not on terrorism charges. A subsequent Bosnian raid on another group, a local branch of Saudi-based Al-Haramain Islamic Foundation, uncovered tapes calling for attacks on peacekeepers in Bosnia. Another raid, this time on the Sarajevo office of the Saudi High Commission for Relief, netted anti-Semitic and anti-American materials, as well as photos of U.S. military installations. Other Al Qaeda fronts, such as Vazir (Al-Haramain's successor organization) and the Global Relief Fund were also shut down. In 2004, the Bosnian government disrupted the operations of al-Furqan (a.k.a. Sirat Istikamet), al-Haramain and al-Masjed al-Aqsa Charity Foundation, and Taibah International, all Al Qaeda-linked organizations. Experts note that when some Al Qaeda front organizations are closed down, others often spring up to replace them. The 2005 State Department terrorism report said that the government remained vigilant against previously shut NGOs renewing their activities. Authorities continued to investigate other organizations, private companies, and individuals for links to terrorist financing. In February 2005, Bosnian state and entity-level governments agreed to form a single joint database of all NGOs and associations in Bosnia. Bosnian officials have been charged with providing aid to terrorists. In November 2004, the Bosnian government charged fifteen former Bosnian officials with illegally helping former foreign Islamic fighters in Bosnia gain Bosnian citizenship from 1995-2000. In 2005, six former Federation officials went on trial for their role in helping to establish an alleged terrorist training camp in Bosnia with Iran's help during the mid-1990s. Iran, designated as an active supporter of terrorism by the United States, has not been viewed as closely linked with Al Qaeda, although it supports groups such as Hizbollah in Lebanon, Hamas and Palestinian Islamic Jihad in Israel's occupied territories, among other groups. However, most experts believe that Iran sharply scaled back its activities in Bosnia soon after the end of the Bosnian war in 1995. In 2005, the Bosnian government set up a Citizenship Review Commission to strip Bosnian citizenship from naturalized citizens who fraudulently obtained their citizenship, have no substantial ties to Bosnia at present, or obtained their citizenship because of government error or misconduct. The commission reviews the citizenship status of former Islamic fighters and withdraws citizenship, when appropriate. About 1,300 cases fell within the commission's mandate. In August 2007, Bosnian officials said that they had revoked the citizenship of 613 persons who were granted citizenship improperly. Those persons whose citizenship has been revoked must leave Bosnia or be deported, but Bosnian authorities reportedly do not know the whereabouts of many of them, because the addresses given on their citizenship applications are often out of date. Some of them may reportedly have changed their names, gone into hiding, are residing in other countries, or have already been detained by authorities in other countries as suspected terrorists. In 2006, Bosnia deported two former Islamic fighters, including one who had returned to Bosnia in 2005 after serving time in a French prison for a terrorist bombing in the 1990s. In December 2007, Bosnia deported another former foreign fighter to Algeria. Others have been able to avoid deportation through a lengthy appeals process. Some observers have asserted that the push to deport the remaining foreign fighters in Bosnia is due to strong U.S. pressure. In August 2007, Raffi Gregorian, a senior U.S. diplomat in Bosnia, said that there were "more than ten and less than 100" Al Qaeda supporters among the former Islamic fighters. In September 2007, a Bosnian newspaper claimed that Bosnian central government Security Minister Tarik Sadovic estimated the number of persons posing a threat to national security in Bosnia was "less than 50," not all of whom still remained in Bosnia. In October 2005, Bosnian Federation police arrested two terrorist suspects with links to terrorist networks in Western Europe and confiscated weapons and explosives. One is a Swedish citizen of Bosnian origin and the other a Turkish national living in Denmark. They were accused of planning a terrorist attack in Bosnia or elsewhere in Europe with the aim of forcing Bosnia or other countries to pull their troops out of Iran and Afghanistan. The men went on trial in July 2006. They were convicted in January 2007 and sentenced to terms of imprisonment ranging from eight to fifteen years. In recent years, with constant international prodding, Bosnia and Herzegovina has set up central-government-level institutions that are in part aimed at helping it fight terrorism and organized crime. Bosnia has deployed a State Border Service (SBS) throughout virtually all of the country's territory. The 2005 State Department terrorism report says that the "SBS is considered one of the better border services in Southeast Europe," but notes that the SBS does not control a few illegal crossing points and that many official border posts are understaffed. Ministries of Defense and Security were established in 2004, and the two entity-level intelligence services were merged into a single Bosnian State Intelligence and Security Agency (OSA) state-level service. Bosnia has established the State Investigative and Protection Agency (SIPA), responsible for investigating complex crimes including terrorism, illegal trafficking, organized crime, and smuggling of weapons of mass destruction. SIPA has a financial intelligence unit (FIU), and a sub-unit of its Criminal Investigation Department is dedicated to counterterrorism and WMD. An Interministerial Counterterrorism Task Force coordinates the counterterrorism activities of these central government bodies. In June 2004, Bosnia adopted laws aimed at strengthening state-level law enforcement capabilities. The set of laws includes legislation giving SIPA law enforcement and investigative authority for state-level crimes, including terrorism, and a law on prevention of money laundering. The Bosnian State Court and the State Prosecutor's Office also deal with terrorism cases. However, most state-level bodies, with the partial exception of the State Border Service, are not fully staffed or operational and lack funds, resources, and qualified personnel. Bosnia and Herzegovina is a party to the 12 international conventions and protocols relating to terrorism. The 2005 State Department terrorism report noted that, although Bosnia possesses counterterrorism laws, prosecutors have had difficulty in linking illegal activities to specific terrorism charges. As a result, they have sometimes sought to convict suspects on such charges as illegal arms possession, arms smuggling, and conspiracy, which often result in lighter sentences. As in the case of Bosnia, instability in Albania gave a foothold to Al Qaeda in the 1990s. Poor internal security, lax border controls, and high rates of crime produced an environment conducive to terrorist activity. Some foreign Islamic extremists used Albania as a safe haven and gained Albanian citizenship. Some former Albanian officials were thought to maintain links with these foreign extremists. Islamic non-governmental organizations, some of them fronts for Al Qaeda, were established in Albania after the collapse of the Communist regime in 1991. The situation worsened during civil unrest in Albania in 1997, when central authority broke down and large military weapons stocks were looted. Wars in neighboring Kosovo in 1999 and Macedonia in 2001 also had a negative impact on Albania's stability. Terrorist threats in the middle and late 1990s caused the temporary closure of the U.S. embassy in Albania and the cancellation of planned visits to Albania by senior U.S. officials. In 1998, Albania and the United States foiled a planned attack on the U.S. embassy in Tirana, raided an Al Qaeda forgery ring, and arrested several Al Qaeda figures. Since the September 11, 2001 attacks, some media sources and political leaders from Serbia have alleged that ethnic Albanian "terrorists" continue to maintain links with Islamic terrorist groups such as al-Qaeda. The Albanian government denies that terrorist training camps are present on its territory. U.S. and European government experts say that Albania does not at the moment appear to harbor a serious terrorist threat. In 2004, Albania announced the discovery of chemical weapons stocks acquired by the Communist regime in Albania during the 1970s. Albanian officials had not known of their existence until they were discovered by accident in a bunker. Although this cache is now guarded, it had been unguarded during the disorder of the 1990s. Moreover, due to a lack of documentation by the former regime, it is uncertain if there are other unreported stocks. Experts have expressed concern that some of these potentially could have fallen into the hands of terrorists. In 2004, the government arrested local arms traffickers for dealing in surface-to-air missiles, which the State Department believes may have been intended for "regional extremists." Albania continues to cooperate closely with the United States and other governments in sharing information and investigating terrorist-related groups and activities, according to U.S. officials. Albania adopted a national action plan against terrorism in 2002. Albania has expelled suspected Islamic extremists and terrorists. Albania has also cooperated extensively to block financial and other assets of persons and groups operating in Albania with suspected links to terrorists. In 2004, the Albanian Parliament passed a strong money-laundering law that included antiterrorist financing provisions, bringing Albania's legislation into compliance with international standards. Since December 2004, the Albanian government has frozen the assets of four organizations (Taibah, International Revival of Islamic Heritage Society, Al Haramein, and Global Relief Foundation) and four individuals (Nabil Abdul Saydi, Patricia Rosa Vinck, Yasin Al-Kadi, and Abdul Latif Saleh), all identified by the United Nations as suspected of supporting or funding extremist groups or organizations. In January 2007, Albania strengthened its Criminal Code in order to bring it into line with counterterrorism legislation in EU countries. Among other provisions, the Code provides for the prosecution of those recruiting or training persons for terrorist acts, or for providing training in the creation or use of weapons for criminal purposes. Albania has ratified all 12 UN international conventions and protocols relating to terrorism. However, the effectiveness of the government's counterterrorist efforts are hampered by inadequate financial resources, corruption, a lack of fully trained officers responsible for borders and ports, and poor communications and data processing infrastructure. According to the 2002 Serbian census, Muslims make up only about 3% of Serbia's population of 7.5 million (excluding the province of Kosovo, a Serbian province that is currently under international supervision). Most are concentrated in the Sandzak region of southwestern Serbia. They are Muslims of Slavic ethnicity, often referred to as Bosniaks or simply as Muslims. In addition, ethnic Albanian Muslims are concentrated in the Presevo valley region of southeastern Serbia, bordering on Kosovo. Islamic terrorism has not been seen as a major threat in Serbia. However, a recent incident has raised some concerns. In March 2007, Serbian police raided a training camp for Islamic extremists in a cave in Sandzak and arrested four local Muslim men. They also found weapons, explosives, military uniforms and other supplies. On April 20, 2007, Serbian police raided the hideout of Ismail Prenetic, who Serbian police said was the leader of a terrorist group. Prenetic was shot dead by police after he or an accomplice lobbed a grenade at them. In January 2008, 15 men associated with the terrorist camp went on trial in Serbia. The 2006 State Department Country Reports on Terrorism said that Serbia has been "eager to cooperate with the United States on a wide range of issues including border security, information sharing, antiterrorism financing, and export control." In June 2005, Serbian police arrested Abdelmajid Bouchar in a train traveling from the Hungarian border to Belgrade. A policeman became suspicious in part because he claimed to be an Iraqi refugee on route to Western Europe, despite the fact that he was traveling in the opposite direction at the time. Bouchar, a Moroccan, is a key suspect in the 2004 train bombings in Madrid, Spain. Serbian authorities extradited him to Spain in August 2005. Serbian police believe that he may have been only passing through Serbia, noting that the country lies on key transportation routes between Europe and Asia, but that they could not be certain whether he had contacts with terrorist supporters in Serbia or elsewhere in the region. Despite its effective action in the Bouchar case, Serbia, like other countries in the region, suffers from serious corruption and organized crime problems, and this situation could in principle make the country vulnerable to terrorism. In 1998 and 1999, ethnic Albanian guerrillas in Serbia's Kosovo province, angry at Serbian repression, fought an increasingly violent conflict with Serbian troops in the province. The United States and its NATO allies, outraged by Serb atrocities against ethnic Albanian civilians and fearing that the conflict could drag in other countries and destabilize the region, engaged in a NATO bombing campaign against Serbia from March to June 1999. Yugoslav leader Slobodan Milosevic agreed to withdraw his forces from the province in June 1999, clearing the way for the deployment of U.S. and other NATO peacekeepers. Since the departure of Serbian troops from Kosovo in 1999, Kosovo has been administered by the United Nations Mission in Kosovo (UNMIK), as called for by UN Security Council Resolution 1244. Serbian and Russian intelligence sources have repeatedly asserted the existence of a strong Al Qaeda presence in Kosovo, allegedly including training camps. However, observers have warned that caution is needed in assessing these claims, given that both countries have an interest in discrediting Kosovar Albanians, particularly their claims to independence from Serbia. There have been few reports from Western sources of terrorists operating from Kosovo. Radical Islamic organizations, some with links to terrorism, have attempted to recruit followers among Kosovo Albanian Muslims but these attempts have met with limited success. Ethnic Albanian nationalists have committed terrorist attacks on Serbian civilians in Kosovo, but there is little evidence so far that they are working with Al Qaeda or other radical Islamic groups. Some observers have expressed concern that powerful ethnic Albanian organized criminal groups from Kosovo, Albania and Macedonia (which play key roles in organized crime in Europe and the United States) could form an alliance with terrorist groups, but so far no such links have been detected, according to U.S. officials. UNMIK has devolved many powers to Kosovo's Provincial Institutions of Self-Government (PISG), but the main responsibility for security lies with UNMIK and the NATO-led peacekeeping force KFOR. UNMIK's Counterterrorism Task Force has the main responsibility for counterterrorism efforts. In addition, the Kosovo Police Service (KPS) has established its own Counterterrorism Unit, with six officers. According to U.S. officials, UNMIK has successfully prosecuted individuals for terrorism and developed new tools to combat terrorist financing. In 2004, UNMIK established a Financial Information Center to monitor suspicious financial transactions and deter money laundering and identify sources of terrorist financing. In 2005, UNMIK police froze the assets of 34 individuals and groups on suspicion of links to terrorist activity. UNMIK's Central Intelligence Unit (CIU) continues to cooperate closely with the United States and other governments in sharing information and investigating terrorist-related groups and activities. UNMIK and the KPS monitored individuals entering Kosovo at official points of entry. Since July 2005, an UNMIK regulation has required persons who are not employed by an international organization to register with the KPS' Office of Foreign Registration upon entering Kosovo. PISG, in cooperation with UNMIK, increased monitoring of 11 foreign NGOs suspected of extremism and issued regulations restricting their activities, including the appropriation of one mosque. It also required each NGO to submit documentation that explains its projects and shows its bank accounts. The Kosovo Islamic Community (KIC) evaluated foreign NGOs and prohibited them from using public facilities for gatherings if their views were found to be extremist. Kosovo's counterterrorism efforts are hampered by porous boundary lines easily crossed by individuals trafficking in people or goods. An insufficient number of KPS border officials limited the ability to monitor wide expanses of mountainous terrain between crossing points. Corruption among border and customs officials is also a problem. KFOR patrols Kosovo's border, but many smuggling routes exist that would allow potential terrorists to evade detection. Terrorism investigations are hindered by witness intimidation and weak witness protection laws. In August 2007, seven inmates broke out of a prison in western Kosovo with the help of prison guards. One of the men was Ramadan Shiti, a convicted terrorist from Syria. Several of the men have been recaptured, but Shiti remains at large. In early 2008, the United States and most EU countries may recognize Kosovo' independence. Under a plan for supervised independence, UNMIK may be succeeded by the International Civilian Representative (ICR) that will lack UNMIK's direct administrative control. However, the ICR would have the power to void any decisions or laws of the Kosovo government that are inconsistent with the plan, as well as the power to remove Kosovo government officials who act in a way that is inconsistent with the settlement. The ICR's mandate would last until an international steering group determines that Kosovo has implemented the settlement. The first review of settlement implementation would take place after two years. Under the plan, a mission under the EU's European Security and Defense Policy (ESDP) would monitor and advise the Kosovo government on all issues related to the rule of law, specifically the police, courts, customs officials, and prisons. It would also have the ability to assume "limited executive powers" to ensure that these institutions work properly. KFOR will likely retain control of overall security for Kosovo for a considerable time after a status settlement, but could be eventually replaced by an EU force. The United States and its allies may have to ensure that Kosovo's counterterrorism efforts remain strong as the country acquires greater control over its security as an independent state. U.S. officials have cited the threat of terrorism in the Balkans as an important reason for the need for continued U.S. engagement in the region. In addition to the need to combat terrorist infrastructure in the region, U.S. officials say that U.S. efforts to bring stability to the region also help to fight terrorism. They note that political instability, weak political and law enforcement institutions and poverty provide a breeding ground for terrorist groups. These objectives are also outlined in the President's National Strategy for Combating Terrorism, which calls for the United States to work with other countries to deny terrorists sponsorship, support and sanctuary, as well as to work to diminish the underlying conditions that terrorists seek to exploit. The United States has a variety of instruments to fight terrorism in the Balkans. One is the direct involvement of U.S. troops. NATO-led peacekeeping forces in Bosnia and Kosovo (dubbed SFOR and KFOR respectively) have provided important resources for anti-terrorist efforts in the region. NATO troops and intelligence services work with their local counterparts and independently to track down and arrest suspected terrorists. The powerful influence exercised by international officials in Bosnia and Kosovo gives the United States more freedom to arrest and deport terrorists than in many European countries, which might object on civil liberties or other grounds. SFOR withdrew from Bosnia in late 2004, and was replaced by an EU-led force. The changeover resulted in the departure almost all of the U.S. troops in Bosnia. The European Union-led successor force to SFOR has counterterrorism as part of its mandate. In Kosovo, KFOR has 16,000 troops, including about 1,600 U.S. troops, which are expected to remain in Kosovo after the province's status is resolved. KFOR may eventually be replaced by an EU-led force, although U.S. and European officials stress that KFOR will remain in Kosovo for some time after status is determined. The reduction of direct international control over Kosovo will require the United States and other countries to establish close links with Kosovo government structures. The United States and its allies have made the creation of effective mechanism for fighting organized crime and terrorism one of its objectives in Kosovo. The overall U.S. aid program to the region, aimed at bringing stability to the region through strengthening the rule of law and promoting economic reform, also serves to combat the sometimes lawless climate in the region in which terrorists can thrive. For FY2008, the President requested $32.95 million for Bosnia, $20 million for Albania, $53.25 million for Serbia, and $151.65 million for Kosovo. The relatively large sum for Kosovo for FY2008, and an additional $279 million for Kosovo in an FY2007 supplemental funding request, is owing to a U.S. desire to support Kosovo quickly after its political status is determined. In Bosnia, part of the U.S. aid supports technical assistance, training and equipment to build the capacities of the police forces in both entities, the State Border Service, the State Information and Protection Agency, the High Judicial Prosecutorial Council and other organizations. One project, co-funded with the EU, was the donation of an integrated data network for Bosnia's police forces. U.S. aid also helps to develop Bosnia's export control regime, including over weapons of mass destruction and dual-use technology. U.S. aid to Albania also includes assistance to strengthen Albania's border controls, port security, and law enforcement agencies, and cut off terrorist financing. Aid to Kosovo includes funds to strengthen the Kosovo Police Service (KPS) and Kosovo's judiciary. The United States views the region, with its reputation as a crossroads for various forms of smuggling, as an important participant in the Proliferation Security Initiative, which aims to work to interdict WMD-related items. The United States has encouraged regional cooperation on terrorism and international crime through the Southeast European Cooperation Initiative (SECI). SECI's Regional Center to Combat Transborder Crime, based in Romania, attempts to build cooperation to combat organized crime and various forms of trafficking, enhance border security, and improve training for border security personnel. U.S. assistance also includes bilateral aid to the countries of the region to fight terrorism. The Antiterrorism Assistance (ATA) program provides equipment and training to fight terrorism, with an emphasis on training the trainers. ATA programs provide advice to countries on counterterrorism and police administration and management, how to teach counterterrorism in police academies, and modern interrogation and investigative techniques. The Administration requested $650,000 in ATA assistance for Bosnia for FY2008. In the longer term, efforts to stabilize the region and thereby perhaps reduce its attractiveness to terrorists, are also dependent upon integrating it into Euro-Atlantic institutions. The prospect of Euro-Atlantic integration for the region is encouraging these countries to take steps that will enable them to more effectively fight terrorism. The European Union has stated its goal of incorporating all of the countries of the region into the EU, although this prospect seems a long way off, with the possible exception of Croatia. All of the countries of the region are seeking or may one day seek NATO membership as well. Three NATO candidate states—Albania, Croatia, and Macedonia—are linked in the U.S.-brokered "Adriatic Charter," which is aimed at improving their qualifications for NATO membership. The Adriatic Charter countries have contributed troops to peacekeeping efforts in Afghanistan. In addition, Albania and Macedonia have contributed soldiers to U.S.-led operations in Iraq. One or all of the Adriatic Charter countries may be invited to join NATO at the alliance's April 2008 summit. Most observers believe that Croatia's qualifications for membership are stronger than those of the other two countries. Bosnia and Herzegovina lacks the prospect of NATO membership until it unifies its police forces, implements key political reforms, and cooperates with the International Criminal Tribunal for the former Yugoslavia. Nevertheless, it has deployed a small military contingent to Iraq and joined NATO's Partnership for Peace program in December 2006. Kosovo's undetermined status excludes it from even potential EU and NATO membership, at least until its independence is recognized. Congress has dealt with the issue of Islamic terrorism in the Balkans through hearings and legislation on global counterterrorism issues, providing funding and oversight for programs aimed at combating terrorism worldwide, mainly in regions such as the Middle East and South Asia where the threat is deemed to be the greatest, but also in other regions, such as the Balkans. In addition, Congress has appropriated foreign aid for the Balkans aimed at enhancing stability and improving the rule of law in the region, objectives that also bolster counterterrorism efforts. Since the deployment of U.S. forces to Bosnia in 1995, in annual appropriations bills Congress has authorized to President to withhold aid to Bosnia if he certifies that the Bosnian Federation (the Bosniak-Croat entity within Bosnia and Herzegovina) is not complying with provisions of the Dayton Peace Accords that require the withdrawal of foreign forces from Bosnia or if Bosnian intelligence cooperation with state sponsors of terrorism or terrorist organizations has not ceased. The Administration has not withheld U.S. aid to Bosnia on the basis of these provisions. The United States and its allies have been able to reduce the terrorist threat from the Balkans over the past decade for several reasons, some of which may be applicable to other regions and others not. The U.S. insistence that all foreign forces leave Bosnia in 1995, backed up by Congressional aid conditions, may have reduced the possible threat to U.S. forces in Bosnia in the immediate post-war period as well as removed a serious threat to Bosnian stabilization efforts. U.S. military interventions in Bosnia and Kosovo were perceived by Muslims in the region to be undertaken to benefit them, thereby bolstering pro-American sentiment. Most elites in the region, both Muslim and otherwise, view the region's future as integration in Euro-Atlantic institutions, making them especially eager to help the United States fight terrorism in the region. However, observers note that complacency would be unwise. Conditions could emerge that could increase the terrorist threat in the future. The stability of the region is fragile and law enforcement and other public institutions are still weak. Some terrorists now fighting in Iraq may decide to redeploy to other regions, including the Balkans, in the future. Conversely, future recruits from the Balkans could also go to Iraq to join the insurgency. Terrorists could obtain weapons and explosives from the region's thriving black market in such items for use in attacks in Western Europe or other regions.
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In the 1990s, wars and political instability provided an opportunity for Al Qaeda and other terrorist groups to infiltrate the Balkans. However, U.S. and European peacekeeping troops, aid, and the prospect of Euro-Atlantic integration have helped to bring more stability to the region in recent years. Moreover, the September 11, 2001 attacks on the United States underscored for the countries of the region the dangers of global terrorism, and resulted in increased U.S. attention and aid to fight the terrorist threat. In part as a result, many experts currently do not view the Balkans as a key region harboring or funding terrorists, in contrast to the Middle East, South Asia, Southeast Asia, and Western Europe. However, experts note that the region may play a secondary role in terrorist plans, as a transit point for terrorists, as well as for recuperation. Moreover, they agree that the region's continuing problems continue to leave it vulnerable to terrorist groups in the future. U.S. officials have cited the threat of terrorism in the Balkans as an important reason for the need for continued U.S. engagement in the region. In addition to the need to take steps to directly combat terrorist infrastructure in the region, U.S. officials say that U.S. efforts to bring stability to the region also help to fight terrorism. They note that political instability, weak political and law enforcement institutions and poverty provide a breeding ground for terrorist groups. U.S. objectives are also outlined in the 9/11 Commission Report and the President's National Strategy for Combating Terrorism, which calls for the United States to work with other countries to deny terrorists sponsorship, support and sanctuary, as well as working to diminish the underlying conditions that terrorists seek to exploit. The United States has a variety of instruments to fight terrorism in the Balkans. One is the direct involvement of U.S. troops in Kosovo. The United States provides bilateral counterterrorism assistance to the countries of the region. The overall U.S. aid program to the region, aimed at bringing stability through strengthening the rule of law and promoting economic reform, also serves to combat the sometimes lawless climate in which terrorists can thrive. U.S. aid helps to develop Bosnia's export control regime, including over weapons of mass destruction and dual-use technology. The United States has encouraged regional cooperation on terrorism and international crime through the Southeast European Cooperation Initiative (SECI). In the longer term, efforts to stabilize the region, and thereby perhaps reduce its attractiveness to terrorists, are also dependent upon integrating it into Euro-Atlantic institutions. The second session of the 110th Congress may consider legislation affecting possible terrorist threats in the Balkans, including in the FY2009 foreign aid appropriations process. For more information on terrorism, see CRS Report RL33600, International Terrorism: Threat, Policy, and Response, by [author name scrubbed]; CRS Report RL32522, U.S. Anti-Terror Strategy and the 9/11 Commission Report, by [author name scrubbed]; CRS Report RL32518, Removing Terrorist Sanctuaries: The 9/11 Commission Recommendations and U.S. Policy, coordinated by [author name scrubbed]; and CRS Report RL33038, Al Qaeda: Profile and Threat Assessment, by [author name scrubbed].
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Over the past century, particularly in recent decades, scientists have documented increases in global temperature and sea levels, decreases of sea ice in the Arctic, and melting of continental ice sheets and mountain glaciers. There is increasing evidence that human activities are at least partially responsible for some of these effects. This is based upon the combination of two conclusions. First, global temperature increases are linked in some manner to the measurable increases of greenhouse gas (GHG) concentrations in the atmosphere. Second, human activities (e.g., fossil fuel combustion, industrial processes, and deforestation) have contributed to the increased concentration of GHG emissions in the earth's atmosphere. The link between GHG emissions and climate change has motivated efforts to achieve reductions of emissions. In 1992, the United States ratified the United Nations' Framework Convention on Climate Change (UNFCCC), which called on industrialized countries to initiate GHG reduction. However, in early 2001, President George W. Bush rejected the UNFCCC 1997 Kyoto Protocol, which called for legally binding commitments by developed countries to reduce their GHG emissions. Over the past decade, the federal government has promulgated or proposed a variety of voluntary and regulatory actions that, while not specifically seeking to reduce GHG emissions, may have yielded emission reductions as a byproduct. In the 110 th Congress, Members introduced multiple bills to address climate change issues in some fashion and enacted several pieces of legislation that contained climate change provisions. In recent years, there has been some congressional support for a mandatory reduction program. For example, the Senate version of the Energy Policy Act of 2005 included a "sense of the Senate" Resolution stating: It is the sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that, No. 1, will not significantly harm the U.S. economy and, No. 2, will encourage other action and key contributors to global emissions. Members in the 110 th Congress introduced multiple bills that would have established some type of a mandatory emissions reductions program. One of these proposals—the Lieberman-Warner Climate Security Act of 2008 ( S. 2191 / S. 3036 )—was reported by the Senate Environment and Public Works Committee (December 2007) and debated in the Senate in June 2008. In the absence of action by the federal government to establish a national program that directly addresses GHG emissions, a number of states (and local governments, whose activities are not covered in this report ) have taken action in this arena. States' efforts cover a wide spectrum, from developing climate action plans to setting mandatory GHG emission standards. Arguably, early state actions were largely symbolic. In the late 1980s, Vermont and Oregon were the first states to set GHG reductions goals, but during the subsequent decade (1990-2001), both states increased their GHG emissions: Vermont by 18% and Oregon by 30%. However, a majority of states have more recently begun to develop their own climate change strategies or policies, with an increasing number of states adopting or proposing more significant provisions, including mandatory GHG reductions. The motivating factors for the various states' actions may be as diverse as the actions themselves. Some actions are motivated by projections of climatic changes, such as sea level rise or agricultural impacts. Some states view their GHG policies as economic opportunities. States want to position themselves for a "less-carbonized" future, by promoting, for example, alternative energy supplies, particularly sources available in-state. Other states champion GHG reduction policies because of the possible co-benefits: improved air quality, reduced traffic congestion, and less reliance on foreign energy supplies. Another motivating factor for state action is the possibility of catalyzing federal legislation. This report covers state actions that directly and explicitly address GHG emissions (see the text box below). First, the report describes the different types of state actions, both individual and cooperative efforts, that are either proposed or under way, and highlights several of the more significant developments. Second, the report examines state actions from a federal policymaking perspective, including both the potential effects of state-led actions and their limitations. Mandatory programs to require GHG reductions represent the most aggressive end of the state action spectrum. As with state actions overall, these programs can vary significantly in scope, stringency, and design. Mandatory programs are generating considerable interest and some controversy. This section discusses the different types of mandatory programs and highlights the regional initiatives and individual state actions that are currently in effect or under development. Arguably, the most significant action on the state level in recent years has involved the development of regional agreements to address GHG emissions. As of the date of this report, 23 states have joined—more states are acting as observers—one of the 3 regional partnerships that would require GHG (or only CO 2 ) emission reductions ( Figure 1 ). Except for the partnership between 10 northeastern states, the regional activities are still in their developmental phases. Moreover, the western and midwestern regional partnerships were initiated by state governors and may not be approved and/or implemented by the relevant state legislatures. In addition, the regional agreements may raise legal issues, particularly constitutional concerns. Article I, Section 10, Clause 3 of the U.S. Constitution states that "[n]o State shall, without the Consent of Congress ... enter into any Agreement or Compact with another State, or with a foreign Power.... " In particular, two of the regional agreements include Canadian provinces. However, it is uncertain whether this clause (the "compact clause") will create legal hurdles for any of the agreements. One of the more significant climate change developments at the state level is the Regional Greenhouse Gas Initiative (RGGI, pronounced "Reggie"). RGGI has been under development since 2003, when states from the Northeast and Mid-Atlantic regions began to discuss setting up a cooperative effort to reduce carbon dioxide emissions. Subsequent meetings and workshops culminated in a Memorandum of Understanding (MOU) that was signed in December 2005. RGGI is a market-based effort by 10 states—Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont—to reduce carbon dioxide emissions from power plants. RGGI would set up the nation's first mandatory cap-and-trade program for carbon dioxide. The initial objective of RGGI is to stabilize current carbon dioxide emissions from power plants in RGGI states, starting in January 2009, followed by a 10% reduction by 2019. A primary strategy of RGGI is to create a program with flexibility, so that in the future other emission sources/sectors, GHGs, or states could be included. Some observers consider RGGI to be a possible test-case for a federal cap-and-trade program, and thus several of RGGI's design elements are generating interest and debate. For example, one specific feature—the emission allocation scheme—is drawing both praise and criticism. In both RGGI's Memorandum of Understanding and its Model Rule, states agreed that at least 25% of emission allowances will be allocated for a "consumer benefit or strategic energy purpose." Since then, all of the states have indicated—either through legislation or rulemakings—that they intend to allocate more than 25% of their state's emissions allowances for various purposes related to those two overarching objectives. This allocation strategy requires power plants to purchase the allowances through an auction, instead of receiving them at no charge. On September 25, 2008, RGGI participants held the first emission allowance auction related to climate change mitigation. Six RGGI states—Connecticut, Maine, Maryland, Massachusetts, Rhode Island, and Vermont—sold allowances for the first RGGI compliance period (2009-2011). By many accounts, the auction was successful: the clearing price as $3.07/ton (60% higher than the reserve price); compliance entities received about 80% of the allowances; and states received nearly $40 million in revenues. Although RGGI is one of the more aggressive state programs addressing climate change, the program has received some criticism and may face upcoming challenges. For example, recent emissions data indicate that the RGGI cap—188 million short tons of carbon dioxide—will most likely be higher than actual emissions, when RGGI goes into effect in 2009. The cap was set slightly above (about 4%) the average emission levels observed between 2000 and 2002. RGGI designers anticipated that emissions would gradually increase, so that actual levels would approximately match the cap in 2009. Although emissions increased in 2007 from their relatively dramatic decline of 2006, emissions data from the first half of 2008 are similar to 2006 figures, suggesting that 2008 emission are unlikely to increase further; another estimate projects that 2008 emissions may go as low as 150 mtCO 2 , approximately 20% below the 2009 cap. If actual emissions are below the cap when it goes into effect, the effectiveness of the RGGI program may be impacted. The allowance price might drop to such a low level that facilities would have no financial incentive to make reductions beyond their required allocation. This potential problem may be alleviated by the opportunity for affected sources to bank emission reductions for future use, when the cap will likely be lower than expected emissions. The RGGI program allows unlimited banking. The ability to bank reductions effectively spreads the costs of emission reduction over time. Banking emissions would reduce compliance costs in the future, but also increase the value of current allowances (because they can be sold later). The incentive to make additional reductions would remain. The recent auction sales data support this notion, as the clearing price was above the reserve price. In addition to allocation concerns, a critical design detail—electricity imports from non-RGGI states—is arguably unresolved. This is often described as the "leakage" problem. Leakage can occur when an emissions reduction program does not include all sources contributing to the environmental problem. For example, if a RGGI state lowers its emissions by importing more power from a non-RGGI state, the emissions reductions in the RGGI state may be offset by an emission increase in the exporting state. A RGGI working group issued a final report on leakage March 2008. Among the four recommendations, the working group concluded that states should monitor for emissions leakage and evaluate whether more aggressive measures—e.g., carbon adders, procurement emissions rates, or load-based caps—should be considered at a later date. Seven U.S. states and four Canadian provinces are participating in the Western Climate Initiative (WCI). WCI got off the ground in February 2007, when the governors of six western states —Arizona, California, Oregon, New Mexico, Utah, and Washington—agreed to reduce GHG emissions in their region. Montana and the four Canadian provinces—British Columbia, Manitoba, Quebec, and Ontario—joined at later dates. The states and provinces set a regional, economy-wide target to reduce GHG emissions to15% below 2005 levels by 2020. In order to implement this target, the participants agreed to develop a market-based program, such as a "load-based cap and trade program." In September 2008, the WCI developers issued design recommendations for meeting the emission reduction goals. The recommendations include a cap-and-trade system that would cover emissions from electricity generation and large industrial and commercial sources in 2012. In 2015, the program would cover emissions from the transportation sector and fuel consumption from residential, commercial, and industrial uses not otherwise covered. The recommendations also include flexible design elements, such as unlimited emission banking, three-year compliance periods, and offsets, which may satisfy up to 49% of the emission reductions. Although this number may appear relatively high compared to federal cap-and-trade proposals, limiting offsets by percentage of reductions is different from limiting offsets as a percentage of allowance submissions (as many federal proposals would do). As a comparison that may provide additional context, RGGI participants agreed to a similar principle: at least half of the reductions should come from covered sources, thus allowing offsets to cover up to 50% of reductions. To apply this principle, RGGI designers allow offsets to satisfy up to 3.3% of a compliance submission. In contrast, most federal proposals would allow domestic offsets to satisfy at least 15% (international offsets often add a further percentage) of a covered sources allowance submission. Although the WCI is still in early development, there are several issues that may hinder its implementation. As noted, the WCI is an agreement between the states' governors. To implement the program, the states' legislatures would need to enact laws to carry out the initiative's objectives. This may present an obstacle if a state's legislative branch finds fault with the reduction program developed by states' executive branch officials. On November 15, 2007, the governors of six states—Illinois, Iowa, Kansas, Michigan, Minnesota, and Wisconsin—signed the Midwestern Regional Greenhouse Gas Reduction Accord. The Premier of the Canadian Province of Manitoba also signed the Accord, potentially raising the same legal issues discussed above. The Accord does not establish discrete GHG emissions targets, but directs the participating states (and their relevant state agencies) to set their own GHG emission reduction targets. In order to meet these GHG emission targets, the Accord calls for the participants to develop a cap-and-trade program and a model rule by November 2008. Although draft recommendations were made available November 2008, the time line was amended by the participants: a draft model rule is now scheduled for September 2009. The participants agreed that full implementation of the Accord will be completed by May 2010. Although not full participants in the Accord, the Governors of Indiana, Ohio, and South Dakota signed on as observers, agreeing to participate in the formation of the regional cap-and-trade system. Individual state efforts that seek to reduce GHG emissions cover a range of activities. Outside of regional agreements, several states currently require power plants to make GHG emission reductions or submit offsets. Other states are developing "economy-wide" GHG emission reduction programs. Multiple states are planning to adopt California's motor vehicle standards for GHG emissions. In addition, states are working on other mechanisms that would require GHG emission reductions. These state efforts are discussed below. Three states—California, Hawaii, and New Jersey—have passed legislation that lays the groundwork for "economy-wide" reduction programs. In general, the state statutes lack critical details regarding the design of the reduction programs. Instead, the statutes direct state agencies to develop the logistical elements that would implement the reduction requirements. However, these programs vary substantially in their progress of development, the California program being well ahead of the other programs. These programs are described below. In September 2006, California enacted landmark legislation—AB 32 or the Global Warming Solutions Act —that would establish a comprehensive GHG reduction regime. The legislation is far-reaching in principle, but does not include many crucial details. Instead, the act directs the California Air Resources Board (CARB) to develop and implement a statewide program that would reduce the state's GHG emissions to 1990 levels by 2020. The statute grants considerable authority to CARB, which is charged with determining critical details concerning the framework and applicability of the program. For example, the law does not specifically require the use of a market-based system, such as a cap-and-trade program, to reduce GHG emissions. Instead, AB 32 authorizes CARB to develop regulations to "achieve the maximum technologically feasible and cost-effective GHG emission reductions.... " Moreover, the statute does not include a list of regulated emission sources or categories, but instructs CARB to determine which sources are necessary to meet the statewide target. The statute does dictate a schedule for various agency deadlines. The following dates highlight significant milestones of the mandatory schedule: June 30, 2007: Identify the early reduction options, which can be implemented prior to the mandatory program, and for which a facility will receive emissions credit. In October 2007, CARB submitted its final report of early actions, which are to be implemented via regulation and enforceable by January 1, 2010. January 1, 2008: Establish the 1990 baseline, which becomes the 2020 emissions cap. A baseline estimate is a critical determination for a cap-and-trade program. On December 7, 2007, CARB approved a baseline of 427 million metric tons of carbon dioxide equivalent (mmtCO 2 e). January 1, 2008: Develop a mandatory reporting scheme for sources that will covered by the cap. Sources report emissions for four years in order to establish accurate facility baselines. CARB submitted regulations for approval to the Office of Administrative Law in October 2008. The regulations would require the first emissions reports to be submitted in 2009 based on 2008 emission levels. January 1, 2011: Finalize regulations, including possible market-based programs, that will implement the statewide emissions cap. Related to these efforts, the Scoping Plan was prepared in October 2008 and awaits approval from CARB. January 1, 2012: Implement and enforce the mandatory emission reduction program created in 2011. In June 2007, Hawaii enacted the Global Warming Solutions Act of 2007, mandating statewide GHG emissions reduction to 1990 levels by 2020. The statute establishes a GHG emissions reduction task force, which is directed to offer policy recommendations by January 1, 2009. Before December 31, 2011, the Department of Health is instructed to adopt implementing regulations that would take effect January 1, 2012. Similar to California's statute, Hawaii's act does not specify details, but gives considerable responsibility to the Department of Health. The act does require the Department of Health "to endeavor to make the requirements consistent with the requirements of international, federal, and other states' greenhouse gas emission reporting programs, as necessary." In July 2007, New Jersey enacted the Global Warming Response Act, which states that GHG emissions shall be reduced to 1990 levels by 2020 and to 80% below 2006 levels by 2050. The statute instructs the Department of Environmental Protection (DEP) to develop a GHG emissions inventory for the baseline years—1990 and 2006—and a system for monitoring and reporting GHG emissions from specific sources (e.g., electricity generators), as well as entities deemed to be significant emitters by the DEP. The law does not specify how the reductions will be met, but directs the DEP, in coordination with other agencies, to submit recommendations to the governor and state legislature. In response to this provision, the DEP prepared a report November 2008. However, unlike the California and Hawaii statutes, the New Jersey act does not grant specific authority to DEP to implement the reduction program through regulation. Although not specifically stated, further legislative action would likely be required to implement the reduction program. A sector-specific approach that focuses on carbon dioxide is relatively easier to implement than an economy-wide program that includes multiple GHGs. The electricity-generating sector is often considered a primary candidate for emission reduction, because in most states electric power plants account for the highest percentage of carbon dioxide emissions. Many of these facilities are already tracking their carbon dioxide emissions as required by the 1990 Clean Air Act. Both Oregon and Washington have programs that require new power plants to reduce carbon dioxide emissions or purchase offsets. In 1997, Oregon became the first state to regulate carbon dioxide emissions by passing legislation requiring new power plants to equal or exceed carbon dioxide levels that are 17% below the best natural gas-fired plant in the nation. Plants can either reduce emissions directly or purchase offsets from a nonprofit organization (the Oregon Climate Trust) that was established with the 1997 law. This organization helps develop various projects that will reduce or sequester GHG emissions. These projects generate the pool of offsets available (by purchase) to the power plants. So far, all of the new facilities have chosen to purchase offsets instead of reducing onsite emissions. Washington passed similar legislation in 2004, requiring new power plants to offset 20% of their carbon dioxide emissions. These states have established emission reduction requirements at existing power plants: Massachusetts: In 2001, Massachusetts became the first state to take formal action on carbon dioxide emissions at operational power plants. As part of a multi-pollutant strategy, which went into effect in 2006, the state's six largest power plants must reduce carbon dioxide to levels consistent with those produced in the late 1990s. In 2008, this cap was lowered further. The program allows the plants to either make the reductions, demonstrate offsite reductions, or purchase emissions credits from other verifiable sources. Note that the carbon dioxide components of this program will be superceded when RGGI goes online in 2009. RGGI will require reductions from 32 power plants in the state. New Hampshire: In 2002, the state enacted multi-pollutant legislation requiring its three fossil fuel power plants to reduce carbon dioxide to 1990 levels by the end of 2006. In order the meet the cap, the law allowed sources to bank early reductions or buy credits through other programs deemed acceptable by state officials. The carbon dioxide elements of this program also will be superceded by RGGI. In June 2008, Florida enacted legislation that authorizes the Florida Department of Environmental Protection to craft a cap-and-trade system that would cover the electric utility sector. Pending subsequent approval by the state legislature, the cap-and-trade program would go into effect in 2010. The U.S. transportation sector accounts for a substantial percentage—26% in 2006 —of the nation's GHG emissions. Automobiles and light-duty trucks (fueled by gasoline or diesel) generate the majority—62% in 2006—of the nation's transportation-related GHG emissions. The transportation sector is the single largest source of the primary GHG, carbon dioxide, in 17 states. California's transportation sector, in particular, generates almost 41% of the state's annual greenhouse emissions. California is in a unique position regarding the regulation of air emissions from motor vehicles. It is the only state with conditional authority (i.e., the state needs a waiver from EPA) to develop motor vehicle pollution standards that are more stringent than federal requirements. The federal Clean Air Act permits other states to choose to follow California's more stringent provisions, and states have adopted California standards in the past. In 2002, California enacted the first state law (AB 1493) requiring GHG limits from motor vehicles. As directed by the statute, the California Air Resources Board (CARB) issued regulations in September 2004, limiting the "fleet average GHG exhaust mass emission values from passenger cars, light-duty trucks, and medium-duty passenger vehicles." The fleet average caps first apply to model year 2009 vehicles. The caps become more stringent annually, so that by 2016, the fleet average would be 30% below the 2009 level. At least 16 states have formally adopted or announced plans to follow the California regulation. In order for the states to implement this standard, California must receive a waiver from the EPA. California requested a waiver (as required by Section 209 of the Clean Air Act) in December 2005. In December 2007, EPA decided to deny the waiver request. EPA's decision is being challenged in court—by California and other states, and environmental groups. For more discussion regarding this issue, see CRS Report RL34099, California ' s Waiver Request to Control Greenhouse Gases Under the Clean Air Act , by [author name scrubbed] and [author name scrubbed]. Although they do not require emission reductions or offsets from specific facilities or sources, other mandatory programs may have an impact on GHG emissions. A few states, California in particular, have recently developed requirements that aim to influence investment in long-term power generation. These state actions may impact GHG levels by influencing which energy sources—coal, oil, natural gas, etc.—are used to generate electricity for consumers. Two states—California and Washington—have enacted laws requiring a GHG emissions performance standard for applicable power plants. In September 2006, California passed legislation (SB 1368) forbidding "load-serving entities" from entering into new "long-term financial commitments" with power plants unless a plant's GHG emissions are as low or lower than those of a new, combined-cycle natural gas facility. This emissions performance standard apply to both in-state power plants and out-of-state facilities that seek to export electricity to California. As directed by the statute, the California Public Utilities Commission (PUC) issued interim performance standards for investor-owned facilities January 25, 2007. The California Energy Commission's (CEC) comparable regulations for publicly owned utilities were approved (by the Office of Administrative Law) in October 2007. Washington passed similar legislation (SB 6001) in May 2007. Regulations implementing this statute were adopted in June 2008, and went into effect the following month. The new performance standards complement the emissions reductions programs being developed in California and Washington. As discussed above, California is developing a mandatory reduction program, and Washington has a statewide emissions reduction target; both states are participants in a regional emissions reduction program (WCI). The implementation of California's emissions reduction program and the WCI is several years away (irrespective of legal challenges). The performance standards act as a stop-gap measure, preventing further utility investment in carbon-intensive fuels while the states develop broader reduction regimes. Once the new performance standards are applicable (and previous commitments expire), they will effectively prohibit California and Washington consumers from using electricity generated by conventional coal-fired power plants. Compared with a combined-cycle natural gas plant, a conventional coal-fired power plant emits more than twice the amount of carbon dioxide. Using current technologies, coal-fired generators would fail to meet the new emissions standards. From 2002 through 2005, approximately 20% of California's electricity was generated from coal; approximately 10% of Washington's electricity came from coal generation facilities over the same period. As the laws take effect, California and Washington will likely need to reduce/conserve a comparable amount of energy or replace the coal-generated electricity with alternative sources of power. The new emissions standards will impact not only California and Washington, but also other states in the West. For example, California's electricity imports generally comprise between 22% and 32% of the state's total electricity consumption, but its imports are responsible for 39% to 57% of the total GHG emissions linked with electricity. This is due to the fact that most of California's in-state electricity is produced from sources other than coal, while most of the state's imported electricity is generated through coal combustion. Once the standard takes effect, the coal-fired plants in neighboring states, which previously provided electricity to California, will need to look elsewhere for customers. The same goes for coal-fired power plants still in development in western states, which may have been designed, at least in part, to serve California consumers. Arguably, the GHG performance standards disproportionately affect the neighboring states that have historically exported coal-generated electricity to California and Washington consumers. This possible consequence may raise legal issues, such as a state's general inability to regulate interstate commerce. Montana enacted the Electric Utility Industry Generation Reintegration Act (HB 25) in May 2007. Among other things, the act prohibits the state's Public Service Commission (PSC) from providing advance approval of coal-fired electric generating units unless a minimum of 50% of the CO 2 generated by the facility would be captured and sequestered. The PSC promulgated regulations to implement this standard in March 2008. At first glance, this statute may appear to be significant landmark in state climate change activity. However, the statute's applicability is relatively narrow, effectively applying to only one public utility—Northwestern Energy—in the state. Moreover, this utility does not own generating units in Montana and is unlikely to construct conventional coal-fired plants in the near future. Other power companies in the state are not subject to this standard. To complement California's statewide GHG reduction program, the governor issued an executive order (signed January 18, 2007) establishing a low carbon fuel standard (LCFS). The LCFS aims to reduce the carbon intensity of California's transportation fuels by 10% by 2020. California currently relies on petroleum-based fuels for 96% of its transportation needs. Achieving the carbon intensity reduction is expected to replace 20% of the state's gasoline consumption with less carbon-intensive fuels. The LCFS would apply to all refiners, blenders, producers, and importers of transport fuels. The order states that transportation fuels shall be measured on a full fuel cycle basis. Thus, regulators must factor in all of the energy used and potential GHGs emitted during the fuel's development (extraction or production), delivery (via vehicle or pipeline), and final use (combustion). Corn-based ethanol, for example, is expected to play a role in meeting California's LCFS. To comply with the full fuel cycle assessment, regulators must consider the energy needed to produce fertilizers, operate farm equipment, transport corn, convert corn to ethanol, and distribute the final product. For more information on these issues, see CRS Report RL33290, Fuel Ethanol: Background and Public Policy Issues , by [author name scrubbed]. The LCFS executive order enhances alternative fuel legislation (AB 1007) that California passed in 2005. AB 1007 requires the California Energy Commission (CEC), in partnership with other agencies, including CARB, to develop and adopt a State Alternative Fuels Plan. CEC adopted such a plan October 31, 2007. The executive order directs CEC to supplement this plan with a compliance schedule for meeting the 2020 LCFS target. The State Alternative Fuels Plan states that CEC will work with CARB "over the next year" to develop a compliance schedule. As of the date of this report, the compliance schedule remains under development. Another state action that may affect a state's sources of electricity generation is the adoption of a GHG (or carbon) adder. In general, adders require utilities to weigh the future costs of GHG emissions when considering different energy investment options (e.g., fossil fuels, renewable energy supplies). For example, California's Public Utilities Commission requires investor-owned utilities to include a value of $8/ton of carbon dioxide emissions when conducting long-term planning or procurement activities. The agency stated that this requirement "will serve to internalize the significant and under-recognized cost of [GHG] emissions, [and] help protect customers from the financial risk of future climate regulation.... " Only a few other states require some type of GHG adder, and California's adder may be rendered less relevant due to its new emission performance standard (discussed above). At this stage, the adders have not been credited with changing any procurement decisions. State emissions targets are goals by which a state can measure its progress in achieving GHG emissions reduction. By themselves, state emissions targets do not directly reduce GHG emissions. The targets are often established by the executive branch of state government (e.g., through an executive order) and may not have the support of the state's legislative branch. However, a target signals that state officials, at least from one branch of the government, consider climate change an important issue. Twenty states have established statewide targets for GHG emissions (see Table 1 ). Three of the state targets—California, Hawaii, and New Jersey—are mandatory (discussed above). Compared to the GHG limits and targets set on the international stage in past years, the state targets are less stringent. The New England states' targets are similar, if not identical, because they are part of a cooperative plan developed in 2001. Of the 20 states in Table 1 , Colorado, Illinois, New Mexico, and Utah stand out because they have substantial coal production. Table 1 compares the states' GHG emissions in 1990 with emissions from the most recent years of available data. The emissions data show the reductions states would need to make to meet their established targets. Although some of the states appear within reach of their 2010 targets, the most recent data from many of these states suggest that emissions are not decreasing, but at best are leveling off. In some states—e.g., Arizona and Florida—emissions have increased substantially in recent years. More years of data are needed to evaluate progress, primarily because many of the states issued their GHG targets after 2003. Moreover, the emissions targets were typically created in conjunction with GHG reduction policies—some of them mandatory limits on specific industries or segments of state activities—whose implementation may not be reflected in the available emissions data. Reliable GHG emissions data are a keystone component of any climate change program. To implement effective solutions to climate change, policymakers need up-to-date and accurate information detailing the volume and sources of GHG emissions in their states. Precise monitoring is particularly vital for market-oriented approaches to GHG control. Whether a market-oriented program is based on tradeable emissions credits or a carbon tax, reliable and transparent emissions data would be the foundation for developing the allocation systems, reduction targets, and enforcement provisions. The federal government has several programs in place that either track or estimate GHG emissions: Power plants subject to the 1990 Clean Air Act acid rain program must monitor and report to EPA various air pollutants, including carbon dioxide. The Department of Energy administers a voluntary GHG reduction registry. This program started in 1994, pursuant to Section 1605(b) of the Energy Policy Act of 1992 ( P.L. 102-486 ). The EPA prepares an annual inventory of the nation's GHG emissions and sinks, which is submitted to the United Nations in accordance with the Framework Convention on Climate Change. Many states have developed, or begun to develop, their own GHG tracking programs. Although tracking programs may overlap in purpose and terminology, for this report, tracking programs are divided into three categories: mandatory reporting, registries, inventories. Mandatory reporting programs allow states to monitor GHG emissions from precise sources. Although the primary purpose of mandatory reporting is typically to support an emission reduction program, a reporting program can potentially provide benefits without an accompanying reduction requirement. For example, if companies' GHG emissions were made publicly-available and thus comparable, the companies might have an incentive to reduce emissions voluntarily. However, there is some concern that emissions may increase under a mandatory reporting program, especially if companies suspect that the state will establish a mandatory reduction regime in later years. For instance, facilities may attempt to "game" the system by deliberately increasing emissions (or over-reporting them) in order to gain additional allowances once a reduction program is established. A few states already require, and others are in the process of developing, GHG emissions reporting to complement an emissions reduction program. Some states require reporting of GHG emissions that are not included in reduction programs. For example, some of the RGGI states mandate reporting of non-CO2 GHG emissions. In addition, other states currently have a mandatory reporting program that is not linked with an emissions reduction requirement. Both of these types of reporting activities are listed below, in the order of when the program started or is scheduled to start: Wisconsin: In 1993, the state established a mandatory reporting program that includes carbon dioxide reporting for facilities generating over 100,000 tons annually. New Jersey: Certain facilities in New Jersey that report air pollutant emissions must also submit emission data for carbon dioxide and methane. This requirement went into effect in 2003. New Jersey is developing a mandatory reduction program (discussed above) that will entail a more comprehensive reporting regime. Maine: Facilities in Maine that emit any criteria pollutant over a specific reporting threshold must also report GHG emissions. This provision went into effect July 2004. Connecticut: Starting in 2006, facilities subject to federal reporting under Title V of the Clean Air Act must submit GHG emissions data on an annual basis. California: See the above discussion regarding the implementation of AB 32, which includes mandatory GHG emission reporting. North Carolina: Facilities with Title V permits (under the Clean Air Act) that submit annual air pollutant emission inventories to the state will be required to include GHG emissions in their 2009 submission (due June 30, 2009). New Mexico: Beginning in 2009, all electrical generating units of 25 megawatts capacity or higher, petroleum refineries, and cement manufacturing plants will be required to report GHG emissions. The initial report will only include CO 2 emissions; reporting of other GHGs will be required in later years. Oregon: In October 2008, the Oregon Environmental Quality Commission established a GHG emission reporting requirement for entities that emit more than 2,500 metric tons of CO 2 annually. Title V sources will report 2009 emissions in 2010; all other sources will report 2010 emissions in 2011. Washington: In March 2008, the state enacted H.B. 2815, directing the Department of Ecology (DEC) to develop a GHG emission reporting system. Starting in 2010, the statute requires emission reporting from entities that emit more than 10,000 t CO 2 annually and vehicle fleets emitting more than 2,500 tCO 2 e annually. In general, state GHG registries are voluntary programs that allow facilities to submit and officially record emissions data. The states' voluntary registry programs encourage participation through incentives. Perhaps the primary incentive is the opportunity for participants to create an official record of emissions reductions, which the parties hope will count as emissions credits in future mandatory reduction programs. At a minimum, participants typically receive some public recognition for their efforts, which may help promote a company's environmental stewardship profile. Five states have passed legislation to establish GHG registries, of which three are now under way: New Hampshire: The New Hampshire GHG Registry went into effect in 2001. The registry is intended to record emissions reductions in a state database that can be used in addressing possible future requirements. California: The California Climate Action Registry began operations in 2002. This state registry is arguably the most comprehensive, as participants register all of their GHG emissions for operations in California; other state (and federal) registries cover only emission reductions. The registry has over 100 participants. Wisconsin: The Wisconsin Voluntary Emission Reduction Registry, a registry of voluntary reductions of GHG emissions, went online in 2003. Numerous states are joining forces to establish a national registry, which may link with regional registries that were previously created. In May 2007, 30 states formed the Climate Registry, which aims to establish a standard system for GHG emissions reporting. As of August 2008, 39 states have joined the registry to support both voluntary and mandatory reporting schemes in the participating states. At least 42 states have developed GHG inventories. Inventories typically provide estimates of emissions for various categories: economic sector (e.g., energy, agriculture), emissions source (e.g., automobiles, power plants), GHGs (e.g., carbon dioxide, methane). In general, states create their inventories by following guidelines developed by the Environmental Protection Agency (EPA) that are based on internationally recognized standards. Inventories are often used to obtain an overall assessment of a state's emissions levels and sources, and are perhaps best suited for monitoring trends and/or developing comprehensive strategies. Although some states have performed inventory updates, most of the states' inventories only cover 1990 emission levels. At least 38 states have either completed or are in the process of preparing climate change action plans (see Figure 3 ). Typically, state action plans are drafted by a climate change task force, composed of members with diverse backgrounds and expertise. In general, task force members examine their state's sources of GHG emissions, and identify and rank the policy options that are most appropriate (i.e., cost-effective, politically feasible, etc.) for controlling emissions in their state. Often the state action plan is made available for public comment, revised if necessary, and then submitted for approval to state officials. Reflecting the fact that states have different economic sectors, natural resources, and political structures, state climate change action plans can vary substantially. Some state action plans focus more on indirect, "no regrets" strategies, such as improved energy efficiency, which will likely yield benefits irrespective of climate change effects. Other state action plans are more comprehensive and recommend a portfolio of direct efforts that address GHG emissions. Although the state climate change action plans may recommend an array of policy options, the plans do not necessarily result in direct actions to reduce GHG emissions. However, the number of completed state plans indicates the interest that a majority of states have in addressing climate change mitigation on some level. The climate change activity in the states raises several issues that may be of interest to Congress. This section discusses some of the potential effects of state action in lieu of federal legislation. This section also examines the limitations of state actions, both from a climate change policy perspective and in the context of legal challenges. Many states generate significant emissions of GHGs. If individual U.S. states were classified as sovereign nations, 18 U.S. states would rank in the top 50 for nations that annually emit the primary GHG: carbon dioxide. Compared with other nations, Texas, the combined Midwest Accord states, the WCI states, the RGGI states, and California rank as top carbon dioxide emitters ( Table 2 ). Almost half (23) of the states have joined one of the three regional emission (all GHGs or just carbon dioxide) reduction programs: the Midwest Accord, WCI, and RGGI. The states in these regional programs account for a substantive percentage of U.S. carbon dioxide emissions (about 38%). However, the remaining 27 states are pursuing considerably less aggressive climate change policies. With this range of state activity, it is difficult to predict the precise consequences of state-led climate change actions. This section highlights possible effects from state actions. A central argument in support of state climate change action is that states can serve as laboratories for policymaking. States can test different ideas and policies on a smaller scale, and help determine which climate change solutions are most effective. For example, there has been some debate regarding how a cap-and-trade program might work on a national level. Although the federal acid rain program, which involves sulfur dioxide emissions trading, is generally considered a success, emissions trading programs for other purposes have encountered problems during implementation. State and regional programs offer the opportunity to iron out logistical details that are crucial in a cap-and-trade system: How high to set the emissions cap. Which sources to regulate. How to allocate emissions allowances. Whether to allow the use of offsets as compliance alternatives. Whether to include a safety valve and, if so, how high to set it. State programs can inform federal policymakers in other ways. The political process by which states create climate change policy can be enlightening and perhaps adaptable on the federal level. For instance, by examining the development and passage of state legislation, federal policymakers may better understand the motivations of different stakeholders and learn how best to frame the issues. Emission reduction programs will likely have economic effects on consumers, businesses and manufacturers, and possibly interstate commerce. The most immediate effects of the emissions programs (at least the ones furthest along in development) will be on the automotive manufacturing and electricity generation sectors. For automotive manufacturers, the California motor vehicle regulations—which at least 16 states have indicated they plan to implement if EPA approves the waiver (discussed above)—will likely have the effect of dividing the market, potentially requiring the manufacture of a different class of cars to meet the new standards (scheduled to apply in 2009). For automotive companies, this raises the issues of the technical means of meeting the standard, marketing, ensuring compliance, and pricing. Depending on how the emission limits are to be met, they may also influence fueling infrastructure. State governments will need resources to enforce the standards. Consumers in regulated states may face higher prices for vehicles. Regarding the electric power industry, the mandatory reduction requirements will likely promote generation from low carbon-intensive fuels, while curtailing generation from high carbon-intensive fuels, such as coal. The GHG performance standards in California and Washington will reach into neighboring states as well, effectively barring electricity imports generated by conventional coal-fired power plants. Because coal-fired plants tend to produce lower-cost electricity, the result of these requirements may be to increase electricity prices within the states that limit emissions, and possibly lower prices in states without such emission standards. If the GHG limitations lead to energy price increases in the regulated states, businesses and manufacturers may factor this cost into location decisions. There is some concern that regulated industries will have a financial incentive to move (and thus transfer jobs) to states (or nations) that do not limit GHG emissions. Others fear that emission limits will raise the cost of living and doing business within those states, although in theory such effects can be at least partially addressed through the design of the emissions reduction program. One concern shared by many observers, particularly industry stakeholders, is that state climate change programs (in lieu of a federal program) will create a patchwork of regulations across the nation. A patchwork system of standards may hinder a company's efficiency and possibly create economic burdens for firms that operate in multiple states. The prospect of regulations that vary from state to state is driving some companies to support a federal climate change program with comparable requirements across the entire United States. Climate change has been described as the "ultimate global commons problem." The global warming and climate impacts associated with increased GHG emissions in the atmosphere cannot be linked with specific emission sources. Unlike localized reductions in other air pollutants (e.g., sulfur dioxide, particulate matter), when an emissions source reduces its carbon dioxide emissions, it does not generate a corresponding local climate change benefit unless there are similar widespread reductions globally or at least in wide areas. From a practical standpoint, the actions of one or a group of states or nations cannot by themselves reduce the global accumulation of GHG emissions in the atmosphere. However, as discussed above, actions now under way by many states in the United States may create examples and/or models that will prove instructive in more widespread applications. Moreover, when business and industry have confronted a growing patchwork of state requirements, these sectors have historically begun to favor a national policy—as has begun to happen in the case of state-level actions on climate change. However, the lack of a national program or a truly global approach to GHG emissions reductions does limit what individual states can accomplish in actually reducing GHG emissions and accumulations. Legal challenges may further limit the effectiveness of state action. The possibility of legal challenges creates considerable uncertainty regarding the future of state climate change actions, particularly the more aggressive programs. There are already several lawsuits against state actions that seek to regulate GHG emissions from motor vehicles. As discussed above, the April 2007 Supreme Court decision ( Massachusetts v. EPA ) did not specifically address all of the plaintiffs' arguments, so uncertainty remains as to the resolution of these cases. Further litigation confronting other types of state action is anticipated. However, many expected RGGI to face a legal challenge when the first state's rule was officially issued, but that did not occur. Regardless, there is some question as to whether California's recently enacted GHG performance standards are constitutional. Arguably, the standards disproportionately impact the neighboring states that have historically exported coal-generated electricity to California consumers. The legal arguments in these cases are beyond the scope of this report, but many observers conclude that it is difficult to predict how the courts will interpret and decide upon these issues. For a more in-depth analysis of various legal issues regarding climate change, see CRS Report RL32764, Climate Change Litigation: A Growing Phenomenon , by [author name scrubbed].
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In the absence of a federal climate change program, a number of states have taken actions that directly address greenhouse gas (GHG) emissions. States' efforts cover a wide range of policies. Although much of the early activity was largely symbolic, the more recent state actions have been more aggressive. Twenty-three states have joined one of the three regional partnerships that would require GHG (or just carbon dioxide) emission reductions. Set to take effect in 2009, the Regional Greenhouse Gas Initiative (RGGI) is a partnership of 10 Northeast and Mid-Atlantic states that creates a cap-and-trade system aimed at limiting carbon dioxide emissions from power plants. Seven western states (and four Canadian provinces) have formed the Western Climate Initiative, which set an economy-wide GHG emissions target of 15% below 2005 levels by 2020. In addition, six states (and one Canadian province) signed the Midwestern Greenhouse Gas Reduction Accord, which aims to establish a multi-sector, GHG cap-and-trade program in the Midwest. The latter two programs are still in the early development stages; RGGI is on schedule for 2009, and participating states have already held one emission allowance auction. California has addressed GHG emissions on several fronts. To complement its statewide emissions reduction regime, California established GHG performance standards that would effectively limit the use of coal-generated electricity in California. In 2004, California issued regulations to reduce greenhouse gases from motor vehicles. At least 16 other states have indicated they intend to follow California's new vehicle requirements. In addition, the state has also taken action to reduce the carbon intensity in its transportation fuels. Predicting the precise consequences of the state-led climate change actions is difficult. Some actions, particularly the mandatory emission reductions, may create economic effects, especially in the automotive manufacturing and electricity-generating sectors. Industry stakeholders are especially concerned that the states will create a patchwork of climate change regulations across the nation. This prospect is causing some industry leaders to call for a federal climate change program. If Congress seeks to establish a federal program, the experiences and lessons learned in the states may be instructive. Although some states are taking aggressive action, their possible emission reductions may be offset by increased emissions in states without mandatory reduction requirements. This is perhaps the central limitation of state climate change programs in actually affecting total greenhouse gas emissions. Legal challenges represent another obstacle for state programs, particularly for the more aggressive, mandatory programs.
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The Centers for Disease Control and Prevention (CDC), the federal government's lead public health agency, has identified teen pregnancy as a major public health issue because of its high cost for families of teenage parents and society more broadly. In addition, teen pregnancy disproportionately affects certain minority communities and selected states and territories. The teen birth rate has been in decline; however, given the consequences associated with teen births, Congress has continued to authorize, and the executive branch has administered, programs to delay sexual activity and prevent pregnancies among teenagers. Four current programs have an exclusive focus on teenage pregnancy prevention education: the Teen Pregnancy Prevention (TPP) program, which is authorized under appropriations law; the Personal Responsibility Education Program (PREP), which is authorized under Title V of the Social Security Act; the Sexual Risk Avoidance Education program, which is authorized under Title V of the Social Security Act (and formerly known as the Title V Abstinence Education Grant program); and the Sexual Risk Avoidance Education program, which is authorized under appropriations law. This report will refer to the latter two programs as the Title V Sexual Risk Avoidance Education program and the Sexual Risk Avoidance Education program, respectively, to avoid confusion. The four programs are administered by the U.S. Department of Health and Human Services (HHS). This report begins with a brief discussion of recent developments in funding for the four teen pregnancy prevention programs. It then provides background on the role of Congress and the executive branch in preventing teen pregnancy. The remainder of the report focuses on the four programs, examining the types of grants they provide as well as related funding, requirements, and research activities. Table A-1 in Appendix A summarizes key programmatic information and allows for comparisons across the programs. Table A-2 in Appendix A describes the changes made by the Bipartisan Budget Act of 2018 (BBA of 2018, P.L. 115-123 ), enacted on February 9, 2018, to Section 510 of the Social Security Act. The BBA of 2018 renamed the Title V Abstinence Education Grant program as the Title V Sexual Risk Avoidance Education program and made other programmatic changes, retroactively effective October 1, 2017. Appendix B includes a table that indicates whether the states and territories, or entities within those jurisdictions, receive funding under each of the four programs. This report accompanies CRS Report R45184, Teen Birth Trends: In Brief . The federal government has long played a role in educating teens and the public generally about preventing pregnancy and sexually transmitted infections (STIs). This has involved public awareness campaigns; providing public health services, including information and access to contraceptives; publishing materials about STIs; and funding organizations to provide sexual education. The federal approach to teen pregnancy prevention has often reflected prevailing public views about sexuality and the role that the federal government should play in the private lives of its citizens. Since the early 1980s, the federal government has supported programs that have an exclusive focus on preventing teen pregnancy. Discussion about these programs has often focused on the type of approaches to pregnancy prevention they should take. Some policymakers and other stakeholders in the teen pregnancy prevention field have contended that teens should not engage in sex before marriage to avoid unplanned pregnancies and protect against STIs. Further, they support the idea that teenagers need to hear a single, unambiguous message that sex outside of marriage is harmful to their physical and emotional health. This approach is sometimes referred to as "abstinence-only," and more recently as "sexual risk avoidance." Other stakeholders have prioritized an approach that provides broad information to teenagers to help them make informed decisions about whether to engage in sex, and about using contraceptives if they do. They contend that such an approach allows young people to make choices regarding abstinence, gives them the information they need to set relationship limits and resist peer pressure, and provides them with information on the use of contraceptives and the prevention of STIs. Congress has authorized and provided funding for programs that take one or both of these approaches to preventing teen pregnancy. Of the current programs, the Title V Sexual Risk Avoidance Education and the Sexual Risk Avoidance Education programs focus exclusively on abstaining from premarital sex. The PREP program requires most grantees to place "substantial emphasis on both abstinence and contraception for the prevention of pregnancy among youth and sexually transmitted infections." The TPP program does not necessarily focus on any one approach, and some grantees use multiple program models to meet the various needs of youth. For example, a TPP program grantee in South Carolina uses an evidence-based model that provides abstinence-only education and other evidence-based models that have broader approaches. The general public appears to support educating teenagers about both abstinence and contraception. A nationally representative telephone survey conducted in 2017 for Power to Decide, an organization focused on preventing unplanned pregnancy, found that about 8 out of 10 adults believe teens should receive more information about abstinence and birth control and protection from sexually transmitted infections. Two of the current teen pregnancy programs, TPP and PREP, reflect government-wide efforts beginning in the George W. Bush Administration and extending into the Obama Administration to expand social programs that work and eliminate those that do not. The two programs use a "tiered evidence" approach: some grantees employ teen pregnancy prevention models that are effective based on rigorous evaluation while other grantees develop and rigorously evaluate new or innovative approaches to reducing teen pregnancy. HHS has identified which teen pregnancy prevention program models meet selected criteria for being considered "evidence-based." Multiple HHS offices worked together to establish the Teen Pregnancy Prevention (TPP) Evidence Review process following enactment of the FY2010 omnibus appropriations law ( P.L. 111-117 ). P.L. 111-117 also authorized the TPP program and required it to use models that are proven effective through rigorous evaluation in reducing teen pregnancy and related outcomes. Despite the connection to the TPP program, the review is intended to more broadly inform the teen pregnancy prevention field. The TPP Evidence Review seeks to identify which teen pregnancy prevention models have been shown to be effective based on studies from the past 20 years. The review team prioritizes studies of programs based on whether they include youth ages 19 and younger and are intended to address teen pregnancy outcomes through some combination of educational, skill-building, or psycho-social interventions. The first review covered research released from 1989 through January 2010. Subsequent reviews have since been conducted on an annual or biannual basis to incorporate new research, including newly available evidence for programs that were previously reviewed. These studies must have one statistically significant impact on at least one of five areas: (1) sexual activity, (2) number of sexual partners, (3) contraceptive use, (4) STIs or HIV, and (5) pregnancies. In addition, the studies must examine impacts of programs using randomized controlled trials (RCTs) and quasi-experimental impact study designs. For the studies that meet these initial criteria, reviewers assign each one a rating of high, moderate, or low quality based on whether it uses RCTs and quasi-experimental design, has relatively low attrition, controls for differences between the treatment and comparison groups, and meets certain other criteria. After its latest round of studies, the TPP Evidence Review includes 41 evidence-based program models. Evidence-based teen pregnancy prevention programs are varied and approach the problem from different frameworks. HHS categorizes the evidence-based models based on certain key features. For example, three of the models use an abstinence-only approach and some of the models incorporate information about abstinence. Other models focus on sexual health education, youth development, clinic-based services, and/or youth with certain histories (e.g., youth who are incarcerated). Programs differ based on their outcomes, settings (e.g., schools, clinics, homes, afterschool programs), session length and duration over time, and target population (e.g., males, females, African American youth, Hispanic youth, low-income youth, rural youth). HHS has taken additional steps to develop research on teen pregnancy prevention interventions. These efforts have been funded through annual appropriations of approximately $4.5 million to $6.8 million in each of FY2011 through FY2018 for Section 241 of the Public Health Services Act (PHSA). Section 241 provides authority for HHS to conduct evaluations of the implementation and effectiveness of public health programs. The funding has been used to support federal evaluations on teen pregnancy, including evaluation of TPP grantees; technical assistance about using rigorous program evaluation for TPP program grantees and unrelated grantees funded through the CDC; the TPP Evidence Review; and measuring performance data for the TPP program and Pregnancy Assistance Fund (PAF) grantees. The PAF provides competitive funding to state and tribal agencies to support pregnant and parenting teens and adults in school-based and community-based settings. The Consolidated Appropriations Act, FY2010 ( P.L. 111-117 ) established and provided annual funding for the Teen Pregnancy Prevention (TPP) program. The TPP program has been funded via the appropriations process in subsequent years, including through FY2018. Funding has ranged from approximately $98 million to $110 million annually. The program primarily provides funds to public and private entities for evidence-based or promising programs that reduce teen pregnancy, including those that focus on sexual risk avoidance and/or use of contraceptives. However, HHS is in the process of discontinuing funding for the current cohort of TPP program grantees. See "Recent Developments" at the beginning of this report for further detail about the status of current funding. Generally, the appropriations laws have specified that no more than 10% of TPP funding is for training and technical assistance, outreach, and other program support. Of the remaining amount, the appropriations laws have further stated the following: 75% is for grants to replicate programs that have been proven through rigorous evaluation to be effective in reducing teenage pregnancy, behavioral factors underlying teen pregnancy, or other related risk factors. HHS refers to these as "Tier 1" grants. 25% is for research and demonstration grants to develop, replicate, and refine additional models and innovative strategies for reducing teenage pregnancy. HHS refers to these as "Tier 2" grants. Appropriation laws generally have not included additional guidance on how the program is to be administered. HHS has established eligibility and other requirements via funding announcements and other publications. Funding recipients must ensure they provide "age appropriate" and "medically accurate" information to their teen clients, as these terms have been defined in program funding announcements. The HHS Office of Adolescent Health (OAH), which administers the program, must approve the materials used by grantees for this purpose. A range of public and private entities have been eligible to apply for TPP funding. Such entities include nonprofit and for-profit organizations, universities and colleges, faith- and community-based organizations, hospitals, and research institutions, among other entities. The TPP grants have supported two cohorts of Tier 1 grantees. This first cohort, from FY2010-FY2014, included 75 grantees in 37 states and the District of Columbia. The current round of Tier 1 funding began with FY2015, and is in the process of being discontinued. The second cohort includes 58 grantees in 28 states, the District of Columbia, and the Marshall Islands. The second round of funds has been used to support two types of grants. Tier 1A grantees are intermediary organizations that are providing capacity-building assistance (CBA) to youth-serving organizations to replicate evidence-based teen pregnancy prevention programs in areas with higher-than-average teen birth rates. CBA refers to the "transmission of knowledge and building of skills to enhance the ability of organizations to implement, evaluate, and sustain evidence-based TPP programs." Tier 1B grantees are entities that are replicating evidence-based programs to scale in communities with populations in the greatest need. Grantees are expected to develop and implement a plan to prevent teen pregnancy, engage in planning and piloting the programs, and then implement the programs. In general, HHS requires Tier 1 grantees to use evidence-based approaches that the department has determined to be effective as part of its TPP Evidence Review. Grantees must implement their models consistent with the original evidence-based model and have minimal adaptations (e.g., changing names or details in a role play). In addition, HHS has emphasized the importance of Tier 1 grantees in the second cohort replicating programs that have the strongest evidence and that evaluations have shown to be effective in multiple sites, in different settings, and with different populations. As with Tier 1 grantees, HHS has funded two cohorts of Tier 2 grants from FY2010-FY2014 and FY2015-FY2019. The first cohort included 18 grantees in 10 states and the District of Columbia, and the second cohort includes 26 grantees in 11 states, the District of Columbia, and the Marshall Islands. HHS is currently (FY2015-FY2019) funding three types of Tier 2 grants in the second cohort, though as noted, these grants are in the process of being discontinued. The grants include the following: Supporting and enabling early innovation to advance adolescent health and prevent teen pregnancy (Tier 2A grants): these grants are intended to establish independent intermediaries that select, fund, and support a portfolio of innovators across the country to design, test, and refine interventions for advancing adolescent health and preventing teen pregnancy. Rigorous evaluation of new or innovative approaches to prevent teen pregnancy (Tier 2B grants): these grants are intended to increase the number of evidence-based teen pregnancy prevention interventions by rigorously evaluating new or innovative approaches for preventing teen pregnancy and related risk behaviors. Effectiveness of teen pregnancy prevention programs designed specifically for young m ales (Tier 2C grants ) : these grants are intended to rigorously evaluate innovative interventions designed for young men ages 15 to 24 to reduce their risk of fathering a teen pregnancy. These interventions are to be feasibly implemented in target settings such as clinics and schools. This grant is administered by the CDC, in partnership with the OAH. HHS supported 41 program evaluations of the first cohort of TPP grants (FY2010-FY2015). This included 19 Tier 1 evaluations of 10 evidence-based models identified as part of the TPP Evidence Review. The evaluations also included 22 studies of Tier 2 grantees, which were expected to implement new or innovative models to improve teen pregnancy-related outcomes. HHS provided detailed findings from these evaluations in a special supplement of the American Journal of Public Health in September 2016. Of the 41 evaluations, 12 showed a positive impact in at least one teen pregnancy-related outcome. Another 16 had no impacts (one of these also had a negative impact), and 13 had inconclusive results. Some of the evaluations were inconclusive because of high attrition, of weak contrasts between the treatment and control groups, or they did not meet HHS's research standards, or for other reasons. PREP is a broad approach to teen pregnancy prevention that seeks to educate adolescents ages 10 through 19 and pregnant and parenting youth under age 21 on both abstinence and contraceptives to prevent pregnancy and STIs. The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 ) established PREP, appropriating $75 million annually in mandatory spending for FY2010 through FY2014. PREP authorization has been extended three times ( P.L. 113-93 , P.L. 114-10 , and P.L. 115-123 ) with mandatory funding of $75 million for each of FY2015 through FY2019. PREP funds states and other entities to carry out sexual education programs that places "substantial emphasis on both abstinence and contraception." Recipients of PREP funds must fulfill requirements outlined in the law, including that they must implement programs that provide youth with information on at least three of six specified adulthood preparation subjects (healthy relationships, adolescent development, financial literacy, parent-child communication, educational and career success, and healthy life skills); are "medically-accurate and complete"; include activities to educate youth who are sexually active regarding responsible sexual behavior with respect to both abstinence and the use of contraception; and provide age-appropriate information and activities, while ensuring these are delivered in the most appropriate cultural context for the individuals served in the program. As with the TPP program, PREP uses a tier-evidence approach. Some grantees replicate evidence-based effective programs that have been proven to delay sexual activity, increase condom or contraceptive use for sexually active youth, or reduce pregnancy among youth. Other grantees substantially incorporate elements of effective programs that have been proven to change behavior. PREP includes four types of grants: (1) State PREP grants, (2) Competitive PREP grants, (3) Tribal PREP, and (4) Personal Responsibility Education Innovative Strategies (PREIS). Most of the PREP appropriation is allocated to states and territories via the State PREP grant. Funding for states and territories that did not apply for this grant is available to local entities under Competitive PREP grants. The law specifies certain levels of funding for the other components, including $10 million for the PREIS grants. After this set-aside, HHS must reserve 5% for grants to Indian tribes and tribal organizations (Tribal PREP) and 10% for training, technical assistance, and evaluation. Total FY2017 funding for the four grants was $63.7 million (the most recent information available). Of this amount, $40.5 million was for State PREP, $10.3 million was for Competitive PREP, $3.3 million was for Tribal PREP, and $9.6 million was for PREIS. The 50 states, District of Columbia, and territories are eligible for State PREP funding. Funds are allocated by a formula that is based on the proportion of youth ages 10 through 19 in each jurisdiction relative to other jurisdictions. State PREP funds do not require a match. A total of 50 jurisdictions applied for and received FY2017 PREP funding. This included 44 states, the District of Columbia, Guam, Puerto Rico, the Republic of Palau, the Virgin Islands, and the Federated States of Micronesia. States and territories can administer the project directly or through sub-awards to public or private entities. If a state or territory did not submit an application for formula funding in FY2010 or later years, it is ineligible to apply for funding for each of FY2010 through FY2019. Organizations in such a state or territory are eligible to apply competitively for funding, which is to be awarded as a three-year grant. In practice, Competitive PREP applicants can include county or city governments, public institutions of higher education, and for-profit and nonprofit organizations, among other entities. Ten states and territories did not apply for State PREP funding: Florida, Indiana, Kansas, North Dakota, Texas, Virginia, American Samoa, Northern Mariana Islands, Marshall Islands, and Palau. HHS awarded Competitive PREP funding for FY2012 through FY2014 to organizations in states that did not apply for funding in FY2010 or FY2011, and awarded Competitive PREP funding for FY2015 through FY2017 to organizations in states that did not apply for funding in FY2016 and FY2017. For each of FY2015 through FY2017, Competitive PREP funded 21 grantees. These grantees are in the states that did not receive PREP funds, except Kansas. Entities in Kansas did not apply for Competitive PREP funds. The Bipartisan Budget Act ( P.L. 115-123 ), the law that most recently reauthorized the PREP program, specified that the Competitive grants that were awarded for any of FY2015 through FY2017 are to be extended for an additional two years, through FY2019. Each State PREP and Competitive PREP applicant must include a description of its plan for using the allotment to achieve its goals related to reducing pregnancy rates and birth rates for youth populations. Applicants are required to specify the populations they will serve, and such populations must be the most high-risk or vulnerable for pregnancies or otherwise have special circumstances. As specified in the law, this includes youth who are ages 10 to 20 and in foster care, are homeless, live with HIV/AIDS, or reside in areas with high birth rates for youth, among other populations; pregnant youth who are under age 21; and mothers who are under age 21. States, territories, and entities that apply for State PREP or Competitive PREP funds must replicate evidence-based teen pregnancy prevention programs or substantially incorporate elements of effective programs. Grantees are referred to the TPP Evidence Review, though they are not required to adopt the models identified in the review. A 2014 review of PREP grantees in 44 states and the District of Columbia, found that more than 90% of them expected to implement such evidence-based models. Tribal PREP grants are intended to support projects that educate American Indian and Alaska Native youth ages 10 to 20 and pregnant and parenting youth under age 21 on abstinence and contraception for the prevention of pregnancy, STIs, and HIV/AIDS. Specifically, grantees must support the design, implementation, and sustainability of culturally and linguistically appropriate teen pregnancy programs. Such programs must replicate evidence-based models, sustainably incorporate elements of effective models, or include promising practices within tribal communities. Although Tribal PREP grantees are referred to HHS's TPP Evidence Review, the review has not identified teen pregnancy prevention programs specifically for tribal youth. Indian tribes and tribal organizations, as these terms are defined in the Indian Health Care Improvement Act, are eligible to apply for Tribal PREP funding. The first cohort of 15 grantees received funding from FY2011 through FY2015. The project period for the second cohort of eight grantees is from FY2016 through FY2020. PREIS grants are intended to build evidence for promising teen pregnancy prevention programs serving high-risk youth populations. The grants are awarded on a competitive basis to public and private entities to implement and evaluate innovative youth pregnancy prevention strategies that have not been rigorously evaluated and/or to participate in a federal evaluation of their program strategies if selected. According to the most recent program funding announcement, innovative strategies could include those that are technology-based and/or computer-based, use social media, or are implemented in non-traditional classroom settings. Such strategies must be targeted to high-risk, vulnerable, and culturally under-represented youth populations. The law specifies that this includes youth ages 10 to 20 in or aging out of foster care; homeless youth; youth with HIV/AIDS; pregnant and parenting women who are under age 21 and their partners; young people residing in areas with high birth rates for youth; and victims of human trafficking. HHS also lists selected other youth populations in the program funding announcement: youth who have been trafficked, runaway and homeless youth, and rural youth. PREIS funds are awarded as five-year cooperative agreements. The first cohort of PREIS grantees (FY2011 through FY2015) included 11 organizations. The second cohort of grantees (FY2016 through FY2020) includes 13 organizations in 10 states and the District of Columbia. The PREP authorizing law directs HHS to evaluate PREP programs and activities. In fulfilling this requirement, HHS is conducting an evaluation of four State PREP grantees—California, Maine, Pennsylvania, and South Carolina—to learn how PREP-funded programs are implemented and to assess their effectiveness in reducing teen pregnancies, STIs, and sexual risk behaviors. According to an early report on implementation of the program, the four states have developed similar approaches to supporting evidence-based strategies. The impact evaluation is underway, and is expected to be completed in 2018. Separate from these evaluation efforts, PREIS and Tribal PREP direct grantees to carry out evaluation activities. PREIS grantees must contract with independent third-party evaluators to conduct RCT or quasi-experimental research to determine whether grantees' interventions led to reduced pregnancies, births, and STIs. Tribal PREP grantees must partner with a university or other organization not associated with the grantee to conduct an evaluation (known as a "local evaluation") that is either descriptive (without treatment and comparison groups) or examines impacts using treatment and comparison groups. State PREP and Competitive PREP grantees may choose to conduct such evaluations. The 1996 welfare reform law ( P.L. 104-193 ) established the "Separate Program for Abstinence Education" under Section 510 in Title V of the Social Security Act. The program had long been known as the Title V Abstinence Education Grant program. The BBA of 2018 ( P.L. 115-123 ) replaced Section 510, thereby changing the name of the program to the Sexual Risk Avoidance Education program; revising the program purpose areas; and adding new requirements on financial allotments, educational elements, research and data, and evaluation. Table A-2 in Appendix A includes a side-by-side comparison of the statutory changes made by the BBA, which went into effect on October 1, 2017. The overall purpose of the program remains essentially the same, which is to provide youth ages 10 through 19 with education that focuses on refraining from sexual activity before marriage. The Title V Sexual Risk Avoidance Education program is funded through mandatory spending. P.L. 104-193 provided $50 million per year for five years (FY1998-FY2002). The program was subsequently funded through June 30, 2009, by various legislative extensions. The ACA reauthorized the program, providing $50 million for each of FY2010 through FY2014. Three subsequent laws extended the program: The Protecting Access to Medicare Act of 2014 ( P.L. 113-93 ), which provided $50 million in FY2015; the Medicare Access and CHIP Reauthorization Act of 2015 ( P.L. 114-10 ), which provided $75 million per year for FY2016 and FY2017; and the BBA of 2018, which provides $75 million for each of FY2018 and FY2019. States are eligible to request mandatory Title V Sexual Risk Avoidance Education funds for FY2018 and FY2019 if they submit an application for Maternal and Child Health (MCH) Block Grant funds for those same fiscal years. The MCH Block Grant, authorized under Title V of the Social Security Act, is a flexible source of funds that states use to support maternal and child health programs. Title V Sexual Risk Avoidance Education funds are allocated to each jurisdiction based on two factors: (1) the amount provided to the program minus any reservations (up to 20%) made by HHS for administering it, and (2) states' relative proportion of low-income children nationally. The law does not require states to provide a match. HHS may competitively award FY2018 and FY2019 funds to one or more entities within a state/territory that had not previously applied for its share of funding. The entity or entities would receive the amount that would have been otherwise allotted to that state. (The law does not define the entities that would be eligible.) The HHS Secretary is required to publish a notice to solicit grant applications for the remaining competitive funds. The solicitation must to be published within 30 days after the deadline for states to apply for MCH Services Block Grant funds. Eligible states are required to apply for the Title V Sexual Risk Avoidance Education funds no later than 120 days after the deadline closed for states to apply for MCH Services Block Grant funds. The 50 states, the District of Columbia, and the territories (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, Commonwealth of the Northern Mariana Islands, Federated States of Micronesia, the Republic of the Marshall Islands, and Republic of Palau) are eligible to apply. In FY2017, 37 states and two territories (Puerto Rico and the Federated States of Micronesia) applied for and received funding (under the Title V Abstinence Education Grant program). States/territories or other entities are required to implement sexual risk avoidance education that is medically accurate and complete, age-appropriate, and based on adolescent learning and developmental theories for the age group receiving the education. The education must also be culturally appropriate, recognizing the experiences of youth from diverse communities, backgrounds, and situations. As described in the previous text box, sexual risk avoidance education must address six topics. If sexual risk avoidance education includes any information about contraception, such information must be medically accurate and ensure that students understand that contraception reduces physical risk but does not eliminate risk. In addition, sexual risk avoidance education may not include demonstration, simulations, or distribution of such contraceptive devices. A state or other entity that receives Title V Sexual Risk Avoidance Education funding must, as specified by the HHS Secretary, collect information on the programs and activities funded through their allotments and submit reports to HHS on the data collected from such programs and activities. Under the Title V Abstinence Education Grant program, HHS has required all jurisdictions to measure the success of their abstinence programs through at least two outcome measures, one of which must be abstinence as a means for preventing teen pregnancy, births, and/or STIs. Additionally, HHS has encouraged jurisdictions to identify programs that have demonstrated effectiveness in delaying the initiation of sexual activity or promoting abstinence from sexual activity. HHS has directed grantees to the TPP Evidence Review, though has not require grantees to use the models identified in the review. A state or other entity receiving funding under the Title V Sexual Risk Avoidance Education program may use up to 20% of its allotment to build the evidence base for sexual risk avoidance education by conducting or supporting research. Any such research must be rigorous, evidence-based, and designed and conducted by independent researchers who have experience in conducting and publishing research in peer-reviewed outlets. Separately, HHS is required to conduct one or more rigorous evaluations of the education (and associated data) funded through the Title V Sexual Risk Avoidance Education program. This evaluation is to be conducted in consultation with "appropriate State and local agencies." HHS is to consult with relevant stakeholders and evaluation experts about the evaluation(s). HHS must submit a report to Congress on the results of the evaluation(s). The report must also include a summary of the information collected and reported by states and other entities on their Sexual Risk Avoidance Education programs and activities. The Balanced Budget Act of 1997 ( P.L. 105-133 ) directed HHS to conduct evaluation activities of the prior Title V Abstinence Education Grant program. In response, HHS undertook a multi-year evaluation that included a study of how grantees in four states implemented abstinence education programs and a separate study that rigorously evaluated whether grantees' programs had impacts on teen sexual abstinence and related outcomes. The programs targeted youth in elementary and middle school and engaged them as part of the school setting, including in afterschool programming. Each youth participated for more than 50 hours. The study tracked outcomes for youth four and six years after they were enrolled in it. The impact evaluation found that youth who received abstinence education under the program did not have different outcomes than youth in the control group. They were no more likely than their peers in the study to have abstained from sex. As noted, federal funding has supported abstinence-only education through the Community-Based Abstinence Education program (FY2001 through FY2009) and the Competitive Abstinence-Only program (FY2012 through FY2015). In each of FY2016 through FY2018, annual omnibus appropriations laws provided funding to support abstinence-only education through the Sexual Risk Avoidance Education program. Funding was $5 million in FY2016, $15 million in FY2017, and $25 million in FY2018. The appropriations laws have specified that Sexual Risk Avoidance Education grants are to be awarded by HHS on a competitive basis; use medically accurate information; "implement an evidence-based approach integrating research findings with practical implementation that aligns with the needs and desired outcomes for the intended audience;" and "teach the benefits associated with self-regulation, success sequencing for poverty prevention, healthy relationships, goal setting, and resisting sexual coercion, dating violence, and other youth risk behaviors such as underage drinking or illicit drug use without normalizing teen sexual activity." The appropriations law provided that up to 10% of the funding for sexual risk avoidance can be made available for technical assistance and administrative costs. Through the grant application process for the Sexual Risk Avoidance Education program, HHS has identified multiple types of entities that are eligible for funding, including states, territories, and localities (county, city, township, special districts); school districts; public and state-controlled institutions of higher education; federally recognized tribal governments; Native American tribal organizations; public and Indian housing authorities; nonprofit organizations other than institutions of higher education; private institutions of higher education; small business; and for-profit organizations other than small businesses. ACF awarded 10 grants in FY2015, 21 grants in FY2016, and 27 grants in FY2017. As specified in the funding announcement, grantees must incorporate an evidence-based program and/or effective strategies that have demonstrated impacts on delaying the initiation of sexual activity. HHS advises Sexual Risk Avoidance Education grantees to review evidence-based program models that are included as part of the TPP Evidence Review. In addition, grantees must link program participants to services with community agencies that support the health, safety, and well-being of participants. Appropriations law and program funding announcements do not direct HHS or grantees to carry out evaluation activities. HHS tracks Sexual Risk Avoidance Education grantee performance—related to youth served, fidelity to curriculum, implementation, outcome measures, and community data—for monitoring purposes, not to measure the impacts of the program. Appendix A. Federal Teen Pregnancy Prevention Programs Appendix B. Grantees Funded Under the Federal Teen Pregnancy Prevention Programs, by State
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Congress has an interest in preventing pregnancy among teenagers because of the long-term consequences for the families of teen parents and society more generally. Since the 1980s, Congress has authorized—and the U.S. Department of Health and Human Services (HHS) has administered—programs with a focus on teen pregnancy prevention. This report intends to assist Congress with tracking developments in four teen pregnancy prevention programs that are currently funded. The report provides detailed information about each program and includes a table that can illustrate the ways in which the programs are both similar and different. The four current programs are the Teen Pregnancy Prevention (TPP) program, the Personal Responsibility Education Program (PREP), the Title V Sexual Risk Avoidance Education program, and the Sexual Risk Avoidance Education program. Despite their similar names and purposes, the latter two programs have different authorizing laws and funding mechanisms. Generally, the four programs serve vulnerable young people in schools, afterschool programs, community centers, and other settings. Grantees include states, nonprofits, and other entities. The TPP program was established and funded by the FY2010 omnibus appropriations law (P.L. 111-117). Subsequent appropriations laws have also provided discretionary funding. As required in appropriations law, the majority of TPP program grants (Tier 1) must use evidence-based education models that have been shown to be effective in reducing teen pregnancy and related risk behaviors. A smaller share of funds is available for research and demonstration grants (Tier 2) that implement innovative strategies to prevent teenage pregnancy. FY2018 funding for the TPP program is $101 million. HHS has taken steps to discontinue the current cohort of grants. PREP was established under Section 513 of the Social Security Act by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148) in 2010. The program receives mandatory funding and is designed to educate adolescents on both abstinence and contraception for preventing pregnancy and sexually transmitted infections, and on selected adult preparation subjects. The PREP authorizing law requires most grantees to replicate evidence-based programs that are proven to change behavior related to teen pregnancy. FY2018 funding for the program is $75 million. The Title V Sexual Risk Avoidance Education program is authorized at Section 510 (Title V) of the Social Security Act. It was formerly known as the Title V Abstinence Education Grant program, which was authorized by the 1996 welfare reform law (P.L. 104-193). The Bipartisan Budget Act of 2018 (P.L. 115-123) renamed the program and made other changes. The program focuses on implementing sexual risk avoidance, meaning voluntarily refraining from sex before marriage. Grantees may set aside some of their funding to conduct rigorous and evidence-based research on sexual risk avoidance. FY2018 funding for the program is $75 million. The Sexual Risk Avoidance Education program (not to be confused with the Title V program of the same name) was established and funded by the FY2016 omnibus appropriations law (P.L. 114-113). Other appropriations laws have since provided discretionary funding. Grantees are to use funding for education on voluntarily refraining from non-marital sexual activity, and they are encouraged to implement evidence-based approaches that teach the benefits associated with resisting risk behaviors. FY2018 funding for the program is $25 million. Multiple HHS offices worked together to establish the Teen Pregnancy Prevention (TPP) Evidence Review process following enactment of the FY2010 omnibus appropriations law (P.L. 111-117). The review is intended to inform the teen pregnancy prevention field about which prevention models have been shown to be effective based on studies from the past 20 years. TPP Tier 1 grantees must use models identified in the review. HHS encourages grantees for the other teen pregnancy prevention programs to use models identified in the review as well.
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I n its sex discrimination decisions, the United States Supreme Court not only has defined the applicability of the equal protection guarantees of the Constitution and the nondiscriminatory policies of federal statutes, but also has rejected the use of gender stereotypes and has continued to recognize the discriminatory effect of gender hostility in the workplace and in schools. This report focuses on sex discrimination challenges based on the equal protection guarantees of the Fourteenth and Fifth Amendments; the prohibition against employment discrimination contained in Title VII of the Civil Rights Act of 1964; and the prohibition against sex discrimination in education contained in Title IX of the Education Amendments of 1972. Although this report focuses on recent legal developments in each of these areas, this report also provides historical context by discussing selected landmark sex discrimination cases. Constitutional challenges that allege discrimination on the basis of sex are premised either on the equal protection guarantees of the Fourteenth Amendment or the equal protection component of the Fifth Amendment. To maintain an equal protection challenge, government action must be established; that is, it must be shown that the government, and not a private actor, has acted in a discriminatory manner. While the Fourteenth Amendment prohibits discriminatory conduct by the states, the Fifth Amendment forbids such action by the federal government. The Fourteenth Amendment provides, in relevant part: "No state shall make or enforce any law which shall abridge the privileges or immunities of the citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws ." Although the Fourteenth Amendment requires equal protection, it does not preclude the classification of individuals. The Court has noted that the Constitution does not require things which are "different in fact or opinion to be treated in law as though they were the same." A classification will not offend the Constitution unless it is characterized by invidious discrimination. The Court has adopted three levels of review to establish the presence of invidious discrimination: 1. Strict scrutiny. This most active form of judicial review has been applied where there is either a suspect classification, such as race, national origin, or alienage, or a burdening of a fundamental interest such as privacy or marriage. A classification will survive strict scrutiny if the government can show that it is necessary to achieving a compelling interest. Generally, statutory classifications subject to strict scrutiny are invalidated. 2. Intermediate scrutiny. This level of review is not as rigorous as strict scrutiny. A classification will survive intermediate scrutiny if it is substantially related to achieving an important government objective. Sex classifications are subject to intermediate scrutiny. 3. Rational basis review. This least active form of judicial review allows a classification to survive an equal protection challenge if the classification is rationally related to a legitimate government interest. This level of review is characterized by its deference to legislative judgment. Most economic regulations are subject to rational basis review. The Court's adoption of intermediate scrutiny for sex classifications did not occur until 1976. In Craig v. Boren , the Court declared unconstitutional an Oklahoma statute that prohibited the sale of "nonintoxicating" 3.2% beer to males under the age of 21 and to females under the age of 18. Females between the ages of 18 and 21, however, were allowed to purchase 3.2% beer. Although the Court agreed with the state's argument that the protection of public health and safety is an important government interest, it found that the gender classification employed by the statute was not substantially related to achieving that goal. The statistical evidence presented by the state to show that more 18 to 20-year-old males were arrested for drunk driving and that males between the ages of 17 and 21 were overrepresented among those injured in traffic accidents could not establish that the statute's gender classification was substantially related to ensuring public health and safety. In establishing an intermediate level of review for sex classifications, the Craig Court identified what has been a common theme in sex discrimination cases under the Fourteenth Amendment: stereotypes and generalizations about the sexes. In Craig , the Court acknowledged its previous invalidation of statutes that premised their classifications on misconceptions concerning the role of females. The Court's rejection of the use of stereotypes may be seen in many of the cases in this area. The Court's more recent decisions similarly allude to the use of stereotypes and generalizations. For example, in J.E.B. v. Alabama , the Court determined that the state could not use its peremptory challenges to exclude male jurors in a paternity and child support action. In reaching its conclusion, the Court reviewed the historical exclusion of women from juries because of the belief that women were "too fragile and virginal to withstand the polluted courtroom atmosphere." In J.E.B. , the Court questioned the state's generalizations of male jurors being more sympathetic to the arguments of a father in a paternity action and female jurors being more receptive to the mother. The Court maintained that state actors who exercise peremptory challenges in reliance on gender stereotypes "ratify and reinforce prejudicial views of the relative abilities of men and women." The Court feared that this discriminatory use of peremptory challenges not only would raise questions about the fairness of the entire proceeding, but also would create the impression that the judicial system had acquiesced in the denial of participation by one gender. In U.S. v. Virginia , the Court conducted a more searching form of intermediate scrutiny to find unconstitutional the exclusion of women from the Virginia Military Institute (VMI). Although the Court reiterated that a classification must be substantially related to an important government interest, the Court also required the state to establish an "exceedingly persuasive justification" for its actions. Virginia advanced two arguments in support of VMI's exclusion of women: first, the single-sex education offered by VMI contributed to a diversity of educational approaches in Virginia; second, VMI employed a unique adversative method of training that would be destroyed if women were admitted. After reviewing the history of Virginia's educational system, the Court concluded that VMI was not established or maintained to promote educational diversity. In fact, VMI's "historic and constant plan" was to offer a unique educational benefit to only men, rather than to complement other Virginia institutions by providing a single-sex educational option. Further, the Court recognized Virginia's historic reluctance to allow women to pursue higher education. Any interest Virginia had in maintaining educational diversity seemed to be "proffered in response to litigation." In addressing Virginia's second argument, the Court expressed concern over the exclusion of women from VMI because of generalizations about their ability. While acknowledging that most women would probably not choose the adversative method, the Court maintained that some women had the will and capacity to succeed at VMI. Following J.E.B. , the Court cautioned state actors not to rely on overbroad generalizations to perpetuate patterns of discrimination. While the Court believed that the adversative method did promote important goals, it concluded that the exclusion of women was not substantially related to achieving those goals. After determining that VMI's exclusion of women violated the Fourteenth Amendment, the Court reviewed the state's remedy, a separate program for women. Virginia established the Virginia Women's Institute for Leadership (VWIL) following the adverse decision of the court of appeals. Unlike VMI, VWIL did not use the adversative method because it was believed to be inappropriate for most women, and VWIL lacked the faculty, facilities, and course offerings available at VMI. Because VWIL was not a comparable single-sex institution for women, the Court concluded that it was an inadequate remedy for the state's equal protection violations. VMI subsequently became coeducational. The Court's most recent equal protection pronouncements with respect to sex discrimination both involved immigration issues. In Miller v. Albright , the Court considered a challenge to §309 of the Immigration and Nationality Act. The petitioner, the child of an American father and a Filipino mother, contended that §309 imposed additional requirements for establishing American citizenship when a child is fathered by an American citizen outside of the United States. For children born of a citizen mother and an alien father, citizenship is established at birth. However, for children born of a citizen father and an alien mother, citizenship is not established until the father or the child takes affirmative steps to confirm their relationship by the child's eighteenth birthday. In this case, the petitioner's father did not attempt to establish his relationship with his daughter until after her eighteenth birthday. Thus, the petitioner's application for citizenship was denied. The case produced five different opinions. While six justices agreed that the petitioner's complaint should be dismissed, they provided different reasons for this conclusion. Justices Stevens and Rehnquist contended that the petitioner's complaint lacked merit, maintaining that §309's distinction between "illegitimate" children of U.S. citizen mothers and "illegitimate" children of U.S. citizen fathers is permissible under heightened scrutiny because it is "eminently reasonable and justified by important Government policies." Justices O'Connor and Kennedy contended, however, that the distinction could withstand only rational basis review and should not satisfy the kind of heightened scrutiny Justice Stevens seemed to conduct. Setting aside the issue of §309's constitutionality, Justices O'Connor and Kennedy believed that the petitioner lacked the standing necessary to even pursue her claim. Finally, Justices Scalia and Thomas contended that the petitioner's complaint should be dismissed because the Court lacks the power to confer citizenship. Having acknowledged that Congress has the exclusive authority to grant citizenship, Justices Scalia and Thomas believed that there was no need to address the constitutionality of §309. Justices Ginsburg, Breyer, and Souter dissented in opinions written by Justices Ginsburg and Breyer. In their separate opinions, Justices Stevens, O'Connor, Ginsburg, and Breyer each addressed the petitioner's argument that §309 invokes gender stereotypes. The petitioner contended that §309 relies on the belief that an American father "remains aloof from day-to-day child rearing duties," and will not be as close to his child. Justice Stevens, however, maintained that the statute has a non-stereotypical purpose of ensuring the existence of a blood relationship between father and child. Justice Stevens recognized that the distinction is reasonable because mothers have the opportunity to establish parentage at birth, while fathers do not always have that opportunity. Further, he contended that the distinction encourages the development of a healthy relationship between the citizen father and the foreign-born child, and fosters ties between the child and the United States. Thus, §309's additional requirements are appropriate for fathers, but unnecessary for mothers. In their dissenting opinions, Justices Ginsburg and Breyer contended that §309 relies on generalizations about men and women and the ties they maintain with their children. Justice Ginsburg argued that §309's goals of assuring ties between the citizen father and the foreign-born child, and between the child and the United States can be achieved without reference to gender, while Justice Breyer argued similarly, positing a distinction between caretaker and non-caretaker parents, rather than mother and father. In Nguyen v. INS , the Court considered a second challenge to §309. The facts in Nguyen closely resembled those in Miller . Nguyen, the child of a citizen father and a non-citizen mother, born out of wedlock, challenged §309 on the grounds that its differing requirements for acquiring citizenship, based on the sex of the citizen parent, violated the Fifth Amendment's guarantee of equal protection. A majority of the Court concluded that §309's differing requirements were justified by two important government objectives. First, the Court found that the government has an important interest in assuring that a biological parent-child relationship exists. While a mother's relationship to a child may be established at birth or from hospital records, a father may not be present at the birth and may not be included on such records. In this way, the Court maintained, fathers and mothers are not similarly situated with regard to establishing biological parenthood. Thus, a "different set of rules ... is neither surprising nor troublesome from a constitutional perspective." Second, the Court found that the government has an important government interest in ensuring that the child and the citizen parent have some demonstrated opportunity or potential to develop a relationship "that consists of the real, everyday ties that provide a connection between child and citizen parent and, in turn, the United States." The opportunity for a meaningful relationship is presented to the mother at birth. However, the father is not assured of a similar opportunity. The Court concluded that §309 ensures that an opportunity for a meaningful relationship is presented to the father before citizenship is conferred upon his child. As a result, the Court found that §309's differing requirements were substantially related to the important government interests. The Court noted that by linking citizenship to the child's youth, Congress promoted an opportunity for a parent-child relationship during the formative years of the child's life. Alluding to its decision in VMI , the Court maintained that the fit between the §309 requirements and the important government interests was "exceedingly persuasive." Like the petitioner in Miller , Nguyen argued that §309 embodied a gender-based stereotype. However, the Court found that §309 addresses an "undeniable difference in the circumstance of the parents at the time a child is born." This difference is not the result of a stereotype or "a frame of mind resulting from irrational or uncritical analysis." Rather, §309 recognizes simply that at the moment of birth, the mother's knowledge of the child is established in a way not guaranteed to the unwed father. While the Court's decisions involving sex and equal protection illustrate that it is concerned with the stereotyping of men and women, it is unclear whether it will continue to subject sex classifications and any related stereotypes to a traditional form of intermediate scrutiny. The Court's requirement of an "exceedingly persuasive justification" in VMI suggests that it may be interested in conducting a more exacting form of judicial review for sex classifications. In his Miller dissent, Justice Breyer emphasized the need to apply the standard established in VMI . However, in Nguyen , both the majority and the dissenting justices, in discussing an "exceeding persuasive justification," simply reiterated the traditional test that is used when applying intermediate scrutiny. Thus, it is not clear whether sex classifications in future cases will be subject to a traditional form of intermediate scrutiny or some form of heightened scrutiny. Title VII prohibits an employer from discriminating against any individual with respect to hiring or the terms and conditions of employment because of such individual's race, color, religion, sex, or national origin. Title VII applies to a broad range of employment practices, including discrimination because of sex in hiring, placement, promotion, demotion, transfer, termination, and discipline. Because the statute prohibits sex discrimination with respect to all terms and conditions of employment, discrimination regarding salary, leave, and other benefits may also violate the act. Moreover, the statute's prohibition against sex discrimination extends to cover discrimination on the basis of pregnancy. This intention was clarified by Congress when it amended Title VII by enacting the Pregnancy Discrimination Act (PDA). In addition, the statute prohibits discrimination in referrals by employment agencies, actions by unions, and retaliation against employees for filing or participating in a Title VII claim or for opposing an employer's discriminatory practices. Title VII contains several exceptions to the prohibition against sex discrimination, the most important of which permits otherwise discriminatory conduct that satisfies a bona fide occupational qualification (BFOQ). Under §703(e)(1) of Title VII, an employer may discriminate on the basis of "religion, sex, or national origin in those certain instances where religion, sex, or national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise." Although a wide variety of Title VII sex discrimination claims have been litigated in the courts, the major Supreme Court sex discrimination cases under Title VII have primarily focused on the following issues: pregnancy discrimination, gender stereotypes, mixed motives, sexual harassment, employer liability, retaliation, and class action status. These issues, as well as a discussion of the two different types of discrimination recognized under Title VII, are described below. This report, however, does not address pay discrimination claims brought under Title VII or the Equal Pay Act. For more information on pay discrimination issues, see CRS Report RL31867, Pay Equity: Legislative and Legal Developments , by [author name scrubbed] and [author name scrubbed]. The Court has developed two principal models for proving claims of employment discrimination. The "disparate treatment" model focuses on an employer's intent to discriminate. Alternately, the "disparate impact" model is concerned with the adverse effects of an employer's practices on a protected class. Under disparate impact analysis, a facially neutral employment practice may violate Title VII even if there is no evidence of an employer's intent to discriminate. To succeed, a plaintiff must demonstrate that the application of a specific employment practice has had a different effect on a particular group of employees. Both disparate treatment and disparate impact analyses involve a system of evidentiary burden shifting. Both models require the plaintiff to establish a prima facie case of discrimination. If such a case can be established, the burden shifts to the employer to articulate a defense for its actions. For example, the employer may produce evidence showing that its actions are justified because of the needs of its business. Ultimately, however, the plaintiff retains the burden of persuasion; that is, the plaintiff must establish that the employer's assertion of a legitimate, nondiscriminatory reason for its actions was a pretext to obscure unlawful discrimination. In general, the Court has addressed Title VII and sex discrimination most frequently in the context of sexual harassment. However, the Court has also handed down a number of decisions involving pregnancy discrimination. For example, in one of its earliest cases, General Electric Co. v. Gilbert , the Court ruled that an employer's practice of excluding pregnant employees from receiving benefits under its temporary disability plan did not constitute sex discrimination in violation of Title VII. Congress subsequently overruled the Court's decision by enacting the PDA, which amended Title VII to clarify that the statute's prohibition on discrimination in employment "on the basis of sex" includes discrimination "because of or on the basis of pregnancy, childbirth, or related medical conditions." In addition, under the statute, "women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes ... as other persons not so affected but similar in their ability or inability to work." In UAW v. Johnson Controls , the Court considered whether an employer may discriminate against fertile women because of its interest in protecting potential fetuses. Johnson Controls, a battery manufacturer, implemented a policy that excluded "women who are pregnant or who are capable of bearing children" from jobs that exposed them to lead, which was the primary ingredient in the manufacturing process at Johnson Controls. Although fertile women were excluded from employment, fertile men were still permitted to work. The Court found that Johnson Controls' policy was facially discriminatory because it did not apply to the reproductive capacity of the company's male employees in the same way it applied to that of female employees. The Court's conclusion was bolstered by the PDA. Although Johnson Controls asserted that sex was a BFOQ for protecting fetal safety, the Court maintained that discrimination on the basis of sex for safety concerns is allowed only in narrow circumstances. The Court stressed that to qualify as a BFOQ, an employment practice must relate to the essence or central mission of the employer's business. Because reproductive capacity does not interfere with a woman's ability to perform work related to battery manufacturing, the Court rejected Johnson Controls' BFOQ defense. In 2009, the Supreme Court issued a decision in AT&T v. Hulteen , a pregnancy discrimination case that involved questions about whether women who took maternity leave before the PDA went into effect were entitled to protection. Prior to enactment of the PDA, AT&T had calculated pension benefits based on a seniority system that considered years of service minus uncredited leave, but had given less leave credit for pregnancy absences than for other types of medical leave. The plaintiffs claimed that, for purposes of calculating their current retirement and other benefits, they were entitled to retroactive credit for the time they spent on maternity leave, while the employer argued that they were not required to account for leave that took place before the PDA went into effect. Ultimately, the Court ruled in favor of AT&T, ruling that its seniority system did not violate Title VII "when it gives current effect to such rules that operated before the PDA." Under Title VII, it is not unlawful for an employer to provide different levels of benefits pursuant to a bona fide seniority system, as long as there is no intention to discriminate. According to the Court, AT&T's pre-PDA seniority system did not reflect intentional sex discrimination because it was lawful at the time it was adopted. Therefore, the Court held that AT&T's pension calculations were made pursuant to a bona fide seniority system and were permissible under the statute. In 2015, the Supreme Court issued a decision in Young v. United Parcel S ervice . In the case, a United Parcel Service (UPS) worker named Peggy Young challenged her employer's refusal to grant her a light-duty work assignment while she was pregnant, claiming that UPS's actions violated the PDA. The dispute in Young centered on how to interpret the second clause of the PDA, which provides that pregnant workers must be treated the same "as other persons not so affected but similar in their ability or inability to work.... " In her argument to the Court, Young contended that the PDA's second clause requires employers to accommodate workers disabled by pregnancy in the same way that they accommodate employees who are disabled in other ways but similar in their inability to work. In contrast, UPS argued that its policy did not violate the PDA because pregnant workers were treated the same as other workers who were disabled due to off-the-job injuries. In a 6-3 ruling, the Court rejected the arguments of both parties. According to the Court, Young's interpretation of the statute would grant pregnant workers a "most-favored nation status" that would require employers who provided one or two employees with an accommodation to provide the same accommodation to all pregnant employees, regardless of any other relevant criteria, such as the nature of the jobs in question. The Court rejected this approach as contrary to congressional intent, noting that disparate treatment law allows employers to establish policies that may negatively affect protected employees, subject to certain conditions. The Court also refused to defer to EEOC guidance that echoed Young's position, noting that the agency had altered its interpretation after the Court granted review in the case. Likewise, the Court disagreed with UPS's interpretation because it would render the PDA's second clause "superfluous" and would be contrary to the unambiguous intent expressed by Congress when it overturned the Gilbert decision. Instead, the Court relied on an alternative interpretation of the PDA that appears to strike a middle ground between the approaches advocated by Young and UPS. Adapting the burden of proof framework established in the disparate treatment case of McDonnell Dougla s Corp. v. Green , the Young Court held that a pregnant worker who alleges a violation of the PDA's second clause when an employer denies her an accommodation must establish a prima facie case of discrimination by showing that she is a member of the protected class; that she sought an accommodation; that the employer denied the accommodation; and that the employer accommodated others similarly situated in their ability or inability to work. At that point, the employer must show that it had a legitimate, nondiscriminatory reason for denying the accommodation, although the administrative convenience or expense of accommodating pregnant employees will not be deemed to be a legitimate excuse. Finally, the employee may rebut this claim by demonstrating that the employer's rationale is pretextual. Further, the Court ruled, an employee may reach a jury on the issue of pretext if she provides "sufficient evidence that the employer's policies impose a significant burden on pregnant workers, and that the employer's 'legitimate, nondiscriminatory' reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination." According to the Court, a pregnant employee can establish that a "significant burden" exists if she can demonstrate that an employer provides accommodations to a large percentage of non-pregnant workers but denies such accommodations to a large percentage of pregnant workers. Based on this reasoning, the Court vacated the lower court's judgment and remanded the case so that the court could determine "whether the nature of the employer's policy and the way in which it burdens pregnant women shows that the employer has engaged in intentional discrimination." Although the Court did not rule on the merits of Young's claim, it did appear to indicate that she could meet her burden of proof by arguing that the "combined effects" of UPS's policies accommodating three separate categories of non-pregnant employees, while simultaneously refusing to accommodate the majority of pregnant employees, imposed a significant burden on the latter. Ultimately, the Court's ruling preserves the ability of pregnant workers to sue under the PDA when an employer refuses to accommodate pregnancy-related disabilities, but it does not require employers to automatically provide accommodations under all circumstances. The Supreme Court has also ruled that employment decisions made on the basis of gender stereotypes may constitute unlawful sex discrimination. In Price Waterhouse v. Hopkins , the plaintiff, a woman who was denied partnership in the accounting firm where she worked, was apparently rejected because of concerns about her interpersonal skills. Some of these concerns, however, appeared to reflect gender stereotypes. For example, one male partner referred to the plaintiff as "macho," and another informed her that she could improve her chances of making partner if she learned to "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry." Reasoning that sex stereotyping is a form of discrimination on the basis of sex, the Court found that employment decisions that result from sex stereotypes may violate Title VII. Although the decision was in part a victory for employees who have been victims of employment actions based on gender stereotypes, another aspect of the Hopkins ruling favored employers by requiring a lower standard of proof when employers defend their actions in mixed-motive cases. In mixed-motive cases such as Hopkins , there are both legitimate and illegitimate reasons for an employer's adverse employment action. In such cases, the Court held that employers may rebut an employee's showing that discrimination was a "motivating factor" in the adverse action by proving that they would have made the same decision even if discrimination had not been a factor. This holding made it easier for employers to defend against discrimination lawsuits by their employees. As noted above, a mixed-motive employment discrimination case is a case in which the employer has both legitimate and illegitimate reasons for taking the challenged employment action. Several years after the Supreme Court ruled in the Hopkins case, Congress passed Title VII amendments that partially overturned the decision. In the amendments, Congress added a provision that defined unlawful employment actions to include situations in which discrimination is "a motivating factor for any employment practice, even though other factors also motivated the practice." If an employer violates this provision but establishes that it would have taken the same employment action absent the illegitimate motive, the amendments specify that courts may grant the plaintiff declaratory and injunctive relief, as well as attorneys' fees, although plaintiffs are not entitled to damages, hiring, reinstatement, or promotion. The Title VII amendments, however, did not address certain questions regarding the evidentiary burden of proof in mixed-motive cases. In 2003, the Supreme Court addressed the issue, ruling in Desert Palace v. Costa that direct evidence of discrimination is not required in mixed-motive cases. By allowing plaintiffs to present circumstantial evidence of discrimination, the decision made it easier for employees to win in mixed-motive cases. Courts have recognized two forms of sexual harassment under Title VII. The first, quid pro quo sexual harassment, occurs when submission to unwelcome sexual advances or other conduct of a sexual nature is made a condition of an individual's employment or is otherwise used as the basis for employment decisions. The second form of harassment involves conduct that has the purpose or effect of interfering unreasonably with an individual's work performance or of creating a hostile or offensive working environment. This second form of sexual harassment, which the Court first recognized as a cognizable claim in Meritor Savings Bank, FSB v. Vinson , is referred to as "hostile environment" sexual harassment. In Harris v. Forklift Systems, Inc. , the Court sought to define when a workplace was sufficiently "hostile" for purposes of maintaining a claim under Title VII. The petitioner, a female manager at an equipment rental company, alleged that the company's president created a hostile environment by repeatedly insulting her because of her gender and making her the target of unwanted sexual innuendos. The Court determined that an employee does not need to suffer injury to assert a hostile environment claim under Title VII: "So long as the environment would reasonably be perceived, and is perceived, as hostile or abusive ... there is no need for it also to be psychologically injurious." The Court identified four factors that should be considered to determine whether a hostile environment exists: (1) the frequency of the discriminatory conduct; (2) the severity of such conduct; (3) whether the conduct is physically threatening or humiliating; and (4) whether the conduct interferes unreasonably with an employee's work performance. Although the Court recognized these factors as those to be considered in identifying a hostile environment, it emphasized that no single factor is determinative. In 1998, the Court interpreted Title VII's prohibition against discrimination "because of ... sex" to include harassment involving a plaintiff and defendant of the same sex. The petitioner in Oncale v. Sundowner Offshore Services, Inc. alleged that he was physically assaulted in a sexual manner and was threatened with rape by three male co-workers. Two of the co-workers had supervisory authority over the petitioner. Although the Court acknowledged that Congress was "assuredly" not concerned with male-on-male sexual harassment when it enacted Title VII, it found no justification in the statutory language or the Court's precedents for excluding same-sex harassment claims from the coverage of Title VII. At the same time, the Court stated that inquiries in same-sex harassment cases require careful consideration of the social context in which particular behavior occurs and is experienced by the claimant. For example, the Court distinguished a football player being patted on the butt in a locker room from similar behavior occurring in an office. The Court contended that this kind of consideration would prevent Title VII from becoming a "general civility code" for the American workplace. The Court continued its examination of hostile environment sexual harassment in two cases involving vicarious liability. In Faragher v. City of Boca Raton , the Court found that an employer is vicariously liable for actionable discrimination caused by a supervisor, subject to an affirmative defense that must consider the reasonableness of the employer's conduct, as well as the conduct of the employee. The petitioner, a former lifeguard for the Marine Safety Section of Boca Raton's Parks and Recreation Department, alleged that she was subject to an environment characterized by lewd remarks, gender-biased speech, and uninvited and offensive touching by her former supervisors. Recognizing that the authority conferred as a result of a supervisor's relationship with the employer allows the supervisor greater ability to act inappropriately, the Court concluded that an employer could be vicariously liable when a supervisor misuses that authority. As the Court noted, "When a person with supervisory authority discriminates in the terms and conditions of subordinates' employment, his actions necessarily draw upon his superior position over the people who report to him ... whereas an employee generally cannot check a supervisor's abusive conduct the same way that she might deal with abuse from a co-worker." While the Court recognized that there could be vicarious liability for the misuse of supervisory authority, it established the availability of an affirmative defense for employers. Under this affirmative defense, an employer could assert that it exercised reasonable care to prevent and correct any sexually harassing behavior or establish that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer. The Court believed that the employer's ability to assert such an affirmative defense was consistent with Title VII's objective of encouraging employers to prevent sexual harassment from occurring. After applying its new rules to the case at bar, the Court concluded that the city did not exercise reasonable care to prevent the supervisors' harassing conduct. Although the city maintained a policy against sexual harassment, it failed to disseminate that policy to beach employees. Further, the city made no attempt to monitor the conduct of the supervisors or assure employees that they could bypass harassing supervisors to register complaints. The Court revisited the issue of vicarious liability for employers in Burlington Industries v. Ellerth , a companion case to Faragher . In Ellerth , the Court maintained that an employer may be found vicariously liable for harassment by a supervisor even if the employee suffers no adverse, tangible job consequences. The petitioner in Ellerth alleged that she was subjected to repeated offensive remarks and gestures by a mid-level manager who supervised the petitioner's immediate supervisor. On three occasions, the manager made remarks that could be construed as threats to deny the petitioner job benefits. For example, the manager encouraged the petitioner to "loosen up" because he "could make [her] life very hard or very easy at Burlington." Although Burlington maintained a policy against sexual harassment, the petitioner did not inform anyone in authority about the manager's misconduct. Instead, the petitioner resigned from her position, providing reasons unrelated to the harassment. Three weeks after her resignation, the petitioner informed Burlington of her true reasons for leaving. While the manager's threats suggested that the claim should be analyzed as a quid pro quo claim, the Court categorized it as a hostile environment claim because it involved only unfulfilled threats. After reviewing the petitioner's claim in terms similar to Faragher , the Court determined that the manager at Burlington also misused his supervisory authority. The Court concluded that Burlington should be given the opportunity to assert and prove an affirmative defense to liability. The Court has also addressed the availability of punitive damages for violations of Title VII. In Kolstad v. American Dental Association , the Court continued to build on its holdings in Faragher and Ellerth by concluding that although an employer may be vicariously liable for the misconduct of its supervisory employees, it will not be subject to punitive damages if it has made good faith efforts to comply with Title VII. The Court noted that subjecting employers that adopt antidiscrimination policies to punitive damages would undermine Title VII's objective of encouraging employers to prevent discrimination in the workplace. In 2004, the Supreme Court considered the defenses, if any, that may be available to an employer against an employee's claim that she was forced to resign because of "intolerable" sexual harassment at the hands of a supervisor. As noted above, an employer may generally assert an affirmative defense to supervisory harassment under the Court's 1998 rulings in Faragher and Ellerth . The defense is not available, however, if the harassment includes a "tangible employment action," such as discharge or demotion. In Pennsylvania State Police v. Suders , the plaintiff claimed the tangible adverse action was supervisory harassment so severe that it drove the employee to quit, a constructive discharge in effect. The Court, in an opinion by Justice Ginsburg, only Justice Thomas dissenting, accepted the theory of a constructive discharge as a tangible employment action, but it also set conditions under which the employer could assert an affirmative defense and avoid strict liability under Title VII of the 1964 Civil Rights Act. The issue was key to determining the scope of employers' vicarious liability in "supervisory" sexual harassment cases alleging a hostile work environment. In Faragher and Ellerth , the Court had sought to clarify the nature and scope of an employer's legal liability for the discriminatory and harassing conduct of its supervisors in Title VII cases. It held employers strictly liable for a sexually hostile work environment created by a supervisor, when the challenged discrimination or harassment results in a "tangible employment action." But in the absence of such a "company act" the employer may raise an affirmative defense based on its having in place a reasonable remedial process and on the employee's failure to take advantage of it. Thus, the Ellerth/Faragher defense has two components: "(a) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior, and (b) that the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise." The Supreme Court defined a "tangible employment action" categorically to mean any "significant change in employment status," that may—but not always—result in economic harm. Specifically, the term includes "hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits" However, a "constructive discharge," where the employee quits, claiming that conditions are so intolerable that he or she was effectively "fired," presented an unresolved issue. Could an employer, faced with a claim of constructive discharge, still assert the Ellerth/Faragher defense? Ultimately, the Court held that Title VII encompasses employer liability for constructive discharge claims attributable to a supervisor, but ruled that an "employer does not have recourse to the Ellerth/Faragher affirmative defense when a supervisor's official act precipitates the constructive discharge; absent such a 'tangible employment action,' however, the defense is available to the employer whose supervisors are charged with harassment." In recognizing hostile environment constructive discharge claims, Suders enhanced Title VII protection for employees who quit their jobs over intense sexual harassment by a supervisor. But the decision also makes it easier for an employer to defend against such claims by showing that it has reasonable procedures for reporting and correcting harassment of which the employee failed to avail herself. Only "if the plaintiff quits in reasonable response to an employer-sanctioned adverse action officially changing her employment status or situation, for example, a humiliating demotion, extreme cut in pay, or transfer to a position in which she would face unbearable working condition," is the employer made strictly liable for monetary damages or other Title VII relief. Moreover, even where there has been a tangible employment action, coupled with a constructive discharge or resignation, the employer may have defenses available. First, the employer may argue that the harassing conduct did not occur as alleged, or was not sufficiently severe, pervasive, or unwelcome to meet standards for a Title VII violation. Second, if the tangible employment action is shown to be unrelated to the alleged harassment, or is taken for legitimate non-discriminatory reasons—particularly, if by persons other than the alleged harasser—the employer might escape liability. Finally, the employer might be able to demonstrate that, whatever form the underlying supervisory harassment may take, it did not meet the standard for constructive discharge: "so intolerable that a reasonable person would have felt compelled to resign." But Suders also makes it more difficult to obtain summary judgment and avoid jury trials in sexual harassment cases involving constructive discharge claims. Under the decision, if there is any real dispute about whether the employee suffered a tangible employment action, the employer may not rely on the affirmative defense to obtain summary judgment. More recently, the Court has issued several decisions that have expanded the protections available under Title VII's anti-retaliation provision. In 2006, the Court issued its decision in Burlington Northern & Santa Fe Railway Co. v. White , a case that involved questions about the scope of the retaliation provision under Title VII. In a 9-0 decision with one justice concurring, the Court held that the statute's retaliation provision encompasses any employer action that "would have been materially adverse to a reasonable employee or job applicant." This standard, which is much broader than a standard that would have confined the retaliation provision to actions that affect only the terms and conditions of employment, generally makes it easier to sue employers if they retaliate against workers who complain about discrimination. Under the Court's interpretation, employees must establish only that the employer's actions might dissuade a worker from making a charge of discrimination. This means that an employee may successfully sue an employer for retaliation even if the employer's action does not actually result in an adverse employment action, such as being fired or losing wages. In 2009, the Court issued a decision in Crawford v. Metropolitan Government of Nashville and Davidson County , a case in which the plaintiff alleged that her participation in a sexual harassment investigation against her supervisor resulted in her termination. Although the plaintiff cooperated in the investigation and provided testimony regarding explicit comments and actions made by her boss, the fact that she had not filed the sexual harassment complaint or other charges with the Equal Employment Opportunity Commission (EEOC) led the lower court to rule that she was not covered under Title VII's retaliation provision. In reversing the decision, the Court held that Title VII's retaliation provision encompasses retaliation against "an employee who speaks out about discrimination not on her own initiative, but in answering questions during an employer's internal investigation." The Court emphasized that this result would prevent employers from undermining the purpose of Title VII by silencing employees who might fear being penalized if they reported discrimination during the course of an investigation. More recently, the Court ruled in Thompson v. North American Stainless , a sex discrimination case involving the question of whether Title VII creates a cause of action for third-party retaliation for individuals who have not personally engaged in protected activity. In Thompson , the plaintiff, who was fired three weeks after his then-fiancée filed a discrimination claim with the EEOC, alleged that his termination constituted unlawful retaliation in violation of Title VII, while the employer claimed that his discharge was for reasons of performance. The en banc Sixth Circuit, in a fractured opinion, held that the employee was not protected because he had not opposed any practice nor participated in a proceeding as required by the anti-retaliation provision of Title VII. In a unanimous decision, the Court reversed, holding that it had "little difficulty" in concluding that the "firing of Thompson violated Title VII." Citing Burlington 's holding that Title VII's anti-retaliation provision prohibits actions that might dissuade a reasonable worker from complaining of discrimination, the Court declared "it obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired." The Court declined to establish fixed rules regarding the types of third-party relationships that are protected, but did indicate "that firing a close family member will almost always meet the Burlington standard, and inflicting a milder reprisal on a mere acquaintance will almost never do so.... " In Wal-Mart v. Dukes , the Supreme Court considered whether it was appropriate to approve class action status for up to 1.5 million current and former female employees of Wal-Mart retail stores nationwide. Alleging a pattern of sex discrimination, the plaintiffs claim that women were paid less than male workers in comparable positions and that the company systematically passed over female employees when awarding promotions to management. A federal district court certified the class. Wal-Mart appealed the district court's class action certification, and a three-judge panel of the appellate court upheld the class action certification, as did a subsequent ruling by a divided panel of appellate judges sitting en banc. In a 5-4 decision, however, the Supreme Court reversed the class certification ruling. Under the Federal Rules of Civil Procedure, parties seeking class certification must show, among other things, that "(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class." According to the Court, the Wal-Mart plaintiffs failed to meet the commonality requirement because they could not establish that Wal-Mart operated under a common, general policy of discrimination. Rather: "The only corporate policy that the plaintiffs' evidence convincingly establishes is Wal-Mart's 'policy' of allowing discretion by local supervisors over employment matters. On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action." In its ruling, the Court emphasized that plaintiffs must provide "significant proof" that a "specific employment practice" led to the discrimination, and rejected as insufficient statistical and anecdotal evidence offered by the plaintiffs. Although the Court's decision makes it more difficult for employees to receive class certification and thus makes it less likely that large employers will face similar suits in the future, it is not the end of the litigation against Wal-Mart. The plaintiffs may still pursue their claims as individuals, or perhaps as part of a smaller class. Title IX of the Education Amendments of 1972 prohibits discrimination on the basis of sex in educational programs and activities that receive federal funding. Until recently, Title IX claims have been most common among women and girls challenging inequities in sports programs, but Title IX also provides a basis for challenging sexual harassment in classrooms and on campuses. Title IX provides, in relevant part, that "[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.... " The Court's recent decisions involving Title IX address various issues, including the availability of damages, the parties that are subject to liability, the scope of retaliation claims, and the availability of other statutory remedies. In an early Title IX case, the Supreme Court held that the statute provides student victims with an avenue of judicial relief. In Cannon v. University of Chicago , the Court ruled that an implied right of action exists under Title IX for student victims of sex discrimination who need not exhaust their administrative remedies before filing suit. However, the availability of monetary damages under Title IX remained uncertain until Franklin v. Gwinnett County Public Schools. In Franklin , a female high school student brought an action for damages under Title IX against her school district alleging that she had been subjected to sexual harassment and abuse by a teacher. Although the harassment became known and an investigation was conducted, teachers and administrators did not act and the petitioner was subsequently discouraged from pressing charges. The Court, which found that sexual harassment by a teacher constituted discrimination on the basis of sex, held that damages were available to the sexual harassment victim if she could prove that the school district had intentionally violated Title IX. After Franklin , it was clear that sexual harassment by a teacher constituted sex discrimination, but the extent to which school districts could be held liable for misconduct by its employees was less clear. The appropriate standard for measuring a school district's liability for sexual abuse of a student by a teacher remained unsettled until the Supreme Court ruling in Gebser v. Lago Vista Independent School District . In Gebser , the Court determined that a school district will not be held liable under Title IX for a teacher's sexual harassment of a student if the school district did not have actual notice of the harassment and did not exhibit deliberate indifference to the misconduct. The petitioner, a female high school student, was involved in a sexual relationship with one of her teachers. Unlike the situation in Franklin , the school district did not have actual notice of any sexual relationship between the petitioner and the teacher until they were discovered by a police officer. The principal of the petitioner's school did learn of inappropriate comments made by the teacher prior to the discovery, but he cautioned the teacher about such comments. After the sexual relationship became known, the school district quickly terminated the teacher. Despite the school district's actions, the petitioner argued that the school district should be found liable on the basis of vicarious liability or constructive notice. In requiring the school district to have actual notice of the harassment, the Court discussed the absence of an express cause of action under Title IX. Unlike Title VII, Title IX does not address damages or the particular situations in which damages are available. While Title IX does address a denial of funds for noncompliance with its provisions, it does not provide for a private right of action. Instead, a private right of action has been judicially implied. Because Title IX does not contain any reference to the recovery of damages in private actions, the Court reasoned that its recognition of theories of vicarious liability and constructive notice would allow an unlimited recovery where Congress has not spoken. Stated differently, the Court was reluctant to expand the availability of damages for such theories when Title IX failed to provide initially for a private cause of action. In this way, the Court sought to refine its holding in Franklin and limit those situations in which a remedy for damages would lie. The Court believed that Title IX's remedial scheme would be undermined if it did not require that a school district have actual notice of a teacher's sexual harassment. Under Title IX, financial assistance will not be denied until the "appropriate person or persons" have been advised of the discrimination and have failed to end the discrimination voluntarily. An "appropriate person" is an official of the entity receiving funds who has the authority to take corrective action. Because the school district in Gebser did not have actual notice of the sexual relationship, it could not have taken any steps to end the alleged discrimination. In addition, the Court stated that damages will not be available unless it is shown that a response exhibits a deliberate indifference to the discrimination; that is, there must be "an official decision by the recipient not to remedy the violation." In Gebser , the school district responded to the situation by first cautioning the teacher, and then terminating him once the relationship was discovered. Thus, the Court concluded that the school district did not act with deliberate indifference. Davis v. Monroe County Board of Education , decided in 1999, addressed the standard of liability that should be imposed on school districts to remedy student-on-student harassment. The plaintiff in Davis alleged that her fifth-grade daughter had been harassed by another student over a prolonged period—a fact reported to teachers on several occasions—but that school officials had failed to take corrective action. Justice O'Connor, writing for a sharply divided Court, determined that the plaintiff had stated a Title IX claim. Because the statute restricts the actions of federal grant recipients, however, and not the conduct of third parties, the Court again refused to impose vicarious liability on the school district. Instead, "a recipient of federal funds may be liable in damages under Title IX only for its own misconduct." School authorities' own "deliberate indifference" to student-on-student harassment could violate Title IX in certain cases. Thus, the Court held, where officials have "actual knowledge" of the harassment, where the "harasser is under the school's disciplinary authority," and where the harassment is so severe "that it can be said to deprive the victims of access to the educational opportunities or benefits provided by the school," the district may be held liable for damages under Title IX. While the development of sex discrimination law under Title IX owes much to Title VII, the Davis Court's recognition of student-on-student harassment highlights dramatic differences between the two statutes. Indeed, in qualifying the Davis standard, the Court suggested that student harassment may be far more difficult to prove than sexual harassment in employment. Beyond requiring "actual knowledge," Justice O'Connor cautioned that "schools are unlike adult workplaces" and disciplinary decisions of school administrators are not to be "second guess[ed]" by lower courts unless "clearly unreasonable" under the circumstances. Additionally, the majority emphasized that "[d]amages are not available for simple acts of teasing and name-calling among school children, even where these comments target differences in gender." In effect, Davis left to school administrators the task of drawing the line between innocent teasing and actionable sexual harassment—a difficult and legally perilous task at best. In a separate decision the same year, the Court found that a private organization is not subject to Title IX simply because it receives payments from entities that receive federal financial assistance. In National Collegiate Athletic Association v. Smith , the respondent, a female graduate student, alleged that the National Collegiate Athletic Association (NCAA) discriminated against her on the basis of sex by denying her permission to play intercollegiate volleyball at two federally assisted institutions. Under NCAA rules, a graduate student is permitted to participate in intercollegiate athletics only at the institution that awarded her undergraduate degree. The respondent, who was enrolled at two different universities for her graduate degree, argued that the NCAA granted more waivers from eligibility restrictions to male graduate students than to female graduate students. The Court concluded that the NCAA was not a recipient of Title IX funds because the NCAA did not receive federal assistance either directly or through an intermediary. Instead, it received dues payments from member institutions. The Court stated, "[a]t most, the Association's receipt of dues demonstrates that it indirectly benefits from the federal assistance afforded its members. This showing, without more, is insufficient to trigger Title IX coverage." Because the Court found that the NCAA was not amenable to suit, it did not address the respondent's substantive allegations of discrimination. In 2005, the Court handed down its decision in Jackson v. Birmingham Board of Education , a case that further broadened the scope of Title IX to include protection against retaliation. In this case, which involved a girls' basketball coach who claimed that he was removed from his coaching position in retaliation for his complaints about unequal treatment of the girl's team, the Court held that Title IX not only encompasses retaliation claims, but also is available to individuals who complain about sex discrimination, even if such individuals themselves are not the direct victims of sex discrimination. Reasoning that "Title IX's enforcement scheme would unravel" "if retaliation were not prohibited," the Court concluded that "when a funding recipient retaliates against a person because he complains of sex discrimination, this constitutes intentional discrimination on the basis of sex in violation of Title IX." More recently, the Court issued a decision in Fitzgerald v. Barnstable School Committee , a case in which the Court considered whether Title IX provides the exclusive statutory remedy for unlawful sex discrimination in the education context. The lower court, concluding that Title IX was the exclusive statutory remedy, had rejected a claim that the original plaintiffs filed under 42 U.S.C. §1983 for violations of Title IX and the Equal Protection Clause of the Constitution. In a unanimous decision, the Court reversed, holding that "Title IX was not meant to be an exclusive mechanism for addressing gender discri mination in schools, or a substitute for § 1983 suits as a means of enforcing constitutional rights." As a result, plaintiffs may file claims related to sex discrimination in education under both statutes in the future.
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In its sex discrimination decisions, the United States Supreme Court not only has defined the applicability of the equal protection guarantees of the Constitution and the nondiscriminatory policies of federal statutes, but also has rejected the use of gender stereotypes and has continued to recognize the discriminatory effect of gender hostility in the workplace and in schools. This report focuses on sex discrimination challenges based on: the equal protection guarantees of the Fourteenth and Fifth Amendments; the prohibition against employment discrimination contained in Title VII of the Civil Rights Act of 1964; and the prohibition against sex discrimination in education contained in Title IX of the Education Amendments of 1972. Although this report focuses on recent legal developments in each of these areas, this report also provides historical context by discussing selected landmark sex discrimination cases. Despite the fact that the Court's analysis of sex discrimination challenges under the Constitution differs from its analysis of sex discrimination under the two federal statutes discussed in this report, it is apparent that the Court is willing to refine its standards of review under both schemes to accommodate the novel claims presented by these cases. The Court's decisions in cases involving Title VII and Title IX are particularly noteworthy because they illustrate the Court's recognition of sexual harassment in both the workplace and the classroom. During the 2015 term, the Court issued a ruling in a high-profile case involving a claim of pregnancy discrimination in employment. In Young v. United Parcel Service, an employee challenged her employer's refusal to grant her a light-duty work assignment while she was pregnant, claiming that the employer's actions violated the Pregnancy Discrimination Act (PDA), a federal law that prohibits pregnancy discrimination in employment. In a highly anticipated ruling, the Justices fashioned a new test for determining when an employer's refusal to provide accommodations for a pregnant worker constitutes a violation of the PDA, and the Court sent the case back to the lower court for reconsideration in light of these new standards.
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Throughout its history, Congress has engaged in oversight of the executive branch—the review, monitoring, and supervision of the implementation of public policy. The first several Congresses inaugurated such important oversight techniques as special investigations, reporting requirements, resolutions of inquiry, and use of the appropriations process to review executive activity. Contemporary developments, moreover, have increased the legislature's capacity and capabilities to check on and check the executive. Public laws and congressional rules have measurably enhanced Congress's implied power under the Constitution to conduct oversight. Congressional oversight of the executive is designed to fulfill a number of important purposes and goals: to ensure executive compliance with legislative intent; to improve the efficiency, effectiveness, and economy of governmental operations; to evaluate program performance; to prevent executive encroachment on legislative powers and prerogatives; to investigate alleged instances of poor administration, arbitrary and capricious behavior, abuse, waste, fraud, and dishonesty; to assess agency or officials' ability to manage and carry out program objectives; to assess the need for new federal legislation; to review and determine federal financial priorities; to protect individual rights and liberties; and to inform the public as to the manner in which its government is performing its public duties, among others. Legislative oversight is most commonly conducted through congressional budget, authorization, appropriations, confirmation, and investigative processes, and, in rare instances, through impeachment. But the adversarial, often confrontational, and sometimes high profile nature of congressional investigations sets it apart from the more routine, accommodative facets of the oversight process experienced in authorization, appropriations, or confirmation exercises. While all aspects of legislative oversight share the common goals of informing Congress so as to best accomplish its tasks of developing legislation, monitoring the implementation of public policy, and of disclosing to the public how its government is performing, the inquisitorial process also sustains and vindicates Congress's role in our constitutional scheme of separated powers and checks and balances. The rich history of congressional investigations from the failed St. Clair expedition in 1792 through Teapot Dome, Watergate, Iran-Contra, Whitewater, and the current ongoing inquiries into Operation Fast and Furious, has established, in law and practice, the nature and contours of congressional prerogatives necessary to maintain the integrity of the legislative role in that constitutional scheme. Congress's power of inquiry extends to all executive departments, agencies, and establishments in equal measure. Over time, however, congressional probes of the Department of Justice (Department or DOJ) have proved to be amongst the most contentious, stemming from the presumptive sensitivity of its principal law enforcement mission. Often, inquiries have been met with claims of improper political interference with discretionary deliberative prosecutorial processes, accompanied by refusals to supply internal documents or testimony sought by jurisdictional committees, based on assertions of constitutional and common law privileges or general statutory exemptions from disclosure. But the notion of, and need for, protection of the internal deliberative processes of agency policymaking, heightened sensitivity to premature disclosures of decision making involving law enforcement investigations, civil and criminal prosecutions, or security matters, is not unique to the DOJ, though the degree of day-to-day involvement there with such matters may be greater. An in-depth examination of the nature, scope, and resolution of such past investigative confrontations with the DOJ appears useful for informing future committees determining whether to undertake similar probes of DOJ, or other executive agencies, as to the scope and limits of their investigative prerogatives and the practical problems of such undertakings. A review of the historical experience pertinent to congressional access to information regarding the law enforcement activities of the Department of Justice indicates that the vast majority of requests for materials are resolved through political negotiation and accommodation, without the need for judicial resolution. Absent an executive privilege claim or a statute barring disclosure there appears to be no court precedent imposing a threshold burden on committees to demonstrate a "substantial reason to believe wrongdoing occurred" in order to obtain information. Instead, an inquiring committee need only show that the information sought is within the broad subject matter of its authorized jurisdiction, is in aid of a legitimate legislative function, and is pertinent to the area of concern. In the last 85 years, Congress has consistently sought and obtained access to information concerning prosecutorial misconduct by Department of Justice officials in closed cases; and access to pre-decisional deliberative prosecutorial memoranda—while often resisted by the Department—is usually released upon committee insistence, as well. In contrast, the Department rarely releases—and committees rarely subpoena—material relevant to open criminal investigations. Typically, disputes are resolved without recourse to an executive privilege claim. Instead, negotiations produce various compromises: narrowing informational requests, delaying the release of information that could have prejudicial consequences on prosecutions, or redacting sensitive materials. However, when Presidents do claim executive privilege, courts have been reluctant to resolve the dispute. Indeed, litigation over the scope of executive privilege in direct relation to congressional oversight and investigations has been quite limited. In total, there have been four cases dealing with executive privilege in the context of information access disputes between Congress and the executive, and two of those resulted in decisions on the merits. The Supreme Court has never addressed executive privilege in the face of a congressional demand for information. Committees, however, normally have been restrained by prudential considerations that involve a pragmatic assessment of the costs and benefits of demanding disclosure of information. Committees often weigh the legislative need, public policy, and their statutory duty to engage in continuous oversight of the application, administration, and execution of laws that fall within their jurisdiction against the potential burdens and harms to an agency if deliberative process matters are publically disclosed. In particular, sensitive law enforcement concerns and duties of the Justice Department have been seen to merit that substantial weight be given the agency's deliberative processes in the absence of a committee's reasonable belief that government misconduct has occurred. A careful review of the historical record indicates a generally faithful congressional adherence to these prudential considerations. This report will briefly review the legal basis for investigative oversight, followed by several prominent examples of congressional oversight that reflect the significant breadth and reach of the legislative investigative prerogative vis-à-vis the Department. Next we will review and assess the Department's contentions, based on policy, common law, and constitutional privilege, that it has asserted to attempt to limit congressional access to agency information. An appendix to this report provides summaries of 20 inquiries in which committees have successfully obtained documents and testimony respecting a wide variety of Department materials and memoranda. Generally, Congress's authority and power to obtain information, including, but not limited to, classified and/or confidential information, is extremely broad. While there is no express provision of the Constitution or specific statute authorizing the conduct of congressional oversight or investigations, the Supreme Court has firmly established that such power is essential to the legislative function as to be implied from the general vesting of legislative powers in Congress. In Eastland v. United States Serviceman's Fund , for instance, the Court stated that the "scope of its power of inquiry ... is as penetrating and far-reaching as the potential power to enact and appropriate under the Constitution." Also, in Watkins v. United States , the Court emphasized that the "power of the Congress to conduct investigations is inherent in the legislative process. That power is broad. It encompasses inquiries concerning the administration of existing laws as well as proposed or possibly needed statutes." The Court further stressed that Congress's power to investigate is at its peak when focusing on alleged waste, fraud, abuse, or maladministration within a government department. Specifically, the Court explained that the investigative power "comprehends probes into departments of the federal government to expose corruption, inefficiency, or waste." The Court went on to note that the first Congresses held "inquiries dealing with suspected corruption or mismanagement of government officials." Given these factors, the Court recognized "the power of the Congress to inquire into and publicize corruption, maladministration, or inefficiencies in the agencies of Government." While the congressional power of inquiry is broad, it is not unlimited. The Supreme Court has admonished that the power to investigate may be exercised only "in aid of the legislative function" and cannot be used to expose for the sake of exposure alone. The Watkins Court underlined these limitations, stating that There is no general authority to expose the private affairs of individuals without justification in terms of the functions of the Congress ... nor is the Congress a law enforcement or trial agency. These are functions of the executive and judicial departments of government. No inquiry is an end in itself; it must be related to, and in furtherance of, a legitimate task of the Congress. A committee's inquiry must have a legislative purpose or be conducted pursuant to some other constitutional power of Congress, such as the authority of each House to discipline its own members, judge the returns of the their elections, and to conduct impeachment proceedings. Although the 1927 Supreme Court decision in Kilbourn v. Thompson held that the investigation in that case was an improper probe into the private affairs of individuals, the courts today generally will presume that there is a legislative purpose for an investigation. A House or Senate rule or resolution authorizing the investigation does not have to specifically state the committee's legislative purpose. In In re Chapman , the Court upheld the validity of a resolution authorizing an inquiry into charges of corruption against certain Senators despite the fact that it was silent as to what might be done when the investigation was completed. The Court stated the following: The questions were undoubtedly pertinent to the subject matter of the inquiry. The resolutions directed the committee to inquire "whether any Senator has been, or is, speculating in what are known as sugar stocks during the consideration of the tariff bill now before the Senate." What the Senate might or might not do upon the facts when ascertained, we cannot say nor are we called upon to inquire whether such ventures might be defensible, as contended in argument, but it is plain that negative answers would have cleared that body of what the Senate regarded as offensive imputations, while affirmative answers might have led to further action on the part of the Senate within its constitutional powers. Nor will it do to hold that the Senate had no jurisdiction to pursue the particular inquiry because the preamble and resolutions did not specify that the proceedings were taken for the purpose of censure or expulsion, if certain facts were disclosed by the investigation. The matter was within the range of the constitutional powers of the Senate. The resolutions adequately indicated that the transactions referred to were deemed by the Senate reprehensible and deserving of condemnation and punishment. The right to expel extends to all cases where the offense is such as in the judgment of the Senate is inconsistent with the trust and duty of a Member. We cannot assume on this record that the action of the Senate was without a legitimate object, and so encroach upon the province of that body. Indeed, we think it affirmatively appears that the Senate was acting within its right, and it was certainly not necessary that the resolutions should declare in advance what the Senate meditated doing when the investigation was concluded. In McGrain v. Daugherty , the original resolution that authorized the Senate investigation into the Teapot Dome Affair made no mention of a legislative purpose. A subsequent resolution for the attachment of a contumacious witness declared that his testimony was sought for the purpose of obtaining "information necessary as a basis for such legislative and other action as the Senate may deem necessary and proper." The Court found that the investigation of the DOJ was ordered for a legitimate object. It wrote, The only legitimate object the Senate could have in ordering the investigation was to aid it in legislating, and we think the subject matter was such that the presumption should be indulged that this was the real object. An express avowal of the object would have been better; but in view of the particular subject-matter was not indispensable. ... The second resolution—the one directing the witness be attached—declares that this testimony is sought with the purpose of obtaining "information necessary as a basis for such legislative and other action as the Senate may deem necessary and proper." This avowal of contemplated legislation is in accord with what we think is the right interpretation of the earlier resolution directing the investigation. The suggested possibility of "other action" if deemed "necessary or proper" is of course open to criticism in that there is no other action in the matter which would be within the power of the Senate. But we do not assent to the view that this indefinite and untenable suggestion invalidates the entire proceeding. The right view in our opinion is that it takes nothing from the lawful object avowed in the same resolution and is rightly inferable from the earlier one. It is not as if an inadmissible or unlawful object were affirmatively and definitely avowed. The court also emphasized that the DOJ, like all other executive departments and agencies, is a creature of Congress and subject to its legislative and oversight authority. Moreover, when the investigation's asserted purpose is supported by reference to specific problems which in the past have been, or in the future may be, the subject of appropriate legislation, it has been held that a court cannot say that a committee of Congress exceeds its power when it seeks information in such areas. In the past, the types of legislative activity which have justified the exercise of the power to investigate have included the primary functions of legislating and appropriating, the function of deciding whether or not legislation is appropriate, oversight of the administration of the laws by the executive branch, and the essential congressional function of informing itself in matters of national concern. In addition, Congress's power to investigate such diverse matters as foreign and domestic subversive activities, labor union corruption, and organizations that violate the civil rights of others have all been upheld by the Supreme Court. Despite the Court's broad interpretation of legislative purpose, Congress's authority is not unlimited. Courts have held that a committee lacks a legislative purpose if it appears to be conducting a legislative trial rather than an investigation to assist in performing its legislative function. Furthermore, although "there is no congressional power to expose for the sake of exposure," "so long as Congress acts in pursuance of its constitutional power, the Judiciary lacks authority to intervene on the basis of the motives which spurred the exercise of that power." The executive branch has advanced several arguments for declining to provide information to Congress about open and closed civil and criminal proceedings, most famously articulated by then Attorney General Robert Jackson in 1941. These rationales have included a desire to avoid prejudicial pre-trial publicity, protecting the rights of innocent third parties, protecting the identity of confidential informants, preventing disclosure of the government's strategy in anticipated or pending judicial proceedings, avoiding a potential chilling effect on the exercise of prosecutorial discretion by DOJ attorneys, and precluding interference with the President's constitutional duty to faithfully execute the laws. In the 1941 opinion, Attorney General Jackson argued that "congressional or public access to [internal DOJ documents] would not be in the public interest" because it would "seriously prejudice law enforcement." Jackson's views were reiterated by Attorney General William French Smith in 1982 during the Superfund dispute, there applying the policy to specific types of documents: [the documents withheld] are sensitive memoranda or notes by EPA attorneys and investigators reflecting enforcement strategy, legal analyses, lists of potential witnesses, settlement considerations and similar materials the disclosure of which might adversely affect a pending enforcement action, overall enforcement policy, or the rights of individuals. I continue to believe, as have my predecessors, that unrestricted dissemination of law enforcement files would prejudice the cause of effective law enforcement and, because the reasons for the policy of confidentiality are as sound and fundamental to the administration of justice today as they were forty years ago, I see no reason to depart from the consistent position of previous presidents and attorney generals. Acceding to congressional investigation demands, the Attorney General asserted, would make Congress "in a sense, a partner in the investigation... [raising] a substantial danger that congressional pressures will influence the course of the investigation." This policy is said to be "premised in part on the fact that the Constitution vests in the President and his subordinates the responsibility to 'Take Care that the Laws be faithfully executed.'" In the 2001-2002 House Government Reform Committee investigation of the FBI misuse of informants, the Department maintained its historic position of withholding internal deliberative prosecutorial documents, before finally disclosing the documents following increased congressional pressure. In a February 1, 2002, letter to Chairman Burton, the DOJ Assistant Attorney General for Legislative Affairs explained, Our particular concern in the current controversy pertains to the narrow and especially sensitive categories of advice memoranda to the Attorney General and the deliberative documents making recommendations regarding whether or not to bring criminal charges against individuals. We believe that the public interest in avoiding the polarization of the criminal justice process required greater protection of those documents which, in turn, influences the accommodation process. This is not an "inflexible position," but rather a statement of a principled interest in ensuring the integrity of prosecutorial decision-making. Finally, during the House Oversight investigation of Operation Fast and Furious, the DOJ resisted committee requests for access to internal deliberative communications made in response to the committee's investigation. The DOJ argued that their disclosure would inhibit the candor of such Executive Branch deliberations in the future and significantly impair the Executive Branch's ability to respond independently and effectively to congressional oversight. This would raise substantial separation of powers concerns and potentially create an imbalance in the relationship between these two co-equal branches of the government. As has been recounted previously, the Supreme Court has repeatedly reaffirmed the breadth of Congress' right to investigate the government's conduct of criminal and civil litigation. The courts have also held that agencies may not deny Congress access to agency documents, even in situations where the inquiry may result in the exposure of criminal corruption or maladministration of agency officials. The Supreme Court has noted, "[B]ut surely a congressional committee which is engaged in a legitimate legislative investigation need not grind to a halt whenever responses to its inquiries might potentially be harmful to a witness in some distinct proceeding ... or when crime or wrongdoing is exposed." The Court further explained: The suggestion made in dissent that the questions which petitioner refused to answer were 'outside the power of a committee to ask' under the Due Process Clause because they touched on matters then pending in judicial proceedings cannot be accepted for several reasons: First, the reasoning underlying this proposition is that these inquiries constituted a legislative encroachment on the judicial function. But such reasoning can hardly be limited to inquiries that may be germane to existing judicial proceedings: it would surely apply as well to inquiries calling for answers that may be used to the prejudice of witnesses in any future judicial proceeding. If such were the reach of 'due process' it would turn a witness' privilege against self-incrimination into a self-operating restraint on congressional inquiry, and would in effect pro tanto obliterate the need for that constitutional protection. Additionally, the pendency of litigation does not prohibit Congress from investigating facts that have a bearing on that litigation, where the information sought is needed to determine what, if any, legislation should be enacted to prevent further ills. Although several lower court decisions have recognized that congressional hearings may generate prejudicial pre-trial publicity, they have not expressly suggested that there are any constitutional or legal limitations on Congress's right to conduct an investigation while judicial proceedings are pending. Instead, the cases have suggested approaches, such as granting a continuance or a change of venue, to deal with the publicity problem. For example, the court in one of the leading cases, Delaney v. United States, stated that "no doubt that the committee acted lawfully, within the constitutional powers of Congress duly delegated to it" but went on to describe the possible consequences of concurrent executive and congressional investigations: We think that the United States is put to a choice in this matter: If the United States, through its legislative department, acting conscientiously pursuant to its conception of the public interest, chooses to hold a public hearing inevitably resulting in such damaging publicity prejudicial to a person awaiting trial on a pending indictment, then the United States must accept the consequences that the judicial department, charged with the duty of assuring the defendant a fair trial before an impartial jury, may find it necessary to postpone the trial until by lapse of time the danger of the prejudice may reasonably be thought to have been substantially removed. The Delaney court distinguished the case of a congressional hearing generating publicity relating to an individual not under indictment at the time: Such a situation may present important differences from the instant case. In such a situation the investigative function of Congress has its greatest utility: Congress is informing itself so that it may take appropriate legislative action; it is informing the Executive so that existing laws may be enforced; and it is informing the public so that democratic processes may be brought to bear to correct any disclosed executive laxity. Also, if as a result of such legislative hearing an indictment is eventually procured against the public official, then in the normal case there would be a much greater lapse of time between the publicity accompanying the public hearing and the trial of the subsequently indicted official than would be the case if the legislative hearing were held while the accused is awaiting trial on a pending indictment. The absence of an indictment and the length of time between a congressional hearing and criminal trial have been factors considered by courts that reject claims that congressionally generated publicity prejudiced defendants. Finally, in the context of adjudicatory administrative proceedings, courts on occasion have held that pressures caused by Members of Congress questioning agency decision makers may be sufficient to undermine the impartiality of the proceeding. But the courts have also made clear that mere inquiry and oversight of agency actions, including agency proceedings that are quasi-adjudicatory in nature, will not be held to rise to the level of political pressure, designed to influence particular proceedings, that would require judicial condemnation. Thus, the courts have recognized the potentially prejudicial effect congressional hearings can have on pending cases. While not directly questioning its prerogatives with respect to oversight and investigation, the cases pose a choice for the Congress. It faces weighing the harm caused by congressionally generated publicity to the prosecutorial effort of the executive against the fact that access to information under secure conditions can fulfill the congressional power of investigation. The observation of the Iran-Contra Independent Counsel is pertinent here: "The legislative branch has the power to decide whether it is more important perhaps to destroy a prosecution than to hold back testimony they need. They make that decision. It is not a judicial decision, or a legal decision, but a political decision of the highest importance." In the past the executive frequently has made a broad claim that prosecution is an inherently executive function and that congressional access to information related to the exercise of that function is thereby limited. Citing the "need to protect the government's ability to prosecute fully and fairly," the executive views questions about the exercise of prosecutorial discretion and demands for access to open law enforcement files as beyond the scope of proper congressional inquiry. The executive views these inquiries as interfering with the discretion traditionally enjoyed by the prosecutor with respect to pursuing criminal cases. Similarly, the Justice Department has objected to releasing internal deliberative documents, since it believes their disclosure would substantially chill future deliberations. These concerns are usually resolved through the traditional negotiation and accommodation process. However, in rare instances the executive branch may respond to a congressional demand to produce information with an assertion of executive privilege by the President. For example, during the congressional investigation of Operation Fast and Furious, the DOJ released numerous documents related to the program, but President Obama specifically claimed executive privilege over DOJ internal documents that were responsive to the committee's subpoena. In the few controversies that have reached a judicial forum, federal courts have been highly reluctant to rule on the merits. For example, in United States v. AT&T , the Justice Department sought to enjoin a congressional subpoena for letters the FBI sent to AT&T. The D.C. District Court held that there is a constitutional duty for the executive and Congress to attempt to accommodate each other's needs, and refused to resolve the dispute because both branches had not yet done so. The court displayed the same reluctance in United States v. House of Representatives , where it dismissed a Justice Department suit seeking a declaratory judgment that the Administrator of the Environmental Protection Agency (EPA), Anne Gorsuch Burford, "acted lawfully in refusing to release certain documents to a congressional subcommittee" at the direction of the President. The court dismissed the case, without reaching the executive privilege claim, on the ground that judicial intervention in a dispute "concerning the respective powers of the Legislative and Executive Branches ... should be delayed until all possibilities for settlement have been exhausted. ... Compromise and cooperation, rather than confrontation, should be the aim of the parties." Finally, the D.C. Circuit Court sketched the outer limits of the executive's power to withhold information in Committee on the Judiciary v. Miers , unequivocally rejecting the executive's claim that present and past senior advisers to the President—in this case former White House Counsel Harriet Miers and Chief of Staff Joshua Bolten—were absolutely immune from compelled congressional process. However, the case did not provide any discussion of the merits of the specific claims of executive privilege, but rather held that executive privilege could be asserted "in response to any specific questions posed by the Committee" while providing testimony. If a court does reach the merits of an executive privilege claim asserted against a congressional inquiry, its analysis may be influenced by In re Sealed Case (Espy ) and Judicial Watch v. Department of Justice , two D.C. Circuit cases that addressed issues left unresolved by the Watergate executive privilege cases. The Espy case distinguished between the "presidential communications privilege" and the "deliberative process privilege." Both, the court observed, are executive privileges designed to protect the confidentiality of executive branch decision making. The deliberative process privilege, which applies to executive branch officials generally, is a common law privilege that requires a lower threshold of need to be overcome, and "disappears altogether when there is any reason to believe government misconduct has occurred." On the other hand, the court explained, the presidential communications privilege is rooted in "constitutional separation of powers principles and the President's unique constitutional role" and applies only to "direct decisionmaking by the President." The privilege may be overcome only by a substantial showing that "the subpoenaed materials likely contain[] important evidence" and that "the evidence is not available with due diligence elsewhere." The court held that the presidential communications privilege covers communications authored or solicited and received by close presidential advisers in the course of preparing advice for the President even if those communications are not made directly to the President. The court, however, carefully restricted its reach by explicitly confining the privilege to staff within the executive office of the President that has "operational proximity" to the President. The D.C. Circuit affirmed the limits of the privilege in Judicial Watch , a case involving requests for documents about pardon applications reviewed by the Justice Department's Office of the Pardon Attorney and the Deputy Attorney General for consideration by President Clinton. The district court held that because the materials sought had been produced for the sole purpose of advising the President on a "quintessential and non-delegable Presidential power"—the exercise of the President's constitutional pardon authority—the presidential communications privilege applied. The appeals court reversed, explaining that the privilege may be invoked only when documents or communications are authored or solicited and received by the President himself or by presidential advisers in close proximity to the President who have significant responsibility for advising him on matters requiring presidential decision making. While the exercise of the President's pardon power was certainly a non-delegable, core presidential function, the officials involved, the Deputy Attorney General and the Pardon Attorney, were deemed to be too removed from the President and his senior White House advisers to be protected by the privilege. These two D.C. Circuit cases appear to highlight two key considerations that should be examined when determining if the presidential communications privilege can be properly asserted. First, the protected communication must be "authored or solicited and received by" the President or a close White House advisor with "operational proximity" to the President. Second, a communication may have to relate to decision making in the context of a "quintessential and non-delegable presidential power." Espy and Judicial Watch do not establish this as a requirement for applying the presidential communications privilege. However, both cases deal exclusively with quintessential and non-delegable presidential powers—the appointment and removal and pardon power. Therefore, one could argue that the Presidential communications privilege is limited to exclude materials concerning presidential decision making pursuant to statutory delegations of authority to the President or other executive branch officials. If an executive privilege claim was challenged in litigation that proceeded to the merits of the claim, the DOJ may argue that the materials withheld are properly covered under the presidential communications privilege. If the materials satisfied the "operational proximity" test laid out above, the DOJ would then have to confront the type of decision making being exercised in the materials. In the case of a claim based on prosecutorial discretion, the Supreme Court's ruling in Morrison v. Olson — sustaining the validity of the appointment and removal conditions for independent counsels under the Ethics in Government Act—casts doubt on whether prosecution is a quintessential and non-delegable presidential power. The Court held that the exercise of prosecutorial discretion is in no way "central" to the functioning of the executive branch and rejected a claim that insulating the independent counsel from at-will presidential removal interfered with the President's duty to "take care" that the laws be faithfully executed. If a court determined that the presidential communications privilege could only apply to decision making related to quintessential and non-delegable presidential powers, the reasoning in Morrison may prevent the DOJ from successfully shielding Congress from accessing materials regarding prosecutorial discretion by asserting this privilege. Even if certain documents fall within the presidential communications privilege, this does not necessarily mean that disclosure of the documents can never be compelled by Congress. The Supreme Court in U.S. v. Nixon made clear, in the context of a subpoena for information from a special prosecutor for use in a criminal proceeding, that executive privilege is not absolute, but rather remains a qualified privilege. While the Supreme Court has not addressed executive privilege in the face of a congressional demand for information, the D.C. Circuit has stated that the presidential communications privilege may be overcome where the "subpoenaed evidence is demonstrably critical to the responsible fulfillment of the Committee's functions." If a court finds that the withheld material does not qualify under the presidential communication privilege, then the executive may fall back on the less comprehensive deliberative process privilege. A "deliberative process" claim may be viewed as a common law privilege available to executive agencies that may be overcome by a showing of need by an investigatory body and, as Espy noted, "disappears" when that body reasonably believes that government misconduct has occurred. No court has delineated the precise weight afforded to common law privileges in the face of a congressional investigation. In practice, the committee exercises its own discretion in deciding whether to accept the assertion of common law privileges. For example, when faced with a claim of attorney-client privilege, a common law privilege, a committee has "weigh[ed] the legislative need for disclosure against any possible resulting injury." The legal basis for Congress's practice in this area is based upon its implicit constitutional prerogative to investigate, which has been long recognized by the Supreme Court as broad, and at its peak when the subject is waste, fraud, abuse, or maladministration within a government department. Common law privileges are not constitutionally based, but rather judge-made exceptions to the normal principle of full disclosure in the adversary process. Thus, a demonstration of need by a jurisdictional committee in most circumstances would appear to be sufficient to overcome common law privileges. An opinion issued by the Legal Ethics Committee of the District of Columbia Bar in 1999 clearly acknowledges the long-standing congressional practice of exercising discretion over acceptance of common law privileges like attorney-client privilege. The D.C. Bar opinion urges attorneys to press every appropriate objection to a congressional subpoena that demands disclosure of information subject to the attorney-client privilege until no further avenues of appeal are available. However, it also allows the attorney to disclose the materials subject to attorney-client privilege at the earliest point that he is put in legal jeopardy, such as being threatened with a contempt of Congress action. This Appendix consists of brief summaries of 21 significant congressional investigations of the Department of Justice that involved either open or closed investigations. In each case, the Department agreed to supply documents pertaining to those investigations, including prosecutorial decision-making memoranda and correspondence, or to make high ranking officials and subordinate employees, such as line attorneys and investigative personnel, available for staff interviews and testimony before committees. These investigations demonstrate that DOJ has consistently been subjected to congressional oversight, which has examined misconduct in the Justice Department and elsewhere. A number of these investigations spawned seminal Supreme Court rulings that today provide the foundation for the generally broad congressional power of inquiry discussed above. In most cases, the DOJ claimed that committee demands for documents and testimony were precluded either by a constitutional or common law privilege or executive branch policy. In many cases, investigating congressional committees were provided with documents regarding closed cases that were considered to be "sensitive" materials. Several of these inquiries appear to have led to important remedial legislation and the resignations and convictions of several Attorneys General. While this appendix examines many notable instances of congressional investigations of the DOJ, it is not an exhaustive list of such inquiries. Palmer Raids In 1920 and 1921, investigations were held in the Senate and House into the so-called "Palmer raids" in which, under the direction of Attorney General A. Mitchell Palmer, thousands of suspected Communists and others allegedly advocating the overthrow of the government were arrested and deported. Attorney General Palmer, accompanied by his Special Assistant, J. Edgar Hoover, during three days of testimony at Senate hearings discussed the details of numerous deportation cases, including cases that were on appeal. In support of his testimony, Palmer provided the Subcommittee with various Department memoranda and correspondence, including Bureau of Investigation reports concerning the deportation cases. Among the materials provided were the Department's confidential instructions to the Bureau outlining the procedures to be followed in the surveillance and arrest of the suspected Communists, and a lengthy "memorandum of comments and analysis" prepared by one of Palmer's special assistants, which responded to a district court opinion, pending appeal, that was critical of the Department's actions in these deportation cases. Teapot Dome Several years later, the Senate conducted an investigation of the Teapot Dome scandal. While the Senate Committee on Public Lands and Surveys focused on the actions of the Department of the Interior in leasing naval oil reserves, a Senate Select Committee was constituted to investigate "charges of misfeasance and nonfeasance in the Department of Justice," in failing to prosecute wrongdoers in the Department of the Interior, as well as other cases. The Select Committee heard from scores of present and former attorneys and agents of the Department and its Bureau of Investigation, who offered detailed testimony about specific instances of the Department's failure to prosecute alleged meritorious cases. Not all of the cases upon which testimony was offered were closed, as one of the Committee's goals in its questioning was to identify cases where the statute of limitations had not run out and prosecution was still possible. The committee also obtained access to DOJ documentation, including prosecutorial memoranda, on a wide range of matters. However, given the charges of widespread corruption in the Department and the imminent resignation of Attorney General Daugherty, it would appear that some of the documents furnished to the Committee early in the hearings may have been volunteered by the witnesses and not officially provided by the Department. Although Attorney General Daugherty had promised cooperation with the committee, and had agreed to provide access to at least the files of closed cases, such cooperation apparently had not been forthcoming. In two instances immediately following Daugherty's resignation, the Committee was refused access to confidential Bureau of Investigation investigative reports pending the appointment of a new Attorney General who could advise the President about such production. Witnesses from the Department were still permitted to testify about the investigations that were the subject of the reports and were even allowed to read from the reports at the hearings. With the appointment of the new Attorney General, Harlan F. Stone, the Committee was granted broad access to Department files. Committee Chairman Smith Brookhard remarked that "[Stone] is furnishing us with all the files we want, whereas the former Attorney General, Mr. Daugherty, refused nearly all that we asked." For example, with the authorization of the new Attorney General, an accountant with the Department who had led an investigation of fraudulent sales of property by the Alien Property Custodian's office appeared and produced his confidential reports written to the Bureau of Investigation. The reports described the factual findings from his investigation and his recommendations for further action, and included the names of companies and individuals suspected of making false claims. The Department had not acted on those recommendations, though the cases had not been closed. A similar investigative report, concerning an inquiry into the disappearance of large quantities of liquor under the control of the Department during Harding Administration, was also produced. As part of its investigation, the Select Committee issued a subpoena for the testimony of Mally S. Daugherty, the brother of the Attorney General. After Mally Daugherty failed to respond to the subpoena, the Senate sent its Deputy Sergeant at Arms to take him into custody and bring him before the Senate. Following his detention by the Deputy Sergeant at Arms, Daugherty petitioned in federal court for a writ of habeas corpus arguing that the Senate's investigation had exceeded its constitutional powers. The case ultimately reached the Supreme Court, where, in a landmark decision, the Court upheld the Senate's authority to investigate these charges concerning the Department: [T]he subject to be investigated was the administration of the Department of Justice—whether its functions were being properly discharged or were being neglected or misdirected, and particularly whether the Attorney General and his assistants were performing or neglecting their duties in respect of the institution and prosecution of proceedings to punish crimes and enforce appropriate remedies against the wrongdoers—specific instances of alleged neglect being recited. Plainly the subject was one on which legislation could be had and would be materially aided by the information which the investigation was calculated to elicit. In another Teapot Dome case that reached the Supreme Court, Sinclair v. United States , a different witness at the congressional hearings refused to answer questions, and was prosecuted for contempt of Congress. The witness had noted that a lawsuit had been commenced between the government and the Mammoth Oil Company, and declared, "I shall reserve any evidence I may be able to give for those courts ... and shall respectfully decline to answer any questions propounded by your committee." The Supreme Court upheld the witness' conviction for contempt of Congress. The Court considered and rejected in unequivocal terms the witness's contention that the pendency of lawsuits provided an excuse for withholding information. Neither the laws directing that such lawsuits be instituted, nor the lawsuits themselves, "operated to divest the Senate, or the committee, of power further to investigate the actual administration of the land laws." The Court further explained: It may be conceded that Congress is without authority to compel disclosure for the purpose of aiding the prosecution of pending suits; but the authority of that body, directly or through its committees to require pertinent disclosures in aid of its own constitutional power is not abridged because the information sought to be elicited may also be of use in such suits. Investigations of the DOJ During the 1950's In 1952, the Special Subcommittee to Investigate the Department of Justice of the House Committee on the Judiciary was constituted. The subcommittee conducted a lengthy investigation from 1952 to 1953, developing thousands of pages of testimony on a range of allegations of abuses and inefficiencies in the Department. Among the subjects of inquiry considered during these hearings were the following. 1. Grand Jury Curbing Extensive testimony was heard about a charge that the Department had attempted improperly to curb a St. Louis grand jury inquiry into the failure to enforce federal tax fraud laws. After taking testimony in executive session from one witness, the subcommittee suspended its hearings on this subject pending the discharge of the grand jury. The subcommittee resumed its hearings several months later, at which time testimony was taken from the former Attorney General, a former Assistant Attorney General, the Chief of the appellate section of the Tax Division, and an Assistant U.S. Attorney. Several members of the St. Louis grand jury also testified before the subcommittee. In addition to intradepartmental correspondence, among the materials that the subcommittee reviewed and included in the public record were transcripts of telephone conversations between various DOJ attorneys concerning the grand jury investigation. The subcommittee began its hearings on the handling of the St. Louis grand jury with a statement emphasizing that its interest "is merely to ascertain whether or not there was in fact any attempt by the Department of Justice to influence the grand jury in its investigation," and that "the members of the subcommittee and counsel are aware of the rule of strict secrecy surrounding the proceedings of any grand jury. Mindful of that, our questioning will not touch upon any specific case or evidence that may have been presented to the grand jury." The subcommittee's questions to the grand jurors focused on efforts by Department attorneys to prevent them from conducting a thorough investigation and on whether the grand jury had been pressured by those attorneys to issue a report absolving the government of impropriety in its handling of tax fraud cases. The present and former Department attorneys who testified were asked similar questions, and at one point the subcommittee asked for, and an Assistant U.S. Attorney provided, the names of certain witnesses who had appeared before the grand jury. Later that same year, the subcommittee examined similar charges of DOJ interference with another grand jury, which had been investigating Communist infiltration of the United Nations. The subcommittee received testimony from a number of grand jurors and Department attorneys, including then Criminal Division attorney Roy Cohn. The subcommittee's chief counsel again cautioned that "[t]he sanctity of the grand jury as a process of American justice must be protected at all costs," and stated that the subcommittee was seeking information solely relating to attempts to delay or otherwise influence the grand jurors' deliberations, not information that would reveal the actual testimony of witnesses appearing before them. 2. Prosecution of Routine Cases Attorney General McGrath resigned in April 1952, in part in response to the evidence uncovered by the subcommittee of corruption in the Department, particularly in the Tax Division. After the replacement of McGrath by James P. McGranery, and the Administration's concern about these corruption reports, the subcommittee observed "a new and refreshing attitude of cooperation which soon appeared at all levels in the Department of Justice." The subcommittee declared that "its work has been limited only by the capacity of its staff to digest the sheer volume of available fact and documentary evidence relating to the Department's work. Everything that has been requested has been furnished, including file materials and administrative memoranda which had previously been withheld." For example, in investigating charges that the Department was often dilatory in its handling of routine cases, the subcommittee staff undertook a detailed analysis of a number of cases in which delay was alleged to have occurred. To demonstrate publicly the nature of this problem, the subcommittee chose a procurement fraud case that had been recently closed, and conducted a "public file review" of the case at a subcommittee hearing. Attorneys from the Department at the hearing went document by document through the Department's file in the case. The subcommittee was granted access to all of the documentation collected in the case, with the exception of confidential FBI reports that the subcommittee had agreed not to seek. However, certain communications from the FBI to the Department concerning the prosecution of the case were provided. 3. New York City Police Brutality During the 83 rd Congress, the subcommittee turned to allegations that the Criminal Division had entered into an agreement with the New York City Police Department (NYPD) not to prosecute instances of police brutality by New York police officers that might be violations of federal civil rights statutes. The subcommittee stated that its purpose was not to inquire into the merits of particular cases, only to ascertain whether DOJ and the NYPD had entered into such an agreement. Justice Department witnesses had also been instructed by the Attorney General not to discuss the merits of any pending cases. Department witnesses included a former Attorney General, several present and former Assistant Attorneys General, as well as other Department attorneys and FBI agents. The substance of earlier meetings between Department officials and the New York City Police Commissioner in which this arrangement was allegedly agreed to was probed in depth. Although questions concerning the merits of specific cases were avoided, the subcommittee obtained from these witnesses a chronology of the Department's actions in a number of cases. The subcommittee received DOJ memoranda and correspondence, as well as telephone transcripts of the intradepartmental conversations of a U.S. Attorney. Investigation of Consent Decree Program In 1957 and 1958, the Antitrust Subcommittee of the House Judiciary Committee conducted an inquiry into the negotiation, enforcement, and competitive effect of consent decrees by the DOJ Antitrust Division, with particular emphasis on consent decrees that had been recently entered into with the oil-pipeline industry and AT&T. The subcommittee developed a 4,492-page hearing record, holding seventeen days of hearings on the AT&T consent decree and four days of hearings on the oil pipeline consent decree. The subcommittee experienced what it viewed as a lack of cooperation from the Department throughout its investigation, stating that "[t]he extent to which the Department of Justice went to withhold information from the committee in this investigation is unparalleled in the committee's experience." The subcommittee's chairman, requesting that the Attorney General disclose "all files in the Department of Justice relating to the negotiations for, and signing of, a consent decree" with AT&T. The DOJ unconditionally refused to grant the subcommittee access to any of these documents. Deputy Attorney General William P. Rogers asserted two grounds to support the Department's refusal to cooperate. First, Rogers maintained that since the files contained information voluntarily submitted by AT&T in the course of consent decree negotiations, disclosing the files to the subcommittee "would violate the confidential nature of settlement negotiations and, in the process, discourage defendants, present and future, from entering into such negotiations." In a later letter, the head of the Antitrust Division, Victor Hansen, added that "[t]hose considerations which require that the Department treat on a confidential basis communications with a defendant during consent decree negotiations also apply to the enforcement of a decree." Second, Rogers argued that the "essential process of full and flexible exchange" of ideas when crafting memoranda and recommendations would be "seriously endangered were staff members hampered by the knowledge they might at some later date be forced to explain before Congress intermediate positions taken." Rogers stated that the DOJ's refusal to comply was in accordance with an earlier directive from the President to the Department to that effect, which provided: Because it is essential to efficient and effective administration that employees of the executive branch be in a position to be completely candid in advising with each other on official matters, and because it is not in the public interest that any of their conversations or communications, or any documents or reproductions, concerning such advice be disclosed, you will instruct employees of your Department that in all of their appearances before [congressional] committees not to testify to any such conversations or communications or to produce any such document or reproductions. This principle must be maintained regardless of who would be benefitted by such disclosures. The subcommittee asserted in its final report that initially the "Attorney General refused access to the files of the Department of Justice primarily in order to prevent disclosure of facts that might prove embarrassing to the Department." The subcommittee further concluded that such withholding had "materially hampered the committee's investigation." However, it may be noted that the subcommittee was ultimately able to obtain much of the material concerning the AT&T consent decree that DOJ refused to provide directly from AT&T itself. The Department was, however, somewhat more forthcoming in permitting attorneys to testify about the AT&T consent decree. For example, the head of the Antitrust Division informed two Division attorneys, who had dissented from the decision to enter into the AT&T consent decree and were called to testify, that "we do not at the present time think it appropriate ... to ... assert any privilege on behalf of the Department with regard to any information within [your] knowledge which is relevant to the negotiations of the decree in the Western Electric case." These two attorneys later testified before the subcommittee about those negotiations, including their reasons for differing with the Department's decision to enter into the consent decree. Cointelpro and Related Investigations of FBI-DOJ Misconduct Between 1974 and 1978, Senate and House committees examined the intelligence operations of a number of federal agencies, including the domestic intelligence operations of the FBI and various units of the Justice Department, such as the Interdivision Information Unit. A Senate Select Committee examined 800 witnesses: 50 in public session, 250 in executive sessions, and the balance in interviews. A number of those providing public testimony were present and former FBI and DOJ officials. The Select Committee estimated it had obtained approximately 110,000 pages of documents from these intelligence agencies and other sources, with still more being preliminarily reviewed at the agencies. Hundreds of FBI documents were reprinted as hearing exhibits, though "[u]nder criteria determined by the Committee, in consultation with the Federal Bureau of Investigation, certain materials were deleted from these exhibits to maintain the integrity of the internal operating procedures of the FBI. Further deletions were made with respect to protecting the privacy of certain individuals and groups. These deletions do not change the material content of these exhibits." The Select Committee concluded in its final report that the "most important lesson" learned from its investigation was that "effective oversight is impossible without regular access to the underlying working documents of the intelligence community. Top level briefings do not adequately describe the realities. For that the documents are a necessary supplement and at times the only source." Hearings on FBI domestic intelligence operations also were held before the House Judiciary Subcommittee on Civil and Constitutional Rights beginning in 1975. A number of DOJ and FBI officials testified, including Attorneys General Edward Levi and Griffin Bell and FBI Director Clarence Kelly. At the request of the chairman of the Judiciary Committee, the General Accounting Office (GAO) also began a review of FBI operations in this area in 1974. In an attempt to analyze current FBI practices, the GAO chose ten FBI offices involved in varying levels of domestic intelligence activity, and randomly selected 899 cases from those offices that year to review. The FBI agreed to GAO's proposal to have FBI agents prepare a summary of each selected cases' file. These summaries described the information that led to opening the investigation, the methods and sources used to collect information for the case, instructions from FBI Headquarters, and a brief summary of each document in the file. After reviewing the summaries, GAO staff held interviews with the FBI agents involved with the cases, as well as the agents who prepared the summaries. These hearings were continued in 1977 to hear the results of a similar GAO review of the FBI's domestic intelligence operations under new domestic security guidelines established by the Attorney General in 1976. In its follow-up investigation, GAO reviewed 319 additional randomly selected cases. As in its earlier review, GAO obtained FBI case summaries and then conducted agent interviews. This time, however, the Department also granted GAO access to copies of selected documents for verification purposes, with the names of informers and other sensitive data excised. White Collar Crime in the Oil Industry In 1979, joint hearings were held by the Subcommittee on Energy and Power of the House Committee on Interstate and Foreign Commerce and the Subcommittee on Crime of the House Judiciary Committee to conduct an inquiry into allegations of fraudulent pricing of fuel in the oil industry and the failure of the Department of Energy and DOJ to effectively investigate and prosecute alleged criminality. During the course of the hearings, testimony and evidence were received in closed session regarding open cases in which indictments were pending and criminal proceedings were in progress. The chairman of the Subcommittee on Energy and Power remarked: We know indictments are outstanding. We do not wish to interfere with rights of any parties to a fair trial. To this end we have scrupulously avoided any actions that might have affected the indictment of any party. In these hearings we will restrict our questions to the process and the general schemes to defraud and the failure of the Government to pursue these cases. Evidence and comments on specific cases must be left to the prosecutors in the cases they bring to trial. DOJ's Deputy Attorney General, Criminal Division, praised the Chairmen and committee members for their discreet conduct of the hearings: "I would like to commend Chairman Conyers, Chairman Dingell, and all other members of the committee and staff for the sensitivity which they have shown during the course of these hearings to the fact that we have ongoing criminal investigations and proceedings, and the appropriate handling of the question in order not to interfere with those investigations and criminal trials." The committees requested access to declination memoranda and the Justice Department stated that it had no objection, except to request that the information not be made public unless the committees had a compelling need. During the course of the hearing a DOJ staff attorney testified in open session as to the reason for not going forward with a particular criminal prosecution. Although a civil prosecution of the same matter was then pending, DOJ agreed to supply the committees with documents leading to the decision not to prosecute. Billy Carter/Libya Investigation A special subcommittee of the Senate Committee on the Judiciary was constituted in 1980 to investigate the activities of individuals representing the interests of foreign governments. Due to the short time frame that was given to report its conclusions to the Senate, the subcommittee narrowed the focus of its inquiry to the activities of the President's brother, Billy Carter, on behalf of the Libyan government. A significant portion of this inquiry concerned the Department's handling of its investigation of Billy Carter, in particular whether Attorney General Benjamin R. Civiletti acted improperly by withholding certain intelligence information about Billy Carter's contacts with Libya from the Criminal Division attorneys responsible for the investigation, or had otherwise sought to influence the disposition of the case. Although there was early disagreement as to the extent of the subcommittee's access to certain White House information, DOJ made no attempt to limit the subcommittee's access to the attorneys involved with the Billy Carter case. The subcommittee heard testimony from several representatives of the Department, including Attorney General Civiletti, and the Assistant Attorney General in charge of the Criminal Division, and three of his assistants. These witnesses testified about various topics, including the general structure of decision making in the Department, the nature of the Billy Carter investigation, the Attorney General's failure to communicate intelligence information concerning Billy Carter to the Criminal Division attorneys immediately, the decision to proceed civilly and not criminally against Carter, and the effect of various actions of the Attorney General and the White House on that prosecutorial decision. The subcommittee also took depositions from some of these witnesses. Pursuant to a Senate Resolution providing it with such power, subcommittee staff took 35 depositions, totaling 2,646 pages. The subcommittee also was given access to documents from the Department's files on the Billy Carter case. The materials obtained included prosecutorial memoranda, correspondence between the Department and Billy Carter, the handwritten notes of the attorney in charge of the Foreign Agents Registration Unit of the Criminal Division, and FBI investigative reports and summaries of interviews with Billy Carter and his associates. Not included in the public record were a number of classified documents, which were forwarded to and kept in the files of the Senate Intelligence Committee. These classified documents were available for examination by designated staff members and the Intelligence Committee, and some of the subcommittee documents were later used by the subcommittee in executive session. Undercover Law Enforcement Activities (ABSCAM) In 1982, the Senate established a select committee to study the undercover law enforcement activities of the FBI and other components of the Department of Justice. Representatives from the Department, including FBI Director William Webster, testified generally about the history of the DOJ's undercover operations, their benefits and costs, and the policies governing the institution and supervision of such operations, including several sets of guidelines promulgated by the Attorney General. These witnesses also testified about Abscam and several other specific undercover operations conducted by the FBI and other units of the Department. In addition to the public testimony from Department witnesses, committee staff conducted interviews with a number of present and former Department attorneys and FBI agents. Among those testifying or interviewed were several present and former members of the Department's Brooklyn Organized Crime Strike Force. The Department told the committee that it "does not normally permit Strike Force attorneys to testify before congressional committees [and has] traditionally resisted questioning of this kind because it tends to inhibit prosecutors from proceeding through their normal tasks free from the fear that they may be second-guessed, with the benefit of hindsight, long after they take actions and make difficult judgements in the course of their duties." The Department, nevertheless, agreed to this testimony, "because of their value to you as fact witnesses and because you have assured us that they will be asked to testify solely as to matters of fact within their personal knowledge and not conclusions or matters of policy." The most extensive focus of the committee's inquiry was on the FBI's Abscam operation, which lasted from early 1978 through January 1980, and resulted in the criminal conviction of one Senator, six Members of the House of Representatives, several local officials, and others. As part of this review, the subcommittee was "given access to almost all of the confidential documents generated during the covert stage of the undercover operation known as Abscam." In all, the committee reviewed more than 20,000 pages of Abscam documents, as well as video and audio tapes and tape transcripts, provided under the terms of an elaborate access agreement negotiated with the Department. Pursuant to the agreement, the subcommittee was provided copies of confidential Abscam materials other than grand jury materials barred from disclosure under the Federal Rules of Criminal Procedure and certain prosecutorial memoranda from the Abscam cases. Under the agreement, the Department was also permitted to withhold from the committee documents that might compromise ongoing investigations or reveal sensitive sources or investigative techniques. However, the Department was required to describe each such document withheld, explain the basis of the denial, and give the committee an opportunity to propose conditions under which the documents might be provided. The committee further agreed to a "pledge of confidentiality" under which it was permitted to use and publicly disclose information derived from the confidential documents and to state that the information came from Department files, but was prohibited from publicly identifying the specific documents from which the information was obtained. All confidential documents were kept in a secure room, with access limited to the committee's members, its two counsel, and several designated document custodians. Later, DOJ agreed to permit access to those materials by other committee attorneys as well. In addition to the documents to which it was given direct access, the committee received extensive oral briefings, including direct quotations, on basic factual material from the withheld prosecutorial memoranda and documents prepared or compiled by the Department's Office of Professional Responsibility as part of an internal investigation of possible misconduct in the Abscam operations and prosecutions. Under the general framework established by this agreement, there was considerable give and take between the committee and the Department as to the degree of access that would be provided to specific documents. For example, the committee's counsel had sought access to a report prepared in the Criminal Division on FBI undercover operations. The committee's chairman had also written to the Attorney General requesting access to that report. An agreement was reached whereby the report could be examined by committee members or counsel at the Department and notes taken on its contents, but it could neither be copied nor removed from the Department. Committee counsel utilized this procedure, but the committee determined that such limited access made it impractical for its members to personally review the report, and the committee's chairman again wrote the Attorney General asking him to release a copy. The Department ultimately agreed to provide a copy of the report to each member of the committee, with the understanding that the report would not be disseminated beyond the members of the committee and its counsel, no additional copies would be made, and the copies provided by the Department would be returned at the conclusion of the committee's work. Finally, the committee retained the right under the access agreement to seek unrestricted access to documents if it determined that the limited access set forth in the agreement was insufficient to permit it to effectively conduct its investigation. A similar investigation was conducted by the House Judiciary Subcommittee on Civil and Constitutional Rights, which held a total of 21 hearings over a period of four years. The subcommittee examined in detail the FBI's Operation Corkscrew undercover operation, an investigation of alleged corruption in the Cleveland Municipal Court, with access to confidential Department documents provided to it under an agreement patterned after the access agreement negotiated by the Senate select committee investigating Abscam. Investigation of Withholding of EPA Documents Burford I: The Superfund Investigation In 1982, during the second session of the 97 th Congress, the House Transportation Committee's Public Works Subcommittee on Oversight and the House Energy and Commerce's Subcommittee on Oversight and Investigations initiated investigations of the Environmental Protection Agency's (EPA) enforcement of the "Superfund" law. The committees requested documents relating to a number of on-going enforcement actions from EPA Administrator Anne Gorsuch Burford. The documents sought included memoranda of EPA and DOJ attorneys containing litigation and negotiation strategy, settlement positions, and other similar materials. After Ms. Burford's initial refusal, the subcommittees issued subpoenas but compliance was resisted on the grounds that the documents requested were "enforcement sensitive" and were part of open law enforcement files. At the direction of President Reagan, Ms. Burford claimed executive privilege to prevent their disclosure. The House Transportation Subcommittee acted first, citing Ms. Burford for contempt of Congress, an action that was affirmed by the full Committee. The full House of Representatives voted 259 to 105 to support the contempt citation. The DOJ's first attempted to obtain a federal court order enjoining the House from forwarding the contempt citation to the U.S. Attorney for prosecution pursuant to the criminal contempt statute (discussed in depth in the next section), but failed. Following a brief period of negotiation with the Public Works and Transportation Committee, DOJ reached an agreement for release of the documents. The documents were released to the subcommittee in stages, beginning first with briefings and redacted copies, and eventually ending with unredacted copies that could only be examined by committee members and up to two designated committee staffers. The Chairman of the House Energy and Commerce Committee, Representative John Dingell, refused to accept the agreement between the DOJ and the House Public Works and Transportation Committee given its limitations on access and time delays. After a threat to issue new subpoenas and pursue a further contempt citation, negotiations were resumed. The result was an agreement that all documents covered by the initial subpoena would be delivered to the subcommittee. There were to be no briefings and no multi-stage process of redacted documents leading to unredacted documents. The subcommittee agreed to handle all "enforcement sensitive" documents in executive session, giving them confidential treatment. The subcommittee, however, reserved for itself the right to release the documents or use them in public session, after providing "reasonable notice" to the EPA. If the EPA did not agree, the documents would not be released or used in public session unless the chairman and ranking minority Member concurred. If they did not concur, the subcommittee could vote on the release of documents and their subsequent use in a public session. Staff access was to be decided by the chairman and ranking minority Member. The agreement was signed by Chairman Dingell, Ranking Member James T. Broyhill, and White House Counsel Fred F. Fielding on March 9, 1983. Burford II: The Investigation of the Claim of Presidential Privilege After the House voted to hold Burford in contempt of Congress, the Department, in the name of the United States, filed an unprecedented legal action against the House. The DOJ attempted to obtain to obtain a judicial declaration that Burford had acted lawfully in refusing to comply with the subpoena. Ultimately, the lawsuit was dismissed, the documents were provided to Congress, and the contempt citation was dropped. However, a number of questions about the role of the Department during the controversy remained: whether the Department, not the EPA, had made the decision to persuade the President to assert executive privilege; whether the Department had directed the U.S. Attorney for the District of Columbia not to present the Burford contempt citation to the grand jury for prosecution and had made the decision to sue the House; and, generally, whether there was a conflict of interest in the Department's simultaneously advising the President, representing Burford, investigating alleged executive branch wrongdoing, and enforcing the congressional criminal contempt statute. These and related questions raised by the Department's actions were the subject of an investigation by the House Judiciary Committee beginning in early 1983. The committee issued a final report on its investigation in December 1985. Although the Judiciary Committee ultimately was able to obtain access to virtually all of the documentation and other information it sought from the Department, in many respects this investigation proved as contentious as the earlier EPA controversy from which it arose. In its final report, the committee concluded that [T]he Department of Justice, through many of the same senior officials who were most involved in the EPA controversy, consciously prevented the Judiciary Committee from obtaining information in the Department's possession that was essential to the Committee's inquiry into the Department's role in that controversy. Most notably, the Department deliberately, and without advising the Committee, withheld a massive volume of vital handwritten notes and chronologies for over one year. These materials, which the Department knew came within the Committee's February 1983 document request, contained the bulk of the relevant documentary information about the Department's activities outlined in this report and provided a basis for many of the Committee's findings. Among the other abuses cited by the committee were the withholding of a number of other relevant documents until the committee had independently learned of their existence, as well as materially "false and misleading" testimony before the committee by the head of the Department's Office of Legal Counsel. The committee's initial request for documentation was contained in a February 1983 letter from its chairman, Representative Peter Rodino, to Attorney General William French Smith. The committee requested that the Department "supply all documents prepared by or in the possession of the Department in any way relating to the withholding of documents that Congressional committees have subpoenaed from the EPA." The letter also specifically requested, among other things, a narrative description of the activities of each division or other unit of the Department relating to the withholding of the EPA materials, information about the Department's apparent conflict of interest in simultaneously advising the executive branch while being responsible for prosecuting the Burford contempt citation, and any instructions given by the Department to the U.S. Attorney not to present the Burford contempt to a grand jury. At first, the Department provided only publicly available documents in response to this and other document requests from the committee. However, after a series of meetings between committee staff and senior Department officials, an agreement was reached whereby committee staff were permitted to review the materials responsive to these requests at the Department to determine which documents the committee would need for its inquiry. Committee staff reviewed thousands of documents from the Land and Natural Resources Division, the Civil Division, the Office of Legal Counsel, the Office of Legislative Affairs, the Office of Public Affairs, and the offices of the Attorney General, the Deputy Attorney General, and the Solicitor General. In July 1983, the committee chairman wrote to the Attorney General requesting copies of 105 documents that committee staff identified during review as particularly important to the committee's inquiry. By May 1984, only a few of those documents had been provided to the committee, and the chairman again wrote to the Attorney General requesting the Department's cooperation in the investigation. In that letter, the chairman advised the Attorney General that the committee's preliminary investigation had raised serious questions of misconduct, including potential criminal misconduct, in the Department's decision to withhold EPA documents. The committee finally received 105 documents in July 1984, a full year after it had initially requested access. At that time, the committee also obtained the written notes and a number of other documents that had been earlier withheld. There was also disagreement about the access committee staff would have to interview Department employees. The Department demanded that it be permitted to have one or more Department attorneys present at each interview. The committee feared that the presence of Department representatives might intimidate the Department employees in their interviews and stated that it was willing to permit a Department representative to be present only if the representative was "walled-off" from Department officials involved with the controversy, if the substance of interviews was not revealed to subsequent interviewees, and if employees could be interviewed without a Department representative present if so requested. The Department ultimately agreed to permit the interviews to go forward without its attorneys present. If a Department employee requested representation, the Department employed private counsel for that purpose. In all, committee staff interviewed 26 current and former Department employees, including four Assistant Attorneys general, under this agreement. Partly as a result of these interviews, as well as from information in the handwritten notes that had been initially withheld, the committee concluded that it also required access to Criminal Division documents about the origins of the criminal investigation of former EPA Assistant Administrator Rita Lavelle. The committee needed these documents to determine if the Department had considered instituting the investigation to obstruct the committee's inquiry. The committee also requested information about the Department's earlier withholding of the handwritten notes and other documents to determine whether Department officials had deliberately withheld the documents in an attempt to obstruct the committee's investigation. The Department at first refused to provide the committee with documents relating to its Lavelle investigation, citing its withholding as "[c]onsistent with the longstanding practice of the Department not to provide access to active criminal files." The Department also refused to provide the committee with access to documentation related to the Department's handling of the committee's inquiry, objecting to the committee's "ever-broadening scope of ... inquiry." The committee chairman wrote the Attorney General and objected that the Department was denying the committee access even though no claim of executive privilege had been asserted. The chairman also maintained that "[i]n this case, of course, no claim of executive privilege could lie because of the interest of the committee in determining whether the documents contain evidence of misconduct by executive branch officials." With respect to the documents relating to the Department's handling of the committee inquiry, the chairman demanded that the Department prepare a detailed index of the withheld documents that included the title, date, and length of each document; its author and all who had seen it; a summary of its contents; an explanation of why it was being withheld; a certification that it contained no evidence of misconduct; and a certification that the Department intended to recommend the President assert executive privilege over it. With respect to the Lavelle documents, the chairman narrowed the committee's request to "predicate" documents relating to the opening of the investigation and prosecution of Lavelle, as opposed to FBI and other investigative reports reflecting actual investigative work conducted after the opening of the investigation. In response, more than three months after the committee's initial request, the Department produced those two categories of materials. E.F. Hutton Investigation In 1985 and 1986, the Crime Subcommittee of the House Judiciary Committee conducted an investigation to determine why no individuals were charged in connection with an investigation of E.F. Hutton, an American stock brokerage firm that pled guilty to 2,000 felony counts. As part of this investigation, the subcommittee sought letters to Hutton employees promising not to prosecute, draft indictments, and internal DOJ communications regarding proposals discussing the disposition of charges against Hutton employees. Assistant Attorney General Trott responded to the request by stating: We understand this to be a request for prospective memoranda.... It now appears that there is one document prepared early in the investigation that may fall within your request. We will produce that for the Subcommittee after appropriate redactions have been made. We believe that the necessary redactions are those principally set out in In re Grand Jury Investigation (Lance ) . Thus, such information as the identity of witnesses who testified before the grand jury and the substance of their testimony and the identity of documents which were subpoenaed by the grand jury must be redacted." The Justice Department also recommended that the subcommittee go to court to obtain access to all of the information, including that which could not be released under the Federal Rules of Criminal Procedure Rule 6(e). The Justice Department went to court to seek guidance regarding the applicability of Rule 6(e) to the documents sought by the subcommittee. In court, the Justice Department argued only on 6(e) grounds, and never claimed that any documents should be withheld on deliberative process grounds. The court dismissed the case because it presented no case or controversy. However, the court did express "serious doubt" as to the applicability of Rule 6(e) to the documents sought by the subcommittee. The Subcommittee report includes as exhibits a number of deliberative prosecutorial documents. One 21-page memorandum contains a detailed discussion of Hutton's money management practices, and concludes that "these money management techniques violated numerous federal criminal statutes and, therefore, prosecution is appropriate and recommended." The Subcommittee was also provided with a series of memoranda prepared by a line attorney, which analyzed the defenses that could be offered by Hutton officers and the DOJ's responses to those defenses. These memoranda are among many examples of deliberative prosecutorial memoranda provided to the investigating congressional committee by DOJ. Iran-Contra In the late 1980s, an intense congressional investigation focused, in part, on Attorney General Edwin Meese's conduct during the Iran-Contra scandal. The House and Senate created their Iran-Contra committees in January 1987. The Iran-Contra Committees demanded the production of the Justice Department's files. Assistant Attorney General John Bolton responded to this request, on behalf of Attorney General Meese, by attempting to withhold the documents by asserting that disclosure would prejudice the pending or anticipated litigation by the Independent Counsel. The Iran-Contra Committees disputed that contention, required the production of all Justice Department documents, and questioned all knowledgeable Justice Department officers up to, and including, Attorney General Meese. One major aspect of the Iran-Contra Committees' investigation focused on the inadequacies of the so-called "Meese Inquiry," the team led by Attorney General Meese that examined the National Security Council (NSC) staff in late November 1987. The Iran-Contra Committees concluded that this inquiry had the effect of forewarning the NSC staff to shred their records and fix upon an agreed false story, ending any opportunity to uncover the obscured aspects of the scandal. The congressional investigation provided documentary evidence regarding incompetence, at best, by the Attorney General's team during the Meese Inquiry. The congressional report documented this incompetence, which included the Attorney General taking no notes and remembering no details of his crucial interviews of CIA Director Casey and others; the DOJ inquiry taking no steps to secure the remaining unshredded documents; and the Justice Department team allowing the documents to be shredded while the team was in the room. Furthermore, the inquiry team excluded the Criminal Division and the FBI from the case until it was too late. Rocky Flats Environmental Crimes Plea Bargain In June 1992 the Subcommittee on Investigations and Oversight of the House Committee on Science, Space, and Technology commenced a review of the DOJ-negotiated plea bargain settlement in the investigation and prosecution of Rockwell International Corporation. Rockwell was accused of committing environmental crimes in its capacity as manager and operating contractor of the Department of Energy's (DOE) Rocky Flats nuclear weapons facility. The settlement was the culmination of a five-year investigation, conducted by a joint government task force involving the FBI, the DOJ, the Environmental Protection Agency (EPA), the EPA's National Enforcement Investigation Centers, and the DOE Inspector General. The subcommittee was concerned by several details, including with the size of the settlement fine relative to the profits made by the contractor and the damage caused by inappropriate activities; the lack of personal indictments of either Rockwell or DOE personnel despite a DOJ finding that the crimes were "institutional crimes" that "were the result of a culture, substantially encouraged and nurtured by DOE, where environmental compliance was a much lower priority than the production and recovery of plutonium and the manufacture of nuclear 'triggers'"; and that reimbursements provided by the government to Rockwell for expenses in the cases and the contractual arrangements between Rockwell and DOE may have created disincentives for environmental compliance and aggressive prosecution of the case. The subcommittee held ten days of hearings, seven in executive session, in which it took testimony from the U.S. Attorney for the District of Colorado; an assistant U.S. Attorney for the District of Colorado; a DOJ line attorney from Main Justice; and an FBI field agent; it also received voluminous FBI field investigative reports, interview summaries, and documents submitted to the grand jury not subject to Rule 6(e). At one point in the proceedings all the witnesses who were under subpoena, upon written instructions from the Acting Assistant Attorney General for the Criminal Division, refused to answer questions concerning internal deliberations in which decisions were made about the investigation and prosecution of Rockwell, the DOE, and their employees. Two of the witnesses advised that they had information on these matters and, but for the DOJ directive, would have answered the subcommittee's inquiries. The subcommittee members unanimously authorized the chairman to send a letter to President George H. W. Bush requesting that he either personally assert executive privilege as the basis for directing the witnesses to withhold the information or direct DOJ to retract its instructions to the witnesses. The President took neither course and the DOJ subsequently reiterated its position that the information sought would chill Department personnel. The subcommittee then moved to hold the U.S. Attorney in contempt of Congress. A last minute agreement forestalled the contempt citation. Under the agreement DOJ had to issue a new instruction to all personnel under subpoena to answer all questions put to them by the subcommittee, including those which related to internal deliberations with respect to the plea bargain. Those instructions were also to apply to all Department witnesses, including FBI personnel, who might testify in the future. Additionally, transcripts were to be made of all interviews and provided to the witnesses. They were not to be made public except to the extent they needed to be used to refresh the recollection or impeach the testimony of other witnesses called before the subcommittee in a public hearing. Witnesses were to be interviewed by staff under oath. Finally, the subcommittee reserved the right to hold further hearings in the future at which time it could call other Department witnesses who would be instructed not to invoke the deliberative process privilege as a reason for not answering subcommittee questions. Investigation of the Justice Department's Environmental Crimes Section From 1992 to 1994, the House Commerce Committee's Subcommittee on Oversight and Investigations conducted an extensive investigation into the impact of the DOJ on the effectiveness of the EPA's criminal enforcement program. The probe involved two public hearings, nearly three years of staff work, intensive review of documents (many of which were obtained only though subpoenas), and the effort to overcome persistent DOJ resistance. The investigation focused on allegations of mismanagement of the Environmental Crimes Section (ECS), a division of DOJ charged with environmental prosecution responsibilities. It also examined DOJ's decision to centralize control of environmental prosecution in ECS, in Washington, while simultaneously decentralizing other areas of prosecutorial contrail and how this impacted the relationship between ECS and U.S. Attorney's offices. The Subcommittee's investigation was delayed for months by DOJ's refusal to cooperate with requests for interviews and documents. The initial phase of the investigation required overcoming refusals to produce internal EPA documents bearing on 17 closed criminal environmental cases. The documents ultimately produced by EPA included Reports of Investigation, case agent notes, internal reports and memoranda, communications with private parties, and correspondence with DOJ. The next phase concentrated on attempts to obtain staff interviews with DOJ line attorneys with first-hand information on whether various closed cases had been mishandled, including three Assistant U.S. Attorneys. DOJ officials initially refused, arguing that allowing access would have a chilling effect on Department officials and noting the Department's historic reluctance to comply with such requests. Instead, it offered to provide access to the head of ECS instead. The Subcommittee responded that it was premature to interview the ECS head without interviewing line attorneys who had first hand knowledge of the facts in question. The change of administration in 1993 did not result in an easing of DOJ's resistant posture and in May 1993 the Subcommittee voted to issue 26 subpoenas to present and former DOJ attorneys. In June 1993 DOJ acquiesced to staff interviews of the subpoenaed attorneys pursuant to a negotiated agreement. Document subpoenas were also authorized but not issued. However, continued refusal to produce the documents voluntarily resulted in issuance of document subpoenas in March 1994 to the Attorney General and the Acting Assistant Attorney General for the Environment and Natural Resources Division. Some of these documents involved closed cases, but DOJ claimed they were "deliberative" in nature and that only limited access could be allowed. Other documents withheld involved internal DOJ communications about responses to the Subcommittee's investigation after the six cases were closed. At the time the subpoenas were served, the Acting Assistant Attorney General's nomination for the position was before the Senate Judiciary Committee. The chairman of the Subcommittee advised the Judiciary Committee of the withholding and a hold was put on her nomination. In late March, DOJ agreed to comply with the subpoena and the documents were provided over a period of months. Coincidentally the Senate hold was lifted. As a result of the investigation, the policy of centralizing control of environmental prosecutions in Washington, DC was reversed, and control was returned to the U.S. Attorney's offices. Additionally, the ECS top management was replaced. Ruby Ridge The next case study, involving the DOJ Office of Professional Responsibility, which monitors the conduct of Department personnel, is notable for its revelations of a number of sensitive, previously undisclosed internal investigations in the face of extraordinary agency resistance. That occurred during the 1995 investigation by the Senate Judiciary Committee's Subcommittee on Terrorism, Technology and Government Information of allegations that several branches of the DOJ and the Department of the Treasury had engaged in serious criminal and professional misconduct in the investigation, apprehension, and prosecution of Randall Weaver and Kevin Harris at Ruby Ridge, Idaho. The subcommittee held 14 days of hearings in which it heard testimony from 62 witnesses, including DOJ, FBI, and Treasury officials, line attorneys and agents, obtained various internal reports from these agencies, and issued a final report. The subcommittee's hearings revealed that the federal agencies involved conducted at least eight internal investigations into charges of misconduct at Ruby Ridge, none of which had ever been publically released. DOJ expressed reluctance to allow the Subcommittee to see the documents out of a concern they would interfere with the ongoing investigation but ultimately provided some of them under agreed-upon conditions regarding their public release. The most important of those documents was the Report of the Ruby Ridge Task Force. The Task Force was established by the DOJ after the acquittals of Randy Weaver and Kevin Harris of all charges in the killing of a Deputy U.S. Marshal to investigate charges that federal law enforcement agents and federal prosecutors involved in the investigation, apprehension, and prosecution of Weaver and Harris may have engaged in professional misconduct and criminal wrongdoing. The allegations were referred to DOJ's Office of Professional Responsibility (OPR). The Task Force was headed by an Assistant Counsel from OPR and consisted of four career attorneys from DOJ's Criminal Division and a number of FBI inspectors and investigative agents. The Task Force submitted a 542 page report to OPR on June 10, 1994, which found numerous problems with the conduct of the FBI, the U.S. Marshals Service, and the U.S. Attorneys Office in Idaho, and made recommendations for institutional changes to address the problems it found. It also concluded that portions of the rules of engagement issued by the FBI during the incident were unconstitutional under the circumstances, and that the second of two shots fired by a member of the FBI's Hostage Rescue Team (HRT), which resulted in the death of Vicki Weaver, was not reasonable. The Task Force recommended that the matter of the shooting be referred to a prosecutorial component of the Department for a determination as to whether a criminal investigation was appropriate. OPR reviewed the Task Force Report and transmitted the Report to the Deputy Attorney General with a memorandum that dissented from the recommendation that the shooting of Vicki Weaver by the HRT member be reviewed for prosecutorial merit based on the view that the agent's actions were not unreasonable considering the totality of the circumstances. The Deputy Attorney General referred the Task Force recommendation for prosecutorial review to the Criminal Section of the Civil Rights Division, which concluded that there was no basis for criminal prosecution. The Task Force Report was the critical basis for the Subcommittee's inquiries during the hearings and its discussion and conclusions in its final report. Campaign Finance Investigations Allegations of violations of campaign finance laws and regulations surfaced during the latter stages of the 1996 presidential election campaign and became the subjects of investigations by committees in both Houses between 1996 and 2000. Several of the committee inquiries focused on the nature and propriety of DOJ actions and non-actions during the course of investigations undertaken by the Department. The following two investigations are illustrative. In 1997, the Senate Governmental Affairs Committee began an investigation into allegations of improprieties with respect to the flow of money into campaigns, particularly into the Republican and Democratic National Committees, and money from foreign sources. After the first round of hearings, the committee became concerned with the quality of DOJ's prosecution efforts as well as with evidence of a lack of cooperation and coordination between Main Justice and the FBI. In 1999 the committee held hearings on DOJ's handling of the investigation of Yah Lin "Charlie" Trie, an Arkansas native with a long time friendly relationship with President Clinton, who had frequent access to the White House and was alleged to have funneled $220,000 from foreign sources to the Democratic National Committee. Mr. Trie also provided the President's Legal Expense Trust (PLET) with $789,000 in sequentially numbered money orders. During the course of the DOJ investigation, Mr. Trie fled the country, leaving an agent in control of his business. In April 1997, the committee subpoenaed business documents relating to its campaign finance investigation and documents relating to the PLET. At the same time the DOJ's Campaign Finance Task Force was engaged in a parallel investigation. As early as June 1997, FBI Agents in Little Rock became convinced that Trie's agent was destroying subpoenaed documents, a process that continued until October 1997. During that period, the FBI attempted to obtain a search warrant to prevent further document destruction. DOJ Task Force supervisory attorneys declined to grant permission to seek a search warrant, believing there was insufficient probable cause. The committee subpoenaed four FBI special agents who testified about their efforts to procure a search warrant, the Task Force supervisory attorney who refused its issuance, and the Chief of the Public Integrity Section of DOJ. The committee also obtained from DOJ the investigatory notes of the special agents, the draft affidavit in support of the warrant requests, the notes of the Task Force supervisor, and a memo from one of the special agents to FBI Director Freeh expressing concern over DOJ handling of the investigation. In December 1997, press reports indicated that FBI Director Freeh had sent a memorandum to Attorney General Reno suggesting that she seek appointment of an independent counsel to conduct the campaign finance investigation in order to avoid the appearance of a political conflict of interest. The House Committee on Government Reform and Oversight scheduled a hearing and requested that Freeh appear and produce the memo. The Attorney General intervened and explained that she would not comply, citing longstanding DOJ policy prohibiting disclosure of deliberative material in open criminal cases to Congress and concerns about the chilling effect such disclosures would have on Department personnel in future investigations. The Committee issued subpoenas on December 5, 1997, and both Reno and Freeh refused to comply. At no time did the Attorney General make a formal claim of executive privilege. In July 1998 the committee learned that the head of DOJ's Campaign Finance Task Force, Charles La Bella, had prepared a lengthy memorandum for the Attorney General, which concluded that the Attorney General was required by both the mandatory and discretionary provisions of the independent counsel law to appoint an independent counsel. On July 24, 1998, the Committee issued a subpoena for both the Freeh and La Bella memos. The Attorney General refused compliance again and on August 6, 1998, the committee voted to hold the Attorney General in contempt of Congress. However, the contempt report was not taken up on the House floor prior to the end of the 105 th Congress. On May 2000, following press reports indicating that the La Bella memo had been leaked in its entirety to a newspaper, the Committee again subpoenaed the memos. The Attorney General still refused to release the memos but offered to allow committee staff to review unredacted copies without taking any notes. Negotiations continued while the committee began review under the DOJ conditions. Ultimately, an accommodation was reached in which all subpoenaed memoranda were to be produced to the committee. The documents would be kept in a secure facility with access restricted to a limited number of staff. The committee agreed to give DOJ notice in advance if it intended to release the documents and to allow DOJ to argue its case against disclosure. The committee notified the Attorney General of its intent to release the documents at a June 6 hearing. The memos were released to the public on that date by unanimous consent. Misuse of Informants in the FBI's Boston Regional Office In early 2001, the House Committee on Government Reform commenced an investigation on FBI corruption in its Boston Regional office that encompassed events extending back to the mid-1960s. After continued refusal to cooperate with requests for documents, the committee issued a subpoena on September 6, 2001 for a number of prosecution and declination memoranda about DOJ's investigation of the handling of confidential informants in New England. DOJ officials made it clear that they would not comply. In December 2001, the committee renewed its request for the subpoenaed documents after a hearing on the request scheduled for September 13, 2001, was postponed because of the September 11 terrorist attacks. That subpoena sought, among other material, Justice Department documents relating to alleged law enforcement corruption in the FBI's Boston office that occurred over a period of almost 30 years. During that time, FBI officials allegedly knowingly allowed innocent persons to be convicted of murder on the false testimony of a cooperating witness and two informants in order to protect the undercover activities of those informants. Later, the FBI knowingly permitted two other informants to commit some 21 additional murders during the period they acted as informants, and, finally, gave the informants warning of an impending grand jury indictment, which allowed one of them to flee. The President directed the Attorney General not to release the documents because disclosure "would inhibit the candor necessary to the effectiveness of the deliberative processes by which the Department makes prosecutorial decisions." Additionally, the executive branch argued that committee access to the documents "threatens to politicize the criminal justice process" and to undermine the fundamental purpose of the separation of power doctrine, "which was to protect individual liberty." In defending the assertion of the privilege, the Justice Department claimed it was following a historical policy of withholding deliberative prosecutorial documents from Congress in both open and closed civil and criminal cases. Pending at the time were a number of Federal Tort Claims Act suits brought by the falsely convicted persons and their families, claiming the government knowingly used fabricated testimony to achieve the conviction. Initial congressional hearings after the privilege claim was made demonstrated the rigidity of the Department's position. The Department later agreed there might be some room for compromise, and on January 10, 2002, White House Counsel Alberto Gonzales wrote to Chairman Burton conceding that it was a "misimpression" that congressional committees could never have access to deliberative documents from a criminal investigation or prosecution. "There is no such bright-line policy, nor did we intend to articulate any such policy." However, he continued, since the documents "sought a very narrow and particularly sensitive category of deliberative matters" and "absent unusual circumstances, the Executive Branch has traditionally protected these highly sensitive deliberative documents against public or congressional disclosure" unless a committee showed a "compelling or specific need" for the documents. The documents continued to be withheld until a February 6, 2002 hearing, when the committee heard expert testimony describing over 30 specific instances since 1920 in which the DOJ disclosed deliberative documents to Congress. These materials included prosecutorial memoranda for both open and closed cases, testimony of subordinate Department employees, such as line attorneys, FBI field agents and U.S. Attorneys, and detailed testimony about specific instances of DOJ's failure to prosecute meritorious cases. In all instances, investigating committees also received documents from open and closed case files, including FBI investigative reports, summaries of FBI interviews, memoranda and correspondence prepared during undercover operations, and documents presented to grand juries not protected by Rule 6(e), among other similar "sensitive materials." Shortly after the hearing the committee was given access to the disputed documents. On July 26, 2007, a Massachusetts federal district court judge awarded the convicted persons and their families $101.7 million under the Federal Tort Claims Act, finding the government liable for malicious prosecution, civil conspiracy, infliction of emotional distress, and negligence. The committee's final report concluded that the documents withheld from it were indispensable to the success of its investigation and that the claim of executive privilege was part of a pattern of obstruction that impeded its investigation: When the FBI Office of Professional Responsibility conducted an investigation of the activities of New England law enforcement, it concluded in 1997: "There is no evidence that prosecutorial discretion was exercised on behalf of informants [James] Bulger and/or [Stephen] Flemmi." This is untrue. Former U.S. Attorney Jeremiah O'Sullivan was asked in the December 5, 2002 committee hearing whether prosecutorial discretion had been exercised on behalf of Bulger and Flemmi and he said that it had. A review of documents in the possession of the Justice Department also confirms this to be true. Had the committee permitted the assertion of executive privilege by the President to be unchallenged, this information would never have been known. That the Justice Department concluded that prosecutorial discretion had not benefitted Bulger or Flemmi—while at the same time fighting to keep Congress from obtaining information proving this statement to be untrue—is extremely troubling. Removal and Replacement of United States Attorneys Commencing in early 2007, the House Judiciary Committee and its Subcommittee on Commercial and Administrative Law and the Senate Judiciary Committee began investigations of the termination and replacement of nine U.S. Attorneys in 2006; The committees sought an explanation of the reasons for the terminations, who was involved in the removal and replacement decisions, and what factors may have influenced the considerations for removal and replacement. During the initial phase of the investigations, DOJ voluntarily made available former and current Department officials and employees for closed door interviews and testimony at hearings. The House subcommittee held five days of hearings, while the full committee held two days of hearings. DOJ witnesses included, among others: the Attorney General, the Deputy Attorney General, the removed U.S. Attorneys, the Chief of Staff to the Deputy Attorney General, the former Chief of Staff to the Attorney General, the acting Associate Attorney General, the Principal Associate Deputy Attorney General, the Deputy Assistant Attorney General and Chief of Staff of the Criminal Division, the Principal Deputy Director of the Executive Office of U.S. Attorneys, the former Director of the Office of U.S. Attorneys and current U.S. Attorney for the Western District of Pennsylvania, the Associate Deputy Attorney General, and the Acting Attorney General for New Mexico. On the basis of the witness testimony and records produced by the DOJ, the committees turned their attention to the role the White House played in the removals and sought similar voluntary provision of witnesses and documents. The White House Counsel responded by offering the committees limited availability to some documents and limited access to witnesses in closed sessions, but without any transcripts of the interviews and with limited permissible questions. As a condition of this proposal the committees had to commit in advance not to subsequently pursue any additional White House-related information by any other means, regardless of what the initial review of documents might reveal. After failing to procure White House documents and witnesses on a voluntary basis, on June 13, 2007, the chairman of the House and Senate committee issued subpoenas to Joshua Bolten, the White House Chief of Staff (as custodian of the White House Documents) for relevant White House documents, returnable on June 28, 2007. On that date, the House committee chairman issued a subpoena for documents and testimony to former White House Counsel Harriet Meirs, returnable on July 12, 2007 and the Senate committee chairman issued a similar subpoena to former White House Political Director Sara Taylor, returnable on July 11, 2007. The White House Counsel thereafter announced that Mr. Bolten would not produce any documents on the basis of a presidential claim of executive privilege and that no privilege logs would be provided. Furthermore, he announced the Ms. Miers had been directed not to appear at the hearing at all based on the notion that the privilege assertion cloaked a witness with "absolute immunity" from even appearing in response to a subpoena. On the return dates of the subpoenas, Ms. Miers did not appear and Mr. Bolten did not produce the subpoenaed documents. On July 12, the House subcommittee voted 7-5 to hold Ms. Miers in contempt of Congress, and on July 19, Mr. Bolten was held in contempt by the subcommittee by a 7-3 vote. On July 25, both Ms. Miers and Mr. Bolten were held in contempt by the full House Judiciary Committee by a vote of 21-17. The full House of Representatives voted to hold Ms. Miers and Mr. Bolten in contempt of Congress on February 14, 2008, by a vote of 223-32. The House passed one resolution, H.Res. 982 that incorporated two other resolutions, H.Res. 979 and 982. H.Res. 979 provided that the Speaker of the House shall certify the contempt of the House report to the U.S. Attorney for the District of Columbia for presentation of the matter to a grand jury. H.Res. 980 authorized the Chairman of the House Judiciary Committee to initiate a civil action in federal district court to seek declaratory and injunctive relief "affirming the duty of any individual to comply with any subpoena." Upon submission of the certified report to the U.S. Attorney by the Speaker, the Attorney General announced that because Ms. Miers and Mr. Bolten were acting pursuant to direct orders of the President, he had determined that their refusals to comply with the subpoenas did not constitute a crime, and that the contempt citation would not be presented for grand jury action. With criminal enforcement foreclosed, the Committee filed a civil action on March 10, 2008 seeking a declaratory judgment and injunctive relief to enforce the subpoena. On July 31, 2008, the District Court granted the Committee's motion for partial summary judgment, declaring that "Ms. Miers is not absolutely immune from congressional process" and that "she must appear before the Committee to provide testimony" when faced with a duly issued congressional subpoena. It ordered Ms. Miers and Mr. Bolten to "produce all non-privileged documents required by the applicable subpoenas and... provide to [the Committee] a specific description of the documents withheld from production on the basis of executive privilege consistent with the terms of the Memorandum Opinion issued on this date." CIA Agent Identity Leak In July 2003, Robert D. Novak wrote a column revealing the identity of Valerie Plame Wilson—a covert CIA agent. His column appeared shortly after Ms. Plame's husband, former U.S. ambassador Joseph Wilson, criticized the Bush Administration for claiming that Saddam Hussein bought uranium from Niger. This sequence sparked an FBI investigation into whether White House officials had illegally disclosed Ms. Plame's identity in retaliation for Mr. Wilson's remarks. On March 6, 2007, I. Lewis "Scooter" Libby, Vice President Cheney's Chief of Staff, was convicted of perjury, obstruction of justice, and making a false statement to federal investigators concerning the leak. During the criminal investigation, Special Counsel Patrick J. Fitzgerald interviewed Vice President Dick Cheney, President Bush, and other senior White House officials about the incident. Mr. Libby's trial raised a number of questions concerning their role in the affair. Following its conclusion, the House Oversight and Government Reform Committee (the "Committee") launched an investigation into the disclosure, aiming to discover: "(1) How did such a serious violation of our national security occur? (2) Did the White House take the appropriate investigative and disciplinary steps after the breach occurred? And (3) what changes in White House procedures are necessary to prevent future violations of our national security from occurring?" On July 16, 2007, Henry Waxman, Chairman of the Committee, requested that Mr. Fitzgerald produce all information from his investigation relevant to answering these questions. On January 18, 2008, the Department of Justice permitted the review of redacted interviews with White House staff, but argued that separation of powers and confidentiality concerns barred access to reports detailing interviews with the President and Vice President. The Committee's analysis of these staff interview reports raised more questions about Vice President Cheney's role in the affair. On June 3, 2008, Chairman Waxman wrote to Attorney General Michael Mukasey, again requesting access to reports of interviews with the President and Vice President. On June 11, 2008, the Justice Department again refused. The next day, the Committee issued a subpoena to the Attorney General, demanding the production of unredacted "transcripts, reports, notes, and other documents relating to interviews outside the presence of a grand jury" the President and Vice President. On June 24, 2008, the Justice Department responded that it would not release reports of interviews with the President or Vice President. It indicated it was willing to "discuss ... the possibility" of permitting more expansive review of previously redacted portions of interviews with White House staff, but the "confidentiality interests" of interviews with the President and Vice President were of a "greater constitutional magnitude" that had not been overcome. These reports dealt with "internal White House deliberations and communications relating to foreign policy and national security ... the absolute core of executive privilege." In addition, the subpoena implicated "separation of powers concern[s] relating to the integrity and effectiveness of future law enforcement investigations." The Justice Department argued that revealing records of interviews officials voluntarily participated in to Congress would deter future White House cooperation with criminal investigations, because subsequent Administrations might "limit the scope" of their participation, or simply refuse to be interviewed so as to prevent possible future disclosure to Congress. Chairman Waxman responded on July 8, 2008, agreeing to refrain from pursuing the interview with President Bush, but reiterating his demand for access to Vice President Cheney's interview and unredacted versions of interviews with White House staff. He noted that at the close of Mr. Libby's trial, Special Prosecutor Fitzgerald remarked that there was a "cloud over what the Vice President did [in connection with the leak]." The interviews with the Vice President were essential in order to investigate this cloud and perform oversight of the executive branch's handling of national security secrets. Waxman also rejected the Justice Department's various arguments for withholding the interview reports. First, he argued that no "confidentiality interests" applied since the Vice President knew the interview could be made public when it was conducted and executive privilege was unavailable for "communications voluntarily disclosed outside the White House." Second, he noted that the reports in question did not concern vital national security or foreign policy issues, but were limited to the role the Vice President and others played in leaking national security secrets. Third, he argued the presidential communications privilege was limited to "communications ... with the President or certain advisers directly on his behalf about presidential decisionmaking," and was therefore inapplicable to conversations between the Vice President and his staff. Fourth, President Bush and Vice President Cheney agreed to be interviewed even though similar interviews with the previous Administration had been released. If the risk of this disclosure did not deter them, it would probably not deter future Administrations. Finally, Chairman Waxman informed the Attorney General that the Committee would consider a resolution on July 16 to hold him in contempt of Congress if he did not comply with the subpoena. On July 16, 2008, the Department of Justice notified the Committee that the President had formally asserted executive privilege over the relevant documents. A July 15, 2008, letter from the Attorney General to the President outlined the legal basis for this claim. The Attorney General argued that the "core" purpose of the executive privilege doctrine was to "preserve[] the confidentiality of internal White House deliberations," and it extended to all executive branch deliberations, "even when the deliberations do not directly implicate presidential decisionmaking." Based on this interpretation, he argued that the subpoenaed documents fell within the presidential communications and deliberative process aspects of executive privilege because they described internal deliberations among staff about how best to advise the President. In addition, the Attorney General maintained that a subpoena for "criminal investigative files" implicated "the law enforcement component of executive privilege," and disclosure to Congress would hamper future White House cooperation with criminal investigations. In order to overcome an executive privilege claim, the letter continued, a committee must point to a "specific legislative decision" that required access to these documents. In his opinion, the Committee's "generalized interest" in the details of the affair did not overcome this standard. At the scheduled contempt hearing on July 16, 2008, Chairman Waxman postponed the vote in order to allow the Committee members to consider the President's claim of executive privilege. On August 5, 2008, the Committee requested a specific description of the documents subject to the President's assertion of executive privilege. Neither the Justice Department nor the Bush Administration responded and no further action was taken before the expiration of the 110 th Congress. On August 25, 2008, the Citizens for Responsibility and Ethics in Washington (CREW) brought a FOIA action in a federal district court seeking release of the records. During the next Administration—in October 2009—the court allowed many portions of the records to be withheld in order to protect the deliberative process and presidential communications privileges, as well as national security interests. However, it ruled that the government's chilling effect argument was not sufficient to justify "withhold[ing] the records in their entirety" because the existence of future investigations was "speculative." Operation Fast and Furious In early 2011, the Committee on Oversight and Government Reform began investigating the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), a DOJ sub-agency, regarding Operation Fast and Furious—an ATF operation based in the Phoenix, Arizona field office. The investigations were principally triggered by ATF whistleblowers who had alleged that suspected straw purchasers were allowed to amass large quantities of firearms as part of long-term gun trafficking investigations. As a consequence, some of these firearms were allegedly "walked," or trafficked to gunrunners and other criminals in Mexico. In December 2010, two of these firearms were reportedly found at the scene of a shootout near the U.S.-Mexico border where U.S. Border Patrol Agent Brian Terry had been killed. On January 27, 2011, Senator Charles Grassley requested information from ATF Acting Director Kenneth Melson about the "sanctioned ... sale of hundreds of assault weapons to suspected straw purchasers, who then allegedly transported these weapons throughout the southwestern border area and into Mexico." On February 4, 2011, Assistant Attorney General Ronald Weich replied in a letter that the "allegation... that ATF 'sanctioned' or otherwise knowingly allowed the sale of assault weapons to a straw purchaser who then transported them into Mexico—is false." On March 16, 2011, alerted by numerous independent sources about a "gunwalking" operation, the House Oversight and Government Reform Committee issued a letter to Mr. Melson requesting all documents and communications regarding Operation Fast and Furious. On March 30, 2011, the Department of Justice notified the Committee that it would not provide any of the requested materials. The next day, the Committee issued a subpoena to Mr. Melson for the relevant documents. Over the next few months, the Department produced numerous redacted files but refrained from disclosing "documents that contain detailed information about ... investigative activities ... includ[ing] information that would identify investigative subjects, sensitive techniques, anticipated actions, and other details that would assist individuals in evading our law enforcement efforts." On October 11, 2011, the Justice Department announced that it had concluded its efforts to respond to the subpoena. The Department explained that the disclosure of a "vast majority of withheld material [was] prohibited by statute," while other documents were withheld in order to protect "pending criminal investigations and prosecutions." In addition, "internal communications" concerning the Department's response to the investigation were withheld because "disclosure would implicate substantial Executive Branch confidentiality interests and separation of powers principles"—their release would have a "chilling effect" on future "deliberations." In response, on October 12, 2011, the Committee subpoenaed Attorney General Eric Holder for an extensive list of materials and communications relating to Operation Fast and Furious, including all documents pertaining to the formulation of the February 4, 2011 letter that denied allegations of "gunwalking." Over the next few months, the Department of Justice produced many documents connected to the program. In a December 2, 2011 letter to the Committee, Deputy Attorney General James Cole admitted that the February 4, 2011 letter "contain[ed] inaccuracies" and "formally withdr[ew]" it. He noted that "Administrations of both political parties" had long agreed that requests for internal deliberation records "implicate[d] significant confidentiality interests grounded in the separation of powers." However, given the "unique circumstances," the Department would "make a rare exception to the Department's recognized protocols and provide ... information related to how the inaccurate information came to be included in the [February 4] letter." The Department still refused to release subpoenaed information in two primary categories: (1) materials judged by the Department not to pertain to the "inappropriate tactics under review by the Committee;" and (2) documents created after the February 4, 2011 letter was issued, relating to "internal communications that were generated in the course of the Department's effort to respond to Congressional and media inquiries." On January 31, 2012, the Committee rejected what it characterized as an attempt to obstruct the congressional investigation, and threatened to hold the Attorney General in contempt if he did not comply fully "with all aspects of the subpoena." On May 3, 2012, the Committee released a draft version of a contempt report for Committee consideration. It criticized the heavy redaction of many documents and outlined three categories in the subpoena that had not been complied with: (1) information relevant to who at the Justice Department should have known of the tactics used in the program, including documents "relating to the preparation of the wiretap applications;" (2) materials "relating to how officials learned about whistleblowers and what actions they took as a result" in order to reveal "the Department's efforts to slow and otherwise interfere with the Committee's investigation;" and (3) documents pertaining to the Organized Crime Drug Enforcement Task Force in order to "reveal the extent of the lack of information-sharing among DEA, FBI, and ATF." In reply, a May 15, 2012, letter from the Department defended its redactions as necessary to "preserve Department interests" in areas outside the "core of the Committee's review." With respect to category (1) the Department argued it was "prohibited by law" from releasing federal wiretap applications. "[C]ore investigative materials from ... ongoing criminal investigations" were also withheld to protect the "independence and integrity of those efforts," a decision that reflected a long held "non-partisan commitment" to separation of powers principles dating to the "early part of the 19 th century." Disclosure, the Department noted, would allow congressional interests to "influence ... the course of the investigation" or "seriously prejudice law enforcement." Turning to category (2) the letter noted that "[a]dministrations of both parties recognized" that "internal communications" made in response to an investigation were "not appropriate for disclosure to the congressional committee conducting the oversight." Additionally, it argued that any release "implicate[d] heightened ... confidentiality interests and ... grave constitutional concerns regarding the separation of powers," including the risk that disclosure would "substantially chill[]" future deliberations. Finally, it argued that category (3) was sufficiently answered—despite the extremely sensitive "confidentiality" interests at stake—at an October 5, 2011 briefing, where Committee staff were shown redacted version of the relevant files. On May 18, the Committee agreed to narrow its subpoena to: (1) "information showing the involvement of senior officials during Operation Fast and Furious;" and (2) "documents from after February 4, 2011, related to the Department's response to Congress." After independent whistleblowers provided the Committee with copies of federal wiretap applications, which apparently satisfied its need for information about senior official involvement, the Committee further narrowed its demand to the post-February 4 documents. On June 11, 2012, Chairman Issa announced that the Committee would vote on whether to hold Attorney General Holder in contempt of Congress on June 20, 2012 if he did not comply. On June 14, 2012, the Justice Department indicated it was willing to produce a "subset" of documents from the post-February 4 th period, and the Committee replied that their delivery would be sufficient to postpone the contempt vote. However, on June 19, 2012, negotiations collapsed and the document disclosure never materialized. On June 20, 2012, Deputy Attorney General James Cole informed the Committee that President Obama had claimed executive privilege over the materials. A June 19, 2012, letter from Mr. Holder to President Obama outlined the reasoning behind this assertion. Pointing to past executive privilege claims in similar situations, Mr. Holder argued that it was "well established that ... 'executive privilege ... encompasse[d] Executive Branch deliberative communications,'" and the requested materials "fit squarely within [its] scope." Disclosure, he argued, would "discourage robust and candid deliberations" and "raise 'significant separation of powers concerns,' by 'significantly impair[ing]' the Executive Branch's ability to respond independently and effectively to matters under congressional review." He continued, arguing that a congressional "power to request information ... and then review the ensuing ... discussions regarding how to respond to that request would ... 'introduce a significantly unfair imbalance to the oversight process.'" Holder also identified an "additional, particularized separation of powers concern" invoked here because the Committee "sought information about ongoing criminal investigations and prosecutions. Such information would itself be protected by executive privilege." In order for a congressional committee subpoena to overcome an executive privilege claim, the letter continued, it must show that the relevant documents are "demonstrably critical" to a "legitimate legislative responsibilit[y]." Mr. Holder argued that in light of the Committee's rejection of the Department's "recent[] offering to provide the Committee with a briefing, based on documents that the Committee could retain" that would cover the post-February 4 period, the "purported connection between the congressional interest cited and the documents at issue is now highly attenuated." As a result, there was no "'demonstrably critical' need for further access to the Department's deliberations." Finally, the Department argued that the "'only informing function' constitutionally vested in Congress 'is that of informing itself about subjects susceptible to legislation, not that of informing the public.'" While the Committee was entitled to the documents previously released—regarding what Department officials knew of the Operation—the Committee had failed to show " any particularized interest ... let alone a need that would further a legislative function" for "other aspects of the Department's response to congressional and related media inquiries, such as procedures or strategies for responding to the Committee's requests." On June 20, 2012, the Committee approved a contempt of Congress resolution along party lines against Mr. Holder with a 23-17 vote. The contempt citation was reported to the full House, and on June 28, 2012, two important resolutions were passed. The first, H.Res. 711 , constituted the formal criminal contempt citation and was approved by a vote of 255-67. The resolution found the Attorney General in contempt of Congress for his failure to comply with a congressional subpoena and directed the Speaker, pursuant to 2 U.S.C. §194, to certify the contempt citation to the U.S. Attorney for the District of Columbia for prosecution. The second resolution, H.Res. 706 , authorized Chairman Issa to initiate a judicial proceeding on behalf of the Committee "to seek declaratory judgments affirming the duty of Eric H. Holder Jr….to comply with any subpoena…issued to him by the Committee as part of its investigation into [Operation Fast and Furious]." H.Res. 706 was approved by a vote of 258-95. Consistent with DOJ's legal position and the precedent set in the previous contempt actions, Deputy Attorney General James Cole informed Speaker Boehner on the same day that the contempt was approved that "the [DOJ] has determined that the Attorney General's response to the subpoena issued by the Committee on Oversight and Government Reform does not constitute a crime, and therefore the Department will not bring the congressional contempt citation before a grand jury or take any other action to prosecute the Attorney General." Although the criminal prosecution of the Attorney General for contempt of Congress appeared to be then foreclosed, the Committee still exercised the authority granted to be in H.Res. 706 and filed a civil enforcement action on August 13, 2012. The case will not resolve whether DOJ has an obligation to prosecute contempt citations that have been approved by a House of Congress and forwarded to the appropriate U.S. Attorney. Nor is it likely that the court will opine on the scope of the contempt power and its proper application. Instead, if the court proceeds to the merits of the claim, the case will likely focus only on the validity of the Committee subpoenas. In evaluating whether the Attorney General is required to comply with the subpoena, the court will likely consider whether the subject matter covered by the subpoena was within the Committee's jurisdiction and whether the Committee was pursuing a valid legislative purpose. Perhaps more significantly, the court will also likely consider whether the documents in question were properly protected by executive privilege, and if so, whether the Committee's need for those documents supersedes that privilege. The case is currently pending before the U.S. District Court for the District of Columbia.
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Legislative oversight is most commonly conducted through congressional budget, authorization, appropriations, confirmation, and investigative processes, and, in rare instances, through impeachment. But the adversarial, often confrontational, and sometimes high profile nature of congressional investigations sets it apart from the more routine, accommodative facets of the oversight process experienced in authorization, appropriations, or confirmation exercises. While all aspects of legislative oversight share the common goals of informing Congress so as to best accomplish its tasks of developing legislation, monitoring the implementation of public policy, and disclosing to the public how its government is performing, the inquisitorial process also sustains and vindicates Congress's role in our constitutional scheme of separated powers and checks and balances. The rich history of congressional investigations from the failed St. Clair expedition in 1792 through Teapot Dome, Watergate, Iran-Contra, Whitewater, and the current ongoing inquiries into Operation Fast and Furious, has established, in law and practice, the nature and contours of congressional prerogatives necessary to maintain the integrity of the legislative role in that constitutional scheme. A review of the historical experience pertinent to congressional access to information regarding the law enforcement activities of the Department of Justice indicates that the vast majority of requests for materials are resolved through political negotiation and accommodation, without the need for judicial resolution. Absent an executive privilege claim or a statute barring disclosure there appears to be no court precedent imposing a threshold burden on committees to demonstrate a "substantial reason to believe wrongdoing occurred" in order to obtain information. Instead, an inquiring committee need only show that the information sought is within the broad subject matter of its authorized jurisdiction, is in aid of a legitimate legislative function, and is pertinent to the area of concern. In the last 85 years, Congress has consistently sought and obtained access to information concerning prosecutorial misconduct by Department of Justice officials in closed cases; and access to pre-decisional deliberative prosecutorial memoranda—while often resisted by the Department—is usually released upon committee insistence as well. In contrast, the Department rarely releases—and committees rarely subpoena—material relevant to open criminal investigations. Typically, disputes are resolved without recourse to an executive privilege claim. Instead, negotiations produce various compromises: narrowing informational requests, delaying the release of information that could have prejudicial consequences on prosecutions, or redacting sensitive materials. However, when Presidents do claim executive privilege, courts have been reluctant to resolve the dispute. Indeed, litigation over the scope of executive privilege in direct relation to congressional oversight and investigations has been quite limited. In total, there have been four cases dealing with executive privilege in the context of information access disputes between Congress and the executive, and two of those resulted in decisions on the merits. The Supreme Court has never addressed executive privilege in the face of a congressional demand for information.
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In the 109th Congress, for the third consecutive Congress, companion bills have beenintroduced ( S. 1155 / H.R. 2470 ) that, if enacted, would establish aCommission on the Accountability and Review of Federal Agencies (CARFA). (1) As discussed later in thisreport, these two bills differ from one another in some key respects, including the procedure forappointing commission members, the agencies that would be within the proposed commission'sscope, and requirements for use of "funds saved" as a result of the commission's plan andrecommendations. (2) Nonetheless, if either version of the legislation is enacted, the proposed CARFA Act would requirethis "review commission," made up of 12 members, to review certain federal agencies and programsto determine if any covered agencies or programs are duplicative , wasteful , inefficient , outdated , irrelevant , or failed . The proposed CARFA would be required (or in some cases in the Senateversion, allowed instead of required) to recommend that any such programs and agencies berealigned or eliminated. The commission's recommendations would then be packaged into animplementation bill that would receive expedited congressional consideration, including prohibitionson amendments and restrictions on procedural delays. Provisions nearly identical to the House and Senate bills also appeared in a budget processreform bill ( H.R. 2290 , Subtitle III.C., providing for the establishment of a Commissionto Eliminate Waste, Fraud, and Abuse) and a bill to offset costs of Hurricane Katrina and HurricaneRita ( S. 1928 , Title III, providing for a CARFA). Nonbinding provisions in the FY2006budget resolution ( H.Con.Res. 95 ) also called for establishing a CARFA-likecommission. Finally, President George W. Bush said in his FY2006 budget submission that hewould put forward, as part of his President's Management Agenda (PMA), legislation authorizinghim to propose "results commissions." These commissions would consider and revise Administrationproposals to restructure and consolidate programs and agencies. (3) Before the legislation'srelease, an Administration official from the Office of Management and Budget (OMB) suggestedthat the results commissions would be similar to the previously proposed CARFA. Proposalsapproved by such a results commission and the President would be considered by Congress underexpedited procedures. Subsequently, the Bush Administration released a legislative proposal forresults commissions and a sunset commission. Bills were later introduced ( H.R. 3276 / S. 1399 ) that substantially incorporated the Administration's draft language thatwould allow the establishment of results commissions. This report analyzes several issues related to the CARFA legislation. The CARFA proposal'sprovisions for expedited congressional consideration have been compared by its proponents to thoseof the legislation that established the Base Closure and Realignment (usually known as "BRAC")commissions. The BRAC commissions have made recommendations to realign and close manymilitary installations in the last 15 years. However, the CARFA proposal also has significantdifferences from the BRAC framework, as discussed later in this report. In addition, OMB hastestified to Congress that, if Congress established CARFA, the commission should use the BushAdministration's Program Assessment Rating Tool (PART) to evaluate programs. (4) This report also brieflydiscusses the results commissions proposal, which appears similar in some respects to presidentialreorganization authority, which lapsed in 1984 and has not been renewed by Congress. (5) The results commissionsproposal also appears similar in some respects to provisions that established BRAC commissions. Like BRAC, the results commissions proposal would provide for multi-stage review ofreorganization plans (i.e., by the commission, the President, and Congress) and expeditedcongressional consideration. The first section of this report summarizes the CARFA legislation's history in the 108th and109th Congresses and its provisions in the 109th Congress. The second section briefly discussesother review commission legislation in the 108th and 109th Congresses. The third section highlightsperspectives that surfaced in the 108th Congress regarding some perceived advantages anddisadvantages of the proposal. The report's fourth section then analyzes several issues that may beof interest in the 109th Congress in the event that the CARFA legislation or similar proposals toestablish a review commission are further considered. In order of presentation, these issues include: the commission's membership; the scope of the commission's review andrecommendations; definitions of key terms; standards and criteria for decision making; expedited congressional consideration; and transparency and participation. Following that discussion, the report discusses potential success factors for commissions and, shouldCongress opt to consider them, potential alternatives or complements to a review commission. These alternatives or complements include pursuing or reauthorizing government reorganization,using the Government Performance and Results Act, and bolstering agency program evaluationcapacity by establishing "chief program evaluation officers." Recent legislative history concerning the proposed CARFA legislation is discussed below,from both the 108th and 109th Congresses. The different types of measures within each Congress(stand-alone bills, budget process reform bills, budget resolutions, and the Bush Administration'sresults commissions proposal) are discussed in chronological order of introduction. 108th Congress. Stand-Alone Bills. On September 26, 2003, SenatorSam Brownback introduced legislation (Commission on the Accountability and Review of FederalAgencies Act, S. 1668 , 108th Congress) to establish a commission to "conduct acomprehensive review of Federal agencies and programs and to recommend the elimination orrealignment of duplicative, wasteful, or outdated functions, and for other purposes" (bill title). Thebill was referred to the Senate Committee on Governmental Affairs, and on September 29, 2003, wasfurther referred to the committee's Subcommittee on Oversight of Government Management, theFederal Workforce, and the District of Columbia. The subcommittee held a hearing on S.1668 on May 6, 2004. (6) However, the bill did not receive further action. A companion House bill, H.R. 3213 , was introduced by Representative ToddTiahrt on October 1, 2003, and was referred jointly to the House Committees on GovernmentReform and Rules, but did not receive further action. (7) Under both the House and Senate bills, the proposed CARFA,made up of 12 members all appointed by the President, would have been required to reviewnon-defense, non-entitlement federal agencies and programs -- accounting for approximatelyone-fifth of the federal budget. (8) Both bills would have required "funds saved" by theimplementation of the commission's plan and recommendations to be used to "support otherdomestic programs" or "pay down the national debt." Budget Process Reform Bills. Nearly identicalprovisions appeared in several budget process reform bills (108th Congress, H.R. 3800 / S. 2752 , H.R. 3925 , and in floor amendments to H.R. 4663 ). These provisions, however, would have established a commission to review all federalexecutive agencies and programs (although H.R. 3925 did not provide for expeditedcongressional consideration) without requirements regarding the used of funds saved. (9) Budget Resolutions. In addition, the CARFAproposal was cited in the context of congressional budget resolutions in both the first and secondsessions of the 108th Congress. In the FY2004 budget resolution (108th Congress, H.Con.Res. 95 , Section 606), which was agreed to by the House and Senate, nonbindingsense of the Senate provisions called for the establishment of a commission ... to review Federal domestic agencies, and programswithin such agencies, with the express purpose of providing Congress with recommendations, andlegislation to implement those recommendations, to realign or eliminate government agencies andprograms that are duplicative, wasteful, inefficient, outdated, or irrelevant, or have failed toaccomplish their intended purpose. (10) In remarks during Senate consideration of the resolution, Senator Brownback stated that thislanguage referred to his CARFA proposal. (11) In the FY2005 budget resolution, nonbinding sense of the Senate provisions in theSenate-passed version (108th Congress, S.Con.Res. 95 , Section 502) and in theHouse-passed conference report to the FY2005 budget resolution ( H.Rept. 108-498 , Section 602)called for enactment of the CARFA legislation. (12) The CARFA-related provisions stated, among other things, ... that legislation should be enacted that would createa bipartisan commission for the purpose of -- (1) submitting recommendations on ways to eliminatewaste, fraud, and abuse; and (2) ... provid[ing] recommendations on ways in which to achieve costsavings through enhancing program efficiencies in all [domestic] discretionary and entitlementprograms. These provisions further called for the commission to "realign or eliminate government agencies andprograms that are duplicative, inefficient, outdated, irrelevant, or have failed to accomplish theirintended purpose." 109th Congress. Budget Resolution. For the third consecutive year,the CARFA proposal was cited in the context of congressional consideration of the budgetresolution, in this case, for FY2006. (13) The Senate-passed version of the budget resolution, S.Con.Res. 18 , was agreed to on March 17, 2005, by a vote of 51-49. Section 502 ofthe measure contained a sense of the Senate provision very similar to the language that was includedin the FY2004 budget resolution, albeit with changed word ordering and deletion of the word"domestic" when specifying the agencies that would be subject to such a review. At Senate passage,the section read as follows: It is the sense of the Senate that a commissionshould be established to review Federal agencies, and programs within such agencies, with theexpress purpose of providing Congress with recommendations, and legislation to implement thoserecommendations, to realign or eliminate Government agencies and programs that are wasteful,duplicative, inefficient, outdated, irrelevant, or have failed to accomplish their intendedpurpose. The section language was amended in the conference on the FY2006 budget resolution to includea clause that would also call for an "assessment of programs on an accrual basis"( H.Con.Res. 95 , Section 502). (14) On April 28, 2005, the conference report was agreed to in theHouse by a vote of 214-211 and in the Senate by a vote of 52-47. Subsequently, several bills wereintroduced proposing the establishment of CARFA or a CARFA-like commission. Budget Process Reform Bill and Hurricane Cost OffsetBill. On May 11, 2005, Representative Jeb Hensarling introduced H.R. 2290 (Family Budget Protection Act of 2005), a budget process reform measure,with 58 original cosponsors. The bill was referred to House Committees on the Budget, Rules, Waysand Means, Appropriations, and Government Reform, but has not received further action. Themeasure was announced and endorsed by the Republican Study Committee. (15) Subtitle III.C. of the bill(Sections 331-337) would provide for the establishment of a Commission to Eliminate Waste, Fraud,and Abuse. These provisions were identical to those from H.R. 3800 , introduced in the108th Congress, which, as discussed previously, would have established a commission to review all federal executive agencies and programs, though without requirements regarding the use of "fundssaved" as a result of the commission's plan and recommendations. On October 27, 2005, Senator John Ensign introduced S. 1928 (SpendingMoney Accountably to Rebuild After Tragedy Act), with seven original cosponsors. The bill wasreferred to the Senate Committee on Homeland Security and Governmental Affairs, but has notreceived further action. Title III of the bill (Sections 301-308) would provide for the establishmentof a CARFA. These provisions were nearly identical to those from S. 1155 , SenatorBrownback's bill that would establish a CARFA. Stand-Alone Bills. Representative Tiahrt introduced H.R. 2470 (Commission on the Accountability and Review of Federal Agencies Act)on May 18, 2005. The bill was referred to the House Committees on Rules and GovernmentReform, but has not received further action. The measure's provisions were identical to those ofRepresentative Tiahrt's legislation from the 108th Congress, H.R. 3213 , and SenatorBrownback's legislation from the 108th Congress, S. 1668 . Accordingly, the billprovided, among other things, that the commission's scope would not include the Department ofDefense, entitlement programs, and agencies that solely administer entitlement programs. H.R.2470 also, like the earlier bills, retained language providing for presidential appointmentof all 12 commission members, and requiring that funds saved would be used to support otherdomestic programs or pay down the national debt. Senator Brownback introduced S. 1155 (Commission on the Accountability andReview of Federal Agencies Act) on May 26, 2005, with 21 original cosponsors. The bill wasreferred to the Senate Committee on Homeland Security and Governmental Affairs, but has notreceived further action. While Representative Tiahrt's bill was identical to its predecessor from the108th Congress, Senator Brownback's bill, in contrast, changed from the previous version in severalrespects. The major changes, which are described in more detail in this report's next section,included expanding the commission's scope to include DOD, agencies that solely administerentitlement programs, entitlement programs, and the Executive Office of the President (EOP). Inaddition, S. 1155 provides for "hybrid" appointment of commission members by thePresident and Members of Congress, instead of only by the President. Finally, the bill deletedlanguage that would have required "funds saved" to be used to support domestic programs or to paydown the national debt. When introducing the bill, Senator Brownback explained his reasoning forthe changes and hopes for the proposal. Last year, we had a bipartisan hearing onCARFA, at which all witnesses supported the CARFA concept. We have incorporated some of thesuggestions made at the hearing, and I believe this year's version of CARFA is even better. I am pleased thatthe Senate is already on record supporting the CARFA concept through Section 502 of this year'sbudget resolution, and it is my hope that we will be able to work with leadership to see CARFAbecome a reality this year. (16) "Results Commissions" Proposal and Bills. Finally,a legislative proposal from the President for "results commissions" has been compared to theproposed CARFA Act. OMB issued a press release on January 26, 2005, mentioning the resultscommissions proposal, (17) and OMB's Deputy Director for Management Clay Johnson IIIreportedly spoke with the media about the proposal at that time. Subsequently, a press reportindicated that the proposed results commission "would function much like the military BaseRealignment and Closure program." (18) On February 7, 2005, President George W. Bush transmitted hisFY2006 budget proposal to Congress. (19) As part of that proposal, the Bush Administration said it wouldpropose, as a "next step" for the "budget and performance integration" initiative of the President'sManagement Agenda (PMA), that Congress enact legislation to give the President authority torecommend the creation of results commissions. (20) The President also proposed establishment of a "sunsetcommission," which is not analyzed in detail in this report. (21) In justifying the proposal, the Administration asserted "[d]ysfunctional program overlap iswhy many of the 30 percent of programs [rated by the PART instrument] are rated either ineffectiveor unable to demonstrate results." (22) The Administration also claimed that "overlapping jurisdictionsin Congress provide daunting hurdles to legislative remedies for the poor performance of duplicativeprograms." (23) Anotherreference to the results commissions proposal, included in the Administration's FY2006 budget,offered this justification: The Federal government's ability to serve the Americanpeople is often hampered by poorly designed programs or uncoordinated, overlapping programstrying to achieve the same objective. Overlapping jurisdictions in the Executive Branch andCongress provide daunting hurdles to legislative remedies to the poor performance of duplicativeprograms. Because the potential for savings and productivity are great, the Administration ... plansto propose legislation that gives the President the authority to propose Results Commissions. Thesecommissions would consider and revise Administration proposals to improve the performance ofprograms or agencies by restructuring or consolidating them. Congress would approve individualResults Commissions to address single program or policy areas where duplication and theoverlapping jurisdictions of Executive Branch agencies or Congressional committees hinder reform. Proposals approved by the commission would then be approved by the President and considered byCongress under expedited procedures. (24) On March 22, 2005, Deputy Director for Management Johnson said the Administration wouldsubmit the results and sunset commission draft legislation to Congress in the next few months. (25) With regard to the resultscommission proposal, he went further to say that Senator Brownback had sponsored similarlegislation in the previous Congress, alluding to Senator Brownback's CARFA bill. On June 30, 2005, OMB released the expected legislative proposal to establish resultscommissions and a sunset commission, entitled "The Government Reorganization and ProgramPerformance Improvement Act of 2005," and said it had transmitted the proposal to Congress. (26) In a transmittal letter, (27) Joshua B. Bolten, Directorof OMB, said OMB was submitting the draft legislation on behalf of the President. He asserted the"proposal would institutionalize for Congress and the Executive Branch procedures that wouldstrengthen the focus on Government agencies and programs achieving results" and summarized theresults commission proposal in language similar to what was included in the FY2006 budgetproposal. On July 14, 2005, bills were introduced in the Senate and House that substantiallyincorporated the draft results and sunset commission language, albeit with some changes. Representative Jon Porter introduced H.R. 3276 (GovernmentReorganization and Improvement of Performance Act), which would provide only for resultscommissions, with two original cosponsors. The bill was referred to the House Committees onRules and Government Reform. On September 27, 2005, the bill was further referred to the HouseCommittee on Government Reform's Subcommittee on the Federal Workforce and AgencyOrganization, which held a hearing on the bill (along with H.R. 3277 , as describedbelow) on the same day. (28) The bill has not received further action. Representative Kevin Brady introduced H.R. 3277 (FederalAgency Performance Review and Sunset Act), which would provide for a sunset commission, withtwo original cosponsors. The bill was referred to the House Committees on Rules and GovernmentReform. On September 27, 2005, the bill was further referred to the House Committee onGovernment Reform's Subcommittee on the Federal Workforce and Agency Organization (alongwith H.R. 3276 , as described above), and was the subject of a hearing (along with H.R.3276, as described above) on the same day. The bill has not received furtheraction. Senator Craig Thomas introduced S. 1399 (The GovernmentReorganization and Program Performance Improvement Act of 2005), which would provide for bothresults commissions and a sunset commission. The bill was referred to the Senate Committee onHomeland Security and Governmental Affairs, but has not received furtheraction. More complete descriptions of these bills' provisions are available in the section of this reportentitled "Other Review Commission Proposals." The bills providing for results commissions ( H.R. 3276 / S. 1399 )differ from the proposed CARFA legislation in many respects. These differences relate to: establishment of commission(s) (e.g., under the results commission proposal,necessity for further congressional action, under expedited procedures, to establish unlimited numberof President's proposed results commissions, while the proposed CARFA Act would, without usingexpedited procedures, establish one commission); appointment and size of membership (e.g., 7 members appointed by thePresident under the results commissions proposals, versus 12 members appointed by the Presidentor the President and Members of Congress under the House and Senate versions, respectively, of theproposed CARFA Act); scope of commission review and recommendations (e.g., possibly narrowerscope under a single results commission, albeit with unlimited ability of President to proposeestablishment, under expedited congressional procedures, of multiple results commissions in manypolicy areas, compared to wider scope under CARFA under a single commission); and standards and criteria for decision making (e.g., none specified for resultscommissions, in contrast with several criteria under CARFA). Additional differences relate to issues of transparency, public participation, commission powers, andcommission administrative provisions. Both the proposed results commissions and CARFAlegislation would provide versions of expedited congressional consideration of commissionrecommendations. Many aspects of the results commission proposals appear to resemble presidentialreorganization authority under 5 U.S.C. §§ 901-912, which expired in 1984, but has been the subjectof occasional congressional interest. In the subcommittee hearing on H.R. 3276 , OMBDeputy Director for Management Clay Johnson III testified that the results commissions legislationwas proposed, instead of reorganization authority, because the Administration judged "there was zerochance of [reorganization authority] ever being approved" by Congress. (29) Because of the majordifferences between the proposed CARFA Act and the results commission proposals, as describedabove, detailed discussion and analysis of the results commission proposals are not within the scopeof this report. However, many issues concerning presidential reorganization authority are discussedand analyzed in detail elsewhere. (30) The balance of this report analyzes the CARFA legislation as introduced in the billssponsored by Representative Tiahrt and Senator Brownback in the 109th Congress ( H.R. 2470 / S. 1155 ). For topics where the two versions are the same, the discussion in thesections below does not differentiate between the bills. For topics where the two versions of theCARFA legislation substantively differ from one another, the sections describe the differences. Duties of the Commission, President, and Joint CongressionalLeadership. As drafted in H.R. 2470 / S. 1155 , thelegislation would establish a 12-member CARFA and require the review commission's members tobe appointed within 90 days of the legislation's enactment. The House version would require thePresident to appoint all 12 members of this review commission. The Senate version, by contrast,would provide for a "hybrid" commission (i.e., appointment of members by both the President andcertain Members of Congress) with four members appointed by the President, two appointed by theSenate majority leader, two appointed by the Senate minority leader, two appointed by the Speakerof the House, and two appointed by the House minority leader. Both versions would require thePresident to designate a chairperson and vice chairperson from among the commission members. It appears that officers and employees of the federal government and non-federal individuals couldbe appointed as members. The proposed CARFA would be required to: under the House version, evaluate all executive branch agencies and programs, excluding agencies and programs within the Department of Defense (DOD), entitlement programs,"any agency that solely administers entitlement programs," and perhaps the EOP; (31) and, under the Senateversion, evaluate all executive branch agencies and programs, including the EOP; (32) determine, according to brief definitions in the legislation, if an agency orprogram is duplicative , wasteful , inefficient , outdated , irrelevant , or failed ;and submit to the President and Congress, not later than two years after the dateof enactment, a plan with recommendations of how any such agencies and programs should berealigned or eliminated, along with supporting documentation and proposed legislation to implementthe recommendations. Under the House version of the CARFA legislation, a determination that certain agencies orprograms fit one or more definitions of duplicative , wasteful , inefficient , outdated , irrelevant , or failed would require the commission to make recommendations, as outlined in the bill, to realign oreliminate the agencies or programs. In the Senate version, by contrast, if an agency or program weredetermined only to be wasteful or inefficient , the commission would be allowed, but not required,to recommend realignment or elimination. In addition, under the House version, the legislationproposed by the commission would be required to provide that all funds saved by implementationof the commission's plan be used to "support other domestic programs" or "pay down the nationaldebt." Under the Senate version, there would be no requirement regarding uses of saved funds. The legislation would also require the President, not later than one year after the date ofenactment, to: establish a systematic method, according to certain requirements, for assessingthe effectiveness and accountability of these agencies and programs; submit to the commission assessments of not less than one-half of all thelegislation's covered programs; and identify "common performance measures" for covered programs that have"similar functions." (33) The commission would be required to "consider" the assessments submitted by the President, butonly after the commission reviewed and accepted the President's method for assessing agencies andprograms. Powers of the Commission. CARFA would beempowered to hold hearings; issue subpoenas for testimony and evidentiary materials; secureinformation from federal agencies; use the U.S. mail as do other federal agencies; and accept, use,and dispose of gifts or donations of services or property. Commission Personnel Matters. (34) Non-federal CARFAmembers would not receive compensation except for travel expenses. Federal officers or employeeswould continue to receive their normal compensation. The CARFA chairperson would be authorizedto appoint and terminate an executive director (subject to confirmation by the commission) and othercommission staff without regard to civil service laws and regulations. The rate of pay for thecommission's executive director and other personnel would not be allowed to exceed the maximumrate payable for a GS-15 position under Section 5332 of Title 5, United States Code , whichestablishes the General Schedule of civil service pay rates. The executive director and personnel ofthe commission would be considered federal employees under several chapters of Title 5, UnitedStates Code , for the purposes of leave (Chapter 63); compensation for work injuries (Chapter 81);retirement (Chapters 83 and 84); unemployment compensation (Chapter 85); life insurance (Chapter87); health insurance (Chapter 89); and long-term care insurance (Chapter 90). Under the Senateversion, the executive director and commission personnel would also be considered federalemployees for the purposes of "enhanced dental benefits" (Chapter 89A) and "enhanced visionbenefits" (Chapter 89B). Federal government employees could be detailed to the commissionwithout reimbursement to the lending agency. Expedited Congressional Consideration. Thelegislation would establish an expedited procedure for each house to consider the commission'sproposed legislation ("implementation bill"). (35) These provisions (like other expedited procedures) wouldoperate as procedural rules of each chamber for consideration of the implementation bill. Therefore,each house would be able to alter the procedural rules at any time, pursuant to its constitutionalpower to change its own rules. The measure would provide for automatic introduction of theimplementation bill in each chamber and referral to any appropriate committees of jurisdiction. Under the House version of the CARFA legislation, a committee would be allowed to report theimplementation bill "without amendment." Under the Senate version, a committee would be allowedto "review and comment" on the implementation bill and report it to the Senate, but "may notamend" the implementation bill. If a committee did not report the implementation bill within 15calendar days after the bill's introduction, the committee would be automatically discharged offurther consideration, and the measure would be placed on the chamber's appropriate calendar. Itwould then be in order for any Member to move that the respective house proceed to consider thebill. All points of order against this motion to proceed would be waived. If the motion weredefeated, it could be repeated. Various potential dilatory motions against this motion to proceedwould also be prohibited. If the chamber chose to consider the implementation bill by adopting themotion to proceed, consideration of the measure would be "locked in." Debate would be limited to10 hours, and no amendment to the implementation bill would be in order. At the conclusion ofdebate, a vote on final passage would occur automatically. (This vote could be preceded by a singlequorum call, if requested.) If either house had already received the implementation bill passed bythe other house, the vote on final passage would occur on the received companion bill. Authorization of Appropriations. The Houseversion would provide authorization for appropriations for the fiscal years FY2004 throughFY2006, (36) and theSenate version would provide authorization for appropriations for FY2006 through FY2008. Other review commission bills were introduced in the 108th and 109th Congresses, in additionto the CARFA legislation. Detailed analysis of each of these measures is outside the scope of thisreport, but provisions of the bills raise many of the same issues as the CARFA legislation. Theseissues may be of interest should Congress opt to consider review commission legislation in the 109thCongress. None of these bills was the subject of hearings or reported from committee. H.R. 1227 (Representative Kevin Brady), the Abolishment of Obsolete Agenciesand Federal Sunset Act of 2003, would have established a Federal Agency Sunset Commission toreview agencies and make recommendations for administrative and legislative action, and providedthat agencies be abolished if not reauthorized by Congress. (37) Among other things, thelegislation would have provided for appointment of commission members by the Speaker of theHouse and Senate majority leader, public hearings, and opportunities for public comment. Thesegeneral topics, regarding a review commission's membership and opportunities for participation inthe commission's work, are discussed later in this report with regard to the CARFA legislation. H.R. 1632 (Representative Edward R. Royce), the Government Reform Act of2003, would have established a Government Reform Commission to review federal agencies andprograms and propose a reorganization plan for federal agencies, which would have receivedexpedited consideration from the President and Congress in a process that, according to the bill, wasmodeled on the BRAC commission statute. The legislation would have provided for appointmentof commission members by the President. The President would have been required to consult withboth majority and minority leaders in the House and Senate regarding four commission members,and the President would have been prohibited from appointing more than a certain number ofmembers from the same political party. The topics of expedited congressional consideration andcommission membership are, as stated above, discussed in this report with regard to the CARFAlegislation. H.R. 2153 (Representative Richard Gephardt), the Corporate Subsidy ReformCommission Act of 2003, would have required federal agencies to identify programs and laws thatthe agency head determined were "inequitable federal subsidies," established a commission to reviewthe agency head determinations, and required the commission to submit to the President a report withits findings and recommendations. The President would have been required to review this report andsubmit to the commission a report indicating whether the President approved or disapproved the"entire package" of the commission's recommendations, including, in the case of disapproval, hisreasons. In the case of disapproval, the commission would have been required to submit to thePresident a revised list of recommendations. If the President approved the package, the Presidentwould have been required to submit the recommendations to Congress, along with supportinginformation, for expedited consideration. If the President disapproved a revised package or did notsubmit to Congress an approval, the act's provisions would have been terminated. The commission'sscope under this legislation would have been narrower than the CARFA proposal in some respects(e.g., H.R. 2153 included only some kinds of funding in its scope) but wider in others (e.g.,including tax laws, not just programs and agencies). Appointments to the commission would havebeen made by both the President and leadership of Congress, majority and minority. This legislationwas in several respects similar to H.R. 2902 and H.R. 3762 , describedbelow. H.R. 2902 (Representative Adam Smith), the Corporate Subsidy ReformCommission Act of 2003, would have required federal agencies to identify programs and laws thatthe agency head determined were "inequitable federal subsidies"; established a commission to reviewthe agency head's determinations; and required the commission to submit to Congress its findingsand recommendations. The commission's scope under this legislation would have been narrower than the CARFA proposal in some respects (e.g., H.R. 2902 included only funds that areprovided by the federal government to corporations and other entities, and excluded funds that"primarily benefit" public health, safety, homeland security, the environment, or education) but wider in others (e.g., would have included tax advantages and potentially other non-appropriated benefitsfor corporations and other entities). The legislation also would have provided for appointment ofcommission members by congressional leaders and commission meetings open to the public. Another bill, H.R. 3762 (Representative Adam Smith), the Corporate Subsidy ReformCommission Act of 2004, was nearly identical to H.R. 2902, but with an expanded scopeof "inequitable federal subsidies" to be reviewed. H.R. 2903 (Representative Adam Smith), the Program Reform Commission Actof 2003, would have required federal agencies to identify programs that the agency head determinedwere "no longer necessary," established a commission to review the agency head determinations, andrequired the commission to submit to Congress its findings and recommendations. Under thelegislation, the commission's scope would have been extended to "programs" in all agencies of thefederal government, arguably including all three branches and other entities, but would havenarrowed the scope to exclude programs that "primarily benefit" public health, safety, homelandsecurity, the environment, or education. The measure would have also provided for commissionmember appointment and open meetings similar to those in H.R. 2902 . Another bill, H.R. 3761 (Representative Adam Smith), the Program Reform Commission Act of2004, was nearly identical to H.R. 2903, but with an expanded scope of "programs" to bereviewed. H.R. 973 (Representative Adam Smith), the Program Reform Commission Act,is nearly identical to H.R. 3761 (108th Congress), described above. Changes to the bill,compared to the prior version from the 108th Congress, include explicitly establishing thecommission in the legislative branch and prohibiting an officer or employee of a federal agency fromserving as a member, among others. H.R. 974 (Representative Adam Smith), the Corporate Subsidy ReformCommission Act, is nearly identical to H.R. 3762 (108th Congress), described above. Changes to the bill, compared to the prior version, include establishing the commission in thelegislative branch and prohibiting an officer or employee of a federal agency from serving as amember, among others. H.R. 3276 (Representative Jon Porter), the Government Reorganization andImprovement of Performance Act, incorporated language from the Bush Administration legislativeproposal described previously in this report, regarding "results commissions," with changes. ( H.R. 3277 , described below, incorporated language from the same BushAdministration proposal, but instead regarding a "sunset commission.") The bill would allow thePresident to propose the establishment of results commissions to Congress and to specify theagencies or programs the proposed commission would study. Congress would consider theestablishment of a results commission under expedited procedures. If Congress established a resultscommission, the President would be required to appoint seven commission members, "who shallserve at the pleasure of the President," of whom four would be required to be appointed "inconsultation" with certain congressional leaders. The President would be allowed to submitproposals to the commission to reorganize agencies or programs in certain "areas where multipleFederal programs have similar, related, or overlapping responsibilities... ." The commission wouldevaluate the proposal, hold public hearings "to the extent appropriate," and respond to the Presidentwith recommended changes. If the President disapproved the commission recommendations inwhole or in part, the commission would be required to respond to the President's "concerns" withany changes in recommendations. The President would then be allowed to transmit to Congress forexpedited consideration the commission's final recommendations together with draft legislation toimplement the recommendations. (38) The commission would cease to exist within nine months afterit commenced operations. The topics of expedited congressional consideration and commissionmembership, among others, are discussed in the present report with regard to the CARFA legislation. H.R. 3277 (Representative Kevin Brady), the Federal Agency PerformanceReview and Sunset Act, substantially incorporates language from the Bush Administration legislativeproposal described previously in this report, regarding a sunset commission, albeit with changes. The bill would establish a sunset commission that, according to a schedule prepared by the Presidentand considered by Congress under expedited procedures, would review executive branch programsand agencies according to certain criteria. Apparently to provide assistance in crafting the President'sschedule, the Director of the Congressional Research Service, with the assistance of the ComptrollerGeneral, would be required to prepare and update an inventory of all executive branch agencies andprograms. The President would be required to appoint seven commission members, "who shall serveat the pleasure of the President," of whom four would be required to be appointed "in consultation"with certain congressional leaders. The commission would be required to consider recommendationsmade by the President and would be allowed to consider "agency or program evaluations andassessments," including those undertaken by OMB. The OMB "assessments" would be required toevaluate several aspects of programs. These aspects are identical to those enumerated in H.R. 185 (Program Assessment and Results Act), which would require OMB programassessments modeled on the Bush Administration's PART. (39) The commission wouldbe required to hold public hearings "to the extent appropriate," and report annually to the Presidentwith recommendations and legislation needed to carry out its recommendations. Agencies andprograms would be abolished two years after the date that the President submitted the report toCongress, unless the agency or program were reauthorized by law after the President's submission,or unless the two-year period were extended by an additional two years, by law. The commissionwould terminate on December 31, 2026. H.R. 3282 (Representative Kevin Brady), the Abolishment of Obsolete Agenciesand Federal Sunset Act of 2005, is nearly identical to H.R. 1227 (108th Congress),described previously. However, among other differences from the prior version, the current billwould not authorize the commission to make recommendations for appropriation levels. S. 1399 (Senator Craig Thomas), "The Government Reorganization and ProgramPerformance Improvement Act of 2005," substantially incorporates language from the BushAdministration legislative proposal described previously, regarding both results commissions anda sunset commission, albeit with changes. The bill's provisions relating to results commissions arevery similar, but not identical, to those in H.R. 3276 (e.g., there are several structuraland technical differences in the language). The bill's provisions relating to a sunset commission arevery similar, but not identical, to those in H.R. 3277 (e.g., certain regulations would beexempt from potential abolishment under the act). A number of potential issues, advantages, and disadvantages regarding the proposed CARFAlegislation were highlighted during the hearing for S. 1668 , 108th Congress, before theSenate Committee on Governmental Affairs, Subcommittee on Oversight of GovernmentManagement, the Federal Workforce, and the District of Columbia. No hearings on the companionHouse bill, H.R. 3213 , were held. In the 109th Congress, the House version of theCARFA legislation, H.R. 2470 , is identical to the Senate version from the 108thCongress, S. 1668. On May 6, 2004, the subcommittee convened a hearing on S. 1668 . In hisopening statement, Chairman George Voinovich said: [The CARFA Act] focuses our attention on an importantquestion facing Congress as we attempt to allocate scarce Federal resources. How do we identifyand reform or eliminate wasteful, ineffective, and outdated governmentprograms?... The biggest problem we must overcome in thiseffort is that almost every program in the Federal Government, no matter how ineffective orspendthrift, has its own core of supporters.... It would be wishful thinking, at best, to believe we canrestructure or shut down large numbers of programs across multiple Federal agencies withoutprovoking a firestorm of opposition. Nevertheless, that task must be undertaken if we are to haveany hope of providing taxpayers the most effective and efficient government possible. That is thegoal of the legislation before us today. (40) Senator Voinovich also cited work done by the General Accounting Office (GAO), which identified"areas of overlap and fragmentation" among federal agencies and programs. (41) In a prepared statement, Senator Brownback outlined the CARFA proposal, saying that "oncea program comes into existence, experience tells us that the program is here to stay -- whether it issuccessful, unsuccessful, or outdated." Senator Brownback also displayed FY2004 and FY2005scores from the Bush Administration's PART in a "report card" for federal agencies, (42) and said that "examplesof government programs that have failed to address effectively the problem they targeted abound." Furthermore, Senator Brownback's prepared statement argued that to address the problem of eliminating well-intended,though ineffective or outdated government programs ... we must learn from both our past failuresand successes. ... I believe we have had one process that has been successful in the realm ofprogram-elimination and prioritization of spending -- the Base Realignment and ClosureCommission (BRAC) ... with the BRAC commission submitting its recommendations to Congressfor the realignment and closure of military bases, [and] the Congress taking an up-or-down vote toaccept or reject the plan as a whole.... [W]ith this in mind, I specifically modeled the [CARFA Act]after BRAC.... Whereas the BRAC Commission examinedmilitary bases and the Department of Defense (DOD), CARFA would review federal agencies, andprograms within agencies. The scope of this commission would be directed toward non-DODdiscretionary agencies and programs ... roughly, a modest quarter of federal spending. I see this asa reasonable first step. If CARFA is successful, future Congresses may choose to authorize newrounds, as there have been multiple rounds of BRAC. (43) Senator Brownback's prepared statement also addressed what he said were two potential concerns. Some have raised concerns that CARFA would amountto the Congress delegating its authority. I answer this concern by noting that CARFA is anappropriate exercise of Congressional oversight and authority. Nothing substantive happens unlessthe Congress passes the Commission's proposed legislation. Others have concerns over the expedited processfor CARFA, because amendments at either the committee level or on the Floor are not in order. Ianswer this concern by noting that the only chance we have for successfully eliminating governmentwaste through CARFA is a straight up-or-down vote. BRAC was successful because members hadto vote on the whole package.... In the case of CARFA, if members could offer amendments toexempt specific programs or agencies, CARFA will not be successful. (44) Echoing some of the same themes earlier in the year, the CARFA legislation's House sponsor,Representative Tiahrt, had offered the following observations in a "U.S. Capitol Update" datedMarch 12, 2004, on his website: Many members of Congress have recognized the needfor an independent body with the appropriate resources to review the federal bureaucracy andidentify programs that are duplicative, ineffective or inefficient. By giving Congress an up-or-downvote on a single package, it will eliminate a great deal of the political wrangling that usuallyaccompanies cutting a government program. Frankly, it also recognizes the fact that members ofCongress simply do not have the time or resources to delve into the details of the federal governmentand provide the type of accountability we would prefer. (45) OMB's deputy director for management, Clay Johnson III, expressed support at the hearingfor both Congress and the executive branch systematically to assess "program performance and cost"as well as to "[work] with [Congress] to craft a sensible approach to ensure that a focus on resultsbecomes a habit ... and irreversible." (46) Deputy Director Johnson also stated that "[r]equiring by statutethat program performance and cost be systematically assessed would help accomplish this." (47) However, in representingthe Administration, he did not explicitly endorse the bill or the idea of a commission. During theSenate hearing, Deputy Director Johnson said the Bush Administration was willing to establish a"formal partnership" with Members of Congress who are interested in evaluating and streamliningprograms. (48) He alsotestified that the Bush Administration supported expedited congressional consideration of proposalsto realign or eliminate certain programs, and that the proposed CARFA should "rely on PARTinformation [and] rely on evaluations from the Executive Branch, from OMB or the agencies" whenrecommending programs for realignment or elimination. In addition, if the commission wished, itcould "challenge some of [the PART] assessments ... and add fresh perspective to it." (49) In that context, SenatorVoinovich spoke about a need to use nonbiased criteria in formulating the commissionrecommendations. Deputy Director Johnson added that OMB has made PART scores and analysispublicly available, because "[t]hese evaluations have to be able to stand the test of publicscrutiny." (50) Former House Majority Leader Richard K. Armey, co-chairman of Citizens for a SoundEconomy (which subsequently merged with Empower America to form FreedomWorks), testifiedin favor of the proposed CARFA Act at the Senate hearing. (51) Mr. Armey stated,"Washington has a spending problem," and "[the CARFA Act] aims to find federal waste in asystematic fashion, guided by a clear and uncontroversial set of principles, and eliminate it." He alsosuggested that the CARFA proposal could be broadened to include all discretionary spending. (52) Mr. Armey cited a GAOreport that, in view of several trends, concluded, "a fundamental review is needed to ensure relevantand sustainable government programs." (53) In addition, Mr. Armey compared the proposed CARFA Actfavorably with BRAC. CARFA, like BRAC, would take parochial politics outof the budget process and make members decide in an up or down vote whether they wanted torealign and streamline the use of taxpayer's dollars going to duplicative, wasteful or irrelevantagencies. In effect, you would ask members of Congress to take a clear up or down vote on wasteprimarily benefitting other districts, effectively turning the politics of pork upside down. (54) Mr. Armey also testified about insulating the commission's work from politics. For the [BRAC-like] process to work, then, you musthave professional information, professional data, and serious hard-working members of thecommission that will not allow politics to impinge on their thinking. And Congress needs theassurance that it will not be political.... [T]he most important thing you must have [in this legislation]is insulation from politics so that the members will not be concerned about having political reprisalstaken against them, the need of a professional criteria and professional judgment by a serioushard-working commission that commands the respect of the members. (55) The hearing's final witness, Paul Weinstein Jr. of the Progressive Policy Institute (PPI),testified that "[t]he executive branch needs a top-to-bottom overhaul" and that "[PPI] has longadvocated creating a commission to reinvent government and eliminate corporate welfare." (56) Furthermore, Mr.Weinstein stated: Our organization has long believed that the best wayto achieve comprehensive reform of the executive branch is to combine the commission functionwith a mechanism to require Congress to vote on its recommendations. Senator Brownback'sCARFA legislation would provide for this type of commission.... However, I believe ... S.1668 needs to be modified in several key aspects. Mr. Weinstein outlined four themes for modifying the legislation. First, under the heading"Bipartisanship," he argued that the CARFA Act should follow the BRAC model more closely byrequiring the members to be appointed by the President by and with the advice and consent of theSenate and composed of equal numbers of Republicans and Democrats. (57) Second, under the heading"Expanded Scope," Mr. Weinstein recommended including all executive branch agencies, programs,and "targeted tax incentives" in the commission's scope of review. Third, under the heading"Multiple Rounds," he recommended that the commission be allowed to submit more than one roundof recommendations, in order to provide the proposed CARFA with "needed flexibility" in the faceof complicated work, and to build public support and increase the likelihood of success. Fourth andfinally, under the headline "Additional Criteria," Mr. Weinstein recommended including additionalcriteria for the commission to consider (in addition to the bill's "duplicative," "wasteful orinefficient," and "outdated, irrelevant, or failed" standards). These criteria would includerestructuring agencies into mission-focused departments, simplifying programmatic regulations,eliminating corporate subsidies "that do not serve the public interest," and directing the commissionto make no recommendations that "it believes might negatively impact the health, safety, and securityof the American people." Several issues and options may be of interest to Congress if the CARFA legislation receivesfurther consideration during the 109th Congress, or if Congress opts to consider alternativeapproaches to reviewing executive branch operations and making improvements. For ease ofpresentation, these items are grouped into three sections: potential issues regarding a review commission; potential success factors for a commission; and potential alternatives or complements to a review commission. Congress and the President have a variety of policy and procedural tools that can help themassess government operations, organization, and performance. One such tool that has been usedoccasionally by Congress has been the statutorily created review commission. During the 20thcentury, Congress and the President established a number of review commissions that were intendedto promote improved efficiency, effectiveness, accountability, and transparency in the executivebranch. With varying emphases, these commissions typically reviewed executive branchorganization, operations, and management, as well as associated public policies. A detailedassessment of each of these efforts is beyond the scope of this report. (58) However, characteristicsof past review commissions can highlight potential points of contrast with the CARFA legislationor other review commission proposals. In particular, the present report frequently highlights someof the characteristics of two commissions -- the Hoover Commission (which operated from 1947 to1949) (59) and the BRACcommission established under P.L. 101-510 (three of which operated from 1991 to 1995 during timeperiods that did not overlap). (60) Congress has many options to weigh if it chooses to consider a commission proposal insteadof, or along with, other alternatives. (Three alternatives or complements are discussed later in thisreport.) The following subsections of the report analyze six types of issues that Congress mightconsider in the context of a commission proposal. As noted earlier, they are: the commission's membership; the scope of the commission's review andrecommendations; definitions of key terms; standards and criteria for decision making; expedited congressional consideration of the commission's recommendations;and transparency and participation. Each subsection cites some of the potential implications, advantages, and disadvantages that mightaccompany a number of choices that Congress could make, using the CARFA legislation's provisions(from H.R. 2470 and S. 1155 , 109th Congress) as a point of comparison. Commission Membership. When consideringthe advantages and disadvantages of a review commission proposal, several topics relating to thecommission's membership may be of interest to Members of Congress and stakeholders. For theCARFA legislation, these include how the membership is to be determined, coverage of the FederalAdvisory Committee Act, and coverage of conflict of interest laws. In addition, the breakdown ofa CARFA commission's membership between federal and non-federal members would havesignificant implications for the coverage of these laws and the commission's operations. Appointment and Removal. One of the keyparameters of a statutorily created commission is how its membership is to be determined. Underthe House version of the CARFA legislation, H.R. 2470 , all 12 commission memberswould be appointed by the President, thus giving the President considerable influence over thecommission's views, activities, and recommendations. Proponents might view this arrangement asgiving a President necessary flexibility to exert influence over the commission's views, whileensuring Congress would still be able to reject the commission's recommendations. Critics,however, might see this provision as giving too much legislative power to a President, especially inview of the legislation's provisions for expedited congressional consideration (including aprohibition on Senate filibusters) (61) and the legislation's potential policy implications for a large setof federal agencies and programs. By contrast, the Senate version of the CARFA legislation, S. 1155 , would provide that 8 of the commission's 12 members be appointed by Houseand Senate leaders (2 each by the Speaker and minority leader in the house, and 2 each by the Senatemajority and minority leaders), and the remaining 4 by the President. Proponents might view thisarrangement as a way to retain congressional control over the commission, as well as make thecommission at least somewhat bipartisan. On the other hand, critics might argue that if a Presidentand congressional leaders were to appoint members only from their respective political parties, theCARFA would always have a two-to-one ratio between parties, because the President's appointeeswould all go to one party. In addition, a President might prefer to have appointing authority over allcommission members rather than only one-third of them. Another potential issue relates to removal power. If the President is given statutory authorityto appoint someone to a particular statutorily created office, the appointee holds that office at thepleasure of the President (even for a specified term of years) unless the statute expressly limits thePresident's removal power, or the nature of the duties given to the officeholder is solely adjudicatory. Therefore, for presidentially appointed commission members under either the House or Senateversion of the CARFA legislation, unless "for cause" removal protection were added for members,the President could remove members at will from the commission and appoint new members. (62) Furthermore, if thepresidency changed hands during the life of the CARFA, the new President could remove thecommission's members and replace them with appointees of his or her own. This removal powercould make the commission's membership, activities, and recommendations responsive to the needsof the President, but, on the other hand, could disrupt the commission's activities and be seen asundermining its independence. Under the Senate version of the CARFA legislation, the Speaker ofthe House, the House minority leader, the Senate majority leader, and the Senate minority leaderwould each be required to appoint two members to the commission. Each congressional leaderwould also have authority to remove at will a commission member whom he or she appointed, unless"for cause" removal protection were added for commission members. (63) Other prominent review commissions -- for example, the Hoover Commission and the BRACcommissions established under P.L. 101-510 -- called for alternative means of determiningcommissions' memberships. The Hoover Commission's statute, for example, required equal numbersof Democrats and Republicans and hybrid appointment by both the President and Members ofCongress. For some observers, the Hoover Commission framework might be seen as advantageous,because it could be viewed as more bipartisan. Under that framework, however, congressionallyappointed commission members are appointed by majority Members of each chamber, potentiallywithout any involvement of minority Members. On the other hand, critics might argue that amembership selected by both majority party and minority party Members could prevent thecommission from coming to consensus or generating an integrated or consistent package ofrecommendations. The BRAC commission approach to appointments, by contrast, required Senate confirmationof the President's appointments as well as consultations with majority and minority leadership in theHouse and Senate. Supporters of the BRAC approach might argue that the approach lessens theappearance and likelihood of politicization of the commission's recommendations by giving Senatorssome ability to influence the President's nominations (e.g., or else the President might risksubsequent filibusters of the nominations), (64) and holds the President's legislative power in check. However,the President can circumvent the need for Senate confirmation of a commission's members by usingrecess appointments. (65) As demonstrated in the 2005 BRAC round, President George W. Bush took this action on April 1,2005, when he announced recess appointments of all nine BRAC commission members. (66) Opponents of the BRACapproach might maintain that it constrains the ability of the President to appoint nominees flexiblyand, indirectly through these nominees, constrains the President's ability under a CARFA Act torecommend his preferred policies to Congress. FACA. The CARFA legislation is silent on whetherthe commission would be considered an "advisory committee" that is covered by the FederalAdvisory Committee Act (FACA; 5 U.S.C. Appendix 2; 86 Stat. 700). (67) If the legislation wereenacted, the issue of FACA coverage might have implications regarding the commission'smembership, because FACA requires that an advisory committee's membership be "fairly balancedin terms of points of view represented" (Section 5(b) of FACA). FACA defines a covered "advisorycommittee" to include any committee or similar group that is (1) established by statute ororganization plan, (2) established or utilized in the interest of obtaining advice or recommendationsfor the President or one or more federal agencies, and (3) not composed wholly of full-time federalofficers or employees. (68) Because the commission would submit its recommendations primarily to Congress (see Section 3(b)of the CARFA legislation), not to the President or an agency, it appears a CARFA might not fallwithin FACA's definition of "advisory committee" and therefore might not be covered by FACA. However, Section 3(f) of the legislation calls for a "report," containing the commission's plan (withrecommendations) and proposed legislation, to be submitted to both the President andCongress. (69) Therefore,unless a court were to address this question, it is not clear whether the commission would be coveredby FACA. Some observers might prefer that a CARFA, if established, not be covered by FACA, inorder to allow appointment of members without the statutory obligation to appoint a commission thatis "fairly balanced" and therefore give flexibility to appoint members with the views, skills, andbackgrounds an appointing authority wishes. However, other observers might criticize this approachas one too easy to politicize and instead prefer that FACA cover the commission, in order to helpensure that a balance of views is present during the commission's work. Conflict of Interest Laws and Regulations. Conflictof interest matters might also be of concern to some observers, regarding the CARFA legislation. In general, certain government officials in the executive and legislative branches must comply withconflict of interest laws and regulations (18 U.S.C. §§ 202-209; 5 C.F.R. § 2635) relating to financialdisclosure, disqualification (recusal), and divestiture. (70) The CARFA legislation is silent with regard to the commission'slocation in the executive or legislative branch. The legislation also does not say directly whethernon-federal CARFA members (i.e., those who are not officers or employees of the federalgovernment) would nevertheless be considered officers or employees of the federal government forpurposes of conflict of interest laws. Even so, based on the legislation's provisions, it appears thatnon-federal commission members would not be considered officers or employees of the federalgovernment for purposes of conflicts of interest. For example, non-federal members of thecommission would not be compensated; Section 5(a) of the legislation makes explicit reference tosome CARFA members potentially not being officers or employees of the federal government; andSection 5(c)(3)(B) states that commission members would not be federal employees under severalprovisions of Title 5, U.S. Code . It appears these members would therefore not be subject to anyfederal conflict of interest laws or regulations. However, if CARFA were deemed an advisorycommittee under FACA, or if commission members were deemed federal employees or "specialgovernment employees" (SGEs), then the conflict of interest provisions would probably apply. (71) Even if the conflict of interest laws and regulations were deemed not to apply to non-federalcommission members, some observers might still raise conflict of interest concerns. Previously, forexample, President Ronald Reagan's Private Sector Survey on Cost Control (popularly known as theGrace Commission) was established by executive order on June 30, 1982, as an advisory committeeunder FACA. (72) Thecommission's activities were sometimes controversial. The commission was funded and staffed bythe private sector, with 161 presidentially appointed members of an executive committee (mostlychief executive officers of corporations) and approximately 2,000 staff over the commission's life,who were loaned from their companies and organizations. (73) Some Members ofCongress and the public expressed concerns about potential conflicts of interest, because somemembers of the commission were assigned to review agencies that, in turn, regulated the members'companies. (74) Similarconcerns might again be voiced if a CARFA were established, because commission members whohave financial, political, or other interests in making certain recommendations for Congress'sexpedited consideration could potentially be appointed. Implications of Composition of Federal and Non-FederalMembers. If the CARFA legislation were enacted, the composition ofcommission members between federal and non-federal individuals would have significantimplications for the coverage of FACA and conflict of interest laws and, possibly, for perceptionsof the commission's recommendations. Following from the preceding analysis, three scenariospresent themselves: If all CARFA members were federal (i.e., officers or employees of the federalgovernment), FACA would not cover the commission, but commission members would be subjectto conflict of interest statutes and regulations. If all CARFA members were non-federal, FACA might or might not cover thecommission, and it appears the commissioners would not be subject to conflict of interest laws andregulations. If a CARFA commission's membership were mixed between federal andnon-federal members, FACA might or might not cover the commission, and some members wouldbe subject to conflict of interest laws, while others apparently would not. Each of the three scenarios would have implications for the operations of the commission and also,perhaps, for how the commission's recommendations might be perceived by Congress and the public. However, the specific perceptions would likely differ depending on a particular observer's viewsabout FACA, the conflict of interest laws, other provisions of the CARFA legsilation (including itsscope and provisions for expedited congressional consideration), and potential alternative approachesto the questions a review commission had been charged to help address. Scope of Commission Review andRecommendations. Previous review commissions have had varied scope, rangingfrom narrow (e.g., for the BRAC commissions, closure and realignment of military installations) tobroad (e.g., for the Hoover Commission, operations, organization, and policy of the entire executivebranch). If the House version of the CARFA legislation were enacted, the scope would be executivebranch agencies and programs, excluding DOD, entitlement programs, and agencies that solelyadminister entitlement programs. If the Senate version were enacted, the scope would be allexecutive branch agencies (including the EOP) and programs. In the House version, the CARFA-covered programs are typically referred to as "non-defensediscretionary" programs. In FY2003, they constituted 19.5% of total federal outlays, or $420.5billion ($391.1 billion in inflation-adjusted, FY2000 dollars). (75) The corresponding actualfigures for FY2004 were 19.3% of total federal outlays, or $441.4 billion ($401.3 billion in FY2000dollars); and estimates for FY2005 were 18.8% of total federal outlays, or $466.4 billion ($412.2billion in FY2000 dollars). According to the President's FY2006 budget proposal, non-defensediscretionary funding was estimated to decline to 15.5% of total outlays by FY2010, or $469.5billion ($363.9 billion in FY2000 dollars, an 11.7% cut in funding compared to the FY2005 level). According to Senate hearing testimony from the 108th Congress, regarding S. 1668 , theproposed CARFA Act's scope was explicitly worded to address non-defense discretionary agenciesand programs "as a reasonable first step." (76) Were an eventual CARFA deemed successful by Congress,Senator Brownback suggested future rounds could be authorized. However, Senator Brownback'sbill in the 109th Congress, S. 1155 , expanded the scope, apparently in response to thehearing on S. 1668 in the previous Congress. Potential advantages of an incremental approach -- e.g., beginning with non-defensediscretionary programs -- might be to make a commission's workload more manageable and to buildthe framework's credibility for potential future "rounds," as with the BRAC commissions. However,some testimony on the CARFA legislation suggested that the legislation's scope be expanded toinclude all executive branch agencies and programs, as well as "targeted tax incentives," (77) which are often called "taxexpenditures." (78) According to one analysis, when tax expenditures are expressed in terms that allow comparison withdirect federal outlays, tax expenditures totaled nearly 51% of federal outlays in FY2002. (79) A potential advantage ofbroadening the scope to all agencies and tax expenditures might be to assess public policies from amore holistic perspective -- regardless of whether policies are associated with annual or permanentappropriations, or direct federal outlays or tax expenditures -- because diverse agencies and policytools might be targeted at the same or similar public policy problems. In addition, some observersmight argue that broadening the commission's scope to include all agencies and tax expenditureswould be necessary to avoid the appearance of partisanship. Other options regarding a review commission's scope might be of interest to Congress. Forexample, if Congress chose to consider the legislation's scope, other policy tools like loans, loanguarantees, tax laws, and regulations could also be explicitly included under the legislation'sdefinition of program , which, as introduced, was defined as "any activity or function of an agency"(Section 3(a)(3)). It is not clear that this definition of program would necessarily include these andother policy instruments in the commission's scope. Moreover, Section 3(d) of the legislationcontains provisions related to program assessments that are arguably similar in structure and contentto the Administration's PART, an instrument that is focused on evaluating the use of appropriatedfunds. Thus, to the extent that the PART is seen as an essential or complementary tool for theCARFA, and possibly as the "systematic method for assessing the effectiveness and accountabilityof agency programs" that is required by the legislation's Section 3(d), a CARFA might tend toconcentrate on appropriated funds to the exclusion of other policy tools. Definitions of Key Terms. The CARFAlegislation uses a number of special terms when specifying the commission's duties, specifically,when requiring the commission to recommend realignment or elimination for agencies and programs that are deemed to be duplicative , wasteful , inefficient , outdated , irrelevant , or failed . If the proposalwere enacted, its implementation and ramifications would likely turn on these definitions. Some ofthese terms are defined by the CARFA legislation to varying extents, and others are not defined. Ifthe legislation were enacted as introduced, the commission's members and staff would arguably needto define further and operationalize some of the terms. Alternatively, during the course of anyconsideration of the legislation, Congress might elect to include more detailed definitions in thelegislation or establish a legislative history demonstrating congressional intent. Each approach mightbring advantages and disadvantages. For example, defining the terms later would obviously grantsignificant flexibility and discretion to the commission and allow commission members to modifythe definitions as they proceed with the commission's work. However, this discretion could alsopotentially open up the commission's actions to charges of bias in the absence of clear or consensusdefinitions. In view of these tensions, definitions of key terms might be of interest to Congress inconsideration of the CARFA Act. Program. The CARFA legislation defines program as "any activity or function of an agency." (80) The term activity is not defined in the legislation, but accordingto Merriam-Webster's Collegiate Dictionary , is defined as "a pursuit in which a person is active" or"an organizational unit for performing a specific function; also : its function or duties." (81) Thus, an activity can bewhat a person or an organization does or, alternatively, a distinct part of an organization. The term function is used in several contexts in Title 5 of the U.S. Code , the codification of laws ongovernment organization and employees. While Title 5 does not define function , the implementingregulations for transfer of functions (5 U.S.C. § 3503) and reductions in force (5 U.S.C. § 3502)define the term as "all or a clearly identifiable segment of an agency's mission (including all integralparts of that mission), regardless of how it is performed" (5 C.F.R. § 351.203). In sum, a CARFAwould have considerable discretion in identifying the "programs" it wished to evaluate. OMB has used primarily a budgetary perspective for defining specific programs for purposesof the PART, an instrument used in the last two years in the President's budget to evaluate theeffectiveness of programs. Under the PART, programs have generally been defined as they arepresented in the President's budget proposals or other budget documents. GAO has noted, however,that OMB's approach sometimes aggregated several separate programs, and at other timesdisaggregated programs, in ways that were not always aligned with how agencies managed ororganized themselves. This practice in turn "contributed to the lack of available planning andperformance information," as observed by GAO. (82) GAO noted that the PART must serve the needs of the Presidentand OMB, but that the Government Performance and Results Act (GPRA; 107 Stat. 285) presentsa broader framework for strategic planning and consultation with stakeholders, includingCongress. (83) Thesetensions raise the questions of how Members and committees of Congress could best be served withregard to how programs should be defined, and who should define them. Realignment. The CARFA legislation calls upon itscommission members to recommend certain programs and agencies for realignment , but does notdefine the term. The BRAC commission law, by contrast, provided a technical and applieddefinition for the term realignment , in the context of deciding whether to close, cut back, orreorganize military installations: "The term 'realignment' includes any action which both reduces andrelocates functions and civilian personnel positions but does not include a reduction in forceresulting from workload adjustments, reduced personnel or funding levels, or skill imbalances." (84) Unless the term werefurther defined by Congress, a CARFA would likely have flexibility to define the term as it wishes. Some discussion may help shed light on possible definitions. Merriam-Webster's CollegiateDictionary defines realign as "to reorganize or make new groupings" (85) and align as "to be in orcome into precise adjustment or correct relative position." (86) Thus, the term's commonusage suggests an emphasis on reorganization. This possible emphasis is arguably consistent withRepresentative Tiahrt's discussion of the proposed CARFA Act in the 108th Congress, in his remarkson the House floor, which referred to the "elimination or the realignment of duplicative, wasteful,and outdated functions " (italics added). (87) The emphasis is also arguably consistent with the legislation'sprovision that duplicative programs be "consolidated or streamlined" (Section 3(c)(1)), terms oftenused as synonyms for restructuring and reorganization. The organization design literature often indicates that an organization's "structure" and"purpose" are complexly intertwined concepts when considering "organizational architectures." (88) Depending on anobserver's perspective, these concepts may arguably be intertwined to such an extent that the terms reorganization or realignment can be construed to imply not only "moving organizational boxes,"but also changing processes and perhaps even purpose. For example, if two similar, but notidentical, programs are proposed to be combined into one program, it is possible that core elementsof one or both programs might be changed. Thus, it is possible that the proposed commission coulddefine the term realignment as allowing both organizational and policy changes, (89) consistent with the CARFAlegislation's directions to recommend the realignment of programs, and corresponding policies, thatare judged duplicative , wasteful , or inefficient . Other Terms to Describe Certain Programs. Section3(c) of the CARFA legislation enumerates a number of descriptive terms that a commission wouldbe required to use in its work and would potentially need to define further. Specifically, under thelegislation, a commission would be required to recommend programs or agencies that fall undermost of these definitions to be realigned or eliminated. (However, the Senate version of the CARFAlegislation, S. 1155 , would allow rather than require realignment or elimination ofagencies or programs found to be wasteful or inefficient .) Duplicative. Section 3(c)(1) of the CARFA legislation would require aCARFA to recommend that duplicative agencies and programs be realigned . The definition of duplicative is operationalized in this way: "[i]f 2 or more agencies or programs are performing thesame essential function and the function can be consolidated or streamlined into a single agency orprogram." How would a commission interpret this term? The term has a long history. Concernsabout "overlap" and "duplication" in federal government programs were expressed as early as 1920,when Congress established a Joint Committee on Reorganization. (90) Similar concerns wereechoed in the late 1940s, when the legislation enacting the Hoover Commission was beingconsidered. The Hoover Commission's concluding report prominently remarked on "the wastes ofoverlapping and duplication." (91) More recently, other terms, in addition to duplicative and overlapping , have been used to describe several agencies or programs engaging in activities thatsome observers see as similar or related. These terms include crosscutting , fragmented , and redundant . GAO's analysis of mission fragmentation and program overlap in federal agencies, forexample, provides the analytical foundation for much of the current discourse regarding federalprograms that appear to do similar or related things. (92) An underlying framework that GAO used for making thesecategorizations is the federal government's set of budget function classifications, which, as notedpreviously, refer to broad categories of federal spending, organized according to the purpose ormission of government (e.g., defense, income security, and law enforcement). (93) However, GAO offeredthe following caveat with regard to the term duplication : Although [the budget function classification] systemcan indicate broad categories of fragmentation and overlap, it does not directly address the issue ofprogram duplication. While mission fragmentation and program overlap are relativelystraightforward to identify, determining whether overlapping programs are actually duplicativerequires an analysis of target populations, specific program goals, and the means used to achievethem. (94) Furthermore, when appearing before the House Committee on Government Reform's Subcommitteeon Government Efficiency and Financial Management, a former OMB career official testified thatmaking such assessments involves several subtleties. He stated that, while some programs mightbe "in competition with one another" (i.e, duplicative), it is also possible that similar programs mightuse different methods, serve different populations, or even be complementary to each other. (95) Wasteful, Inefficient, Outdated, Irrelevant, or Failed. The other terms inSection 3(c) of the CARFA legislation have less complex histories, but also might be more difficultto define in ways that would achieve consensus among varied stakeholders and observers. Section3(c)(2) defines wasteful and inefficient in three possible ways, either requiring (House version of theCARFA legislation) or allowing (Senate version) the proposed commission to "recommend therealignment or elimination of any agency or program that has wasted Federal funds by -- (A)egregious spending; (B) mismanagement of resources and personnel; or (C) use of such funds forpersonal benefit or the benefit of a special interest group." Similarly, Section 3(c)(3) would requirethe proposed commission to "recommend the elimination of any agency or program that -- (A) hascompleted its intended purpose; (B) has become irrelevant; or (C) has failed to meet its objectives." How would the commission define "egregious" spending, or determine the threshold for whatconstitutes "mismanagement" of resources and personnel? What is a "special" interest group? Howdoes it differ from other interest groups that are not "special"? What constitutes an outdated , irrelevant , or failed program or agency? The legislative history behind the CARFA legislation doesnot appear to answer these questions, and the answers would likely need to be supplied by Congressor the commission's presidential appointees (House version) or mix of presidential and congressionalappointees (Senate version). Advocates of these provisions might argue that it is proper to give thecommission flexibility to define these terms, and that in any case their recommendations, packagedas an implementation bill, would still be subject to an up-or-down vote by Congress. However,critics might argue that the terms are inherently subjective, and that the legislation's expeditedprocedures for congressional consideration (discussed and analyzed further, below) would not allowsufficient scrutiny of a commission's recommendations and implementation bill. If a commission were to craft definitions for these terms, it is possible that the commissionwould create and use standards for making some of these decisions, as discussed in the followingsection. Standards and Criteria for Decision Making. Thesubject of decision making standards arose during the hearing in the 108th Congress for S. 1668 , with Senator Voinovich discussing a need to establish non-biased criteria forrecommending the elimination of programs. (96) Former Majority Leader Armey also testified that politics shouldnot be allowed to intrude in such a process. OMB Deputy Director for Management Clay JohnsonIII testified that a commission should use the Bush Administration's PART to help make itsdeterminations. Section 3(d) of the CARFA legislation, which would require "systematic assessmentof programs" by the President and the commission's consideration of these assessments, contains aframework of provisions that is arguably similar in structure and contents to the Administration'sPART. (97) If Congress chose to evaluate the CARFA legislation, Congress would have precedent forpaying close attention to a commission's standards and criteria for making recommendations. In theBRAC statute, for example, the Secretary of Defense was required to articulate and publish in the Federal Register the proposed criteria for base closures, with an opportunity for public comment(104 Stat. 1810-1811; Section 2903(b)). (98) Should Congress wish to explore the topic of standards, threeperspectives from the program evaluation and social science literatures might be helpful in assessingstandards that could be used by an eventual CARFA: the concepts of validity , reliability , and objectivity . (99) Inprogram evaluation and social science research, validity has been defined as "the extent to which anymeasuring instrument measures what it is intended to measure." (100) Another term, reliability , has been described as "the relative amount of random inconsistency or unsystematicfluctuation of individual responses on a measure," that is, the extent to which several attempts atmeasuring something are consistent (e.g., by several human judges or several uses of the sameinstrument). (101) Finally, the term objectivity has been defined as "whether [an] inquiry is pursued in a way thatmaximizes the chances that the conclusions reached will be true." (102) The opposite conceptis subjectivity , suggesting, in turn, concepts of bias, prejudice, or unfairness. Thus, making ajudgment about the objectivity of a test or researcher "involves judging a course of inquiry, or aninquirer, against some rational standard of how an inquiry ought to have been pursued in order tomaximize the chances of producing true findings " (emphasis in original). (103) A framework similar to the validity/reliability/objectivity trio of concepts, as summarizedabove, was once used to assess a BRAC commission's standards for decision making. Specifically,in the context of the 1995 BRAC commission's consideration of U.S. Army bases, an independentanalysis by the RAND Corporation identified 10 "criteria [that] should characterize an effectiveBRAC process." (104) The first criterion used by RAND focused on the reliability of the assessment process; the secondcriterion focused on objectivity ; and the remaining eight criteria arguably focused on severaldimensions of validity . With regard to the CARFA legislation, a commission would need to make numerousdeterminations for non-defense discretionary programs in the executive branch (whether a programis duplicative , wasteful , etc.). How should one validly , reliably , and objectively determine a programis irrelevant , for example? General consensus among stakeholders and researchers might exist onhow to make these determinations for some "programs," as the commission elects to define the term program . But consensus might be lacking for other programs. Should Congress wish to explorethese issues, Congress could ask if the CARFA legislation's assessments might be completed validly,reliably, and objectively -- including by the Administration's PART, an instrument which has beenlauded by some observers and the subject of criticism among others. (105) To the extent that thePART is seen as an essential or complementary tool for a CARFA (and probably as the "systematicmethod" required by the legislation's Section 3(d)), perspectives on the PART may help highlightor clarify issues for Congress should it consider the proposed CARFA Act. Expedited Congressional Consideration. Adistinctive feature of the CARFA legislation is its provision for expedited consideration by Congressof the commission's recommendations, packaged together in an implementation bill. (106) Depending on anobserver's outlook, these arrangements could be considered to offer distinct advantages ordisadvantages. For example, possible advantages include the assurance that Congress would actuallyconsider the work of the commission, less ability for Members to engage in "logrolling" (votetrading) that could undermine the commission's recommendations, and the prevention of potentialfilibusters in the Senate. Possible disadvantages, however, include less ability to engage in thecompromises that are necessary for a democratic system to function, diminished power for minoritygroups in the Senate, and a movement away from the rights and prerogatives of individual Senatorsto engage in extended debate unless an extraordinary majority votes to invoke cloture. Theadvantages and disadvantages relating to logrolling and constraint on Members of the Senate arediscussed below. Logrolling and the CARFA Legislation. When theBRAC commission legislation was being considered in 1990, there was a broad consensus that thenumber and extent of military installations needed to be reduced in order to save funds. (107) Supporters of theBRAC process argued that parochial politics prevented the closure of bases which they believedwere no longer needed. Critics countered that it was Congress's responsibility to make thesedeterminations, not a commission's, and that presidential administrations had in the past used baseclosing decisions for political purposes. In addition, there were many concerns about how thesemilitary installations were to be chosen. If a commission's recommendations could be amendedduring the legislative process, Members of Congress could face strong incentives to exclude someor all installations from the list, perhaps via bartering votes on base closures with votes on otherseemingly unrelated matters. If this happened to a large extent, then the primary reason for pursuingthe BRAC process, saving funds, might be undermined. Thus, one justification for creating theBRAC commission framework was that it would prevent, or at least limit, vote trading, or"logrolling." (108) Under the BRAC framework, when a commission's recommendations reached Congress,Congress would be allowed only an up-or-down vote on a resolution disapproving the package inits entirety, with no amendments. If no such resolution were passed within 45 days, therecommendations would then be automatically implemented. Members of Congress would not beable to make deals to exclude installations from the list of facilities to be realigned or closed, whichwould preserve the integrity of the original list and its corresponding (projected) budget savings, asrecommended by the commission and transmitted by the President. These provisions, together withadditional ones to help insulate the process from political manipulation by presidentialadministrations and make it open to the public, became what were considered key attributes of theBRAC statute. (109) Concerns about logrolling were expressed by the House sponsor of the proposed CARFAAct, Representative Tiahrt, during the 108th Congress: CARFA is based on a process with an established recordof successful program elimination and prioritizing of spending. The Base Realignment and ClosureCommission, or BRAC as it is called, is similar only [in how] it deals strictly with military bases,whereas H.R. 3213 will establish a commission to conduct a comprehensive review ofFederal agencies and programs and recommend the elimination or the realignment of duplicative,wasteful, and outdated functions. CARFA provides for a disciplined spendingreview process for nondefense, nonentitlement programs. Congress will simply have to vote up ordown on the commission's recommendations in their entirety. The congressional logrolling thatnormally bogs down the process will be short-circuited. In this way, real reform can emerge and thedeficit and debt program can be brought under control. (110) According to public choice theory, (111) logrolling can improve or degrade societal welfare dependingon the specifics of the situation, including how strongly different individuals value several issues andhow value is to be measured. (112) Which of these two approaches -- vote trading versus no votetrading -- is better in a given situation is open to interpretation and debate. According to onetextbook, [v]ote trading is controversial. Its proponents argue thattrading votes leads to efficient provision of public goods, just as trading commodities leads toefficient provision of private goods. Proponents also emphasize the potential for revealing theintensity of preferences and establishing a stable equilibrium. Moreover, the compromises implicitin vote trading are necessary for a democratic system to function.... On the other hand, opponentsof logrolling stress that it is likely to result in special-interest gains not sufficient to outweigh generallosses. Large amounts of waste can be incurred. (113) In sum, different stakeholders may have different views on how the CARFA legislation'sno-amendment provisions would affect logrolling. Moreover, theory alone does not indicate whetherlogrolling (or the absence thereof) would have beneficial or adverse consequences for society as awhole, compared to the other option. Three issues that Congress might consider, in light of this discussion, are whether legislation based partially on the BRAC model, which targetedmilitary bases for realignment and closure based on widespread consensus, would be appropriate forthe case of reviewing non-defense discretionary agencies and programs (under the House version ofthe CARFA legislation) or all executive branch agencies and programs (under Senate version) forrealignment or elimination, when widespread consensus might or might not exist and when thecommission's membership would not require Senate confirmation; whether vote trading, or the lack thereof, in considering a proposed CARFAAct would be likely to improve societal welfare; and whether Members believe the proposal would be a fully legitimate exercise oflegislative power, an abdication of that power, or something in between. Constraint on Potential Filibusters in the Senate. Section 7 of the CARFA legislation would provide for expedited congressional consideration of thecommission's implementation bill, "as an exercise of the rulemaking power of the Senate and Houseof Representatives." (114) In the Senate, this provision would prohibit amendments andalmost all procedural delays, unless a majority of the Senate did not wish to vote on or pass thecommission's implementation bill. Thus, in contrast to customary Senate procedures, which giveindividual Senators considerable power to influence or delay the Senate's business, Senators wouldlose the ability to filibuster the implementation bill, if any wished to prevent it from coming to avote. (115) In otherwords, for purposes of considering the implementation bill, a proposed CARFA Act's expeditedprocedures could diminish the power of minorities in the Senate. (116) Proponents mightargue that the legislation's expedited procedure provisions would make Senate consideration of thecommission's recommendations more responsive to majority rule and speed consideration of theproposal. Opponents of this approach might maintain that it takes power away from minority groupsin the Senate and de-emphasizes the rights and prerogatives of individual Senators to engage inextended debate unless an extraordinary majority votes to invoke cloture. If one or more Senators wished to modify the rules contained in the CARFA legislation (i.e.,if the CARFA Act were enacted), the Senate could choose to do so by making changes to theexpedited consideration provisions. (117) This could be done in several ways. For example, the Senatecould change the expedited procedures by unanimous consent. If a Senator objected to theunanimous consent request to change the expedited procedures, a super-majority of three-fifths ofall Senators chosen and sworn (normally 60 votes) would be needed to invoke cloture and allow theSenate to vote on the proposed changes to the expedited procedures, by statute or standing order. And finally, invoking cloture to vote on an amendment to the Senate's standing rules would requirea super-majority of two-thirds of all Senators present and voting (up to 67 votes). In the House ofRepresentatives, by contrast, making changes to the CARFA procedural rules would require only asimple majority vote on the adoption of a special rule, something a majority could achieve easily. In essence, then, while the expedited procedures would apply equally to both chambers, in effect theywould be considerably more restrictive on the Senate than on the House. Transparency and Participation. Another topicthat Congress could choose to consider is the transparency with which the CARFA would berequired to operate and related issues of public participation. Past review commissions have workedunder a wide range of requirements to open their work to public visibility, participation, andoccasional accompanying scrutiny. The BRAC commissions, for example, operated under theexplicit requirement that "[e]ach meeting of the Commission, other than meetings in which classifiedinformation is to be discussed, shall be open to the public" (Section 2902(e)(2)(A)). In addition, theBRAC statute specified that "[a]ll the proceedings, information, and deliberations of the Commissionshall be open, upon request" to the chairmen and ranking members of several congressionalcommittees and subcommittees (Section 2902(e)(2)(B)). By contrast, the Hoover Commission'sauthorizing statute was silent on the subject of transparency and participation. (The HooverCommission predated the enactment of FACA, which sets out requirements governing public accessto meetings and records as well as public participation, and other "open government" laws.) A morerecent review commission, the 9/11 Commission, was explicitly excluded from FACA'srequirements and required to hold public hearings "to the extent appropriate." (118) As discussed previously in this report, it is unclear whether a CARFA would be covered byFACA or affected by its requirements (e.g., advisory committee meetings are presumptively opento the public). A CARFA would also probably not be subject to the Government in the Sunshine Act(90 Stat. 1241). (119) This law requires collegially headed federal executive agencies with two or more members -- amajority of whom are appointed by the President with the advice and consent of the Senate -- to holdcertain meetings in public. The CARFA legislation is silent with regard to the commission's locationin the executive or another branch, but if the legislation were enacted, the commission's memberswould not be Senate-confirmed. Finally, the CARFA legislation is silent with regard to whether the proposed commissionwould be subject to the Freedom of Information Act (FOIA; 5 U.S.C. § 552). FOIA's definition of"agency" (5 U.S.C. § 552(f)) includes executive departments, military departments, governmentcorporations, government controlled corporations, independent regulatory agencies, or any "otherestablishment in the executive branch of the Government (including the Executive Office of thePresident)." However, if the commission were deemed strictly advisory in nature, it would not becovered by FOIA. If Congress chose to enact the CARFA legislation, and in the event that thecommission were considered an establishment in the executive branch, FOIA would likely be heldto cover the commission (based on the fact that, under Section 4 of the legislation, the CARFAwould have investigatory powers), if a court were to address this question. In Energy ResearchFoundation v. Defense Nuclear Facilities Safety Board , 917 F.2nd 581 (D.C. Cir. 1990), the courtheld that the board (which was responsible for reviewing, evaluating, investigating, and makingrecommendations to the Department of Energy regarding standards and safety issues pertaining tonuclear facilities of the department) was subject to FOIA, basing its decision on the fact that theboard had investigatory powers. (120) In sum, therefore, it is not clear the extent to which a CARFA would be able to conduct itswork outside public and congressional view (e.g., convene meetings, hold hearings, and formulaterecommendations), if it chose to pursue that course. Some might see advantages associated with anapproach that kept the commission's activities largely outside public or congressional view. Forexample, supporters might maintain that, by limiting public involvement, a CARFA would avoidpublic or interest group pressure as it weighed individual and difficult policy recommendations, issueby issue. From the perspective of supporters, this could potentially help a CARFA'srecommendations to be formulated, seen, and considered as a cohesive package. Furthermore,because the commission would be advisory, a CARFA's recommendations still would have to beconsidered by Congress (albeit under expedited procedures) and signed by the President before anyrecommendations became law. However, some disadvantages could also be associated with an approach that other observersmight see as lacking transparency and participation. For example, the commission'srecommendations might lose credibility if observers were not sure who was involved, both insideand outside government, in formulating them. In addition, critics might argue that the legislation'sexpedited congressional procedures would not allow for (a) enough time or public participation toconsider what could be large changes to a large subset of federal programs; or for (b) enoughcongressional and public input through mechanisms like GPRA, which was enacted to address manyissues of federal management and performance, arguably including those that would be addressedby a CARFA, if it were established. (121) When evaluating proposals to establish major reorganization or review commissions,Congress might also consider the "success factors" that observers have identified as important inputsto successful commissions. One scholar proposed four "propositions" for an effective commissionthat, if ignored, he argued could make "success" with a commission more difficult to attain: 1. A focused and limited mandate for a commission ...is more likely to provide useful results than a commission with a broad, unstructured mandate withsubstantial policy implications. 2. A commission should have ties with centralmanagerial agencies in the executive branch and with committees with general managementresponsibilities in Congress. Others besides the commission must have a stake in the success of theexercise. 3. Commissions should be cognizant of the distinctivelegal character of governmental organization and activities. Included in any commission reviewshould be a review, with recommendations, of the general management laws pertinent to the mandateof the commission. 4. There should be some consensus in advance amongcommission members regarding the organizational principles to be applied in their review andrecommendations. Commissions do not tend to be effective vehicles for generating consensus ifnone previously existed. (122) GAO also weighed in with "lessons" regarding "successful government restructurings": The lesson of the two Hoover Commissions is clear:If plans to reorganize government are to move from recommendation to reality, creating a consensusfor them is essential to the task. In this regard, both the process employed and the players involvedin making any specific reorganization proposals are of critical importance. The success of the firstHoover Commission can be tied to the involvement and commitment of both the Congress and thePresident. Both the legislative branch and executive branches agreed to the goals. .... A distinctionalso needs to be made between policy choices and operational choices. Relatively straightforwardreorganization proposals that focus on operational issues appear to have met with greater successthan those that addressed more complex policy issues. (123) Different observers will have different opinions about whether success factors such as these relateto specific commission proposals. A noteworthy point of comparison with these prescriptions maybe experience with the 9/11 Commission. The 9/11 Commission was established only after extendednegotiation among Members of Congress and the President regarding its scope, powers, etc., and wastasked in its authorizing statute with making not only operational recommendations, but also policyrecommendations: "[t]he purposes of the Commission are to -- ... (5) investigate and report to thePresident and Congress on its findings, conclusions, and recommendations for corrective measuresthat can be taken to prevent acts of terrorism" (116 Stat. 2408). The 9/11 Commission proceededto make organizational, operational, and policy recommendations in a charged political environmentduring a presidential election year. (124) The commission's bipartisan, unanimous report has been bothcriticized and commended for omitting some policy topics, (125) and may or may notillustrate that to be effective, a commission's scope and reorganization-related recommendationsmust fit within an overall context of legislative-executive consensus. A CARFA could provide a mechanism for the President and Congress -- through thePresident's appointees to the commission (under both the House and Senate versions of the CARFAlegsilation), congressional leaders' appointees (under the Senate version), and Congress'sconsideration of the commission recommendations -- to consider "elimination or realignment ofduplicative, wasteful, or outdated functions" in certain programs and agencies. (126) However, establishinga commission is only one possible way of exploring these issues. If Congress wants to exploresimilar issues, it could consider alternatives or complements to a commission. Three are discussedand analyzed below. Pursue or Authorize Government Reorganization. Commentators sometimes propose reorganization of government agencies as a way to realignprograms and improve government efficiency and effectiveness. Thus, as an alternative orcomplement to the CARFA legislation, Congress could consider undertaking specific reorganizationlegislation, as it did with the Homeland Security Act of 2002 (116 Stat. 2287) when it created theDepartment of Homeland Security, or alternatively, reauthorizing executive reorganizationauthority. (127) In the past, reorganization was viewed largely as a technical exercise that could be delegatedto experts in the executive branch. In recent decades, however, commentators have seenreorganizations as also having potentially significant institutional, policy, and politicalconsequences. (128) In 1995, GAO explored many of the associated issues. (129) In 2003, the Comptroller General recommended streamliningand simplifying the federal government's organizational structure to address "duplicative,overlapping, and conflicting and outdated government programs, policies, and operations." (130) Furthermore, theNational Commission on the Public Service ("Second Volcker Commission") recommended a"fundamental reorganization" of the federal government "into a limited number of mission-relatedexecutive departments," in order to enhance "mission coherence and role clarification." (131) According the SecondVolcker Commission's proposal, the choice of agency subordinate organizations and personnelsystems -- traditionally the subject of congressional attention and negotiation -- would be definedby the President, and subject to oversight by OMB and the Office of Personnel Management(agencies under control of the President), "as well as Congress." (132) The organization design literature has expressed mixed assessments of the ability ofreorganization to improve organizational performance. Grouping organizations together can beviewed as a "double-edged sword": On one hand, grouping eases the flow of informationwithin the boundaries of the group by providing a common language, a common goal, and, indeed,even a common view of the world. The group becomes an identifiable subculture of the largerorganization, and the sharing and processing of information become easier. But the boundariesinevitably become barriers, making it more difficult to share information outside the group and oftenengendering conflict, competition, and a lack of cooperation amonggroups.... It's essential to keep in mind that organizations,in the final analysis, are political systems with complex patterns of power and influence.... If newgrouping patterns seem to elevate one group over another, channel increased resources to a particularactivity, or substantially alter reporting relationships, some manager or group will be seen as winningat the expense of someone else.... Strategic grouping ... by definition separates some jobs andindividuals at the same time it brings others together. (133) It is possible that Congress had similar concerns when enacting the Homeland Security Act, whenCongress included Section 888, "Preserving Coast Guard Mission Performance" (116 Stat. 2249),in the bill, which prohibited the Secretary of the Department of Homeland Security (DHS) fromsubstantially or significantly reducing the "non-homeland security missions" of the Coast Guard. Furthermore, in the 108th Congress, S. 910 ("Non-Homeland Security MissionPerformance Act of 2003") was reported from committee favorably with amendments, articulatingconcerns that non-homeland security missions (e.g., maritime search and rescue, fisheriesenforcement, asylum for refugees, protecting against counterfeiting, etc.) be preserved and notcrowded out by homeland security-related activities. (134) Similar concerns could apply to other proposed executivebranch reorganizations. Establishing a commission like the CARFA might arguably entail some advantages comparedto reorganization, whether that reorganization were undertaken through the regular legislativeprocess or executive reorganization authority. For example, in contrast to reorganization throughthe regular legislative process, the CARFA legislation would expedite congressional considerationof the commission's recommendations without the risk of amendments undermining the cohesivenessof the package. The CARFA legislation would arguably impose fewer restrictions upon thecommission's recommendations compared with executive reorganization authority, which, ifrenewed, would impose a number of restrictions on what reorganization plans could contain (e.g.,a prohibition on abolishing statutory programs). A CARFA would thus have more flexibility to dealwith a broad range of policy matters. Other observers might see disadvantages in the CARFA proposal, compared to reorganizationthrough the regular legislative process or executive reorganization authority. Compared to CARFA,pursuing reorganization (or policy changes) through the regular legislative process could be seen aspreserving important congressional prerogatives under the Constitution's separation of powers andchecks and balances, subjecting proposals to more deliberation, transparency, and publicparticipation. (135) Inaddition, Congress enacted major legislative changes to tax laws in 1986, social policy in 1996, farmsubsidies in 1996, and homeland security agencies in 2002 by relying on existing processes andinstitutions. The CARFA legislation could also be seen as having disadvantages compared toexecutive branch reorganization authority, if Congress were concerned about giving too much powerto the President. Because executive branch reorganization authority, if renewed, would be subjectto many restrictions regarding what the President could propose for expedited congressionalconsideration, the executive branch's legislative powers would be arguably more constrained undera renewed Reorganization Act than a new CARFA Act. Use GPRA. Another potential alternative orcomplement for the CARFA legislation, which Congress might consider, is continued or expandedusage and oversight of the Government Performance and Results Act. (136) Congress enactedGPRA to accomplish several goals, including to "systematically [hold] Federal agencies accountablefor achieving program results"; "improve congressional decisionmaking by providing more objectiveinformation on achieving statutory objectives, and on the relative effectiveness and efficiency ofFederal programs and spending"; and "improve internal management of the FederalGovernment." (137) Thus, GPRA established a statutory foundation intended for examining issues, among others, thata CARFA would also emphasize. The extent to which GPRA has been successful in moving toward these goals has been asubject of discussion and debate in Congress and the legislative branch, in the executive branch, inthe scholarly community, and among other observers. (138) Some, including GAO, see GPRA as having established a"solid foundation" of results-oriented planning, measuring, and reporting, albeit with a number ofchallenges remaining, including an "inadequate focus on addressing issues that cut across federalagencies." (139) Otherssee GPRA at risk of creating a "paper exercise" unless agency program evaluations and performancereporting documents have budget and management implications, and some are concerned about aperceived lack of analytical capacity in federal agencies in order to comply with GPRA and the BushAdministration's PART initiative. Still others might question whether GPRA or its implementationhave focused on the right things. Apart from the CARFA legislation, a number of observers haveadvocated for continued use of the Bush Administration's PART as a complement to GPRA, in orderto forge a "link" between performance and budgets. (140) However, some others have criticized the PART forinconsistency, its emphasis on serving the needs of the executive branch without the significantinvolvement of Congress and other stakeholders, and its focus on individual programs instead ofissues that cut across several agencies (e.g., food safety). (141) Proponents of a CARFA might argue that it would bring several advantages compared tousing GPRA alone, including (1) producing an integrated and internally consistent set ofrecommendations for congressional consideration; (2) potentially insulating the commission'sdeliberations from day-to-day politics, thereby potentially allowing the commissioners moreflexibility to investigate controversial options and develop innovative recommendations; (3)potentially establishing some measure of independence for the commission's recommendations,thereby increasing the commission's credibility; and (4) eliminating the ability of Members ofCongress to amend the commission's set of recommendations or delay their consideration, therebyincreasing the probability of enacting a coherent package. On the other hand, opponents are likely to see the disadvantages of establishing a commissioncompared to using GPRA alone, including (1) potential duplication of effort with federal agenciesin evaluating programs and agencies; (2) arguably less transparency and participation in formulatingand considering proposals compared to the process under GPRA, potentially undermining thecommission's credibility; (3) potential questions about the ability of a commission to make credibleassessments with limited time and analytical capacity; and (4) eliminating the ability of Membersof Congress to amend the commission's recommendations or delay their consideration, therebyfacilitating the floor consideration of legislation that might otherwise have stood little chance ofenactment had there been opportunity for more scrutiny of commission recommendations. Bolster Agency Program Evaluation Capacity Through "ChiefProgram Evaluation Officers. " Congress could also consider bolstering programevaluation capacity in federal agencies as a potential alternative or complement for the CARFAlegislation. Many observers have asserted that agencies frequently do not adequately evaluate theperformance or results of their programs -- or integrate evaluation efforts across agency boundaries-- possibly due to lack of capacity, management attention and commitment, or resources. (142) Bolstering the programevaluation capacity at federal agencies could arguably address many of the same issues that aCARFA would address. If Congress found adequate progress has not been made in evaluating federal programs andagencies, and if Congress deemed these to be serious problems, Congress might establish "chiefprogram evaluation officer" (CPEO) positions in major agencies to bring more attention to thisfunction. "Chief officer" positions have proliferated in recent years. (143) Because programs candiffer considerably and the field of program evaluation is highly interdisciplinary, evaluationmethods differ from program to program. (144) A common theme behind the creation of each of these chiefofficer positions was many observers' belief that senior managers within executive branch agenciespaid insufficient attention to a given functional perspective (e.g., financial management, informationtechnology) in managing their agencies. Therefore, observers believed that each functionalperspective needed to be "elevated" to a higher position within agencies' management ranks, as ameans to ensure that long-standing problems would be addressed. (145) This situation may hold true for the program evaluation function in some agencies. TheComptroller General stated in late 2002 that, [u]nfortunately, there is reason to be concerned aboutthe capacity of federal agencies to produce evaluations of their programs' effectiveness. Manyprogram evaluation offices are small, have other responsibilities, and produce only a feweffectiveness studies annually. Even where the value of evaluations is recognized, they may not beconsidered a funding priority. (146) If agency program evaluation staff and organizations struggle for visibility even with regard to theirown programs, these units might face an even more difficult task in attempting to look acrossagencies at crosscutting, overlapping, duplicative, or fragmented program areas. If Congress chose to establish CPEO positions in major agencies, it might also considerestablishing a corresponding interagency council of CPEOs. CPEOs might be tasked to help theagencies ensure quality performance information, evaluate crosscutting programs (in addition to theagency's indigenous programs), and report findings and information to Congress. Under current law,it is no one's explicit job to do this coordination. (147) Proponents of pursuing this option, apart from the CARFA legislation, might argue thatestablishing these chief officer positions could create a "seat at the table" for program evaluation inagency senior management teams, potentially helping agencies to improve performance or coordinateprograms with overlapping missions. However, critics might argue that establishing another typeof chief officer would be excessive for agency leaders and management teams. If this option wereviewed in context with the CARFA legislation as an alternative or complement, it could be seen byobservers as bringing potential advantages or disadvantages. For example, some might see bolsteredagency program evaluation efforts as an essential complement for a CARFA. A commission couldthen draw upon the work of program evaluation units and officers in federal agencies. (148) On the other hand,some observers might see a CARFA as essentially duplicative of the agency CPEOs andunaccountable to Congress.
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In the 109th Congress, companion bills have been introduced ( S. 1155 / H.R. 2470 ) that, if enacted, would establish a Commission on the Accountabilityand Review of Federal Agencies (CARFA). Either version of the proposed CARFA Act wouldrequire this 12-member commission to review certain federal agencies and programs to determineif any are duplicative , wasteful , inefficient , outdated , irrelevant , or failed . The House version wouldinclude within the commission's scope only non-defense, non-entitlement agencies and programs inthe executive branch, while the Senate version would include all executive branch agencies andprograms, including the Executive Office of the President. The commission would be required or,in some cases allowed, to recommend that any such programs and agencies be realigned oreliminated. The commission's recommendations would be packaged into an implementation bill thatwould receive expedited congressional consideration. Nearly identical provisions appeared in abudget process reform bill ( H.R. 2290 ) and a bill to offset costs from Hurricane Katrinaand Hurricane Rita ( S. 1928 ). In addition, nonbinding provisions in the FY2006 budgetresolution ( H.Con.Res. 95 ) called for enacting a CARFA-like commission. PresidentGeorge W. Bush said in his FY2006 budget that he would propose, as part of his President'sManagement Agenda (PMA), legislation authorizing him to propose "results commissions," whichwould consider and revise Administration proposals to restructure and consolidate programs andagencies. Proposals approved by such a results commission and the President would be consideredby Congress under expedited procedures. The Administration suggested that the resultscommissions legislation would be similar to the CARFA proposal. Bills have been introduced( H.R. 3276 / S. 1399 ) that largely incorporated the Administration's draftlanguage. Proponents have argued that, if enacted, a CARFA could evaluate programs and agencies,use a successful model for congressional consideration of commission recommendations, andthereby eliminate or reform wasteful agencies and programs. The Bush Administration has suggestedthat a CARFA should use the Administration's Program Assessment Rating Tool (PART). Criticsmight likely contend that the legislation is too narrowly focused -- looking only at discretionary,non-defense programs (House version); that the commission should be equally balanced alongpartisan lines or less under the President's control; that expedited procedures undermine thedemocratic process; and that the decision making criteria are too subjective. This report summarizesthe legislation's history and provisions, discusses other review commission legislation, and highlightsperspectives about the CARFA proposal from the 108th Congress. Next, the report analyzes issuesthat may be of interest in the 109th Congress in the event that the CARFA legislation or similarproposals to establish a review commission are further considered. Finally, the report discussespotential success factors for commissions and potential alternatives or complements to acommission. A short version of this report is available ( CRS Report RS21980 , ProposedCommission on the Accountability and Review of Federal Agencies (CARFA): A Brief Overview ). This report will be updated as events warrant.
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Congress periodically establishes agricultural and food policy in an omnibus farm bill. Following nearly three years of debate, Congress completed action in February 2014 on the most recent farm bill (The Agricultural Act of 2014 (P.L. 113-78), which succeeded the expired Food, Conservation, and Energy Act of 2008 (2008 farm bill, P.L. 110-246). The 2014 farm bill establishes policy for the next five years in its 12 titles, covering farm commodity price and income support, crop insurance, conservation, domestic food assistance, agricultural trade and international food aid, credit, rural development, research, horticulture, forestry, and bioenergy, among others. Periodic farm bills provide Congress, the Administration, and interest groups with an opportunity to reexamine agriculture and food issues more carefully, and address them more comprehensively. Within the various titles of the enacted 2014 farm bill are provisions that reshape the structure of farm commodity support, expand crop insurance coverage, consolidate conservation programs, reauthorize and revise nutrition assistance, and extend authority to appropriate funds for many U.S. Department of Agriculture (USDA) discretionary programs through FY2018. Many provisions of the previous farm bill (P.L. 110-246) expired in 2012, but were extended for an additional year in the American Taxpayer Relief Act of 2012 ( P.L. 112-240 , the fiscal cliff bill). The 112 th Congress began work on a new farm bill but did not complete action before the conclusion of the Congress, requiring new bills to be introduced in the 113 th Congress. The House and Senate Agriculture Committees marked up their respective bills in May 2013 and floor action was completed in the summer months. A conference agreement was reached in late January 2014; it was approved by both chambers within eight days and was signed into law as the Agricultural Act of 2014 ( P.L. 113-79 ) on February 7, 2014. The Senate Agriculture Committee reported its version of the 2013 omnibus farm bill on May 14, 2013 (S. 954, the Agriculture Reform, Food and Jobs Act of 2013), by a vote of 15-5. Floor action began during the week of May 20, 2013, and concluded on June 10, 2013, when the full Senate approved the measure by a vote of 66-27. While the bill was being debated in the Senate, approximately nine amendments were adopted and six were rejected. Attempts to modify the sugar program, further limit SNAP spending, eliminate crop insurance subsidies for tobacco, and require the labeling of genetically engineered foods were all defeated. More than 200 other amendments were offered to the Senate bill, but were not considered, when an agreement could not be reached on consolidating the amendments and limiting floor debate. On May 15, 2013, the House Agriculture Committee completed markup of its version of the bill ( H.R. 1947 , the Federal Agriculture Reform and Risk Management Act of 2013) and approved the revised measure by a 36-10 vote. The bill was subsequently referred to the House Judiciary Committee, which revised the bill to ensure that certain dairy programs were subject to standard rulemaking procedures. Floor action on the House bill was conducted during the week of June 17, 2013, when numerous amendments were adopted to the committee bill. However, the amended bill was defeated by a vote of 195-234 on June 20. Three weeks later, the full House debated a variation of the defeated bill that dropped all of the nutrition title but included all of the earlier adopted floor amendments to the other titles. This revised bill ( H.R. 2642 ) was approved by the House by a 216-208 vote on July 11. In order to initiate conference committee negotiations with the House, the Senate on July 18 substituted the text of H.R. 2642 with the text of S. 954 . On September 19, the House passed a stand-alone nutrition bill ( H.R. 3102 ) by a vote of 217-210. The House adopted a resolution ( H.Res. 361 ) on September 28 that combined the texts of H.R. 2642 and H.R. 3102 into one bill ( H.R. 2642 ) for purposes of resolving differences with the Senate. A conference agreement reconciling the differences between the two measures was reported as the Agricultural Act of 2014 ( H.Rept. 113-333 ) on January 27, 2014. Within eight days, both chambers approved the conference agreement, the House on January 29 by a vote of 251-166 and the Senate on February 4 by a vote of 68-32. The President signed it into law ( P.L. 113-79 ) on February 7, 2014. This report begins with a brief overview of the estimated budgetary impact of the 2014 farm bill, followed by a summary comparison of the major provisions of each title. A side-by-side section comprehensively compares all of the provisions in P.L. 113-79 to Senate and House versions of the farm bill—including S. 954 as passed by the Senate (also referred to as the Senate amendment to H.R. 2642 ) and the House-passed version of H.R. 2642 (which includes the provisions of H.R. 3102 as a new Title IV to H.R. 2642 )—as well as to relevant provisions in then-current law. The "Prior Law/Policy" column of the side-by-side tables reflects the provisions of the 2008 farm bill ( P.L. 110-246 ) as amended by the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ), which extended most of the 2008 farm bill provisions for an additional year, as well as other relevant statutes that are revised by the 2014 farm bill. The budgetary impact of the 2014 farm bill is measured relative to what the prior farm bill would have spent had it been continued. The Congressional Budget Office (CBO) projected that the mandatory programs of the 2008 farm bill would have cost $973 billion if continued for the next 10 years (FY2014-FY2023). This "baseline" already had been reduced by $6.4 billion to reflect the effects of sequestration over the 10-year baseline. Compared to this post-sequestration baseline, the 2014 farm bill ( P.L. 113-79 ) reduces projected spending and the deficit by $16.6 billion (-1.7%) over 10 years. (The five-year reduction through FY2018 is $5.4 billion from a five-year baseline of $494 billion.) P.L. 113-79 saves less than either the House-passed or Senate-passed proposals. The House-passed combination of H.R. 2642 and H.R. 3102 together would have reduced spending by $51.9 billion (-5.3%) over 10 years. The Senate-passed farm bill proposal ( S. 954 ) would have reduced spending by $17.9 billion (-1.8%) over 10 years. If the baseline had not already been reduced by sequestration, the enacted 2014 farm bill could have been credited for reducing spending by $23 billion over 10 years. Similarly, the savings from each of the House and Senate proposals could have been $6.4 billion greater. But sequestration had already been factored into the baseline, so the official score of P.L. 113-79 remains as savings of $16.6 billion over 10 years. The net reduction is composed of some titles receiving more funding than in the past, while other titles provide offsets, some of which contributes to deficit reduction. The titles for farm commodity subsidies, nutrition, and conservation provide budgetary savings. The titles for crop insurance, research, bioenergy, horticulture, rural development, trade, forestry, and miscellaneous items receive additional funding. The final 2014 farm bill is projected to spend $956 billion over the next 10 years, of which $756 billion is for nutrition assistance and $200 billion is for the agriculture portion. (The five-year total is $489 billion, with $391 billion for nutrition and $98 billion for the agriculture portion). Within the agriculture portion, crop insurance outlays are projected to be $90 billion over the next 10 years, $58 billion for conservation, and $44 billion for farm commodity programs (Title I). The trade title is projected to spend $3.6 billion over the next 10 years, horticulture $1.7 billion, research $1.3 billion, and bioenergy $1.1 billion. Figure 1 illustrates the budgetary impacts of changes to each title in each bill. The Table contains the data in tabular form and includes an estimate of the projected outlays. More details on the farm bill budget are available in CRS Report R42484, Budget Issues That Shaped the 2014 Farm Bill . Under the enacted 2014 farm bill ( P.L. 113-79 ), farm support for traditional program crops is restructured by eliminating direct payments, the counter-cyclical price (CCP) program, and the Average Crop Revenue Election (ACRE) program. Since 1996, direct payments have been made to producers and landowners based on historical production of corn, wheat, soybeans, cotton, rice, peanuts, and other "covered" crops. Direct payments lost political support in recent years because recipients did not need to suffer a loss in order to receive a payment. Approximately three-fourths of the 10-year, $47 billion in savings associated with the elimination of current farm programs was used to offset the costs of revising farm programs in Title I, adding permanent disaster assistance in Title I, and enhancing crop insurance in Title XI. P.L. 113-79 provides farm programs (described below) for covered crops, but not cotton, which has a new crop insurance policy (see " Farm Bill Title XI, Crop Insurance "). Under P.L. 113-79 , authority is continued for marketing assistance loans, which provide additional low-price protection at "loan rates" specified in previous law (with an adjustment made to the cotton loan rate). As in previous farm bills as well as in the 2013 Senate farm bill, the enacted 2014 farm bill suspends permanent price support authority under the Agricultural Adjustment Act of 1938 and Agricultural Adjustment Act of 1949 until program authority expires in 2018. In contrast, the House bill would have repealed permanent law and made permanent the commodity support programs authorized in H.R. 2642 . P.L. 113-79 borrows conceptually from 2008 farm bill programs while enhancing price or revenue protection for producers. Producers may choose between the following two programs linked to a decline in either price or revenue (price times yield). It retain s a counter-cyclical price program , called Price Loss Coverage or PLC , which makes a farm payment when the farm price for a covered crop declines below its "reference price" set in statute (and the House bill) . To better protect producers in a market downturn, the reference prices are higher than the parameters in the expired 2008 farm bill (called "target prices"). The Senate farm bill would have provided slightly lower levels of fixed reference prices for rice and peanuts, and significantly lower levels for other crops by using a market-based reference price calculated as 55% of a rolling five-year average (excluding the high and low years). After significant congressional debate, P.L. 113-79 continues current policy by making payments on 85% of historical plantings (or "base acres"), a provision designed to minimize the program's effect on planting decisions. Base acres can be updated with plantings from 2009-2012. In contrast, the House bill would have made payments based on 85% of planted acreage to better align payments with producer risk, but critics contended that such a provision could lead to production distortions and trade disputes. It retains a revenue-based progra m, called Agriculture Risk Coverage (ARC), which is designed to cover a portion of a farmer's out-of-pocket loss (referred to as "shallow loss") when crop revenues decline . Farmers may select ARC as an alternative to PLC. Like the PLC program, ARC payments are made on 85% of base acres. (This is in contrast to both the House and Senate bills, which would have made revenue program payments on planted acreage.) Payments are triggered when actual crop revenue drops below 86% of historical or "benchmark" revenue (compared with 88% in the Senate bill and 85% in the House bill). Farmers can select coverage at either the county or individual farm level. These farm programs are separate from a producer's decision to purchase crop insurance. However, farmers selecting the Price Loss Coverage (but not ARC) are also eligible to purchase an additional subsidized crop insurance policy to protect against "shallow losses" called the Supplemental Coverage Option (see Title XI, Crop Insurance below). Five disaster programs were established in the 2008 farm bill for weather-induced losses in FY2008-FY2011. P.L. 113-79 retroactively reauthorizes and funds four programs covering livestock and tree assistance, beginning FY2012 and continuing without an expiration date, as provided in the House bill (the Senate bill had authorized the programs for only FY2012-FY2018). The crop disaster program from the 2008 farm bill (i.e., Supplemental Revenue Assistance, or SURE) was not reauthorized, but elements of it are folded into the new ARC by allowing producers to protect against farm-level revenue losses. In the Miscellaneous Title (XII), P.L. 113-79 adopted the Senate bill provision to provide disaster benefits to tree fruit producers who suffered crop losses in 2012, and additional coverage levels are authorized under the Noninsured Crop Assistance Program (NAP). Farm commodity programs have certain limits that cap payments (in the 2008 farm bill, $40,000 per person for direct payments, plus $65,000 for counter-cyclical and ACRE payments; limits may be doubled with a spouse). There is also an eligibility requirement based on adjusted gross income (AGI, in the 2008 farm bill a maximum of $500,000 per person for nonfarm income and $750,000 for farm income). The enacted 2014 farm bill sets a $125,000 per person cap on the total of PLC, ARC, marketing loan gains and loan deficiency payments. This approach differs from the House and Senate bills, which had separate $50,000 and $75,000 limits for the new counter-cyclical and marketing loan programs, respectively. Although the total limit in P.L. 113-79 is the same as in the two bills, some argue that this may allow larger payments from an individual program when payments from another program are small. P.L. 113-79 applies the $125,000 limit to the total from all covered commodities except peanuts, with a separate $125,000 limit for peanuts—similar to 2008 farm bill law and the Senate proposal. Also regarding eligibility, P.L. 113-79 instructs USDA to write regulations that define "significant contribution of active personal management" to more clearly and objectively implement existing law. This differs from both the Senate and House bills, which would have deleted "actively personal management" and effectively required personal labor in the farming operation. For AGI limits, the enacted 2014 farm bill changes the AGI limit to a single, total AGI limit of $900,000. The AGI limit was $750,000 in the Senate bill and $950,000 in the House bill. P.L. 113-79 does not cap total farm program spending, unlike the House bill's cap of $16.96 billion for FY2014-FY2020 for combined payments under Price Loss Coverage and Revenue Loss Coverage. For dairy policy, P.L. 113-79 makes significant changes, including as in both bills the elimination of the dairy product price support program, the Milk Income Loss Contract (MILC) program, and export subsidies. These are replaced by a new program, which makes payments to participating dairy producers when the national margin (average farm price of milk minus an average feed cost ration) falls below a producer-selected margin ranging from $4.00 per hundredweight (cwt.) to $8.00/cwt. No premium is charged for the minimum $4.00/cwt. margin protection; however, premiums are charged for coverage at higher margins—the premium schedule differentiates for annual milk production of 4 million or fewer pounds and for production greater than 4 million pounds. The final law removes a provision in S. 954 that would have subjected participating producers to a separate program to reduce incentives to produce milk when margins are low—the House bill had specifically excluded this provision. In addition, the final bill adopts a provision from the House bill that requires USDA to adhere to standard rulemaking procedures and to determine the market impacts of the new program during the rulemaking process. Separately, federal milk marketing orders have permanent statutory authority and continue intact. However, the Senate bill only included two additional provisions: one that would have required USDA to use a specified pre-hearing procedure to consider alternative formulas for Class III milk product pricing, and a second that would have required USDA to analyze and report on the potential effects of replacing end-product pricing with alternative pricing procedures. P.L. 113-79 is silent on this matter. The objective and structure of the sugar program are left unchanged from prior law in P.L. 113-79 . Prior to enactment of the 2014 farm bill ( P.L. 113-79 ), the agricultural conservation portfolio included over 20 conservation programs. The Conservation title of P.L. 113-79 reduces and consolidates the number of conservation programs, while also reducing mandatory funding over the 10-year baseline by close to $4 billion. Many of the larger existing conservation programs, such as the Conservation Reserve Program (CRP), the Environmental Quality Incentives Program (EQIP), and the Conservation Stewardship Program (CSP), are reauthorized, while smaller and similar conservation programs are "rolled" into them. In response to reduced demand and as a budget saving measure, the largest conservation program, CRP, is reauthorized with a reduced acreage enrollment cap using a step-down approach from the current 32 million acres to 24 million by FY2018. CRP also is amended to include the enrollment of grassland acres similar to the Grasslands Reserve Program (GRP), which is repealed. EQIP, a program that assists producers applying conservation measures on land in production, is reauthorized in the 2014 farm bill with a 5% funding carve-out for wildlife habitat practices (similar to the Wildlife Habitat Incentives Program, WHIP, which is repealed). Funding for EQIP is reduced by a total of almost $500 million over 10 years, halfway between the Senate's proposed reduction of $1 billion and the House bill's proposal of none. CSP, another working lands program, is reauthorized at a reduced enrollment level of 10 million acres annually, down from 12.769 million acres annually under current law. As in the House- and Senate-passed bills, P.L. 113-79 creates two new conservation programs—the Agricultural Conservation Easement Program (ACEP) and the Regional Conservation Partnership Program (RCPP)—out of several of the existing programs. Conservation easement programs, including the Wetlands Reserve Program (WRP), Farmland Protection Program (FPP), and GRP, are repealed and consolidated to create ACEP. ACEP retains most of the program provisions in the current easement programs by establishing two types of easements: wetland reserve easements (similar to WRP) that protect and restore wetlands, and agricultural land easements (similar to FPP and GRP) that prevent non-agricultural uses on productive farm or grasslands. The Agricultural Water Enhancement Program (AWEP), Chesapeake Bay Watershed program, Cooperative Conservation Partnership Initiative (CCPI), and Great Lakes Basin program are repealed (as in both the House and Senate bills) and consolidated into the new RCPP. RCPP will use partnership agreements with state and local governments, Indian tribes, farmer cooperatives, and other conservation organizations to leverage federal funding and further conservation on a regional or watershed scale. The most contentious provision in Title II was the Senate-passed bill's inclusion of the federally funded portion of crop insurance premiums to the list of program benefits that could be lost if a producer is found to produce an agricultural commodity on highly erodible land without implementing an approved conservation plan or qualifying exemption, or converts a wetland to crop production. This prerequisite, referred to as conservation compliance, has existed since the 1985 farm bill and previously affected most USDA farm program benefits, but has excluded crop insurance since 1996. The House-passed bill offered no comparable provision; however, P.L. 113-79 includes the majority of the Senate-passed provision, with some changes. Title III of the enacted 2014 farm bill ( P.L. 113-79 ) deals with statutes concerning U.S. international food aid and agricultural export programs. P.L. 113-79 reauthorizes all of the international food aid programs, including the largest, Food for Peace Title II (emergency and nonemergency food aid). In addition, P.L. 113-79 amends current food aid law both to increase the portion of Title II funds allocated to eligible organizations under Section 202(e)—up from a range of "not less than 7.5% nor more than 13%" to "not less than 7.5% nor more than 20%"—and to allow for greater flexibility in the use of Section 202(e) funds, including for cash-based assistance (i.e., cash transfers, food vouchers, and local and regional commodity purchases). In addition, it places greater emphasis on improving the quality of food aid products (i.e., enhancing their nutritional quality) and ensuring that sales of agricultural commodity donations do not disrupt local markets. In this regard, an annual report to Congress is required to address how funds are allocated to and used by eligible organizations as well as the rate of return on aid funds—defined as the sum of the proceeds from monetization of food aid commodities relative to the total cost of procuring and shipping the commodities to the recipient country's local market. Special attention is to be given when the rate of return is below 70%. The enacted 2014 farm bill repeals the specified, annual dollar amounts for nonemergency food aid (i.e., the "safe box") required in current law. Instead, it provides that not less than 20%, nor more than 30% of funds be made available to carry out nonemergency food aid programs, subject to the requirement that a minimum of $350 million be provided for nonemergency food aid each fiscal year. P.L. 113-79 creates a new local and regional purchase program in place of the expired local and regional procurement (LRP) pilot program of the 2008 farm bill and raises the authorized appropriations for LRP to $80 million annually for FY2014 through FY2018. P.L. 113-79 reauthorizes funding for the Commodity Credit Corporation (CCC) Export Credit Guarantee program. The value of U.S. agricultural exports that can benefit from export credit guarantees remains at $5.5 billion annually. To address differences that have arisen over how the United States might comply with the WTO cotton case won by Brazil, the final law grants flexibility to the Secretary of Agriculture to make changes to the credit guarantee program to meet the terms agreed upon by both countries. This program is also amended in three ways to address in part Brazil's criticism of how it is administered. P.L. 113-79 also reauthorizes through FY2018 CCC funding of $200 million annually for the Market Access Program (MAP), which finances promotional activities for both generic and branded U.S. agricultural products. It also provides CCC funding of $34.5 million annually through FY2018 for the Foreign Market Development Program (FMDP), a generic commodity promotion program, and CCC funding of up to $10 million a year through FY2018 for the Emerging Markets Program (EMP), to carry out technical assistance activities that facilitate U.S. farm exports and to address technical barriers to trade in emerging markets. The enacted 2014 farm bill also requires the Secretary, in consultation with the House and Senate Agriculture Committees and House and Senate Appropriations Committees, to propose a plan to reorganize the international trade functions of USDA, to report to the congressional committees on the plan 180 days after the farm bill's enactment, and to implement the reorganization plan not later than one year after the report is submitted. It directs the Secretary to include in the plan the establishment of the position of an Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs within USDA, who will be responsible for serving as a multi-agency coordinator of sanitary and phytosanitary matters and addressing agricultural non-tariff trade barriers. The Nutrition title in the enacted 2014 farm bill ( P.L. 113-79 ) reconciles the House-passed bill ( H.R. 2642 , as combined with H.R. 3102 , Nutrition Reform and Work Opportunity Act) and the Senate-passed bill ( S. 954 ). The final law reauthorizes SNAP and related programs for five years; CBO estimates that the Nutrition title in P.L. 113-79 will reduce spending by $8.0 billion over 10 years (FY2014-FY2023). The SNAP provisions alone are estimated to reduce spending by slightly more than $8.6 billion over 10 years. Certain other Nutrition provisions are estimated to increase spending, which together result in the total estimated reduction of $8.0 billion. Farm bill conferees were faced with significant differences in the SNAP provisions in the Senate- and House-passed bills. Over the 10-year budget window (FY2014-FY2023), CBO estimated that the Senate's Nutrition title would have reduced spending by approximately $4 billion and the House's Nutrition title would have reduced spending by approximately $39 billion. The House bill would have reauthorized SNAP and related programs for three years, while the Senate would have reauthorized the programs for five years. Although the Nutrition title of the enacted 2014 farm bill contains a number of provisions that change aspects of SNAP and related nutrition programs, it largely retains the provisions in the Food and Nutrition Act of 2008 and other nutrition program authorizing statutes. For example, most eligibility and benefit calculation rules in SNAP do not change under P.L. 113-79 . While various changes in the Nutrition title are estimated to reduce or increase spending on the nutrition programs, most provisions are estimated to have little or no budgetary impact. The budgetary impact of the Nutrition title in P.L. 113-79 (as compared to the Senate and House bills) is largely the result of changes to SNAP eligibility and benefit calculation rules. In particular, it is the result of the final law excluding two House SNAP provisions that were estimated to make the bill's greatest reductions in SNAP spending (ending broad-based categorical eligibility and ending the availability of labor-market based waivers from the time limit for certain able-bodied adults). Major issues that have potential to impact households' eligibility and benefit amounts include the following. P.L. 113-79 amends how Low-Income Home Energy Assistance Program (LIHEAP) payments are treated in the calculation of SNAP benefits. Both the Senate and House had included such changes, with the House version of this change estimated to affect a greater share of participants. The final agreement, for the most part, includes the House version. According to information from June 2012, this change to benefit calculation is expected to reduce household benefit amounts in approximately 17 states. The House and Senate had both proposed to disqualify certain ex-offenders from receiving SNAP benefits. P.L. 113-79 modifies that policy by requiring the disqualification of only such offenders who are not complying with the terms of their sentence. P.L. 113-79 includes policies related to the SNAP Employment and Training (E&T) program, including a pilot project authority and related funding ($200 million over FY2014 and FY2015) for states to implement and USDA to evaluate a variety of work programs for SNAP participants. The agreement includes the House bill's provisions that would expand reporting measures for all E&T programs. P.L. 113-79 does not include the House's expansion of the time limit for able-bodied adults without dependents or the House's work-related policies that may incentivize states to reduce their caseloads. P.L. 113-79 does not include any changes to broad-based categorical eligibility. The House bill would have eliminated broad-based categorical eligibility, which would have impacted the eligibility of SNAP participants in 43 states. P.L. 113-79 does not include the House provision to give states the option to administer drug testing as part of their eligibility determination processes. Since SNAP provides benefits redeemable for SNAP-eligible foods at SNAP-eligible retailers, much of SNAP law pertains to retailer authorization and benefit issuance and redemption. P.L. 113-79 includes the retailer and redemption provisions that had been included in both the House and Senate bills. This includes requiring stores to stock more fresh foods, requiring retailers to pay for their electronic benefit transfer (EBT) machines, and providing additional funding for combatting trafficking (the sale of SNAP benefits). P.L. 113-79 also includes $100 million in mandatory funding (over 10 years) for Food Insecurity Nutrition Incentive grants, a program similar to that in the Senate bill, which will support organizations that offer bonus incentives for SNAP purchases of fruits and vegetables. The enacted 2014 farm bill increases funding for the Emergency Food Assistance Program (TEFAP), the program that provides USDA foods and federal support to emergency feeding organizations (e.g., food banks and food pantries). Taking into account CBO's estimates of inflation, it is estimated to provide an additional $205 million over 10 years, $125 million of which is provided in the first 5 years. (The Senate bill would have increased funding by $54 million over 10 years, and the House would have increased funding by $333 million over 10 years.) P.L. 113-79 includes many other changes to SNAP and related program policy. These changes include amendments to the nutrition programs operated by tribes and territories, the Commodity Supplemental Food Program (CSFP), and the distribution of USDA foods to schools. The 2010 child nutrition reauthorization (Healthy, Hunger-Free Kids Act of 2010, P.L. 111-296 ) has already reauthorized WIC and the child nutrition programs through FY2015, but P.L. 113-79 includes related policies, such as farm-to-school efforts. The Consolidated Farm and Rural Development Act (also known as the ConAct) is the permanent statute that authorizes USDA agricultural credit and rural development programs. USDA serves as a lender of last resort by providing direct and guaranteed loans to farmers and ranchers who are denied direct credit by commercial lenders but have the wherewithal to repay the loan. The enacted 2014 farm bill ( P.L. 113-79 ) makes relatively small policy changes to USDA's credit programs. It gives USDA discretion to recognize alternative legal entities to qualify for farm loans and allow alternatives to meet a three-year farming experience requirement. It increases the maximum size of down-payment loans, and eliminates term limits on guaranteed operating loans (by removing a maximum number of years that an individual can remain eligible). It increases the percentage of a conservation loan that can be guaranteed, adds another lending priority for beginning farmers, and facilitates loans for the purchase of highly fractionated land in Indian reservations, among other changes. The Senate bill would have updated and modernized the ConAct's statutory language and reorganized the various programs into separate subtitles (Subtitle A for farm loans; Subtitle B for rural development; Subtitle C for general provisions). The House bill, like the final law, did not reorganize the ConAct. For the Farm Credit Act, which governs the Farm Credit System, P.L. 113-79 adopts a Senate provision that instructs the system's regulator (the Farm Credit Administration) to improve the disclosure of compensation packages for senior officers in the Farm Credit System. Like the Credit title discussed above, the Rural Development title in the Senate-passed 2013 farm bill ( S. 954 ) proposed a restructuring of the ConAct, which provides permanent authority for USDA to carry out many of the rural loan and grant programs in its portfolio. The Senate provision would have consolidated various programs, established criteria for which rural communities receive priority in making loan and grant awards, and modified the definitions of "rural" and "rural area." This proposed reorganization of the ConAct is not included in the enacted 2014 farm bill ( P.L. 113-79 ), although one aspect of the proposed restructuring is retained: the consolidation of two rural business programs into a single business development platform, which is authorized with annual appropriations of $65 million through FY2018. P.L. 113-79 increases the mandatory spending authorization of the Value-Added Agricultural Product Grants to $63 million and retains the program's $40 million in annual discretionary appropriations. P.L. 113-79 also adopts the Senate provision providing $150 million in mandatory spending for pending rural development loans and grants and the Senate provision to fund the Microentrepreneur Assistance Program at $3 million annually in mandatory spending and $40 million subject to appropriations. P.L. 113-79 adopts the House provision to amend the water and waste water direct and guaranteed loan program to encourage financing by private or cooperative lenders to the maximum extent possible. The final law also adopts the House provision that provides up to 5% of the Community Facilities appropriation for technical assistance to help smaller communities develop their applications to the program, and to use loan guarantees to the maximum extent possible. P.L. 113-79 also adopts the House provisions directing the Secretary of Agriculture to begin collecting data on the economic effects of the projects that USDA Rural Development funds, and directs the Secretary to develop simplified applications for funding. The enacted 2014 farm bill also retains the definition of "rural" and "rural area" under current law for purposes of program eligibility. The Senate bill had proposed modifications to the 2008 farm bill permitting communities that might otherwise be ineligible for USDA Rural Development funding to petition USDA to designate their communities as "rural in character," thereby making them eligible for program support. While the provision under current law is retained, the modifications to the provision were not adopted by the conferees. P.L. 113-79 does amend the definition of rural area in the 1949 Housing Act so that areas deemed rural between 2000 and 2010 will retain that designation until USDA receives data from the 2020 decennial census. That provision also raises the population threshold for eligibility from 25,000 to 35,000. P.L. 113-79 adopts the Senate provision authorizing USDA to prioritize otherwise eligible applications that support multijurisdictional strategic economic and community development. The provision reserves 20% of a fiscal year's appropriation for community facilities, water and waste water projects, and rural business development for such strategic development projects. Also adopted is the Senate provision authorizing a new Rural Energy Savings Program, which provides 0% interest rate loans to eligible borrowers to implement energy efficiency measures. Included in P.L. 113-79 (as in both bills) is reauthorization of funding for programs under the Rural Electrification Act of 1936, including the Access to Broadband Telecommunications Services in Rural Areas Program and the Distance Learning and Telemedicine Program. It largely adopts the Senate provisions authorizing access to broadband telecommunications service to rural areas, including authorized appropriations of $10 million annually (FY2014-FY2018) for a new Rural Gigabit Network Pilot program for "ultra-high speed" broadband connectivity. Conferees did not adopt the Senate provision that would have authorized a new grant program for rural broadband in addition to the existing loan program. P.L. 113-79 adopts the Senate provision reauthorizing the Northern Great Plains Regional Authority at its current authorized appropriation of $30 million annually, rather than the House measure that would have authorized $2 million in appropriations. As in both bills, P.L. 113-79 also reauthorizes the three regional authorities established in the 2008 farm bill. USDA is authorized under various laws to conduct agricultural research at the federal level, and to provide support for cooperative research, extension, and post-secondary agricultural education programs in the states. The enacted 2014 farm bill ( P.L. 113-79 ) reauthorizes funding for these activities through FY2018, subject to annual appropriations, and amends authority so that only competitive grants can be awarded under certain programs. Mandatory spending for the research title is increased by $1.145 billion over 10 years compared with projected baseline spending. Funding is increased for the Specialty Crop Research Initiative ($745 million over 10 years) and the Organic Agricultural Research and Extension Initiative ($100 million). Also, mandatory funding is continued for the Beginning Farmer and Rancher Development Program ($100 million). As in the Senate-passed version of the bill, P.L. 113-79 provides mandatory funding of $200 million to establish the Foundation for Food and Agriculture Research, a nonprofit corporation designed to supplement USDA's basic and applied research activities. It will solicit and accept private donations to award grants for collaborative public/private partnerships with scientists at USDA and in academia, nonprofits, and the private sector. General forestry legislation is within the jurisdiction of the Agriculture Committees, and past farm bills have included provisions addressing forestry assistance, especially on private lands. The enacted 2014 farm bill ( P.L. 113-79 ) generally repeals, reauthorizes, and modifies existing programs and provisions under two main authorities: the Cooperative Forestry Assistance Act (CFAA), as amended, and the Healthy Forests Restoration Act of 2003 (HFRA), as amended. Many federal forestry assistance programs are permanently authorized, and thus do not require reauthorization in the farm bill. However, P.L. 113-79 does reauthorize several other forestry assistance programs through FY2018. It also repeals programs that have expired or have never received appropriations. Both the House- and Senate-passed bills included similar reauthorizations and repeals. P.L. 113-79 also includes provisions that address the management of the National Forest System. For example, it permanently reauthorizes stewardship contracting and extends the good neighbor authority nationwide. Both the House and the Senate bills included similar provisions, although the House bill would have reauthorized stewardship contracting only through FY2018. P.L. 113-79 also adopts a Senate provision authorizing the designation of treatment areas within the National Forest System that are of deteriorating forest health due to insect or disease infestation, and allowing for expedited project planning within those designated areas. However, it does not include House provisions requiring the designation of critical areas within the National Forest System and authorizing expedited project planning for projects up to 10,000 acres. P.L. 113-79 does include provisions from the House bill to modify the existing public notice, comment, and appeals process for land and resource management plans. USDA renewable energy programs have been used to incentivize research, development, and adoption of renewable energy projects, including solar, wind, and anaerobic digesters. However, the primary focus of USDA renewable energy programs has been to promote U.S. biofuels production and use. Cornstarch-based ethanol dominates the U.S. biofuels industry. The 2008 farm bill attempted to refocus U.S. biofuels policy initiatives in favor of non-corn feedstocks, especially the development of the cellulosic biofuels industry. The most critical programs to this end are the Bioenergy Program for Advanced Biofuels, which pays producers for production of eligible advanced biofuels; the Biorefinery Assistance Program, which assists in the development of new and emerging technologies for advanced biofuels; the Biomass Crop Assistance Program (BCAP), which assists farmers in developing nontraditional crops for use as feedstocks for the eventual production of cellulosic biofuels; and the Renewable Energy for America Program (REAP), which has funded a variety of biofuels-related projects, including the installation of blender pumps to help circumvent the emerging "blend wall" that could potentially circumscribe domestic ethanol consumption near current levels of about 13 billion gallons. All of the major farm bill energy programs expired at the end of FY2013 and lacked baseline funding going forward. The enacted 2014 farm bill ( P.L. 113-79 ) extends most of the renewable energy provisions of the 2008 farm bill, with the exception of the Rural Energy Self-Sufficiency Initiative, the Forest Biomass for Energy Program, the Biofuels Infrastructure Study, and the Renewable Fertilizer Study, which are either omitted or explicitly repealed. In addition, P.L. 113-79 adds a new reporting requirement on energy use and efficiency at USDA facilities. Over the five-year reauthorization period (FY2014-FY2018), P.L. 113-79 contains a total of $694 million in new mandatory funding and authorizes $765 million to be appropriated for the various farm bill renewable energy programs. This contrasts with the House- and Senate-passed farm bills. The Senate bill ( S. 954 ) contained a total of $880 million in new mandatory funding and authorized $1.140 billion to be appropriated for the various farm bill renewable energy programs. The House bill ( H.R. 2642 ) contained no mandatory funding for these programs and authorized $1.405 billion over the five years, subject to annual appropriations. In addition, the House bill would have eliminated all support for the collection, harvest, storage, and transportation (CHST) component of BCAP, which would have severely limitied its potential effectiveness as an incentive to produce cellulosic feedstocks. BCAP funding for CHST is retained in P.L. 113-79 . The enacted 2014 farm bill ( P.L. 113-79 ) adopts many of the horticulture provisions in the Senate- ( S. 954 ) and House-passed ( H.R. 2642 ) farm bills. The final bill reauthorizes many of the existing farm bill provisions supporting farming operations in the specialty crop and certified organic sectors. Many Title X provisions fall into the categories of marketing and promotion; organic certification; data and information collection; pest and disease control; food safety and quality standards; and local foods. CBO estimates a total increase in mandatory spending of $338 million (FY2014-FY2018) for Title X in P.L. 113-79 . However, provisions affecting the specialty crop and certified organic sectors are not limited to the Horticulture title, but are contained within several other titles of the new law. These include programs in the research, nutrition, and trade titles, among others. CBO's cost estimate for specialty crop provisions in Title X does not include cost estimates for provisions in other titles. CBO estimates research programs benefitting specialty crop and organic producers, for example, will require a $418 million increase in mandatory spending (FY2014-FY2018). P.L. 113-79 adopts nearly all the programs reauthorized in both the House and Senate bills, and in some cases provides for increased funding for several key programs benefitting specialty crop producers. These include the Specialty Crop Block Grant Program, plant pest and disease programs, USDA's Market News for specialty crops, the Specialty Crop Research Initiative (SCRI), and the Fresh Fruit and Vegetable Program (Snack Program) and Section 32 purchases for fruits and vegetables under the Nutrition title. The final law also reauthorized most programs benefitting certified organic agriculture producers, including continued support for USDA's National Organic Program (NOP) and development of crop insurance mechanisms for organic producers, Organic Production and Market Data Initiatives (ODI), and research programs such as the Organic Agriculture Research and Extension Initiative (OREI) and the Organic Transitions Program (ORG) under the Integrated Research, Education, and Extension Competitive Grants Program. Both bills would give USDA authority to consider an application for a research and promotion order (or "checkoff" program) for the organic sector. Reauthorization of each of these provisions was in both the House and Senate bills. One exception is that the House bill would have repealed the National Organic Certification Cost Share Program (NOCCSP), which was not part of the Senate bill, but was included in the final law. Programs in other farm bill titles benefitting specialty crop and certified organic producers include the Value-Added Producer Grant Program, Technical Assistance for Specialty Crops (TASC), the Market Access Program (MAP), and most conservation programs (including assistance specifically for organic producers), among other programs, within the crop insurance, credit, and miscellaneous titles. Horticulture and other titles in P.L. 113-79 , which were for the most part included in both the House-and Senate-passed bills, also include provisions that expand opportunities for local food systems and also beginning farmers and ranchers. Other provisions supporting local food producers are within the research, nutrition, and rural development titles, among others. The House-passed bill included other provisions that were not in the Senate bill. These provisions would have provided exemptions from certain regulatory requirements under some laws, such as the Federal Insecticide, Fungicide, and Rodenticide Act, the Clean Water Act, and the Endangered Species Act. P.L. 113-79 included aspects of some of these provisions, albeit in modified form, but did not adopt the provisions as proposed by the House bill. The crop insurance title enhances the existing federal crop insurance program, which is permanently authorized by the Federal Crop Insurance Act. Crop insurance is designed generally to cover losses from natural disasters, while Title I programs ("farm programs") make payments to farmers of program crops when prices fall below statutory minimums or when crop revenue is low relative to recent levels. The federal crop insurance program makes available subsidized crop insurance to producers who purchase a policy to protect against losses in yield, crop revenue, or whole farm revenue. More than 100 crops are insurable. The enacted 2014 farm bill ( P.L. 113-79 ) increases funding for crop insurance relative to baseline levels by an additional $5.7 billion over 10 years. Most of the funding increase stems from two new insurance products, one for cotton and one for other crops. With cotton not covered by the counter-cyclical price or revenue programs established in Title I, a new crop insurance policy called Stacked Income Protection Plan (STAX) is made available for cotton producers. The STAX policy indemnifies losses in county revenue of greater than 10% of expected revenue but not more than the deductible level (e.g., 25%) selected by the producer for the underlying individual policy (or not more than 30% if used as stand-alone policy). Similarly, for other crops, P.L. 113-79 (as in both the House- and Senate-passed bills) makes available an additional policy (i.e., not stand-alone) called Supplemental Coverage Option (SCO), based on expected county yields or revenue, to cover part of the deductible under the producer's underlying policy (referred to as a farmer's out-of-pocket loss or "shallow loss"). The farmer subsidy as a share of the policy premium is set at 80% for STAX and 65% for SCO. Additional crop insurance changes in both bills, and adopted by the conferees, are designed to expand or improve crop insurance for other commodities, including specialty crops. Provisions revise the value of crop insurance for organic crops to reflect prices of organic (not conventional) crops. USDA is required to conduct more research on whole farm revenue insurance with higher coverage levels than currently available. Studies or policies are also required on insuring (1) specialty crop producers for food safety and contamination-related losses, (2) swine producers for a catastrophic disease event, (3) producers of catfish against reduction in the margin between the market prices and production costs, (4) commercial poultry production against business disruptions caused by integrator bankruptcy, (5) poultry producers for a catastrophic event, (6) producers of biomass sorghum or sweet sorghum grown as feedstock for renewable energy, and (7) alfalfa producers. A peanut revenue insurance product and rice margin insurance also are mandated. Another provision provides funding for private-sector index weather insurance, which insures against specific weather events and not actual loss. For conservation purposes, a provision in Title XI reduces crop insurance subsidies and noninsured crop disaster assistance for the first four years of planting on native sod acreage in Iowa, Minnesota, Montana, Nebraska, North Dakota, and South Dakota. In Title II, crop insurance premium subsidies are available only if producers are in compliance with wetland conservation requirements and conservation requirements for highly erodible land, as originally adopted by the Senate. A controversial item not included in P.L. 113-79 was the reduction of premium subsidies for high income farmers, a provision that was included in the Senate bill but not the House bill. In the 2012 farm bill passed by the Senate in the 112th Congress, an amendment was adopted during floor debate to reduce crop insurance premium subsidies by 15 percentage points for producers with average adjusted gross income greater than $750,000. In 2013, the Senate Agriculture Committee-reported version of S. 954 did not include the provision, but an amendment to S. 954 requiring the subsidy reduction was adopted on the Senate floor in June 2013 by a vote of 59-33. The Miscellaneous title of the enacted 2014 farm bill ( P.L. 113-79 ) contains four sections: livestock; socially disadvantaged and limited-resource producers; other miscellaneous, and a fourth section added by the conferees on oilheat efficiency, research, and jobs training. Animal health-related provisions in the livestock section of P.L. 113-79 include provisions that renew the trichinae certification and aquatic animal health programs that were established in the 2008 farm bill; establish an animal health laboratory network; and require USDA to continue to administer the avian influenza surveillance program through the National Poultry Improvement Plan. The section also includes a Sense of Congress statement on the priority of feral swine eradication. P.L. 113-79 establishes a competitive production and marketing grant program for the sheep industry through the National Sheep Industry Improvement Center. Another provision confirms the transfer of catfish inspection authority to USDA from FDA (originally in the 2008 farm bill) and directs USDA to finalize the rules on catfish inspection, and for USDA and FDA to execute a memorandum of understanding to improve interagency cooperation on inspection. Lastly, USDA is to conduct an economic analysis of its country-of-origin labeling (COOL) rule (78 Federal Register 31367, May 24, 2013) within 6 months of the enactment of the farm bill. Some livestock industry groups pushed for a provision to repeal or modify the COOL law, but such a provision was not included in the final law. P.L. 113-79 extends authority for outreach and technical assistance programs for socially disadvantaged farmer and ranchers, and adds military veteran farmers and ranchers as a qualifying group. The final law creates a research center to develop policy recommendations for socially disadvantaged farmers and ranchers, reauthorizes funding for the USDA Office of Advocacy and Outreach for socially disadvantaged and veteran farmers and ranchers, and includes a provision to increase transparency by automatically providing receipts for service or denial of service. Provisions in the other miscellaneous section of Title XII preserve farm bill benefits for participants in the High Plains Water Study, make available higher coverage levels under the Noninsured Crop Assistance Programs, prohibit attendance at animal-fighting events and exempt small dealers and exhibiters from license requirements under the Animal Welfare act. P.L. 113-79 also includes grants to promote the U.S. maple syrup industry, and grants for technological training for farm workers. It also creates a military veterans agricultural liaison within USDA to advocate for and to provide information to veterans, and establishes an Office of Tribal Relations to coordinate USDA activities with Native American tribes. The final Miscellaneous title contains two provisions related to the Environmental Protection Agency (EPA). The first establishes a standing agriculture-related subcommittee under the EPA's Science Advisory Board to provide advice on matters of significant impact on agricultural entities. The second provides National Pollutant Discharge Elimination System permit exemptions for certain silviculture activities. A provision amending the EPA's spill prevention, control, and countermeasure rule was excluded; as well as a provision prohibiting EPA from disclosing producer information The section also includes provisions to establish a Pima Cotton Trust Fund and an Agriculture Wool Apparel Manufacturers Trust Fund for users of pima cotton and wool, and funding for wool research and promotion. The Citrus Disease Research and Development Trust Fund provision from the Senate bill was moved to the research title. P.L. 113-79 adds a provision not found in either the House or Senate bills to provide mandatory funding in 2014 for Payments in Lieu of Taxes, which provides payments to local governments based on the presence of non-taxable federal lands. Also, the fourth section of the miscellaneous title includes new provisions on oilheat efficiency, renewable fuels research, and jobs training. Sixteen provisions that were in either the House or Senate bill are not included in P.L. 113-79 . One particularly controversial issue that was deleted in conference was the interstate commerce provision originally in the House bill that would have prohibited states from imposing production or manufacturing standards on agricultural products from other states. Of interest to the livestock and poultry industry, provisions repealing marketing and competition rules proposed by USDA (the GIPSA rule) were excluded. Some of the other provisions not included were flood protection for the Missouri River basin and the Wallkill River and Black Dirt region; prohibitions on closing Farm Service Agency (FSA) offices with high workloads; a prohibition on FSA employees keeping GSA-leased cars overnight; and provisions on the restoration of the Chesapeake Bay also were excluded from the final law.
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Congress periodically establishes agricultural and food policy in a multi-year, omnibus farm bill. The 2008 farm bill governed policy for farm commodity support, horticulture, livestock, conservation, nutrition assistance, trade and international food aid, agricultural research, farm credit, rural development, bioenergy, and forestry. It originally expired in 2012, but the 112th Congress did not complete action and instead extended the law for one year (P.L. 112-240), leaving consideration of a new farm bill to the 113th Congress. After nearly three years of deliberations, Congress completed action on a new omnibus farm bill when conferees reported a conference agreement on January 27, 2014 (the Agricultural Act of 2014, H.R. 2642/H.Rept. 113-333); the full House and Senate approved the conference agreement on January 29 and February 4, respectively. The President signed the measure into law (P.L. 113-79) on February 7, 2014. Within P.L. 113-79 are provisions that reshape the structure of farm commodity support, expand crop insurance coverage, consolidate conservation programs, reauthorize and revise nutrition assistance, and extend authority to appropriate funds for many U.S. Department of Agriculture (USDA) programs through FY2018, among many other provisions. The new 2014 farm bill restructures farm support for traditional program crops by eliminating direct payments, the counter-cyclical price (CCP) program, and the Average Crop Revenue Election (ACRE) program. Much of the savings associated with the elimination of these farm programs was used to offset the costs of revising the remaining programs, adding permanent disaster assistance, and enhancing crop insurance. P.L. 113-79 also reauthorizes the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) through FY2018. The new measure restricts how a household's receipt of Low-Income Home Energy Assistance Program (LIHEAP) benefits can affect SNAP benefits, accounting for most of the nutrition budget savings. Not adopted were House provisions to restrict categorical eligibility and change several time limit and work requirements. The Congressional Budget Office (CBO) projected that if the mandatory programs of the 2008 farm bill were to continue, they would cost $973 billion over the next 10 years (FY2014-FY2023), which served as a baseline budget for deliberations on the 2014 farm bill. The enacted 2014 farm bill is projected to spend $956 billion over the next 10 years, of which $756 billion is for nutrition assistance and $200 billion is for the agriculture portion. Compared to the baseline, the 2014 farm bill reduces projected spending and the deficit by $16.6 billion (-1.7%) over 10 years. This projected 10-year savings is closer to the Senate-passed bill level of $17.8 billion than the projected House-passed savings of $51.8 billion. Not included in the final conference agreement were a number of controversial miscellaneous provisions such as a House provision that would have prohibited states from imposing production or manufacturing standards on agricultural products from other states, and a House provision that would have repealed livestock and poultry marketing and competition rules proposed by USDA.
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The Air Force F-22 fighter, also known as the Raptor, is "the most capable fighter aircraft ever built, period." Procurement of F-22s began in FY1999, and a total of 195 (177 production aircraft, 16 test aircraft, and 2 development aircraft) were procured through FY2009. Ongoing issues for Congress regarding the F-22 program include questions regarding the F-22's supply of oxygen to its pilots, the possible resumption of production, the reliability and maintainability of in-service Raptors, the F-22 modernization program, and the potential sale of F-22s to other countries. Congress's decisions on all these issues could affect Department of Defense (DOD) capabilities and funding requirements, the U.S. tactical aircraft industrial base, and U.S. relations with other countries. Following a November 2010 fatal crash of an F-22 in Alaska, the Air Force began an effort to understand why pilots were "reporting hypoxia-like symptoms in the air. Hypoxia is a condition that can bring on nausea, headaches, fatigue or blackouts when the body is deprived of oxygen." At least 25 "physiological incidents" were recorded among F-22 pilots; 14 prior to the Raptor being grounded from May to September 2011, for investigation of the issue, and at least 11 subsequently. In an August 2012 review, the Air Force announced that the oxygen deprivation issue was due to "a 'mosaic' of interrelated cockpit equipment issues that led to a chain reaction of glitches resulting in symptoms similar to hypoxia." The equipment problems included issues with valves in vests designed to help pilots breathe during high-g maneuvers; improper "scheduling," or programming, of those vests; and effects of the charcoal canisters added by the Air Force during the investigation in order to reduce possible toxins in the oxygen supply. While the valve has performed satisfactorily for pilots of older F-15 and F-16 fighters, the F-22 is designed to fly at higher altitudes, which requires continuously pumping more oxygen to the pilots, Lyon said. The valve wasn't strong enough to prevent that higher pressure oxygen from inflating the pilots' vests at lower altitudes. ... the Air Force did "rudimentary testing" on the valve some years ago and found that it caused the high-pressure vest to inflate early, hampering pilot mobility. However, the vest was found to be unnecessary on the F-15 and F-16. When the vest was re-introduced on the F-22 with the same valve, the problem wasn't detected. Also in response to the 2010 crash, the Air Force is "replacing handles that engage the F-22 Raptor fighter jet's emergency oxygen system." Difficulty in operating the backup oxygen system was cited as contributing to the crash. Beginning April 4, 2013, Air Combat Command returned F-22s that had had emergency backup oxygen systems installed to unrestricted flight status. The full fleet was expected to be in this status by July 2014. On May 3, 2012, Lockheed Martin delivered the 195 th F-22 to the Air Force, completing the fleet. That final aircraft had come off the Lockheed Martin production line in Marietta, GA, on December 13, 2011. Following its assembly, Lockheed Martin had begun to store "a total of more than 30,000 jigs, fixtures and other 'tooling' used to build the plane" in order to "leave open an option to restart the premier plane's production relatively cheaply." Lockheed Martin had also documented the assembly process, including videotaping each step of assembly, in order to more quickly train workers to assemble F-22s in the event of a production line restart. About 5,600 Lockheed employees worked on the F-22 program at its peak in 2005, including 944 in Marietta. The current number is 1,650 companywide, 930 in Marietta.... However, 600 Marietta employees will handle technical support and modernizations for the existing F-22 fleet. Conscious of DOD's having preserved the F-22 production tooling and Lockheed Martin's actions to ease a potential restart, a number of commentators have posited that the F-22 could be returned to production, whether to enable foreign sales, increase fleet numbers, or act as a hedge against difficulties in the F-35 program. The potential cost of a restart, and its concomitant effect on F-22 unit costs, is unclear. By one account: Bringing back the F-22 line would take less than $200 million, "a fraction of the costs seen in previous line restarts of other weapons systems," Alison Orne, a Lockheed spokeswoman, said by email, citing preliminary analysis. In a 2009 study conducted for the Air Force prior to the termination decision, the RAND Corporation analyzed the costs of four industrial scenarios: shutting down the F-22 line permanently; restarting the line after a two-year shutdown; maintaining low-rate production; and maintaining full-rate production, in each case to produce an additional 75 F-22s. This study found that shutdown, hiatus, and restart would cost $513 million, or $434 million more than termination. According to another report, in 2010, "Lockheed officials ... told Japanese leaders it would cost $900 million to re-open the production line." Given the range of possible restart costs and the uncertainty of how many aircraft would be purchased, it is not possible to estimate the unit cost of any F-22s built following a potential production restart. The F-22A Raptor is the world's most capable air-to-air combat aircraft. It also has an air-to-ground (i.e., attack) capability. The F-22 incorporates a high degree of stealth, as well as supercruise, thrust-vectoring for high maneuverability, and integrated avionics that fuse information from on-board and off-board sensors. The F-22 and the multi-service F-35 Joint Strike Fighter (JSF) are considered the world's first (and to date only) fifth-generation tactical aircraft. Fifth-generation aircraft incorporate the most modern technology and are considered to be generally more capable than earlier-generation (e.g., fourth-generation and below) aircraft. The F-22 is intended to replace the Air Force's aging F-15 air superiority fighters, while the F-35A (the Air Force version of the F-35) is intended to replace the service's aging F-16 fighters and A-10 attack aircraft. The F-22 is more stealthy than the F-35, and more capable than the F-35 in air-to-air combat. The F-35A is intended to be a more affordable complement to the F-22, and is a strike fighter—a dual-role aircraft with significant capability in both air-to-ground (strike) and air-to-air (fighter) operations. If the F-15/F-16 combination represented the Air Force's earlier-generation "high-low" mix of air superiority fighters and more-affordable dual-role aircraft, then the F-22/F-35A combination might be viewed as the Air Force's intended future high-low mix of air superiority fighters and more-affordable dual-role aircraft. The Air Force states that: Fifth generation fighters like the F-22A and the F-35 are key elements of our Nation's defense and ability for deterrence. As long as hostile nations recognize that U.S. airpower can strike their vital centers with impunity, all other U.S. Government efforts are enhanced, which reduces the need for military confrontation.... Both the F-22A and the F-35 represent our latest generation of fighter aircraft. We need both aircraft to maintain the margin of superiority we have come to depend upon, the margin that has granted our forces in the air and on the ground freedom to maneuver and to attack. The F-22A and F-35 each possess unique, complementary, and essential capabilities that together provide the synergistic effects required to maintain that margin of superiority across the spectrum of conflict.... The F-22A Raptor is the Air Force's primary air superiority fighter, providing unmatched capabilities for air supremacy, homeland defense and cruise missile defense for the Joint team. The multi-role F-22A's combination of speed, stealth, maneuverability and integrated avionics gives this remarkable aircraft the ability to gain access to, and survive in, high threat environments. Its ability to find, fix, track, and target enemy air- and surface-based threats ensures air dominance and freedom of maneuver for all Joint forces. The F-22 program was initiated in the early 1980s with the aim of developing a highly capable successor to the F-15 that would be capable of defeating all known and projected enemy fighters, including those being developed at the time by the Soviet Union. The F-22 program was given Milestone I approval in October 1986. The first flight of an F-22 industry prototype occurred in August 1990, and the first flight of a development version of the aircraft occurred in September 1997. The program was granted approval for Low Rate Initial Production (LRIP) in August 2001, and the first LRIP F-22 was delivered in June 2003. The F-22 achieved Initial Operational Capability (IOC) in December 2005. Operational F-22s are currently assigned to Joint Base Langley-Eustis, Virginia; Joint Base Elmendorf-Richardson, Alaska; Holloman Air Force Base (AFB), New Mexico; and Joint Base Pearl Harbor-Hickam, Hawaii. A training unit is at Tyndall AFB, Florida. Tactics development is conducted at Nellis AFB, Nevada, and some testing continues at Edwards AFB, California. Lockheed Martin in the past has studied the idea of a fighter-bomber version of the F-22 called the FB-22, but the Air Force currently has no program to develop or acquire such an aircraft. The major contractors for the F-22 program were Lockheed Martin of Marietta, GA, and Fort Worth, TX, along with Boeing of Seattle, WA, for the F-22's airframe; and United Technologies of East Hartford, CT (the parent firm of engine maker Pratt & Whitney) for the F-22's F119 engines. A map provided by Lockheed shows a total of roughly 1,040 F-22 supplier firms in 44 states (all but Alaska, Hawaii, North Dakota, South Dakota, West Virginia, and Wyoming). Lockheed stated that as of 2009, the F-22 program supported a total of 8,800 direct jobs at Lockheed's Marietta, GA, and Fort Worth, TX, locations, and at Boeing and Pratt & Whitney. Lockheed estimated, on the basis of purchase order receipts, that the F-22 program supported an additional 16,200 supplier-firm jobs in 44 states around the country. Lockheed combined these two figures to estimate that the F-22 supported a total of about 25,000 direct jobs. Using a multiplier of 2.8 to estimate jobs elsewhere in the economy that were indirectly supported by these 25,000 jobs, Lockheed estimated that an additional 70,000 jobs were indirectly supported by the F-22 program. Lockheed combined the figures of 25,000 and 70,000 to estimate that a total of 95,000 jobs were supported either directly or indirectly by the F-22 program. A map provided by Lockheed shows roughly 25,800 direct F-22-related jobs in 44 states. According to the map, states with more than 1,000 direct F-22-related jobs included California (6,532 jobs), Texas (3,526), Georgia (2,821), Connecticut (2,205), New Hampshire (2,197), Washington (1,491), and Florida (1,025). The map shows several states with a few hundred to several hundred direct F-22-related jobs each, and a number of states with fewer than 100 (in some cases fewer than 25) direct F-22-related jobs each. The map shows four states—North Dakota, South Dakota, West Virginia, and Wyoming—as having no direct F-22-related jobs in 2009. The map does not depict Alaska or Hawaii. Since the submission to Congress in early 2005 of the FY2006 budget, DOD plans called for procuring a total of about 187 operational F-22s. The final figure of 195 includes 177 production aircraft, 15 Production Representative Test Vehicle (PRTV) aircraft, 1 replacement test aircraft, and 2 Engineering and Manufacturing Development (EMD) aircraft funded with research and development funding. The final figure of 177 production aircraft includes 4 F-22s whose procurement was included in the FY2009 supplemental appropriations act. The Air Force originally envisaged a production run of 750 F-22s. The figure was reduced to 648 in 1991. DOD's 1993 Bottom-Up Review reduced the planned number of production F-22s to 438 (plus 4 pre-production versions, later reduced to 2), which was enough to support 4 F-22 fighter wings in a total Air Force force structure of 20 wings (13 active; 7 Reserve/National Guard). The 1997 Quadrennial Defense Review (QDR) reduced the planned number of production F-22s to 339, which was enough to support three F-22 fighter wings in a 20-wing force structure (12 active; 8 Reserve/National Guard). Table 1 shows planned total numbers of F-22s in the budget submissions for FY1999 to FY2010. Table 2 shows annual procurement quantities for the 195 F-22s procured through FY2009. The 64 F-22s procured in FY2007-FY2009 include 20 F-22s per year that were procured under a multiyear procurement (MYP) arrangement, plus the four additional F-22s whose procurement cost was completed in the FY2009 supplemental appropriations act. As of December 31, 2010, the final Selected Acquisition Report for F-22 procurement, DOD estimated the total acquisition cost (meaning the sum of research and development cost, procurement cost, and military construction [MilCon] cost) of a 179-aircraft F-22 program at about $67.3 billion in then-year dollars (meaning dollars across various years that are not adjusted for inflation). This figure includes about $32.4 billion in research and development costs, about $34.2 billion in procurement costs, and $676.6 million in MilCon costs. As of December 31, 2010, the 179-aircraft F-22 program had a Program Acquisition Unit Cost (or PAUC, which is the program's total acquisition cost divided by the total number of aircraft acquired [including non-production aircraft]) of $369.5 million in then-year dollars, and an Average Unit Procurement Cost (which is the program's total procurement cost divided by 179 production aircraft) of $185.7 million in then-year dollars. Beginning in FY1998, the F-22 program operated under legislated limits on total engineering and manufacturing development (EMD) cost and on total production cost. The limit on EMD cost was repealed as part of action on the FY2002 defense budget, leaving in place the limit on total production cost. The limit on total production cost is adjustable for inflation after September 30, 1997, and for changes in federal, state, and local laws enacted after September 30, 1997. For FY2009, the adjusted limit on total production cost was $37.6432 billion in then-year dollars. The 187-aircraft F-22 program appears to be more than $3 billion below this cap. The Administration's proposed FY2013 defense budget requests $283.9 million in FY2013 procurement funding for modification of in-service aircraft and $36.7 million to equip Air Logistics Centers to perform F-22 maintenance. The Administration's proposed FY2013 defense budget also requests a new start program, funded at $140.1 million in research and development, for the Increment 3.2B software; and $371.7 million in FY2013 research and development funding for F-22A Squadrons. The Air Force in 2003 established a program to modernize its in-service F-22s. The program includes upgrades to the aircraft's air-to-ground and intelligence, surveillance and reconnaissance (ISR) capabilities, to be applied in four scheduled increments. A May 2012 Government Accountability Office (GAO) report assessing major DOD weapon acquisition programs found that "total projected cost of the F-22A modernization program and related reliability and maintainability improvements more than doubled since the program started–from $5.4 billion to $11.7 billion–and the schedule for delivering full capabilities slipped 7 years, from 2010 to 2017." GAO cited "(1) additional requirements, (2) unexpected problems and delays during testing, and (3) research, development, testing, and evaluation funding fluctuations" as contributing to the cost increases and delays. GAO also found that "(p)rogram accountability and oversight have been hampered by how the modernization program was established, managed, and funded," as the F-22 modernization program has not been treated as a major defense acquisition program (MDAP). Beginning with Increment 3.2B, future F-22 modernization programs will be managed as MDAPs. Further, in its report accompanying the FY2013 Defense Authorization Act, the Senate Armed Services Committee included language stating, "The committee believes the category 'major defense acquisition programs' is not limited only to programs that are acquiring brand new weapon systems, and that any F-22A program for modifications or upgrades, if it would otherwise meet the statutory definition of a major defense acquisition program, should be treated that way." F-22 sustainment costs—the funds expended to maintain and operate a system following its procurement—have also attracted congressional attention. In its report accompanying the FY2013 defense authorization act, the Senate Armed Services Committee included language concerning alternate methods of sustaining the F-22 fleet: F-22A Raptor Sustainment In addition to the near-term modernization, sustainment over the life cycle of a weapon system represents a significant expenditure of resources. On average, about two-thirds of the total life cycle cost of a major defense system lies in post-production—in its operation and sustainment over its useful life. If that rule were to hold true, with a charge of roughly $79.0 billion to buy the F-22A, the Air Force could be facing a demand for roughly $160.0 billion in F-22A sustainment costs. Moreover, under its `structures retrofit program', over the next few years the Air Force will need more than $100.0 million to retrofit the F-22A fleet just to ensure these aircraft can fly for the full 8,000 hours for which they were designed. Over just the last 2 years, the Air Force issued sole-source contracts for sustainment of the F-22A fleet to the prime contractor totaling almost $1.4 billion. The Air Force recently completed an F-22A sustainment strategy review that concluded that a joint contractor/government approach could save more than $1.0 billion in sustainment costs over the life of the aircraft. The committee believes that the Air Force must transition its sustainment strategy to adopt the least expensive sustainment strategy now, while continuing to be aggressive in exploring opportunities to compete F-22A sustainment work. Annual DOD appropriations acts since FY1998 have included a provision known as the Obey amendment that prohibits the use of funds made available in each act to approve or license the sale of the F-22 to any foreign government. Congress from time to time has reconsidered this annual prohibition. The Senate Appropriations Committee mark of H.R. 5856 , the Department of Defense Appropriations Bill, 2013, includes this language. Japan's fighter force includes, among other aircraft, about 200 F-15s and about 90 aging F-4s. To replace the F-4s, Japan reportedly wanted to purchase 40 to 50 new fighters. The effort to procure the replacement fighters is called the FX program. (A projected subsequent effort to replace the F-15s is known as the FXX program.) Secretary of Defense Robert Gates reportedly recommended the F-35 Lightning II over the F-22 and other candidates in a meeting with Japan's defense minister on May 1, 2009, but Japan reportedly still preferred to purchase the F-22. In December, 2011, Japan chose the F-35. Congress was notified of the proposed sale in May 2012. However, former Air Force Secretary Michael Wynne "said by email that Japan and Australia would 'immediately partner' to restart the line if Congress lifted the F-22 export ban." Japan may not be the only foreign country interested in purchasing F-22s. A November 9, 2009, press report states: Legally, the F-22 Raptor cannot be sold outside the United States. But the plane will be at the Dubai Air Show after having been absent from the Paris Air Show this summer. Why the Raptor will fly in Dubai and didn't fly in Paris has to do with the debate over how many F-22s the U.S. Air Force is buying, observers said. Leading up to the Paris Air Show, discussion was still heated over that number. Now that the total has been effectively limited, bringing the plane to an international air show is a less sensitive proposition, said defense and aerospace analyst Loren Thompson of the Lexington Institute in Arlington, Va. "The F-22 did not make it to the Iraq war and did not make it to the Paris Air Show, but now that it's dead, it is making an appearance at Dubai," he said. "I think the message is very clear: The political types over in the Pentagon wanted it gone. Now, it's not a problem for them any more." There was discussion of sending the plane to Paris, but around the time of the Paris Air Show, "what [Defense] Secretary [Robert] Gates and people around him did not want was to underscore how valuable the plane was at a time when they were trying to kill it," Thompson said. Now that the Air Force's purchase has been limited to 187 planes, showing off the United States' most advanced fighter jet is less sensitive. On the other hand, the F-22's appearance at the Dubai show will come shortly after President Barack Obama signed the Defense Authorization Act for 2010, which includes language about a version of the aircraft for export. By about six months from now, Gates, coordinating with Secretary of State Hillary Clinton, is to submit a report to Congress on potential foreign military sales of the restricted aircraft. The report will include cost estimates for developing an "exportable version" of the F-22 and analysis of the strategic implications for the United States of such sales. A second report will look at the impact on the U.S. aerospace industry of foreign F-22 sales, and the advantages and disadvantages of such sales for sustaining that industry. "I don't think that we've heard the end of the story on the F-22," said John Pike, director of Global-Security.org, an Alexandria, Va., think tank focused on defense and intelligence. "There are people in the Air Force who still think we need twice as many [F-22s] as we've got on order. They are continuing to look for options as to how to keep that alive" and keep the production line open. One option would be foreign sales, of course, and interested countries could include Israel and Japan. "To maintain air supremacy beyond the foreseeable future, you go with the F-22," Pike said. "Who wants to do that? The Israelis do and the Japanese do." But representatives from Lockheed Martin, the maker of the F-22, and the Air Force didn't bite when asked about what the plane's appearance in Dubai means for potential foreign sales. "Our one customer is the U.S. Air Force, and any sales of F-22s to other countries would be determined by the USAF, Department of Defense and State Department, subject to congressional approval," said Lockheed spokesman Jeffery Adams. "The U.S. policy on foreign military sales for the F-22 weapons program remains restricted," a U.S. Air Force spokeswoman said. "The F-22 is a cutting-edge, fifth-generation fighter that offers unparalleled capability. It is for this reason that F-22 will not be available for foreign sales." As of Oct. 1, the Air Force had 147 of the 187 planes it will receive. The Defense Authorization Act language is no guarantee of foreign sales—not by a long shot, Pike said. Whether that language represents something "that might have legs or whether this is something everybody knows is a non-starter" is still an open question, he said. Thompson dismissed the notion that an exportable version will be produced. "There will not be a production line from which to sell F-22s overseas by the time an export version could be created," he said. "Most of the skill in any major weapons system resides in the workers, and they will drift away" as production for the Air Force concludes. An October 23, 2009, press report states: The Air Force has told F-22A Raptor prime contractor Lockheed Martin not to expect foreign sales of the fifth-generation fighter, a company official acknowledged this week. "That is the guidance that we have received for post-production planning was that we are to assume no" foreign military sales, Tim Ryan, director of F-22A strategic plans and sustainment for Lockheed Martin, said during an Oct. 21 presentation at an industry conference in Vienna, VA. "For our planning purposes, we have to go in planning worst case," he said, noting Lockheed has an understanding of production changes that would need to be made in order to build an exportable version of the fighter. In November 2010, an F-22 crashed in Alaska, killing its pilot. Although the official accident report declared that hypoxia did not contribute to the accident, it determined that among other contributing factors, oxygen flow to the pilot had been interrupted. The Air Force began an effort to understand why pilots were "reporting hypoxia-like symptoms in the air. Hypoxia is a condition that can bring on nausea, headaches, fatigue or blackouts when the body is deprived of oxygen." At least 25 "physiological incidents" were recorded among F-22 pilots; 14 prior to the Raptor being grounded from May to September, 2011, for investigation of the issue, and at least 11 subsequently. The Air Force pursued numerous avenues in the process of investigating the oxygen issues. An on-board oxygen generating system was suspected of being faulty, then cleared. Charcoal canisters were installed in F-22s to neutralize toxins that were thought to have entered the oxygen supply. Operating procedures were examined to see if starting the F-22's engines while the plane was in its hangar allowed exhaust gases to be taken into the cockpit. The Air Force Scientific Advisory Board was convened to consider all possible explanations and recommend corrections. During the investigation, some Members of Congress indicated concerns regarding the oxygen issue, whether F-22s were safe to fly, and whether pilots could decline to fly the aircraft. In August 2012, the Air Force announced that the oxygen deprivation issue was due to "a 'mosaic' of interrelated cockpit equipment issues that led to a chain reaction of glitches resulting in symptoms similar to hypoxia." The equipment problems included issues with valves in vests designed to help pilots breathe during high-g maneuvers; improper "scheduling," or programming, of those vests; and effects of the charcoal canisters added by the Air Force during the investigation in order to reduce possible toxins in the oxygen supply. While the valve has performed satisfactorily for pilots of older F-15 and F-16 fighters, the F-22 is designed to fly at higher altitudes, which requires continuously pumping more oxygen to the pilots, Lyon said. The valve wasn't strong enough to prevent that higher pressure oxygen from inflating the pilots' vests at lower altitudes. ... the Air Force did "rudimentary testing" on the valve some years ago and found that it caused the high-pressure vest to inflate early, hampering pilot mobility. However, the vest was found to be unnecessary on the F-15 and F-16. When the vest was re-introduced on the F-22 with the same valve, the problem wasn't detected. Also in response to the 2010 crash, the Air Force is "replacing handles that engage the F-22 Raptor fighter jet's emergency oxygen system." Difficulty in operating the backup oxygen system was cited as contributing to the crash. Subsequently, some commentators indicated that they did not believe the oxygen problem had been solved. The Senate Armed Services Committee, in its report accompanying the FY2013 Defense Authorization Act ( S.Rept. 112-173 ), directed the Secretary of the Air Force: to explain, no later than 90 days after enactment of this Act, how the Air Force has implemented or will implement each of the recommendations provided by the (Air Force Scientific Advisory Board to address F-22 oxygen issues) If the Secretary disagrees with any of these recommendations, he should explain why and describe what other corrective actions he may be taking to respond to the concern underlying that recommendation. Finally, as the Air Force continues to investigate this matter, the committee will view as unacceptable any act of retaliation against any F-22A Raptor pilot who raises concerns about the safety of this aircraft or declines to fly it on that basis. Although the F-22 achieved IOC in December 2005, in-service F-22s continue to experience relatively low mission-capable rates, and are expensive to maintain. Until F-22 production ended, a key issue for Congress was whether to approve ending F-22 procurement at 187 aircraft, or reject that proposal and provide funding to procure additional F-22s in FY2010 and/or subsequent fiscal years. The issue emerged as a high-profile item of debate on the FY2010 defense budget. The White House vowed to veto any bill that supports the acquisition of F-22s beyond the 187 that had been procured through FY2009. In past years, the issue of how many F-22s to procure has been a topic of apparent disagreement between the Office of the Secretary of Defense (OSD) and Air Force leaders, with OSD supporting a total of 183 (now 187), and Air Force officials supporting procurement of substantially more than that. Disagreement on the issue appeared to come to a head in June 2008, when Secretary of Defense Robert Gates asked the Secretary of the Air Force and the Air Force Chief of Staff to resign. It was reported in press articles, and later confirmed by the former Air Force Secretary, Michael Wynne, that their reluctance to support a total of no more than 183 F-22s was the key factor leading to their resignations. The potential costs of restarting production (discussed in " Potential Production Restart " above) may significantly change the economic argument for procuring more F-22s, were the United States to bear all of the restart costs. If production is restarted (e.g., to provide F-22s to a foreign buyer), the United States might be able to acquire additional F-22s more economically than were it to restart production solely to increase the U.S. F-22 fleet. Independent of the startup costs, arguments can be made both for and against increasing the size of the U.S. F-22 fleet. Supporters of maintaining the current fleet size could argue one or more of the following: Procuring additional F-22s would add to total F-22 fleet maintenance and sustainment costs, reducing funding available for other Air Force programs. A projected Air Force fighter gap of up to 800 aircraft by 2024 that Air Force officials identified in 2008 testimony is open to question, because the projection is strongly influenced by assumptions on threats and whether the United States will fight alone or as part of a coalition. Even if such a fighter gap does emerge, procuring F-22s is not necessarily the most cost-effective way to address it—other potential options for addressing the shortfall would include procuring less expensive aircraft, such as F-35s, upgraded F-15s, or upgraded F-16s. Advocates of acquiring additional F-22s could argue one or more of the following: In the fall of 2011, the Obama Administration announced a reorienting of U.S defense strategy to focus on the Pacific. (See CRS Report R42448, Pivot to the Pacific? The Obama Administration's "Rebalancing" Toward Asia , coordinated by [author name scrubbed].) With the deployment distances and air defense environments found in the Pacific theater, it is uncertain whether the current number of F-22s would be sufficient to meet U.S. strategic goals. As the Air Force continues to gain operating experience with F-22s, the aircraft's mission-capable rate will increase, and F-22 maintenance costs per flight hour will come down. F-22 mission-capable rates are increasing. (See " Reliability and Maintainability of In-Service F-22s " below.) Although the F-22 is an expensive aircraft to operate, the F-22's capabilities are worth the costs. The F-35 program continues to run behind schedule, and the resulting aircraft will not be as capable as the F-22 in some scenarios, even though its unit cost is approaching that of the F-22. Procuring additional F-22s for the U.S. Air Force could be of value in maintaining Air Force capabilities and force structure in the event of a reduced or delayed F-35 buy. The House Armed Services Committee stated, "The committee notes that without advanced fifth generation aircraft that the United States may be significantly limited in its ability to project power in the future. In addition, the committee believes that the 187 F–22 Raptors currently planned for may not alone provide enough of this capability." A second issue for Congress for the F-22 program concerns the reliability and maintainability of in-service F-22s. Operations and sustainment now form the bulk of F-22 spending. For FY2012, "the Air Force is spending about $803.4 million to modify and sustain the Raptor." In February 2009, it was reported that the F-22's mission capable rate (MCR), one measure of an aircraft's reliability and maintainability, was 60%. Critics of the F-22 noted that a 60% MCR is unacceptable by the Air Force's own standards. Air Force leaders defended the F-22, arguing that the aircraft was experiencing typical growing pains. The Government Accountability Office found in 2010 that F-22s were encountering corrosion at unusually high rates, "and the Defense Department plans to spend $228 million through 2016 to fix the deteriorating aluminum-skin panels." A Lockheed spokesman said "the F-22s experienced corrosion because of 'interaction' with stealth materials used to hide them from enemy radar. Lockheed has developed alternative material that 'eliminated that interaction' and began changing the fleet in early 2010." Another potential issue for Congress for the F-22 program concerns the cost effectiveness of the F-22 modernization program (discussed in " Modernization and Sustainment of In-Service F-22s " above). Supporters of the program could argue that upgrading the F-22's air-to-ground and ISR capabilities will expand the aircraft's mission flexibility and thereby realize a greater return on the significant investment made in developing and procuring the aircraft. Air Force officials have emphasized the F-22's potential to execute many of the ISR missions that UAVs have performed in support of counter insurgency and low-intensity conflicts. Skeptics could argue that upgrading the F-22's air-to-ground and ISR capabilities is not critical in light of the substantial air-to-ground capability of the F-35, which is to be procured in large numbers, and the ISR capabilities of other existing or planned DOD systems, including unmanned aerial vehicles (UAVs). They could argue that resolving instability problems with the F-22's advanced avionics has been a significant contributor to the program's development cost, and that adding a new feature such as an air-to-ground radar or new communications capabilities could jeopardize the progress that has been made in the F-22's avionics software. They could argue that controlling the F-22's electronic emissions is a key component of making the aircraft elusive to enemy defenses, and that if the upgrades make the F-22 less stealthy, the benefits of these modifications might not be worth the risks. A further issue for Congress for the F-22 program concerns the potential export of the aircraft to other countries. As mentioned earlier, Congress from time to time has reconsidered the annual prohibition on foreign sales of the F-22. Some Members in 2009 reportedly have expressed interest in reconsidering the annual prohibition, although the economics of restarting the now-closed production line may affect that calculation. The Administration's proposed FY2013 defense budget requests $283.9 million in FY2013 procurement funding for modification of in-service aircraft and $36.7 million to facilitize Air Logistics Centers to perform F-22 maintenance. The Administration's proposed FY2013 defense budget also requests a new start program, funded at $140.1 million in research and development, for the Increment 3.2B software; and $371.7 million in FY2013 research and development funding for F-22A Squadrons. The House Armed Services Committee, in its report ( H.Rept. 112-479 of May 11, 2012) accompanying H.R. 4310 , recommends authorizing the requested amounts for F-22 without amendment. The Senate Armed Services Committee, in its report ( S.Rept. 112-173 of June 4, 2012) on S. 3254 , recommends authorizing the requested amounts for F-22 without amendment. The report includes the following related provisions: Treatment of certain programs for the F-22A Raptor aircraft as major defense acquisition program (sec. 142) The committee recommends a provision that would require that the Air Force report F-22A modernization and upgrade programs under the system of the Selected Acquisition Reports (SAR). The committee was informed that, with new production of the F-22A coming to an end, the Air Force intends to stop reporting within the SAR system on the F-22A, despite the fact that there could be as much as $11.7 billion remaining to be spent on defined F-22A upgrade programs. The committee believes the category `major defense acquisition programs' is not limited only to programs that are acquiring brand new weapon systems, and that any F-22A program for modifications or upgrades, if it would otherwise meet the statutory definition of a major defense acquisition program, should be treated that way. The committee believes there is ample justification for continuing to track F-22A modernization past the end of new production. (1) In April 2012, the Government Accountability Office (GAO) issued a report on the program to modernize the F-22A Raptor fleet, estimated to cost almost $10.0 billion through 2023. In this report, GAO noted that similar efforts to modernize Air Force and Navy tactical fighters in the past involved building upgrades into newly produced jets, resulting in entirely new, fresh airplanes. (2) In another report, issued in May 2012, GAO found that the total projected cost to modernize the F-22A Raptor fighter jet more than doubled from $5.4 billion to $11.7 billion since the program started and the schedule for delivering full capabilities slipped 7 years from 2010 to 2017. (3) Upgrades to the F-22A are much more complicated than those made to other legacy fighters, giving rise to likelihood of schedule slips and cost growth. (4) With these factors in mind, GAO believes that many of the Air Force's F-22A Raptors may not get their long-promised capability upgrades until they will have, in some cases, expended as much as 20 percent of their service lives. This could limit the amount of utility the Air Force will be able to extract from this enormously expensive modernization program. F-22A Raptor Sustainment In addition to the near-term modernization, sustainment over the life cycle of a weapon system represents a significant expenditure of resources. On average, about two-thirds of the total life cycle cost of a major defense system lies in post-production—in its operation and sustainment over its useful life. If that rule were to hold true, with a charge of roughly $79.0 billion to buy the F-22A, the Air Force could be facing a demand for roughly $160.0 billion in F-22A sustainment costs. Moreover, under its `structures retrofit program', over the next few years the Air Force will need more than $100.0 million to retrofit the F-22A fleet just to ensure these aircraft can fly for the full 8,000 hours for which they were designed. Over just the last 2 years, the Air Force issued sole-source contracts for sustainment of the F-22A fleet to the prime contractor totaling almost $1.4 billion. The Air Force recently completed an F-22A sustainment strategy review that concluded that a joint contractor/government approach could save more than $1.0 billion in sustainment costs over the life of the aircraft. The committee believes that the Air Force must transition its sustainment strategy to adopt the least expensive sustainment strategy now, while continuing to be aggressive in exploring opportunities to compete F-22A sustainment work. F-22A Raptor Pilot Air-Supply Problems The Air Force has been having problems with the oxygen-supply for its F-22A Raptor pilots. The committee is aware of, and has been closely monitoring, these problems. The Air Force has documented 11 reported incidents of hypoxia-like symptoms in 10,000 sorties (about 0.1 percent) since late 2011, with 6 of these incidents having occurred as recently as February and March 2012. Since reports of pilots experiencing hypoxia-like symptoms in flight first arose, the Secretary of the Air Force, among other actions, directed the Air Force Scientific Advisory Board (SAB) to conduct a quick-look study; gather and evaluate information; and recommend any corrective actions on aircraft using on-board oxygen generation systems. Unfortunately, to date, the Air Force has not been able to identify conclusively a root cause for the problem. But, the committee has been assured that the Air Force has put in place measures intended to ensure that these aircraft are safe to fly, including new commercial oxygen status sensors and emergency oxygen handles in the aircraft. For this reason, after having grounded the fleet after initial reports of hypoxia-related symptoms in its pilots late last year, the Air Force returned the F-22A to flying under its full mission envelope and, in fact, deployed it to Southwest Asia and the United Arab Emirates in late April. Despite that a small number of pilots have asked not to fly the F-22A or to be reassigned because of this issue, Air Force leadership has conveyed to the committee that, while the Air Force continues to investigate this problem, these aircraft are safe to fly today. Notably, the Navy had similar problems with F-18s; there were 64 incidents from 2002 to 2009, resulting in 2 deaths. Ultimately, however, the Navy overcame these problems. The committee remains hopeful that the Air Force will be similarly successful. In the meantime, the committee will continue to exercise close oversight of this problem and how the Air Force addresses it. The committee directs the Secretary of the Air Force to explain, no later than 90 days after enactment of this Act, how the Air Force has implemented or will implement each of the recommendations provided by the SAB. If the Secretary disagrees with any of these recommendations, he should explain why and describe what other corrective actions he may be taking to respond to the concern underlying that recommendation. Finally, as the Air Force continues to investigate this matter, the committee will view as unacceptable any act of retaliation against any F-22A Raptor pilot who raises concerns about the safety of this aircraft or declines to fly it on that basis. In its report ( H.Rept. 112-493 of May 25, 2012) on H.R. 5856 , the House Appropriations Committee recommends authorizing $333.9 million in FY2013 for modification of in-service F-22s, an increase of $50.0 million from the Administration's request. The committee's report states: F–22 BACKUP OXYGEN SYSTEM The Committee is concerned by the continuing problems with hypoxia-type events involving the F–22 and the Air Force's inability to determine a remediable root cause for this problem. As the military's only operational fifth generation fighter, the F–22 is critical to the implementation of the National Defense Strategy. Due to the small size of the F–22 fleet, and the utmost importance of preserving the safety and readiness of F–22 pilots, the Committee strongly supports Air Force efforts to address this problem. The Committee understands that the Air Force is in the final stages of selecting a design for an automated backup oxygen system as a mitigation measure. The Committee's recommendation therefore includes $50,000,000 only for the procurement and installation of a backup oxygen system for the F–22. The Committee further directs the Air Force to provide regular updates to the Committee on physiological events involving F–22 pilots, impacts on flight operations, and the progress of efforts to discover and implement solutions. Section 8057 would prohibit the use of funds made available in the bill from being used to approve or license the sale of the F-22 to any foreign government. This is the so-called Obey amendment on the F-22 program that has been included in annual DOD appropriation acts since FY1998. The Senate Appropriations Committee, in its report ( S.Rept. 112-196 of August 2, 2012) on H.R. 5856 , recommends a $4.4 million addition to the Administration's request for FY2013 procurement funding for the modification of in-service F-22s. The recommended $4.4 million addition includes a recommended reduction of $17.5 million for "Engine modifications – excessive cost growth," and a recommended addition of $21.5 million for "Backup oxygen system." (Page 145, line 39) The committee included the following language regarding oxygen systems: F–22 Automatic Backup Oxygen System [ABOS] .—The fiscal year 2013 budget request includes no funds for the F–22 ABOS. The Committee notes that following submission of the fiscal year 2013 budget request, the Air Force was directed by the Secretary of Defense to take additional measures to ensure the health and safety of the airmen and maintainers operating the F–22, to include expediting the installation of an automatic backup oxygen system. The Committee understands that the fiscal year 2013 funding requirement for the procurement of ABOS is $21,500,000 and that the Air Force intends to defer other, previously funded critical reliability improvements to the F–22 in order to accelerate the procurement and installation of ABOS. The Committee does not agree with this strategy and recommends an additional $21,500,000 in fiscal year 2013 to execute the accelerated ABOS schedule without negatively impacting other reliability projects. Section 8038 of H.R. 5856 , as reported by the committee, would retain and modify the annual provision regarding foreign sales of the F-22. The text of the provision as reported by the committee is as follows: Sec. 8038 . None of the funds made available in this Act may be used to approve or license the sale of the F-22A advanced tactical fighter to any foreign government: Provided, That the Department of Defense may conduct or participate in studies, research, design and other activities to develop a future export version of the F-22A that protects classified and sensitive information, technologies and U.S. warfighting capabilities.
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Procurement of Air Force F-22 Raptor fighters began in FY1999, and a total of 195 (177 production aircraft, 16 test aircraft, and 2 development aircraft) were procured through FY2009. In the FY2010 budget, the Administration proposed to end F-22 procurement at 187, and Congress approved that termination. The F-22 assembly line in Marietta, GA, has been shut down, with its tools and equipment placed in storage. Since 2010, operational issues have arisen. Following a November 2010 fatal crash of an F-22 in Alaska, the Air Force recorded at least 25 "physiological incidents" of F-22 pilots reporting hypoxia-like symptoms while flying, possibly indicating oxygen deprivation. Following a lengthy investigation and grounding of the F-22 fleet, the Air Force attributed the oxygen deprivation to "a 'mosaic' of interrelated cockpit equipment issues." Following corrective actions, the F-22 fleet has returned to the air. The Administration's proposed FY2013 defense budget requests $283.9 million in FY2013 procurement funding for modification of in-service aircraft and $36.7 million to equip Air Logistics Centers to perform F-22 maintenance. The Administration's proposed FY2013 defense budget also requests a new start program, funded at $140.1 million in research and development, for the Increment 3.2B software, and $371.7 million in FY2013 research and development funding for F-22A Squadrons. The Senate Appropriations Committee markup of the FY2013 defense appropriation bill includes language prohibiting funds from being used to approve or license the sale of the F-22 to other countries. The bill does permit the Department of Defense to conduct studies and design activities to develop a future export version of the aircraft that protects classified and sensitive information. This language is similar to provisions passed by Congress each year since 1998.
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Home visiting is a strategy for delivering support and services to families or individuals in their homes. While home visiting may also be used to address needs of the chronically ill or elderly, this report deals exclusively with home visiting as a service strategy for families with young children or those who are expecting children. Further, as used in this report, the terms "home visitation" or "home visiting programs" refer to structured models of interaction with families and children; these programs have specific child and family goals, involve regular home visits over a sustained period of time, and have established components or curricula to be covered during those visits. Further, this kind of home visitation is typically implemented as a primary prevention strategy—home visiting is offered before any specific "problem" (e.g., abuse or neglect of children, early childhood developmental delays) has been identified. At the same time, many home visitation models discussed in this report target services to families with certain risk factors (e.g., low income, low social support) for poor child outcomes. In addition, some home visiting programs implement intervention strategies meant to prevent recurrence of a poor outcome or to limit any ongoing negative consequences. There are a variety of early home visiting models. These models typically seek to positively impact one or more child or family outcomes across three main domains: maternal and child health; early childhood social, emotional, and cognitive development; and family/parent functioning. Some estimates suggest that, at any point in time, as many as 400,000 to 500,000 families may be receiving early childhood home visitation services. This equals about 3% of all families with children under the age of six (17.4 million families), or a little more than 7% of those same families with income below 200% of the poverty line (7.0 million families). Depending on the particular model of early childhood home visitation being used, the visitors may be specially trained nurses, other professionals, or paraprofessionals; visits may begin during a woman's pregnancy or later; and the visits may continue, regularly, until the child reaches his/her second birthday or enters school. Participation of families is voluntary. Early childhood home visitation is currently undergoing a phase of broad popularity. This appears to be driven in some part by newer research on how the human brain develops and, specifically, the significance of the prenatal and early childhood environments to later life. To a large extent, parents shape their children's earliest experiences, and because most home visiting programs seek to help parents understand their own child's development, advocates see these programs as an opportunity to enhance child development, thereby achieving long-term positive benefits for the children, their parents, and society. Further, at least since the 1960s, a variety of early childhood home visiting models have undergone many assessments and evaluations intended to test how effectively they achieve their goals. While the results of these evaluations have been mixed, some models, or aspects of models, have been shown to be particularly effective. Overall, while researchers have cautioned that home visiting is not a panacea, they have generally encouraged its use as part of a range of strategies intended to enhance and improve early childhood. There are many "models" used to provide voluntary prenatal and early childhood home visitation. At the state and community level, implementation of early childhood home visitation models can vary greatly. Some states and communities rely on established models, others blend components from more than one model, and some develop their own models. In addition, many states support more than one model of home visiting. These models may target different groups of families, have different primary goals, and/or operate in different parts of the state. The Administration for Children and Families (ACF), an agency of the U.S. Department of Health and Human Services (HHS), is currently carrying out a competitive grant initiative intended to assist grantees in implementing home visitation models that have been proven effective. Apart from this research effort (described below), the federal government currently supports some ongoing programs in which home visitation is a primary strategy for achieving program goals (e.g., Early Head Start), others in which support for home visiting is explicitly permitted or strongly suggested by the program's statutory authority (e.g., Maternal and Child Health Block Grant and Promoting Safe and Stable Families), and still others where the broad purposes of the program allow use of funds for some or all of the activities supported by home visitation programs (e.g., Temporary Assistance for Needy Families (TANF), Medicaid). Home visiting models can be differentiated by, among other things, who they intend to serve, the intensity and duration of services, staff qualifications and training, specific program goals, and the exact services or curricula they use in working with families. Some program characteristics of six early childhood home visitation models—Healthy Families America, Parents as Teachers, Nurse-Family Partnership, Home Instruction for Parents of Preschool Youngsters, the Parent-Child Home Program, and SafeCare—are discussed below as examples of early childhood home visitation programs. Each of these home visitation models was privately originated, has established core program components and specific training standards, and has been evaluated with results published in peer-reviewed journals. Further, each of these models has available materials and other resources that may be used to replicate the model. Readers should be aware, however, that there are other models in existence that meet some or all of the criteria discussed above (e.g., Maternal and Infant Health Outreach Worker ). Therefore, the discussion of these models is meant to be illustrative rather than exhaustive. Early childhood home visitation is typically understood as a primary prevention strategy rather than an intervention strategy. Accordingly, in most of the home visiting models reviewed here services are made available to families before any "problem" has been identified. For example, services are typically available before a family is reported as having abused or neglected a child, or before any particular developmental delay is found in a child. At the same time, some models target families with specific demographic features that suggest additional family support may be needed or useful. The Nurse Family Partnership model focuses exclusively on low-income, first time mothers who are identified during their pregnancy. The Healthy Families model typically targets a broader set of families, including pregnant women or families with pre-school age children who are identified as "at-risk" using a standardized assessment tool. However, individual sites where the Healthy Families model is being implemented may choose to serve only particular subgroups within that broader target population. By contrast, the Parents as Teachers model espouses a principle of universal access for families with young children (including pregnant women). Finally, the SafeCare model is more narrowly focused, and is primarily directed at families where a report of child abuse or neglect has been made. Thus while it intends to prevent additional maltreatment, it is specifically designed to intervene in families where a problem (report of child abuse or neglect) has already been identified. As noted above, several models are being used to provide home visitation programs to pregnant women or to families with young children. These programs may continue for the length of time it takes to cover a specific model's curriculum or they may continue until the child reaches a certain age. For example, both the Healthy Families America and the Parents as Teachers models may begin visitation during pregnancy or after birth of a child and generally continue until the child is enrolled in kindergarten. By contrast, the Home Instruction for Parents of Preschool Youngsters (HIPPY) and Parent-Child Home Program models do not begin until a child is approximately 2 or three years of age, but also typically end around the time of the child's enrollment in preschool or kindergarten. Separately, the Nurse Family Partnership model requires that services begin during the first-time mother's pregnancy and end with the child's second birthday. The SafeCare model is implemented after the birth of a child and continues only for the length of time it takes to cover the program curriculum (typically four or five months). Visits may occur weekly, biweekly, or on a monthly basis. In some models, visits may occur less often as the family progresses through the program. Both the HIPPY and Parents as Teachers models include group meetings (outside the home and with other families) as part of their program model. Home visits typically last one hour, although some models include 30-minute visits and others suggest that a single visit may continue for up to 90 minutes. The Nurse Family Partnership program is the only model discussed here that requires a specific education degree; home visitors in this model must be registered nurses. In all of the other program models, individuals of any education level may become visitors provided they successfully complete training under the program model. Home visitors in these models may have bachelor's or higher level education degrees, though this is not always required. The Healthy Families model stresses the home visitor's ability to establish rapport with families as critical. Some program models (e.g., Parents as Teachers, HIPPY, Parent-Child Home Program) prefer that home visitors be from the local community—or even that they be alumni of the home visiting program—as a way to help establish credibility or a connection between home visitors and families. Finally, the SafeCare model identifies willingness to implement a structured service delivery protocol as a key criterion for its home visitors. Primary goals also vary by program model, as do the kinds of activities used by each model to achieve those goals. Some program models focus more heavily on the school-readiness aspect of early childhood development (e.g., HIPPY, Parent-Child Home Program) while others are more broadly focused on child development issues, as well as maternal and child health, and family functioning. Across all program models, a variety of methods (some very structured, others less so) are used to offer parents information about their child's growth and development. Table 1 outlines goals and other characteristics of the six home visiting program models discussed above. Table 2 shows the presence of five of these program models by state, including the number of locations in which the model operates within the state. Please note that the number of sites for a given model are not necessarily comparable because they may be of very different sizes (both geographically and in terms of the number of families served). Data shown are based on information provided on the websites of the given program. State-by-state information was not available on the program website for SafeCare. (However, the SafeCare website does indicate that the model has been implemented statewide in Oklahoma, is undergoing statewide implementation in Georgia, and has also been implemented in one or more locations in California, Washington, and Maryland.) Currently many states and localities have implemented home visiting programs as part of a range of family support and/or early childhood interventions or services. Among 46 states that responded to a 2007 survey conducted by Columbia University's National Center on Children in Poverty (NCCP), 40 indicated the presence of one or more "state-based" home visiting programs. The survey defined "state-based" to include any distinct program model that was administered by the state (in most instances) or otherwise coordinated by state agencies (excluding Early Head Start, Healthy Start, and the Infants and Toddlers Program funded under Part C of the Individuals with Disabilities Education Act). The survey separately noted that in 24 states, at least 32 distinct programs operated under a state legislative mandate or with some state-legislated program content. The NCCP survey indicated that most publicly funded home visiting programs targeted low income families with certain risk factors. Further, the survey showed that the most commonly identified program goals for state-based home visiting programs were related to parenting and children's early health and development. Around 70% of the state-based programs included in the 2007 survey identified program goals in those categories. Just above half of all programs identified outcomes related to pregnancy (e.g., increased time interval between pregnancies). Reduction of government services related to child abuse was cited as a program goal in a little more than 40% of the programs. As used in the NCCP survey, a single state-based "program" refers to a particular home visiting model that might be in operation at one or many sites in the state. Many of the states responding to the survey had more than one distinct "state-based" home visiting program in place. Further, the survey showed that while some of those programs were based on well-known home visiting models, most were not. Of the 70 state-supported, administered, or coordinated programs identified in 40 states, only 17 (identified by 14 states) were implementing one of the well-known home visiting models, such as Healthy Families, Nurse Family Partnership, Home Instruction Program for Preschool Youngsters (HIPPY), and Parents as Teachers. Separately, 14 of the state-supported, administered, or coordinated programs (in 14 states) used more than one of those well-known home visiting models or some combination of different elements from those models (e.g., a "blended design"). However, the majority (the remaining 39) of these state-funded, administered, or coordinated programs reported using "homegrown" models. The use of blended or homegrown models may reflect efforts by states to address particular needs of a specific target population, to vary intensity of service by identified family need, to offer the amount of services they can financially support, and/or to provide a level of service that will be locally accepted. In a 2006 report reflecting on implementation of home visiting programs in several states, researcher Miriam Wasserman observed that in most locations there was not a deliberate effort to identify a program with the most evidence of success. Typically, she writes, statewide programs—of whatever model—were launched in one or more sites based on response to specific, locally identified needs. This attracted the notice and interest of other sites in the state (along with some entrenched local interests), which in turn led to more secure federal or state funding, and ultimately to greater proliferation of that program model. Noting that grassroots efforts have been critical, she also cites the importance of influential champions of a particular model. These might be legislators or other state leaders. As examples, she cites the importance of a 1991 early childhood initiative by then Indiana Governor Evan Bayh in the development of a statewide Healthy Families network in that state; the efforts of Michele Ridge, wife of former Pennsylvania Governor Tom Ridge, in the spread of Nurse Family Partnership in Pennsylvania; support of then Arkansas first lady Hillary Clinton in spreading the HIPPY model in Arkansas; and the arrival of the Parents as Teachers model in Idaho, which she credits to the relationship between Senator "Kit" Bond of Missouri—where the Parents as Teachers model was first demonstrated and then broadly replicated—and former Idaho Senator Dirk Kempthorne, who subsequently became governor of that state. As part of its FY2008 Budget Request, the Bush Administration sought $10 million (as a set aside within the discretionary activities account of the Child Abuse Prevention and Treatment Act, CAPTA) for competitive grants to encourage and enable states to invest existing funding streams in a range of "administrative mechanisms" that are "needed to successfully implement and sustain high quality, evidence-based home visitation programs that have strong fidelity to a proven effective model" and to support a national cross-site evaluation to examine factors associated with successful replication or expansion of "proven-effective models." Congress provided an initial $10 million dollars for this purpose as part of its FY2008 appropriations process ( P.L. 110-161 ) and on September 30, 2008, the Administration for Children and Families (ACF) at HHS awarded cooperative agreements to 17 grantees in 15 states to support "state and local infrastructure needed for the high quality implementation of existing evidence-based home visiting programs to prevent child maltreatment." The grants are valued at $500,000 per year and, if appropriations are available, are expected to continue for five years. The successful grantees are implementing (or enhancing) and studying a variety of home visiting models (alone or in combination). These models include the Nurse Family Partnership, Healthy Families America, Parents as Teachers, and SafeCare models, as well as the Positive Parenting Program (Triple P) and a separate model known as Family Connections. In addition to these cooperative agreements, HHS/ACF awarded funds to Mathematica Policy Research, Inc., and the Chapin Hall Center for Children to conduct a cross-site evaluation of the funded programs, to include study of model implementation, fidelity, outcomes, and costs. Mathematica and Chapin Hall are also charged with providing technical assistance to grantees and their local evaluators, and they must establish and coordinate a peer learning network to allow grantees, federal staff, and other stakeholders to share information. Recipients of the cooperative agreement award spent the majority of the first year under the agreement (i.e., most of FY2009) engaged in collaborative planning efforts. Among other things, the collaborative planning effort was meant to ensure that "all relevant programs and funding streams are identified and included" in the coordination efforts. Ultimately, the plan was expected to lay out the necessary infrastructure for widespread adoption, implementation, and continuation of evidence-based home visiting programs and it will serve as a roadmap for the implementation phase of the cooperative agreement. Because it is "very interested in interagency collaborative efforts across various disciplines," HHS/ACF (through its Children's Bureau) has required that the planning and implementation process for these home visitation projects must include the state or local child welfare agency and the state's designated lead agency for the Community-Based Child Abuse Prevention Program (CBCAP, authorized under Title II of the Child Abuse Prevention and Treatment Act (CAPTA), which is administered by the Administration for Children and Families of HHS). (For more information on CBCAP, see "Selected Federal Programs That Provide or Support Home Visitation," Appendix A .) The Children's Bureau also "strongly recommended" collaboration with grantees under two other federally supported efforts related to improving outcomes for young children. These are the State Maternal and Child Health Early Childhood Comprehensive Systems (ECCS) grantees (competitive grants administered by the Health Resources and Services Administration of HHS and currently funded in as many as 47 states) and Linking Actions for Unmet Needs in Children's Health (or "Project LAUNCH" competitive cooperative agreements, now in place in seven locations and administered by the Substance Abuse and Mental Health Services Administration of HHS). (For more information on these and other "Federal Initiatives Related to Coordination of Early Childhood Programs and Services," see Appendix B .) Funding provided in years two through five of the ACF home visiting initiative are to be used for plan implementation. In P.L. 111-8 , Congress directed that $13.5 million be set aside to continue the home visitation initiative for a second year. However, no specific funding for the initiative was included in the FY2010 Consolidated Appropriations Act ( P.L. 111-117 ). The statement of the managers on the FY2010 appropriations bill ( H.Rept. 111-366 ) suggests that the conferees did not necessarily expect the current ACF home visiting initiative to end. Instead, it stated that they "anticipate that mandatory funding will be provided for this activity in fiscal year 2010 as proposed by the Administration." As part of its FY2010 budget request, the Obama Administration sought continued funding for the current ACF home visiting initiative, while it separately requested legislative authority to establish a new state grant program that would support home visits to low-income mothers and pregnant women. For the newly proposed program, the Obama Administration sought mandatory (capped entitlement) funds. As noted above, both the House-passed ( H.R. 3962 ) and the Senate-passed ( H.R. 3590 ) health care reform bills would establish a state grant program to support evidence-based home visiting programs for low-income families with young children and those expecting children. Nothing in the current health care reform proposals would require states that receive funds under the new grant program to continue support of the ACF home visiting grantees. However, neither bill would necessarily preclude a state from providing that support. In its FY2011 budget justifications for Congress, the Administration notes that a third year of funding was not appropriated for this initiative under the CAPTA discretionary activities account. However, it notes that, as discussed above, the conference report to the FY2010 appropriations act anticipated mandatory funding would be available for this purpose. Most home visiting programs now in operation use a blend of federal and state funding streams, with some additional support coming from local public funds or private sources. For example, support for Healthy Families America (HFA) programs in 2004 came from an average of 2.4 federal funding sources, 2.0 state funding sources, and 2.7 local funding sources by state. Current and/or past sources of federal funding for home visiting have come from programs administered by several different federal agencies, most commonly the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Education (ED). Support from existing federal programs comes in several different ways. Some programs, such as Early Head Start, operate what amounts to their own home visiting model. For other programs, such as the Maternal and Child Health Block Grant, home visiting services are explicitly permitted by statute, but as one of a range of activities eligible to receive a share of program funding. Finally, there is a larger pool of federal programs, including Medicaid and Temporary Assistance for Needy Families (TANF), which may support early childhood home visitation under broadly stated program authorities. In the latter case, the statute does not explicitly focus on home visiting; rather, some or all of the activities provided under home visiting programs can be considered to be appropriate, allowable strategies for accomplishing the program's overall goals. HHS programs that have or may be used to support home visiting programs include a number authorized under the Social Security Act as well as other acts. Social Security Act programs that have been used to support home visiting include Temporary Assistance for Needy Families (TANF, Title IV-A), Stephanie Tubbs Jones Child Welfare Services (Title IV-B, Subpart 1), Promoting Safe and Stable Families (Title IV-B, Subpart 2), Maternal and Child Health Block Grant (Title V), Social Services Block Grant (SSBG, Title XX), Medicaid (Title XIX), and the Children's Health Insurance Program (CHIP, Title XXI). Programs authorized in other acts include the Community-Based Child Abuse Prevention Program (CBCAP, Title II of CAPTA), Early Head Start (Head Start Act), the Child Care and Development Fund (Child Care and Development Block Grant Act and Title IV-A of the Social Security Act), the Community Services Block Grant (Community Services Block Grant Act), Healthy Start (Section 330H of the Public Health Service Act), and the Adolescent and Family Life Care Demonstration Grants (Title XX of the Public Health Service Act). Among the ED programs that support home visiting are the Infants and Toddlers Program authorized by Part C of the Individuals with Disabilities Education Act, as well as several programs that are authorized under the Elementary and Secondary Education Act (ESEA). ESEA programs that may support home visiting include Even Start (Title I, Part B), Education for the Disadvantaged (Title I, Part A), and the Parental Information and Resource Centers (PIRC, Title V, Part D). In addition to HHS and ED, several other federal agencies administer programs that have provided financial support for home visiting programs. Among these are the Office of Juvenile Justice and Delinquency Prevention (OJJDP) at the U.S. Department of Justice, which has supported home visiting through initiatives such as Safe Start; the Corporation for National and Community Service, an independent agency which supports home visiting through AmeriCorps programs; and the Department of Defense, which funds home visiting efforts as part of its New Parent Support Program for families with children ages 0-3. Table 3 parses these federal programs into one of two categories based on how home visiting activities relate to the program goals or statute. The first category lists programs for which home visitation is either a mandatory program component (e.g., Even Start ) or an explicitly permitted (or recommended) activity for achieving the program's goals. The latter refers to programs like Early Head Start, for which home-based programs are a primary strategy for achieving program goals and are explicitly detailed in statute and regulation. This first category also includes programs such as Community-Based Child Abuse Prevention grants, for which "voluntary home visiting" services are considered one of several possible core resource and support services for families. The second category includes a selection of programs that have broadly stated goals and authorities; while home visiting is not explicitly required or permitted for these programs, their expansive and flexible nature may allow them to fund some or all home visiting services. For instance, home visiting services could be funded through Temporary Assistance for Needy Families (TANF) programs as a strategy to meet the program's goal of providing "assistance to needy families so that children may be cared for in their own homes or in the homes of relatives." While programs in this category may support home visiting activities, it is not necessary for them to do so. Moreover, even if funds from these programs are used to support home visiting activities, they may account for only a very small portion of total spending. The list of federal programs in Table 3 is illustrative only. It is not meant to be exhaustive, nor is it meant to be an exact typology. Rather, it is intended to suggest how strongly home visiting may be linked to current programs, either through common practice or program rules. Descriptions of the programs listed in the first category of the table are included in Appendix A of this report. State funding sources for early childhood home visiting programs include state general revenues, TANF maintenance of effort (MOE) funds, and state funds allocated to match federal grant programs. One study published in 2001 found that 44% of the reported home visiting program budget dollars came from state revenues. In addition, programs often tap into state tobacco settlement dollars to support home visiting programs. This may be due to fortuitous timing, as the tobacco settlement of 1998 awarded funding to 46 states at a time when home visiting programs were rapidly emerging across the country. The tobacco settlement required five tobacco manufacturers to make annual payments to states (allocated by formula) in perpetuity. Approximately 13 bills were then enacted by state legislatures targeting children's services with tobacco settlement funds, and home visiting organizations have encouraged programs to tap into these resources when seeking state funds. While federal and state sources typically provide the largest contributions to program budgets, local public funds (such as county taxes or school funds) and private funds (such as those from charitable foundations) also support home visiting efforts. Most home visiting programs are funded by multiple sources. In addition, funding sources appear to vary by program model and, in some cases, within program models over time. For instance, a 2004 Healthy Families America (HFA) survey found that 54% of program funding came from the federal government, 38% came from the state, and 8% came from local sources. This is a change from 2002 and 2003, when HFA survey data suggested that a greater share of the total funding came from state, rather than federal, funding streams. In 2004, the bulk of federal funding for Healthy Families America programs came from TANF (86%), with smaller contributions from Title IV-B programs (e.g., Child Welfare Services, Promoting Safe and Stable Families), CAPTA, and other federal sources. This reported composition of federal funding sources also represents a change from prior years. HFA data indicate that in FY2003 the sources of federal funding were more balanced, with Title IV-B programs representing about 35% and TANF accounting for about 28% of total federal funding. Results from these annual Healthy Families America surveys also suggest that funding for HFA programs has decreased over time, from nearly $296 million in FY2002 to almost $185 million in FY2004. Notably, results from these surveys represent only a subset of all HFA programs (due to a response rate of about 73%). While these survey data may provide useful insight into Healthy Families America budgets, they should not be interpreted as reflecting a comprehensive picture of HFA funding. Moreover, the results of these HFA surveys should not be generalized to other home visiting program models, as the sources of federal funding may differ across programs, depending on the program model's origin and primary focus. Healthy Families America, for example, was launched in 1992 by Prevent Child Abuse America with an explicit emphasis on preventing child abuse and neglect. Thus, it is not surprising that many Healthy Families America sites appear to receive more support from HHS human services programs (e.g., Title IV-B programs, TANF, CAPTA), while programs like the Nurse Family Partnership, by contrast, report significant support from public health programs at HHS (e.g., Medicaid, Maternal and Child Health Block Grant). In fact, the original Nurse Family Partnership (NFP) trial study, launched in Elmira, NY, in 1978, was funded by the Maternal and Child Health Bureau within the Health Resources and Services Administration (HRSA) at HHS. In subsequent years, the Maternal and Child Health Bureau remained a common source of funding for Nurse Family Partnership programs, though federal support grew to include grants offered by the National Institutes of Health, as well as programs such as TANF and Medicaid. Recently, David Olds, founder of the Nurse Family Partnership, reported during congressional testimony that Medicaid was a growing source of funding for NFP programs, while the use of TANF funds was decreasing. He indicated that states had used TANF funds more during the program's start-up phase, but that they now rely more on Medicaid funding. In his testimony, Olds also pointed to the Maternal and Child Health Block Grant as a common source of federal support for NFP programs. In contrast to both Healthy Families America and the Nurse Family Partnership, Parents as Teachers (PAT) and Home Instruction for Parents of Preschool Youngsters (HIPPY) have both reported significant financial support from ED programs, such as Education for the Disadvantaged, Even Start, and Parent Information Resource Centers (all three programs are funded under the Elementary and Secondary Education Act). For instance, the 2005-2006 HIPPY USA End-of-Year Report notes that 120 HIPPY sites received federal funding from ED programs, compared to only eight sites that reported federal support from HHS (this split is roughly consistent with data in prior year reports). The Parents as Teachers model, meanwhile, originated largely due to support from the education community. PAT started in 1981 with a pilot project in Missouri, funded by the state Department of Elementary and Secondary Education and the Danforth Foundation. Four years later, the Missouri Department of Elementary and Secondary Education had expanded the PAT program to all school districts across the state. Today, more than 160 Local Education Agencies (LEA) are using Title I funds from ED to support PAT programs. In fact, both Parents as Teachers and HIPPY programs are referenced by name in the authorizing statute for three programs in the Elementary and Secondary Education Act (ESEA). Education for the Disadvantaged (Title I, Part A) requires that local education agencies coordinate and integrate their parental involvement strategies under Title I with those provided under other programs, such as Parents as Teachers and HIPPY. Organizations receiving grants through Parent Information Resource Centers (Title V, Part D) are required to use at least 30% of the funds they receive in each fiscal year to "establish, expand, or operate Parents as Teachers programs, Home Instruction for Preschool Youngsters programs, or other early childhood parent education programs." The Even Start (Title I, Part B) statute allows for the provision of funds to "eligible organizations" for program improvement and replication activities. The statute defines eligible organizations as "any public or private nonprofit organization with a record of providing effective services to family literacy providers" and goes on to list Parents as Teachers and HIPPY as examples of such organizations. Largely because there is such variety in home visiting program models and the sources that fund them, it is difficult to estimate the current level of national investment in home visiting programs. Partial information provided by some states support the assertion that no less than $250 million is currently being spent each year on home visitation and one researcher has estimated total annual spending for this purpose (from all sources) at "perhaps $750 million to $1 billion." Based on reporting from 31 states in the study conducted by the National Center for Children in Poverty (NCCP), the aggregate annual level of support for home visiting programs in responding states in 2007 was more than $250 million (covering about 55 programs). This figure represents only a partial accounting of spending for early childhood home visitation, however, because it does not include funding for programs operating in states that did not respond to this survey question and it does not capture spending on programs that did not meet the definition of "state-based" used in the NCCP report. A survey of state appropriations for "parent education and home visiting" programs (including some Healthy Families America, Nurse Family Partnership, HIPPY, and Parents as Teachers programs) conducted by the National Conference of State Legislatures (NCSL) found that among the 26 responding states a total of about $250 million was appropriated for FY2007 and $281 million for FY2008. Of this total, it appears that federal funding sources account for roughly 15% of total appropriations, with most federal contributions attributed to TANF or Medicaid. The NCSL report is likely to under-represent federal contributions, as not all federal programs require state legislative action in order to be directed toward services at the state or local level. Taking a broader view of home visiting programs across the United States, home visitation researcher Deanna Gomby estimated in a 2005 report that annual costs for these programs are "perhaps $750 million to $1 billion." Gomby's estimate assumes a range of $1,000 to $3,000 per family per year and is based on the number of children enrolled in seven selected home visiting programs operating nationally. Estimating costs for home visiting is also difficult because costs may vary significantly by program model and site, as demonstrated in Table 1 . For example, Healthy Families America estimates that their programs spent from $1,950 to $5,768 per family in FY2004, with costs averaging about $3,348 per family in that year. This was up from an average cost of $2,764 in FY2003, when spending ranged from $1,550 to $4,500 per family. The Nurse Family Partnership offers more current numbers in a 2009 fact sheet, indicating that their typical costs range from $2,914 to $6,463 per family per year. Variation in costs across program models and sites can be attributed to a number of factors, including the intensity of services provided (e.g., number of visits), the qualifications and salary requirements of staff, the differences in cost of living for communities across the country, and the variety and scope of services offered. Typically, the more comprehensive the program, the higher the cost. The average cost for a slot in Early Head Start, for instance, is estimated to exceed $11,000 annually (though this average is based on all Early Head Start programs, which include center-based, home-based, and combination programs). Looking at findings across multiple home visiting studies, researchers conclude that home visiting can provide benefits to children and their parents, including preventing potential child abuse and neglect, enhancing cognitive development, improving parenting attitudes and parenting behaviors (e.g., discipline strategies), and increasing maternal education. They caution, however, that while all of those positive effects for home visiting programs were statistically significant, the size of the effect is small. (That is to say, the difference between observed outcomes for home visited as opposed to not-visited parents and children is small.) Further, while one or more individual studies may have shown positive effects with regard to many other desired outcomes, those effects have not necessarily been studied and/or achieved across more than one study or program site. Efforts to better understand the components of successful home visitation and to find additional effective methods for meeting a range of family and child needs continue with newer research providing additional information on positive outcomes. In sum, most researchers seem confident that early childhood home visitation can be effective in improving outcomes for families and children, although they differ on how strong they think this evidence is across the range of program models and across the variety of outcomes. Other researchers caution that to be effective (regardless of program model or goal) a home visitation program's goals must be aligned with the program's content (e.g., if you want to prevent child abuse and neglect you have to focus on the aspect(s) of the home visit that will accomplish this), and that home visitors must appropriately and adequately deliver the services. They also make clear that home visiting is not a silver bullet strategy that can solve all prevention needs. Instead they suggest it will be most successful if it is integrated into a broader set of services that are focused on supporting families and ensuring positive outcomes for young children. These include quality center-based education for preschoolers, preventive health care as part of medical homes for all children, parenting support groups, and clinical mental health and other treatment services for parents who need them. Finally, they seek continued study of programs to understand what is most effective and they urge that programs be implemented in a manner that permits continuous quality improvement. There is a fairly large and growing body of research looking at a variety of home visiting programs. Some of these studies have been designed as randomized control trials. Findings generated from these experiments, provided they are well designed and implemented, can demonstrate the level of effectiveness. In this kind of program evaluation, study participants are randomly assigned to a "treatment" or "experimental" group, while others are randomly assigned to a "control" group. Families assigned to the "treatment" group subsequently receive home visiting services; families assigned to the control group do not. The outcomes for both groups are tracked and tested for statistically significant differences. To ensure that the findings accurately reflect what is achieved, however, these studies must have a participant pool that is large enough to allow researchers to draw conclusions that are statistically significant. Finally, the experiment should be carried out in more than one site and the findings of the study should be consistent (or replicated) across those multiple sites. Follow-up studies (longitudinal analysis) of the original may be used to determine if any initial positive effects are maintained over time and/or to measure later effects (e.g., academic success in grade school of home visited versus not-visited infants and toddlers). Other studies that have been used to evaluate home visitation programs are referred to as "quasi-experimental." Although they do not randomly assign participants, quasi-experimental studies are designed so that outcomes for the group of families and children receiving the treatment (e.g., home visiting) may be compared to a group of families who did not receive these services. Ideally, the characteristics of this comparison group closely match those of the group receiving the treatment (home visiting services) so that any differences are fairly attributed to the treatment received rather than to differences in the groups studied. As with randomized control tests, findings from quasi-experimental studies that use larger participant pools and test outcomes in more than one location are considered of greater merit than those not meeting these standards. Finally, some evaluations of home visitation programs look at changes across time (e.g., pre-test, post-test) but only among the group of families who were served. This kind of program feedback can be important in implementing a program—particularly if consistent data are regularly collected and reviewed as part of a structured and continuous program improvement process. However, this type of study is considered "non-experimental" because it lacks a contemporaneous comparison group, and some of the changes observed could have occurred even without implementing home visiting. Randomized control studies may provide the clearest evidence of a home visiting program's effects, and some researchers call for continued implementation of these studies to ensure effectiveness of home visiting models. Others note that randomized control studies are expensive and time consuming, and that they require social service providers to withhold what may be valuable family support from "control group" members. Reflecting on their own efforts to implement a randomized control trial of a particular service strategy for children and families, two researchers at the Michigan State University Child Health Care Clinic note that these trials are based on three assumptions—standardized interventions, equal groups, and equal environments—and that "most if not all, of these assumptions are difficult to meet in the complex environment of practice." Some researchers and home visitation advocates cite the wide range of family needs and circumstances as dictating that more than one model of home visiting is necessary and they further argue that each of those iterations can not be tested, practically, in a random trial. Instead, these researchers assert that the overall efficacy of home visiting has been proven and therefore efforts should be placed on fine tuning existing program models to ensure their quality and monitor outcomes. As discussed above, home visiting programs have goals that cross several major domains, including maternal and child health; early childhood social, emotional, and cognitive development; and family/parent functioning. Programs may identify one or more desired outcomes across one or more of these main domains. In the maternal and child health domain, desired program outcomes may include decreased infant mortality and improved infant health and physical development; improved perinatal maternal health and health behaviors; a reduced number of subsequent pregnancies and/or a longer time interval between pregnancies; and prevention of child injuries, intentional or unintentional. In the early childhood development domain, desired program outcomes may include improved parent-child interaction to enhance and ensure children's social/emotional and cognitive development; enhanced school readiness for children and longer-term academic success. Finally, in the domain of family/parent functioning, home visitation programs may seek to improve parenting skills, knowledge, and behaviors; reduce the incidence of child abuse or neglect; and increase maternal education attainment and family self sufficiency. A variety of factors have been cited as important to the effectiveness of home visiting generally without regard to the model being employed or outcome sought. These include, but are not limited to, clear program goals that are tied to program content; educational status and training of the home visitors; intensity and duration of service provision, including the ability to attract and retain families; and integration of the program with other kinds of parenting support programs and early childhood programs related to children's health, education, and socio-emotional development. There is a large and still growing body of research on home visitation programs. Some of the findings to date are discussed below. A number of home visiting studies have considered the effectiveness of these programs in improving maternal and child health outcomes, including maternal mental health and substance abuse (during or after pregnancy), the number and spacing of subsequent pregnancies, the incidence of preterm and low birth weight babies, use of preventive/well-child care, and frequency of emergency room treatment or injuries among children. A 2004 meta-analysis found that home visiting programs could be effective in reducing, for children, the number of emergency room visits, injuries or ingestions treated, and accidents requiring medical attention. In her 2005 review of the research on home visitation, however, Deanna Gomby concluded that home visitation programs had not been shown to increase the use of preventive health care. With regard to outcomes for mothers, some home visitation programs, discussed below, have been shown to reduce the number of subsequent pregnancies or to increase the time interval between pregnancies. Researchers have identified maternal depression, substance abuse, and intimate partner violence as critical issues that home visitors have not necessarily known how to identify or address, and that may, in turn, reduce the effectiveness of home visitation on other outcomes. Maternal mental health and substance abuse can have significant implications for both mother and child. For instance, research shows that clinical depression can be a barrier to employment and that it can affect interactions between mother and child. In fact, poor maternal mental health has been linked to higher rates of behavioral, academic, and health problems among children. Meanwhile, studies have shown that prenatal exposure to alcohol or drugs can increase the risk of preterm birth, miscarriage, and birth defects, including physical, cognitive, and behavioral disorders. Despite this, data from the combined 2006-2007 National Survey on Drug Use and Health show that substance usage among pregnant women ages 15 to 44 is prevalent, with an average of 5.2% reporting use of illicit drugs in the past month, 16.4% indicating cigarette use in the past month, and 11.6% reporting current alcohol use. A randomized trial study of the Hawaii Healthy Start Program (generally acknowledged as the prototype for Healthy Families America) concluded that there were positive maternal mental health outcomes for participating mothers compared to the control group in one of the three Hawaii Healthy Start programs operating in Hawaii. The same Hawaii Healthy Start Program study found that home visitation had no statistically significant effect on maternal substance abuse. However, when isolating families receiving a higher dose of services, this study concludes that, compared to control group mothers, those who received a higher dose of home visiting services did demonstrate reduced maternal "problem alcohol use." This suggests that intensity and duration of services may be critical factors in determining program success. Results from a randomized control trial of the Nurse Family Partnership model in Denver, CO, concluded that two years after the program of home visits was completed, mothers who had been visited by paraprofessionals exhibited better mental health (on a standardized scale) than did control group mothers in the study. However, there was no statistically significant difference for nurse-visited mothers (compared to control group mothers) on mental health outcomes. Neither nurse-visited nor paraprofessional-visited mothers in Denver showed statistically significant outcomes that were different from control group mothers with regard to substance abuse. The nine-year follow-up to the NFP's program in Memphis, TN, found that nurse-visited mothers used fewer substances. However, this evaluation found no statistically significant effect on maternal depression. Some researchers argue that "rapid successive pregnancies" can negatively affect mothers' educational and workforce achievements. Several studies have looked at the effectiveness of home visiting programs on maternal health outcomes. Research on the Nurse Family Partnership site in Elmira, NY, found that by the child's fourth birthday (two years after program ended) nurse-visited mothers had fewer subsequent pregnancies. Results from studies at the NFP site in Memphis found that four years after the program ended nurse-visited mothers had experienced fewer subsequent pregnancies. This study also found evidence of longer intervals between births of the first and second child. The follow-up to this study found that nine years after the intervention, these results held; on average, nurse-visited women had longer intervals between the births of first and second children and fewer cumulative subsequent births per year. Notably, while both sites showed effects on reducing subsequent pregnancies, the effect size was much larger in Elmira (67% reduction) than in Memphis (23% reduction). A study from the Denver NFP site found that, among the nurse-visited mothers who had at least one additional child (within four years of their first pregnancy), there was a greater interval between that pregnancy and the first one, compared to the control group. However, this same study found no statistically significant difference for paraprofessional-visited mothers (compared to control group mothers) in birth intervals and that neither nurse-visited nor paraprofessional-visited mothers showed statistically significant outcomes that were different from control group mothers with regard to the number of subsequent pregnancies. A randomized control trial among teen mothers in California of the Parents as Teachers home visiting model found that significantly fewer home visited mothers had multiple pregnancies during the study period than did control group mothers (1.4% versus 4.8%). By contrast, the randomized trial evaluation of the Hawaii Healthy Start program showed no effects on repeat births. Birth weight can be another important indicator of maternal and child health. Low birth weight is a leading cause of infant deaths and childhood illnesses and disabilities. Several home visiting studies have looked at outcomes in this area. For instance, nurse-visited young adolescents (ages 14 to 16) in the Nurse Family Partnership's Elmira study had babies who were an average of 395 grams heavier than the babies of adolescents in the comparison group. In the nine-year follow-up of the Memphis site, researchers found a significantly lower number of subsequent low birth weight infants (0.18 versus 0.27). The randomized control trial of teen mothers in California found that among those who entered the study while pregnant, mothers in the PAT-only group had marginally lower rates of low birth weight babies than did mothers in the control group (4% versus 8%). In addition, a study of the Healthy Families America program in New York found that, of those who began participating in the Healthy Families America program at least two months prior to the birth of their children, control group mothers were significantly more likely to deliver low birth weight babies than were participating mothers. The rate of low birth weight was two-and-a-half times higher for the control group (8.3%) than it was for participating mothers (3.3%). However, it is worth noting that this study found no significant program effects on the rate of premature births or the percentage of babies requiring neonatal intensive care. Many home visiting studies have looked at outcomes related to children's health, including access to health insurance, primary care physicians, well-child visits, and immunization rates. A study of the New York Healthy Families America program found that parents in the control group were significantly less likely than participating parents to have health insurance for their children as of the first-year follow-up interview (90.4% compared to 93.9%). There was no program effect, however, on the parents' likelihood of having health insurance coverage for themselves. There were also no significant differences between the participating families and control group families in outcomes related to the child having a regular health care provider, the child ever having been without needed medical care, the number of well-child visits, and completion of all immunizations. Meanwhile, results from the second-year follow-up on the random trial study of the Hawaii Healthy Start Program indicate that participating parents were statistically more likely to describe themselves as having a primary care provider who handles most of their child's health care needs and understands their concerns about their child's health. However, this same study found no differences in the rates of immunization or well-child visits for participating children compared to control group children. By contrast, in a third-year follow-up of a randomized control study of the Parents as Teachers program (one site only), participating children were significantly more likely to be fully immunized than control group children. To gain the most health benefits for young children, researchers have also looked at the importance of linking home visiting with quality pediatric care, including establishment of a medical home for all children. Child health and safety can also be linked to need for urgent care, hospitalization, or frequency of ingestions or injuries. Research on the Nurse Family Partnership site in Elmira, NY, found that at the program's end (when children were two years old), children in nurse-visited homes had fewer emergency room visits for injuries and ingestions than did children in homes of control group mothers, as well as fewer emergency room visits overall when compared to those children. Results from the Memphis NFP site suggest that at the end of the program (when the child was two years old) nurse-visited children had fewer health care encounters for injuries and ingestions compared with control group children. By contrast, the Hawaii Healthy Start study reported that children participating in the program experienced no beneficial effect with respect to emergency room use, hospitalization, and need for urgent medical care when compared to children in the control group. A number of studies of home visiting programs have evaluated program effectiveness in enhancing children's social, emotional, and cognitive development. Among other things, these outcomes may be manifested in early language skills and behaviors, as well as school-aged academic achievement, and matriculation rates. Overall, most analyses conclude that cognitive and socio-emotional outcomes were stronger for home visited children than for control group children. However, researchers caution that the effect sizes for child development outcomes were usually small to medium at best, noting that home visited children might see improved scores on a standardized intelligence test of only a few points. As reported in Deanna Gomby's 2005 paper, some studies of home visiting programs such as Parents as Teachers, HIPPY, or the Parent-Child Home Program have demonstrated that home visited children outperform other children in the community through the 4 th , 6 th , or 12 th grades, respectively, in measures such as school grades and achievement test scores on reading and math, suspensions, or high school graduation rates. However, large cognitive benefits such as these are not always demonstrated reliably in high-quality randomized control trials of home visiting programs. Many evaluations of Nurse Family Partnership programs do not assess child cognitive development outcomes. However, some studies of the randomized control trials in Elmira, NY, and Memphis, TN, suggest very limited to no significant program effects on children's cognitive development and intellectual functioning. By contrast, the nine-year follow-up study of participants in the Nurse Family Partnership's program in Memphis found that nurse-visited children born to low-resource mothers had grade point averages (GPAs) that were equivalent to those of control group children who were born to high-resource mothers. In contrast, control group children with low-resource mothers had the lowest GPAs in the study. This same study found that nurse-visited children had fewer failures in conduct during the first three years of elementary school than control group peers. Sixteen to twenty years after their participation in the randomized control study, high school drop out rates for children who were assigned to participate in the Parent-Child Home Program were found to be lower than those for children assigned to the control group. (This result was just below statistical significance. Some outside researchers have described it as "marginally significant," while others have argued that the effect may have been due to chance rather than to the program. ) At the time of their enrollment in the study, both PCHP participants and control group children were considered "at-risk" based on the presence of certain child or family factors, including parental unemployment, welfare receipt, low child IQ, single parenting, and/or poverty status. The study's researchers noted that the high school graduation rates for PCHP participants were 30% higher than those of the control group that remained in the community and over 20% higher than low-income students nationally. Controlled trials of Nurse Family Partnership programs have found mixed results with respect to child development, sometimes concluding that these programs produced "few effects on children's development," while at other times finding that home visited children of mothers with "low psychologic resources" (i.e., low-functioning mothers, based on levels of intelligence, mental health, and coping abilities) experienced home environments that were more "conducive to early learning" than control group counterparts. In an attempt to better parse effects, some studies have raised the issue of linking program quality to program outcomes. For instance, the Nurse Family Partnership controlled trial in Denver looked at differential outcomes for children based on whether or not the home visitor was a registered nurse or a paraprofessional. In Denver studies, the paraprofessional program for low-resource mothers was statistically linked to home environments that were more supportive of early learning than the control group. However, the paraprofessional program had no statistically significant effects on children's language, executive functioning, or behavioral adaptation. By contrast, the nurse program for low-resource mothers was linked to statistically significant, positive effects on the home learning environment, as well as language development, executive functioning, and behavioral adaptation during testing, compared to the control group. Some of the literature has suggested that child-focused strategies may be more successful than parent-focused strategies in generating large benefits in a child's cognitive development. A meta-analysis conducted by Abt Associates in 2001 compares the effect of home visiting and center-based early childhood education on cognitive development, and concludes that home visiting services generate an effect size for cognitive development of 0.26, but programs with early childhood education components generate effects almost twice as large (0.48). Others have suggested that the center-based preschool education component accounted for 63% of the variance in cognitive outcomes during the preschool years. In fact, there is a body of research which suggests that to generate lasting cognitive and other developmental benefits for children, home visiting should be linked with high-quality center-based child care and/or enrollment in a high-quality preschool. Results from Early Head Start (which has center-based programs, home-based programs, and programs that combine center-based and home-based services) research have found that, compared to control groups, participation in center-based programs has consistently enhanced cognitive development and, by age three, reduced negative aspects of children's social-emotional development. On the other hand, not all home-based Early Head Start programs have demonstrated positive effects on cognitive development. In fact, one study reports that "home-based programs had few significant impacts" compared to center-based programs and programs combining center-based and home-based services. However, recent studies have found that full implementation of HHS performance standards can affect program effectiveness. For instance, HHS reports that when home-based Early Head Start programs fully implemented performance standards, they demonstrated positive impacts on child cognitive development at the three-year mark (suggesting that previous studies may have shown no effect because the performance standards were not being rigorously implemented). Studies have found that some of the largest gains from Early Head Start programs occur in the programs that combine center-based and home-based services, with some effects in the 20-30% range. Moreover, combination programs consistently demonstrated enhanced language development and aspects of social-emotional development among children, as well as improved parenting behaviors and participation in self-sufficiency oriented activities among parents. This held true, even at the three year mark, for participating children and families. Home visitation programs often seek to affect parenting behaviors to, among other things, reduce child abuse and neglect. They may also seek to encourage family self-sufficiency through higher educational attainment and increased work attachment. Among other activities, providing parents with information about their children's developmental needs and abilities as well as communicating positive parenting skills are typical home visitation activities intended to reduce the incidence of child maltreatment. The assumption that improved parenting practices and attitudes may prevent child abuse and neglect is supported by research suggesting that a lack of parenting knowledge may serve as one predictor of child maltreatment. In randomized control trials of home visiting, researchers have been more likely to find indications of changed parenting behaviors or attitudes—which suggest less harsh or abusive parenting—than to find a significant difference in rates of reported or substantiated child abuse or neglect. In a randomized control trial, the Nurse Family Partnership (NFP) showed reduced substantiated child abuse and neglect reports in one site (Elmira), although this difference was not shown as statistically significant until a number of years after the program ended. Any difference in substantiated child abuse and neglect reports between treatment and control group families was not tested at other NFP evaluation sites (Memphis and Denver). A randomized trial involving parents who had already been reported for abuse and neglect found that home visited parents who completed all three SafeCare training modules were less likely to recommit child maltreatment than those in the control group. Other studies have shown no statistically significant results. Implementers of Healthy Families America home visitation programs were encouraged early on by some quasi-experimental studies in Hawaii that showed much higher rates of abuse and neglect in families where home visiting had not occurred (18%) compared to those where it had occurred (1%). However, a subsequent randomized control study of the program did not find any significant program effect with regard to rates of child maltreatment. Similarly, some evaluations of the Parents as Teachers model where the number of child maltreatment reports were compared between control and treatment groups found no significant differences. In one study of teenage mothers, however, those who received PAT services combined with case management were less likely to be investigated for child maltreatment than were mothers in the control group who received no services. This study found no statistically significant difference, however, in this measure between teen mothers who received PAT-only services and those in the control group. For a variety of reasons, it may be that the number of substantiated (or all reported) cases of child maltreatment (studied at the individual level) is not a strong measure of program effectiveness related to children's experiences of abuse or neglect. The overall incidence of substantiated abuse or neglect is relatively low across the population. Generally, this means that to show a "statistically significant" effect, a fairly large number of participants must be included in a study. If the number of participants is relatively small, even what appears to be a large difference in the proportion of children abused among the control group and the treatment group may not be statistically significant. Differing definitions of child abuse and neglect by state as well as varied state policies for how investigators are to determine whether child abuse or neglect has occurred also complicate any national or multisite effort that uses substantiated child abuse and neglect reports to measure program effectiveness. Finally, families who are regularly visited by a nurse or other family worker are subject to a high degree of surveillance and may thus be more likely to be reported to the Child Protective Services (CPS) agency. Testing this common sense proposition, a recent study in New York state found that mothers who participated in the Healthy Families program and who admitted to having committed acts of serious abuse and neglect were nearly twice as likely to have a CPS report than were control group parents who admitted to having committed serious abuse or neglect. Other measures have sometimes been used as proxies for the effect of a home visiting program on child abuse or neglect. These include the number of health care or emergency department visits that are tied to injuries or ingestions (see " Findings in the Maternal and Child Health Domain "), and parental self reports of abusive actions, discipline strategies, or other relevant parenting practices. A randomized control study of the Healthy Families New York model found that home visited mothers reported engaging in fewer abusive practices (i.e., fewer instances of neglect, severe physical abuse, minor physical aggression, and psychological aggression against their children) than did control group mothers. The researchers also noted that the positive effects were stronger among only the subgroup of participants who were first-time mothers under age 19 and enrolled in the prenatal period. An evaluation of SafeCare implementation found that parents receiving the training were more likely to engage in positive parent behaviors. Effectiveness of home visitation in changing parenting behaviors and/or reducing child abuse or neglect may be related to home visitors' recognition of and response to additional family stress factors and/or to provision of opportunities for peer support and interaction. In a randomized control study of a statewide home visiting program in Hawaii (Hawaii Healthy Start, considered the predecessor of the Healthy Families America program), researchers found a trend toward less neglectful behavior from home visited mothers compared to those in the control group. Overall, however, they concluded that the program did not prevent child abuse or promote use of nonviolent parenting. Among the critical issues cited by the researchers as hindering program effectiveness was the frequent failure of home visitors to identify and address family risk factors (e.g., domestic violence, mental health needs). In a large meta-analysis of family support programs, including many that used home visiting as the primary means of providing services and others that did not, researchers found that efforts to improve parenting behaviors, attitudes, and practices were most successful when they specifically focused on developing parents' skills as effective adults—their self-confidence, self-empowerment, family management, and parenting—and included opportunities for peer support (e.g., parent mutual support groups meeting outside the home). The Parents as Teachers home visiting model includes, as a core part of its program, parent group meetings and other opportunities for parents to share information with and learn from each other, and the HIPPY model also includes regular group meetings. Many home visitation programs seek to improve family self-sufficiency over the longer term by ensuring increased educational attainment and labor force participation among visited families. A study comparing at-risk PAT families (40) to a comparison group in Binghamton, NY, found that welfare dependence doubled for both groups in the year following the child's birth, but that between the first and second birthday "marginally significant differences" emerged, with welfare dependence declining in the visited group and increasing among the control group. In the initial NFP test in Elmira, NY, nurse-visited first-time mothers had greater labor force participation than did control group mothers two years after the evaluation ended (i.e., at child's fourth birthday). Thirteen years after the Elmira evaluation ended (by the child's 15 th birthday), nurse-visited mothers who were unmarried and from low socioeconomic backgrounds at the time of program enrollment had spent less time receiving public aid (including cash aid and Food Stamps) than comparable mothers in the control group who did not receive nurse visits. Similar findings related to public assistance use were found among first-time at-risk mothers both four years and seven years after an NFP trial in Memphis ended: nurse-visited mothers spent less time receiving public assistance than did control group mothers who were not visited. In a third NFP trial, this one in Denver, comparisons were made between low-income mothers who received home visits by nurses, those who receive home visits by paraprofessionals, and those who received no visits. Two years after the trial ended, paraprofessional-visited mothers worked more than mothers in the control group. There was no significant difference between nurse-visited mothers and control group mothers with regard to workforce participation. Finally, neither nurse-visited nor paraprofessional-visited mothers showed statistically significant outcomes that were different from control group mothers with regard to their own educational achievement or use of welfare two years after the trial ended. The President's FY2010 budget request included a proposal to provide mandatory funding to states for home visitation programs, and the FY2010 budget resolution ( S.Con.Res. 13 ) supports increased federal funding for these programs provided this can be done in a "deficit neutral" manner. A number of legislative proposals to provide more support for home visitation programs have been offered, and the health care reform proposals passed by the House in November 2009 ( H.R. 3962 ) and Senate in December 2009 ( H.R. 3590 ) would both establish a program of, and provide funding for, grants to states to support the expansion of home visiting to families with young children and those expecting children . The FY2011 budget does not make specific reference to establishing a home visiting program. As part of its FY2010 budget request the Obama Administration proposed a new capped entitlement program to support formula grants to states, territories, and tribes for the establishment and expansion of "evidence-based" home visitation programs for low-income mothers and pregnant women. It expected the program to "create long-term positive impacts for children and their families, as well as generate long-term positive impacts for society as a whole." Outcomes the Administration cited that may be achieved by home visitation include reductions in child abuse and neglect, improvements in children's health and development and their readiness for school, and improvements in the ability of parents to support children's optimal cognitive, language, social-emotional, and physical development. Further, it noted that one model of home visitation, which used nurses to visit low-income first-time mothers, was found to reduce Medicaid costs in several randomized control trials. Accordingly the Administration assumed that expanding proven effective home visitation programs would result in savings to the Medicaid program (via reductions in preterm births, emergency room use, and subsequent births) totaling $77 million in the first five years and $664 million over the entire 10 years. Mandatory funding for the newly proposed home visitation program was proposed at $124 million in budget authority ($87 million in "outlays" ) for FY2010, rising each year to $790 million in budget authority ($710 million in outlays) by year five of the program (FY2014) and to $1.837 billion in budget authority ($1.753 billion in outlays) in year ten (FY2019). This funding was expected to allow home visiting services to 50,000 families in the initial year of the program, rising to 450,000 new families by FY2019. Under the Administration's proposal, states would be expected to provide some matching funds to receive federal home visitation grants. Further, the Administration would give priority to funding for models "that have been rigorously evaluated and shown to have positive effects on critical outcomes for families and children." Accordingly, states, territories, and tribes seeking grants under the proposed home visitation program would be required to submit a plan describing, among other things, the program model they will follow, evidence for the effectiveness of the program model, and how the state will ensure that the proven program model is adhered to (model fidelity). Funding related to programs with strong research evidence demonstrating their effectiveness would include technical assistance, monitoring, and evaluation to ensure fidelity of the model and for "evaluating effectiveness of these models as conditions change over time." The Administration also anticipates that additional funds will support "promising programs" such as those based on some research evidence and those that are adaptations of previously evaluated programs. Funding for these programs would also include technical assistance, monitoring, and evaluation that focuses on developing these promising models and on "rigorous (random assignment) evaluations of effectiveness." Finally, the Administration proposed that no less than 5% of the program's overall funding be reserved for research, evaluation, training, technical assistance, monitoring, and administration. Based on its inclusion in the Administration for Children and Families (ACF) budget justifications, the Obama Administration expected this HHS agency to administer the new home visiting state grant program. At the same time, the FY2010 budget request noted an effort to coordinate planning for the proposal across HHS agencies to ensure the most effective program structure. It also added that "a coordinated strategy" involving the Centers for Disease Control and Prevention (CDC), the Centers for Medicare and Medicaid Services (CMS), the Health Resources and Services Administration (HRSA), and ACF will "enable HHS to respond to varying approaches that States may wish to use to implement this initiative." In late April 2009, the House and Senate approved a conference agreement on the FY2010 budget resolution ( S.Con.Res. 13 ), which reconciles separate FY2010 budget resolution proposals passed earlier that month by the House ( H.Con.Res. 85 ) and Senate ( S.Con.Res. 13 ). The FY2010 budget resolution is designed to set federal funding priorities across all purposes for the upcoming fiscal year. According to the conference report on the budget resolution ( H.Rept. 111-89 ), the agreement includes a "deficit neutral reserve fund" for establishing or expanding home visitation programs. Health care reform bills passed, separately, in the House and in the Senate would establish a program of grants to states to support expanded delivery of evidence-based home visitation services to families with young children and those expecting children. The Affordable Health Care for America Act ( H.R. 3962 ), as passed by the House on November 7, 2009, would appropriate $750 million over five years (FY2010-FY2014) for the new grant program it authorizes. On the Senate side, the Patient Protection and Affordable Care Act ( H.R. 3590 ), as passed by the Senate on December 24, 2009, would appropriate $1.5 billion over five years (FY2010-FY2014) for the home visiting grants it authorized. Table 4 below compares major similarities and differences in these proposals. There is no current law program that provides grants to states exclusively for the purpose of funding home visiting programs. The first column of the table lists general provisions and primarily describes the substantively similar approaches taken. The second and third columns describe aspects of the House and Senate bills, respectively, that are related to that general provision but differ, to some degree, from each other. Differences may be substantive (e.g., different funding levels or different requirements), may be primarily a difference in wording (e.g., one bill more explicit or detailed than the other on purposes of the grant program) or may reflect a different approach to the same issue (e.g., both bills support home visiting provided on voluntary basis only, but one bill requires a state to have a procedures to ensure participation is voluntary and another simply provides that states may not seek federal payment for services not provided on a voluntary basis). Separately, the proposal passed by the House ( H.R. 3962 ) would amend Medicaid to clearly permit states to claim federal reimbursement for "nurse home visitation services" provided to certain Medicaid eligible individuals. The Senate-passed bill ( H.R. 3590 ) does not include a comparable amendment to Medicaid. Section 1713 of the House bill ( H.R. 3962 ), would create a new optional Medicaid benefit called "nurse home visitation services," and would permit states to seek federal reimbursement at their Federal Medical Assistance Percentage (or FMAP) rate (which may range from 50%-83%) for providing these services. The bill would define "nurse home visitation services" as home visits by trained nurses to families with a first-time pregnant woman or a child (under two years of age) and who are otherwise eligible for Medicaid, but only if HHS determines that there is evidence that these services are effective in one or more of the following areas: (1) improving maternal or child health and pregnancy outcomes or increasing birth intervals between pregnancies; (2) reducing the incidence of child abuse, neglect, and injury, improving family stability (including reductions in domestic violence), or reducing maternal and child involvement in the criminal justice system; and (3) increased economic self-sufficiency, employment advancement, school readiness and other educational achievement, or reducing dependence on public assistance. Federal reimbursement for this new optional Medicaid benefit would be effective for services offered on or after January 1, 2010. H.R. 3962 would stipulate that creation of this new optional Medicaid benefit must not be construed to prevent states from continuing to claim federal reimbursement for home visitation services under currently authorized Medicaid care coordination and case management activities (as an administrative activity or a benefit). On June 9, 2009, the Subcommittee on Income Security and Family Support of the House Ways and Means Committee held a hearing on proposals to provide funds to states for early childhood home visitation programs. Witnesses included researchers, an administrator of state funding for home visitation programs, a former participant and current home visitor, and a nurse consultant. The witnesses generally supported broader implementation of early childhood home visitation programs that are informed by evidence on efficacy. Most witnesses appeared to support availability of home visitation services to any family, without regard to any specific demographic or family risk factors, although one witness clearly favored providing services to low-income mothers. At the same time, in responding to a question regarding which families they would target if limited funds were available, at least one witness cautioned against using demographic markers to select families, but suggested the importance of engaging families early, perhaps during pregnancy (via prenatal clinics or obstetric offices) or at birth (via hospital). Another witness stressed first-time young mothers as an important group, and one where research to date has shown the greatest level of successful outcomes. In their written testimony, at least two of the witnesses, both researchers, cautioned that supported programs—regardless of any prior demonstrated level of evidence—must have certain attributes to succeed. Both mentioned the need for (1) clearly linking program activities to expected program goals, (2) providing services (engaging family) with sufficient frequency and for a sufficient length of time to have an impact, and (3) employing well-trained home visitors whose work is evaluated/supervised on an ongoing basis. Other factors given as important to program success included solid organizational capacity and linkages to other community resources and supports. Appendix A. Selected Federal Programs That Provide or Support Home Visitation As discussed in the section on " Existing Federal, State, and Local Funding Streams for Home Visiting ," a number of federal programs are already being used to support early childhood home visitation efforts. Federal statute for these programs may require some amount of home-based services (e.g., Even Start), explicitly permit home visiting as a possible activity (e.g., Maternal and Child Health Block Grant), or allow home visiting under broad authorities or program goals (e.g., Medicaid). Selected programs, arranged alphabetically, are briefly described below. Community-Based Grants for the Prevention of Child Abuse and Neglect (CBCAP) Title II of the Child Abuse Prevention and Treatment Act (CAPTA) authorizes grants to support community-based services for the prevention of child abuse and neglect. CBCAP grants are distributed by formula to a lead entity in all states (which may be a public agency, a quasi-public entity, or a nonprofit private organization). The lead entity is charged with developing a continuum of community-based services for children and families that are designed to strengthen and support families to prevent child abuse and neglect. Core family resource and support services to be provided by community-based programs include voluntary home visiting services, parent education, community and social services referrals, and respite care services, among others. In their FY2007 program summaries, the majority of state CBCAP contacts indicated explicit support of home visiting services. For FY2010, the CBCAP program received funding of approximately $42 million ( P.L. 111-117 ). CBCAP is administered by the Office of Child Abuse and Neglect within the Children's Bureau of the Administration for Children and Families at HHS. Early Head Start Early Head Start is a federally funded community-based program for low-income expectant parents and families with infants and toddlers that seeks to (1) promote healthy prenatal outcomes; (2) enhance the development of infants and toddlers; and (3) promote healthy family functioning. Nationwide, there are more than 650 Early Head Start programs providing child development and family support services, serving approximately 62,000 children under the age of three annually. Grantees select an Early Head Start service delivery option (typically center-based, home-based, or a combination) to meet the needs of the children and families in their communities. In 2006, about half (51%) of Early Head Start slots were center-based, while 41% were in home-based programs. Children and families enrolled in center-based programs receive comprehensive child development services in a center-based setting, supplemented with limited home visits by the child's teacher and other Early Head Start staff (a minimum of two home visits a year to each family). In home-based programs, children and their families are supported through weekly home visits of at least 90 minutes and bimonthly group socialization experiences. Combination programs provide a blend of center class sessions and 90-minute home visits (regulations specify acceptable combinations of minimum numbers of class sessions and corresponding home visits). Home visits are conducted by professionals who receive training in child development, family development, and community building. In FY2008, the majority of Early Head Start teachers (54%) and home visitors (66%) held a degree in early childhood education (or a related field). Legislation that reauthorized the program in 2007 ( P.L. 110-134 ) required HHS to develop standards for Early Head Start home visitors related to staff training and qualifications, as well as to conduct of home visits. For FY2010, HHS estimated that Early Head Start programs would receive about $690 million out of the total appropriation provided for Head Start ( P.L. 111-117 ). In addition, Early Head Start programs are expected to receive funds in FY2010 that were appropriated in the previous fiscal year as part of the American Recovery and Reinvestment Act (ARRA), P.L. 111-5 . According to HHS, nearly $1.1 billion in Early Head Start funds from ARRA remained unobligated at the end of FY2009. The program is administered by the Office of Head Start within the Administration for Children and Families (ACF) at HHS. Even Start Even Start programs are authorized by ESEA Title I, Part B, Subpart 3, and are intended to integrate early childhood education, adult basic education, and parenting skills education into a unified family literacy program. Funds are distributed to all states and must be subgranted to local education agencies working in collaboration with community based organizations. Even Start programs generally serve children aged zero to seven and their parents. Services must include home-based instruction, adult literacy instruction, early childhood education, instruction to help parents support their child's education, participant recruitment, screening of parents, and staff training. An assumption underlying Even Start is that children whose parents have low literacy or basic education levels are more likely to be educationally successful if, in addition to receiving early childhood instruction themselves, their parents receive educational services plus instruction in how to help their children learn. The program is administered by the Office of Elementary and Secondary Education, within the Department of Education. It was funded at the level of $66 million for FY2010 ( P.L. 111-117 ). Healthy Start The Healthy Start program provides funding through competitive grants or cooperative agreements to provide health and related services to high-risk pregnant women, infants, and mothers in communities with exceptionally high rates of infant mortality. Among other purposes, the program seeks to reduce racial and ethnic disparities in the proportion of pregnancy-related maternal deaths, preterm births, and infant mortality. Healthy Start projects also work to ensure that the basic needs of mothers and infants (including "housing, psychosocial, nutritional and education support, and job skill building") are met. The program operates in 40 states (including the District of Columbia and Puerto Rico) and reaches roughly 100 communities. Home visits are frequently a part of services offered under this program. A 2003 survey of Healthy Start grantees (n=95) found that 99% provided home visits to at least some of their clients, with most offering home visits to a majority of their pregnant or parenting clients: 76% of grantees provided home visits to at least three-fourths of their pregnant clients and 64% of grantees provided home visits to their inter-conceptional clients. A little more than one-third of the grantees (35%) used a specific schedule to provide these home visits, but most (64%) reported scheduling visits in accordance with client need. Home visiting services provided to Healthy Start clients frequently included depression screening and treatment (84%), well baby care (75%), and smoking cessation and reduction services (73%). The large majority of grantees (87%) also conducted home visits to assess the home environment for infants and toddlers. The program is authorized under the Public Health Service Act (Section 330H, as amended by P.L. 106-310 ) and is administered by the Maternal and Child Health Bureau within the Health Resources and Services Administration (HRSA) of HHS. For FY2010, it received funding of approximately $105 million ( P.L. 111-117 ). Infants and Toddlers Program, Part C, IDEA The Infants and Toddlers Program ("Part C") component of the Individuals with Disabilities Education Act (IDEA) provides grants to states to assist them in implementing statewide systems of "coordinated, comprehensive, multidisciplinary, interagency programs" that identify children (ages birth through three) that have or are at risk of physical, mental, or social skills developmental delays. The Part C program may be targeted toward children experiencing a developmental delay in one or more physical, mental, or social skill areas; The IDEA requires that these Part C services be delivered to the "maximum extent possible" in a child's "natural environment," and the very large majority of Part C services are delivered in the home. In fact, one report indicates that more than 80% of Part C Services are delivered in the home. However, specific services are not based on any statutorily developed curriculum. Instead, they are provided pursuant to an Individual Family Services Plan (IFSP) that must be created to address the identified developmental delays. The Part C program is administered by the Office of Special Education within the Department of Education. The program received an appropriation of $439 million in FY2010 ( P.L. 111-117 ). Maternal and Child Health Block Grant The Maternal and Child Health Block grant (Title V of the Social Security Act) is a public health program that seeks to (1) ensure access to and improve the quality of health care for mothers and children, especially those with low income or limited availability of care; (2) reduce infant mortality; (3) provide and ensure access to comprehensive prenatal and postnatal care to women (especially low-income and at-risk pregnant women); (4) increase the number of children receiving health assessments and follow-up diagnostic and treatment services; (5) provide and ensure access to preventive and child care services as well as rehabilitative services for certain children; (6) implement family-centered, community-based systems of coordinated care for children with special health care needs; and (7) provide toll-free hotlines and assistance in applying for services to pregnant women with infants and children who are eligible for Medicaid. States use Title V block grant funds for a variety of purposes, including direct services; efforts to build community capacity to deliver "enabling services" (e.g., home visiting, care coordination, transportation, and nutrition counseling); personal and preventive health services; and infrastructure-building services. Separately, Title V funds Community Integrated Service Systems (CISS). These projects use six specified strategies to increase capacity and integration of local service systems, including through provision of maternal and infant home health visiting, health education, and related support services for pregnant women and infants up to one year old. The Title V program received FY2010 funding of $662 million ( P.L. 111-117 ), the large majority of which is distributed to all states under the block grant. However, some of these funds are provided for CISS grants and others are devoted to research via the Special Projects of Regional and National Significance (SPRANS) grants. The Title V block grant is administered by the Maternal and Child Health Bureau within the Health Resources and Services Administration (HRSA) at HHS. New Parent Support Program The military's New Parent Support Program (NPSP) was developed in recognition of the unique parenting challenges faced by military families (e.g., frequent deployments, long duty hours, moves to unfamiliar locations, and separation from extended families and friends). NPSP services are available to military families who are expecting a child, or who have a child or children up to three years of age (or five years of age for the Marine Corps). Services offered may vary across military branches and installations, but all NPSP programs include a home visiting component. In addition, programs may include supervised playgroups, prenatal and parenting classes, hospital visits, and referrals to other resources. Home visitors provide parents with guidance on child growth and development and address topics such as breastfeeding, sleeping, nutrition, and behavior management. The Department of Defense notes that home visits per family may be limited unless the family has been identified as being at high risk for child abuse. Every professional NPSP program staff member is required to be licensed as a Licensed Clinical Social Worker (LCSW), Marriage and Family Therapist, or Registered Nurse (RN). In addition, all staff must complete a criminal background check. The NPSP program is a part of the military's Family Advocacy Program (FAP). Parent Information Resource Centers Parent Information and Resource Centers (PIRCs) help implement parental involvement policies, programs, and activities designed to improve student academic achievement and strengthen partnerships among parents, teachers, principals, administrators, and other school personnel in meeting the education needs of children. The Elementary and Secondary Education Act (ESEA) (Section 5563) requires the recipients of PIRC grants to serve both rural and urban areas; use at least half their funds to serve areas with high concentrations of low-income children; and use at least 30% of the funds they receive to establish, expand, or operate Parents as Teachers (PAT) programs, HIPPY programs, or other early childhood parent education programs. Projects generally include a focus on serving parents of low-income, minority, and limited English proficient (LEP) children enrolled in elementary and secondary schools. According to the most recent data available, nearly 60% of parents served in the 2006-2007 school year were from low-income families, and nearly 25% had limited English proficiency. PIRC funding is distributed through competitive grants to nonprofit organizations or a consortium of a nonprofit organization and a local education agency (LEA). For FY2010, PIRC grants were funded at the level of $39 million ( P.L. 111-117 ), of which about 30% (roughly $11.7 million) may go toward PAT, HIPPY, or other early childhood parent education programs selected by the grantee. PIRC grants are administered by the Office of Innovation and Improvement (OII) at the Department of Education. Promoting Safe and Stable Families The Promoting Safe and Stable Families program (PSSF, Title IV-B, Subpart 2 of the Social Security Act) primarily authorizes funds to state child welfare agencies for provision of four categories of services. The statute requires that states spend a "significant" amount of program funding on each of the categories: family support, family preservation, time-limited reunification (for families whose children have been removed to foster care within the past 15 months), and adoption promotion and support. For FY2010, the PSSF program received funding of $408 million, of which an estimated $64 million, at a minimum, should be made available for family support services. Home visitation is typically considered a family support service and the statutory definition of "family support services" for purposes of the PSSF program is "community-based services to promote the safety and well-being of children and families designed to increase the strength and stability of families (including adoptive, foster, and extended families), to increase parents' confidence and competence in their parenting abilities, to afford children a safe, stable and supportive family environment, to strengthen parental relationships and promote healthy marriages and otherwise to enhance child development." Current data on the number of states using PSSF dollars to support home visitation are not available. The PSSF program is administered by the Children's Bureau within the Administration for Children and Families at HHS. Appendix B. Federal Initiatives Related to Coordination of Early Childhood Programs and Services Researchers have noted the importance of providing home visitation services in the context of other community supports intended to support and improve the well-being of young children and their families. In recent years, a number of federal initiatives have been established that seek to improve coordination among early childhood health, education, and social services programs and which might be relevant to home visitation programs. Several are discussed below. State Advisory Councils on Early Childhood Education and Care The 2007 reauthorization of Head Start ( P.L. 110-134 ) 2007 included a new requirement for governors to establish State Advisory Councils on Early Childhood Education and Care ( "State Advisory Councils") for children from birth to school entry. These councils are intended to improve coordination across critical early childhood programs within each state and are expected to have representation from a broad spectrum of stakeholders, ranging from the state child care and education agencies to agencies responsible for health and mental health care. State Advisory Councils must: conduct a statewide needs assessment; identify opportunities for collaboration and coordination among entities carrying out federally funded and state-funded child development, child care, and early childhood education programs; develop recommendations for increasing the participation of children in existing federal, state, and local early childhood education and child care programs; develop recommendations for establishing a unified data collection system for publicly funded programs offering early childhood education, development, and services; develop recommendations for a statewide professional development and career plan for early childhood education and care; assess the capacity and effectiveness of two- and four-year public and private institutions of higher education toward supporting the development of early childhood educators; and make recommendations for improvements in state early learning standards, as appropriate. The Head Start Act requires that governors officially "designate" a council to serve as the State Advisory Council and an individual to coordinate the activities of the council (which might be a pre-existing advisory council). The Head Start Act allows HHS to award one-time start-up grants of $500,000 or more to states for the development or enhancement of high-quality systems of early childhood education and care designed to improve school preparedness. Funding ($100 million) was made available for these grants for the first time in FY2009. States have until the end of FY2010 to apply for these funds. Grantees are required to provide a 70% match. All Head Start activities, including State Advisory Councils, are administered by the Office of Head Start within the Administration for Children and Families at HHS. Early Childhood Comprehensive Systems State Early Childhood Comprehensive Systems (ECCS) are funded via competitive grants to states, and are to ensure school readiness through creation of a seamless system of early childhood services for all children. There are five core areas in which these systems, by fostering integrated efforts across health, human service, and education agencies, are meant to ensure delivery of services for young children. The five areas are (1) access to health care and medical homes; (2) assessment of and services to address socio-emotional development and mental health needs; (3) early care and learning programs; (4) parenting education; and (5) family support services. The initiative, which is supported with a part of the Title V (of the Social Security Act) Maternal and Child Health Block Grant funding reserved for Special Projects of Regional or National Significance (SPRANS), was first funded in FY2003. Nearly all states have now received these grants and were developing or implementing these systems. States have tended to focus ECCS activities on state early care and learning policies and programs, and one analysis concluded that "most states need to give more importance to strategies that promote health, mental health, and family support." Home visiting is one family support strategy that is generally consistent with the overall school readiness aim of the initiative and which has received specific attention by some ECCS grantees. In its announcement of FY2009 funding (just over $7 million was made available), the Maternal and Child Health Bureau (HRSA, HHS), stated that this phase of the initiative was expected to support continued implementation of the state early childhood strategic plans and "the integration of the ECCS program with the Substance Abuse and Mental Health Services Administration's Project LAUNCH [described below in this Appendix], the Administration for Children and Families Home Visiting Program [see " Current ACF Home Visiting Initiative "], and the State Early Learning Councils mandated by the Head Start reauthorization legislation [described above in this Appendix]." Project LAUNCH The Project LAUNCH (Linking Actions for Unmet Needs in Children's Health) initiative provides competitive grants for states and tribes to promote the wellness (defined as positive physical, emotional, social, and behavioral health) of children from birth to age eight. Grantees are charged with supporting evidence-based initiatives to achieve the overall goal of wellness. In their applications for funds grantees have sometimes identified one or more specific home visitation models they intend to support. These have included Parents as Teachers, Healthy Steps Home Visitation Component, Baby University Nurse Home Visiting Program, First Born Home Visiting Program, Safe Care, and "Visitation to at-risk infants and parents by Touchpoints trained visitors." In addition, grantees identified numerous additional parent training and family strengthening programs, along with programs focused on developmental assessments, mental health, and physical health. Among other requirements, grantees are required to create a State (or Territorial or Tribal) Council on Young Child Wellness and to include public agencies that administer health, education, and human services for young children (including child welfare agencies). In addition, grantees are specifically required to link their efforts to those of any HRSA-funded ECCS grantee in the state as well as any ACF Home Visitation grantee. Initial funding of just under $7.5 million was provided for FY2008 ( P.L. 110-161 ) under authority of Section 520A of the Public Health Service Act; for FY2009 Congress provided $20 million for the initiative ( P.L. 111-8 ) and $25 million for FY2010 ( P.L. 111-117 ). The initiative now supports some 25 grantees, many of which are state health departments. The program is administered by the Center for Mental Health Services within the HHS, Substance Abuse and Mental Health Services Administration (SAMHSA). Interagency Coordinating Councils The Individuals with Disabilities Education Act (IDEA) requires that each state establish a state Interagency Coordinating Council, appointed by the governor of the state, for the purpose of advising and assisting the state's lead agency in the implementation of the Part C program. States receiving funds under Part C are expected to establish such a council. The statute gives governors authority to appoint members to the council and goes on to specify a broad spectrum of early childhood stakeholders that should be included. At least 20% of council members must be parents of children with disabilities, a requirement that emphasizes the role of family involvement in policy and program development. The IDEA state councils are required to meet on a quarterly basis and council meetings may be open to the public. State councils are responsible for advising and assisting the lead state agency in the identification of fiscal and other resources for early intervention programs. Moreover, the councils may advise and assist the lead agency and the state educational agency on the provision of appropriate services for children from birth through age five, including the transition to preschool. The councils may also advise appropriate agencies in the state with respect to the integration of services for infants and toddlers with disabilities and at-risk infants and toddlers and their families, regardless of whether at-risk infants and toddlers are eligible for early intervention services. The councils are also required to prepare an annual report on the status of the state's early intervention programs for infants and toddlers with disabilities and their families.
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Health care reform legislation passed by the House in November 2009 (H.R. 3962) and in the Senate in December 2009 (H.R. 3590) would authorize and provide funds for grants to states to provide home visiting services, on a voluntary basis, to families with young children. (For a comparison of selected provisions in those proposals, see Table 4). There is no current law program that provides grants to states exclusively for home visiting programs. The Obama Administration requested authorization and funding for such a program as part of its FY2010 budget request. This proposal was not included in the President's FY2011 budget request, although the Administration has indicated its expectation that the pending health care reform legislation will be enacted. Home visiting is a strategy for delivering support and services to families or individuals in their homes. This report deals exclusively with home visiting as a service strategy for families with young children or those expecting children. There are a variety of early childhood home visitation models. These models typically seek to positively impact one or more outcomes across three main domains: maternal and child health; early childhood social, emotional, and cognitive development; and family/parent functioning. Depending on the particular model of early home visitation being used, the visitors may be specially trained nurses, other professionals, or paraprofessionals. Visits, which often occur weekly, may begin during a woman's pregnancy or some time after the birth of a child and may continue until the child reaches his/her second birthday (in some cases) or enters kindergarten. Participation of families is voluntary. Early childhood home visitation programs are in operation in all 50 states and the District of Columbia. The current combined public and private annual investment in these services has been estimated at between $750 million and $1 billion. This funding supports services for an estimated 400,000-500,000 families, or about 3% of all families (17.4 million) with children under six years of age. In addition to private and state and local public funds provided for early childhood home visitation, a number of federal programs have been tapped to support home visitation programs. Among others, these include Medicaid, the Temporary Assistance for Needy Families block grant, the Social Services Block Grant, the Promoting Safe and Stable Families program, Community-Based Grants to Prevent Child Abuse and Neglect, Even Start, Part C early intervention services for infants under the Individuals with Disabilities Education Act, the Maternal and Child Health Block Grant, Healthy Start, and Early Head Start. The current popularity of early childhood home visitation draws, in some measure, from newer research on how the human brain develops and, specifically, the significance of prenatal and early childhood environments to later life outcomes. Further, since at least the 1960s, a variety of home visiting programs have undergone evaluations to test their effectiveness. While the results have been mixed, some research has shown results that promise both immediate and longer term benefits to children and their families, including improvements in birth outcomes, enhanced child cognitive development and academic success, and strengthened child-parent interactions. Overall, researchers caution that home visiting is not a panacea, but many have encouraged its use as part of a range of strategies intended to enhance and improve early childhood. This report will be updated as warranted.
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The Child Care and Development Block Grant (CCDBG) provides subsidies to assist low-income families in obtaining child care so that parents can work or participate in education or training activities. Discretionary funding for this program is authorized by the CCDBG Act, which is currently due for reauthorization. Mandatory funding for child care subsidies, authorized in Section 418 of the Social Security Act (sometimes referred to as the "Child Care Entitlement to States"), is also due for reauthorization. In combination, these two funding streams are commonly referred to as the Child Care and Development Fund (CCDF). While this term is not found in statute, it can serve as a useful catch-all when discussing the complex financing structure underlying federal support directly targeted to child care subsidies. For the purposes of this report, the term CCDBG will refer specifically to the discretionary funding stream, while the term CCDF will refer to the jointly administered funding streams. The CCDF is administered by the Department of Health and Human Services (HHS) and provides block grants to states, according to a formula, which are used to subsidize the child care expenses of working families with children under age 13. In addition to providing funding for child care services, funds are also used for activities intended to improve the overall quality and supply of child care for families in general. The CCDF is the primary source of federal funding dedicated solely to child care subsidies for low-income working and welfare families. The FY2014 funding level for the CCDF is nearly $5.3 billion, which includes about $2.4 billion in discretionary funds and $2.9 billion in mandatory funds. The current structure of federal child care programs and funding is most easily understood by tracing its evolution from the system that existed prior to 1996, when the welfare reform law ( P.L. 104-193 ) simultaneously repealed, created, and consolidated federal child care programs (see Figure 1 ). Before 1996, four separate federal programs specifically supported child care for low-income families. Three were associated with the cash welfare system, then Aid to Families with Dependent Children (AFDC). At that time, families on AFDC were entitled to free child care. In addition, families who had left the AFDC rolls with employment were entitled to 12 months of "transitional" subsidized child care. The third AFDC-related child care program targeted families who, without a child care subsidy, would be "at risk" of qualifying for AFDC. These three programs operated under three separate sets of rules, and targeted three separate populations. Critics argued that mothers navigating their way through the welfare system faced unnecessary complexity that could be alleviated with a more unified child care program. All three of the AFDC-related child care programs were funded with mandatory money, and fell under the same congressional committee jurisdiction (the Ways and Means Committee in the House, and the Finance Committee in the Senate). AFDC Child Care and Transitional Child Care were both open-ended federal entitlements (i.e., there was no limit on program funding), with the federal share of payments to states based on the state's Medicaid matching rate. The AFDC At-Risk program, on the other hand, was not open-ended, but was instead authorized as a "capped entitlement" to the states at an annual level of $300 million. The fourth pre-1996 child care program for low-income families was the CCDBG. Established in the CCDBG Act of 1990 (a component of the Omnibus Budget Reconciliation Act, P.L. 101-508 ), the CCDBG was designed to support child care for low-income families who were not connected to the AFDC welfare system. The CCDBG subsidized child care for children under age 13 whose working family income did not exceed 75% of state median income (SMI), adjusted for family size. In addition, it provided funds for activities to improve the overall quality and supply of child care. Unlike the AFDC-related programs, the CCDBG was funded with discretionary funds appropriated as part of the annual appropriations process. Authorizing legislation fell under the jurisdiction of the Education and Labor Committee in the House (later renamed the Committee on Education and the Workforce) and the Labor and Human Resources Committee in the Senate (later renamed the Committee on Health, Education, Labor and Pensions). The 1996 welfare reform law ( P.L. 104-193 ) repealed AFDC and its three associated child care programs. Like cash welfare, child care was no longer an individual entitlement to welfare families. Instead of preserving three separate programs, the new law created a consolidated block of mandatory funding under Section 418 of the Social Security Act. Like the earlier three programs, this new block of funding was largely targeted toward families on, leaving, or at risk of receiving welfare (now Temporary Assistance for Needy Families, or TANF). However, unlike the three AFDC-related child care programs, each of which was administered under its own set of rules, the 1996 law instructed that the new mandatory funding be transferred to each state's lead agency managing the CCDBG, and be administered according to CCDBG rules. The law authorized and appropriated funding for the new mandatory child care program through FY2002. In addition to creating the new block of mandatory child care funding, the 1996 welfare reform law reauthorized the CCDBG through FY2002. This law also substantially amended the CCDBG by modifying program rules such as income eligibility requirements, which were expanded from 75% of SMI (under pre-1996 law) to 85% of SMI (under the 1996 law). The child care provisions in the 1996 law were designed to achieve several purposes. As a component of welfare reform, the child care provisions were intended to support the overall goal of promoting self-sufficiency through work. However, separate from the context of welfare reform, the legislation attempted to address concerns about the effectiveness and efficiency of child care programs. The previous four separate child care programs (the original CCDBG and the three AFDC programs) had different rules regarding eligibility, time limits on the receipt of assistance, and work requirements. Consistent with other block grant proposals considered in the 104 th Congress, the child care provisions in P.L. 104-193 were intended to streamline the federal role, reduce the number of federal programs and conflicting rules, and increase the flexibility provided to states. The CCDBG Act has not been reauthorized since the 1996 welfare reform law ( P.L. 104-193 ), which authorized the program through the end of FY2002. Although the program's authorization has expired, the CCDBG has continued to receive discretionary funding in each year since FY2002 through the annual appropriations process. Over the years, Congress has undertaken a number of efforts to reauthorize the CCDBG Act (e.g., H.R. 4 and S. 880 from the 108 th Congress, and H.R. 240 and S. 525 from the 109 th Congress). More recently, both the House and Senate have approved CCDBG reauthorization bills in FY2014. For more information, see the section on " Recent CCDBG Reauthorization Efforts ." The 1996 welfare reform law ( P.L. 104-193 ) authorized and directly appropriated (or pre-appropriated) mandatory child care funding for each of FY1997 through FY2002. Temporary extensions provided mandatory child care funding into FY2006, when a spending budget reconciliation bill was enacted into law ( P.L. 109-171 ), reauthorizing and increasing mandatory child care funding by $1 billion over five years (for a total amount of $2.917 billion for each of FY2006 to FY2010). The authorization and pre-appropriations for mandatory child care funding were set to expire at the end of FY2010, but a series of short-term extensions maintained mandatory child care funding at the same level ($2.917 billion) for FY2011-FY2013. No extension legislation was enacted prior to the start of FY2014, resulting in a 16-day funding gap. However, mandatory child care funding has since been restored at the $2.917 billion level via temporary extensions, the most recent of which (in P.L. 113-76 ) provides mandatory child care funding through the end of FY2014. On September 15, 2014, the House approved the Child Care and Development Block Grant Act of 2014 ( S. 1086 , as amended) by voice vote. This is an amended version of the CCDBG reauthorization bill that was agreed to in the Senate, by a vote of 96-2, on March 13, 2014 ( S. 1086 , S.Rept. 113-138 ). The Senate would need to approve the amended bill as is, in order for it to be presented to the President for signature. Both the House- and Senate-passed versions of S. 1086 would reauthorize the CCDBG through FY2020. While the Senate version would authorize appropriations at "such sums as may be necessary," the House version would authorize specific appropriations levels for each year, increasing from $2.360 billion in FY2015 to $2.759 billion in FY2020. Both versions of the bill would significantly amend the CCDBG Act, adding new requirements related to state health and safety standards, pre-licensure and annual unannounced on-site monitoring visits for certain child care providers, criminal background checks and professional development for child care providers, activities to improve the quality and availability of child care, continuity of care for participating children, and increased consumer education for parents and the public. On May 20, 2013, HHS published a Notice of Proposed Rulemaking (NPRM) in the Federal Register . The proposed rule would provide a comprehensive update of CCDF regulations, which were first published in 1998. The proposed rule calls for changes to current regulatory policy related to state health and safety standards, state monitoring practices, consumer education for parents, linking payment rates to quality of care, continuity of care, state contracts for direct services, and program integrity and accountability. The public comment period on the NPRM ended on August 23, 2013. HHS is required to take all comments into consideration before publishing a final rule. At the federal level, the CCDF is administered by the Administration for Children and Families (ACF) within HHS. In October 2010, HHS announced the creation of a new Office of Child Care at ACF with responsibility for administering the CCDF. The office reports directly to the Assistant Secretary for Children and Families. According to an ACF press release, this reorganization was intended to "elevate child care issues within ACF" and to "facilitate direct collaboration" with other key early childhood programs and agencies (e.g., Head Start). In the press release, then-Acting Assistant Secretary for Children and Families David A. Hansell noted that early childhood development is a "key priority" for the Obama Administration. Hansell stated, "The creation of an Office of Child Care will strengthen the quality of child care and maximize the program's effectiveness in achieving its dual goals of supporting employment for low-income families and promoting healthy development and school success for children." Prior to the October 2010 reorganization, the CCDF was administered by the Child Care Bureau as a subcomponent of the larger Office of Family Assistance at ACF, which administers the federal TANF program. The Child Care Bureau had been part of the Office of Family Assistance since 2006. When moving the Child Care Bureau into the Office of Family Assistance in 2006, an ACF publication noted that this organizational decision reflected the "close coordination necessary" between child care programs and TANF. Previously, the Child Care Bureau had been part of the Administration for Children, Youth, and Families (ACYF) since 1995. Federal law requires states to designate a lead agency to administer the CCDF. The responsibilities of the lead agency are to administer federal funds, develop a state plan, and coordinate services with other federal, state, or local child care and early childhood development programs. States have tremendous flexibility in the design and operation of their child care policies, but federal law establishes program goals and a set of requirements that states must meet in order to receive CCDF funds. The 1996 law established five goals for the CCDF. They include (1) allowing states maximum flexibility in developing their child care programs; (2) promoting parental choice; (3) encouraging states to provide consumer education information to parents; (4) helping states to provide child care to parents trying to become independent of public assistance; and (5) helping states to implement health, safety, licensing, and registration standards established in state regulations. Federal law states that children eligible for services under the CCDF are those whose family income does not exceed 85% of the state median. However, states have the discretion to adopt income eligibility limits below this federal maximum, and generally do. At the beginning of FY2013, initial income eligibility estimates for a family of three were expected to range from about 35% to 83% of SMI, depending on the state. Because child care funding is not an entitlement for individuals, states are not required to aid families even if their incomes fall below the state-determined eligibility threshold. Federal law does, however, require states to give priority to families defined in their state plan as "very low income." To be eligible for CCDF funds, children must be less than 13 years old and be living with parents who are working or enrolled in school or training, or be in need of protective services. States must use at least 70% of their total mandatory CCDF funds for child care services for families who are receiving public assistance under TANF, families who are trying to become independent of TANF through work activities, and/or families who are at risk of becoming dependent on public assistance. In their state plans, states must demonstrate how they will meet the specific child care needs of these families. Of their remaining child care funds (including discretionary CCDBG funds), states must ensure that a substantial portion is used for child care services to eligible families other than welfare recipients or families at risk of welfare dependency. Preliminary HHS program data (the most recent available) indicate that about 1.5 million children received child care subsidies funded by the CCDF in an average month in FY2012. This would represent a decrease of about 116,400 children (-7%) compared to FY2011, should the preliminary FY2012 report hold constant after all data are finalized. Parents of children eligible to receive subsidized child care must be given maximum choice in selecting a child care provider. Parents must be offered the option to enroll their child with a provider that has a grant or contract with the state to provide such services—to the extent that such services are available —or parents may receive a certificate that can be used to purchase child care from a provider of the parents' choice. A child care certificate (also sometimes referred to as a voucher) is an authorization form, letter, voucher, or other disbursement document authorizing child care payments for the provider of the parents' choice. The certificate may be in the form of a check or other disbursement directly to the parent, but must be used for child care services only. Under limited circumstances, payments can also be provided in the form of cash. The 1996 law expanded the definition of "child care certificate" to allow the vouchers or disbursements to be used as a deposit for child care services, if such deposits are required for other children cared for by the same provider. The CCDBG Act generally requires that families contribute to the cost of care on a sliding fee scale basis. However, federal regulations allow states to waive child care fees for families with incomes at or below the poverty guidelines. In addition, federal regulations allow states to waive, on a case-by-case basis, contributions from eligible families whose children are in protective services or in foster care (or whose children may need such services). HHS has suggested that a family's fee should be no more than 10% of its income. States may use this 10% limit as a guide in deciding the amount of the fee, but are not required to do so. Federal statute requires that states take family size and income into account when establishing co-payments, but states may also take other factors into account, such as the number of children in care, whether care is full-time or part-time, or cost of care. States have flexibility in establishing rules for counting income. States must establish payment rates for child care services that are sufficient to ensure equal access for eligible children to comparable child care services provided to children whose families are not eligible for subsidies. Essentially, payment rates are reimbursement rate ceilings (that is, the maximum rate providers can receive for child care services through CCDF). Providers are paid either the state's established payment rate (i.e., reimbursement rate ceiling) or the actual fee that providers charge to nonsubsidized parents, whichever is the lesser of the two. When determining payment rates, states are not required to consider variations in costs based on child care settings, age groups, and special needs (this was required prior to the 1996 law); however many state plans do link payment rates to such characteristics and/or to regional variation. Some state plans also link payment rates to quality of care provided. That is, some states may pay a higher rate to a provider with a better quality rating than they pay to providers who fail to meet specified quality standards. States are required to conduct a local market rate survey every two years to assess the price of child care being charged. Federal regulations suggest that states establish payment rates equal to at least the 75 th percentile of the market rate to ensure equal access for eligible families. (That is, HHS recommends that states set their payment rate ceiling at a level that, on average, equals or exceeds the rate charged by three out of every four providers who responded to the local market rate survey.) However, federal law does not require that payments be set at this rate, nor that states use the most current market survey when setting rates. Instead, states must include a summary of the facts they used in determining the sufficiency of their payment rates to ensure equal access when they submit their state plans. Traditionally, state payment rates vary based on setting, age of child, and other characteristics. In addition, many states use tiered reimbursement systems, meaning that they issue higher reimbursement rates to providers based on certain criteria, such as meeting high quality standards, offering care during non-traditional hours, or serving special populations. Federal law requires that no less than 4% of expenditures made from states' CCDF allotments (discretionary and mandatory) be spent on activities designed to (1) provide consumer education to parents and the public, (2) increase parental choice, and (3) otherwise improve the quality and availability of child care (such as resource and referral services). States use quality funds for a variety of activities, including professional development, licensing and monitoring, and improving provider compensation. In addition, federal appropriations frequently target portions of discretionary CCDBG funds toward quality improvement activities, including specific quality set-asides in areas such as infant and toddler care, school-aged child care, and child care resource and referral services. Although the CCDF is a fairly flexible funding source for states, there are some limitations on use of funds. For instance, federal law and regulations prohibit states from expending more than 5% of aggregate CCDF funds from each fiscal year's allotment on administrative costs. However, regulations also specify that costs considered to be an "integral part of service delivery" should be excluded from the 5% administrative cap. These activities include eligibility determination (and redetermination), the establishment and maintenance of computerized child care information systems, and determination of erroneous payments (including case reviews and the preparation of error rate reports). In addition, the CCDBG Act prohibits the use of federal funds for the purchase or improvement of land or buildings, with a limited exception for sectarian organizations. The amendments of 1996 also added an exception for Indian tribes and tribal organizations with respect to construction, though this is subject to the Secretary's approval. Finally, the law states that, in general, no federal CCDF funds may be used for any sectarian purpose or activity, including sectarian worship or instruction (more detail on this in the section on " Religious Providers "). To receive federal funding for child care, states must submit an application and plan to HHS. After an initial three-year plan, required by the original CCDBG Act in 1990, states are now required to submit plans that cover a two-year period. State plans include detailed information on many components of CCDF program administration, including state decisions about child and family income eligibility criteria, state priorities in children served, sliding fee scales, provider payment rates, and specific quality improvement initiatives. In addition, state plans must certify or assure that their programs will include certain elements related to parental choice, parental access, parental complaints, consumer education information, licensing and regulation, and health and safety requirements. In 2011, HHS issued a new state plan "preprint" (i.e., the form used by states to meet biennial application and plan requirements) that included major changes in structure and content compared to prior years. These changes have generally been maintained in subsequent preprints. The preprints are now divided into three main sections: (1) Administration (e.g., roles and responsibilities at the state level), (2) CCDF Subsidy Program Administration (e.g., state rules governing the subsidy program, including eligibility criteria and payment rates), and (3) Health and Safety and Quality Improvement Activities. The changes initiated in 2011 also required states to conduct a detailed self-assessment and goal-setting process in four "component" areas: (1) licensing and health and safety standards, (2) early learning guidelines, (3) quality improvement activities, and (4) professional development systems and workforce initiatives. As part of this process, states were required to identify goals in the four component areas and report on progress toward achieving these goals in an annual Quality Performance Report (QPR). The first round of QPRs (on activities conducted in FY2012) were due to HHS on December 31, 2012. FY2013 QPRs were due in December 2013. Parents of children eligible to receive subsidized child care must be given the option to enroll their child with a provider that has a grant or contract with the state program to provide such services (when available), or to receive a child care certificate or voucher that can be used with a provider of the parents' choice. State plans must include a detailed description of how this parental choice provision is implemented. In addition, they must assure that the value of child care certificates will be commensurate with the subsidy value of child care services provided under a grant or contract, and that their payment rates for all subsidies will be sufficient to ensure equal access for eligible children to comparable child care services provided to children whose families are not eligible for subsidies. States may not significantly restrict parental choice among the various types of child care providers, which range from child care centers to family homes. Under the CCDBG Act, eligible child care providers can include individuals, age 18 and older, who provide child care services for their grandchildren, great grandchildren, siblings (if the provider lives in a separate residence), nieces, or nephews. In recent years, some questions have arisen about how parental choice protections in the CCDBG Act interact with certain state initiatives that may require child care providers who receive federal subsidies to meet minimum quality standards. Such requirements may be wrapped into state Quality Rating and Improvement Systems (QRIS), which are used by a growing number of states to systematically assess, improve, and communicate about the quality of early childhood care and education programs (see additional information on such systems in the section of this report entitled " Quality Rating and Improvement Systems "). For instance, a state might require child care providers to meet a specified minimum QRIS score in order to be eligible to receive CCDF subsidies. In January 2011, in response to concerns about whether such policies might interfere with parental choice protections, HHS issued a program instruction on parental choice and QRIS initiatives. The program instruction stated that HHS would not consider parental choice requirements violated by such policies unless a given state's policy "significantly restricts or will clearly have the effect of restricting parental choice." However, HHS also reiterated that state CCDF lead agencies must continue to ensure that families are able to choose from providers of all types and in all settings. States must have procedures to ensure that child care providers receiving subsidies will give parents unlimited access to their children and to providers while the children are in care. State plans must include a detailed description of these procedures. States are required to maintain a record of substantiated complaints made by parents, and to make information about these complaints publicly available upon request. The state plan must include a detailed description of how this record is maintained and made available. Under the CCDBG Act, states must collect and disseminate, to parents of eligible children and to the general public, consumer education information that will promote informed child care choices. At a minimum, the information must include information about the full range of providers available, and health and safety requirements. States must have in effect licensing requirements applicable to child care services provided within the state, and state plans must include a detailed description of these requirements and how they are effectively enforced. Federal law does not dictate what these licensing requirements should be or what types of providers they should cover. The 1996 law specifies that this provision shall not be construed to require that licensing requirements be applied to specific types of providers. The conference report on the 1996 law further states that the legislation is not intended to either prohibit or require states to differentiate between federally subsidized child care and nonsubsidized child care with regard to the application of specific standards and regulations. States must have in effect, under state or local law, health and safety requirements that are applicable to child care providers; and states must have procedures in effect to ensure that subsidized child care providers (including those receiving child care certificates) comply with applicable health and safety requirements. States must have health and safety requirements in the following areas: prevention and control of infectious diseases (including immunization), building and physical premises safety, and health and safety training. In addition, state plans must assure that children receiving services under the CCDF are age-appropriately immunized, and that the health and safety provisions regarding immunizations incorporate (by reference or otherwise) the latest recommendation for childhood immunizations of the state public health agency. Current CCDF law and regulations do not explicitly require that criminal background checks be included as part of a state's health and safety requirements. However, on September 20, 2011, HHS released an information memorandum recommending that all CCDF lead agencies institute comprehensive criminal background checks for child care providers receiving CCDF subsidies, as part of their minimum health and safety requirements. The memorandum characterizes a "comprehensive" criminal background check as one that includes (1) fingerprints checks of state criminal history records; (2) fingerprints checks of Federal Bureau of Investigation (FBI) criminal history records; (3) checks of state child abuse and neglect registries; and (4) checks of sex offender registries. Separately, tribal lead agencies for the CCDF may be subject to certain requirements in the Indian Child Protection and Family Violence Prevention Act (ICFVP). This law requires background checks for federal and tribal agency employees who have regular contact with, or control over, American Indian children. In practice, all states subject certain child care providers to some type of background check. However, there is great variation across states in terms of which providers are required to undergo background checks (e.g., center-based staff, staff in child care family homes, relative caregivers) and in terms of the stringency of the background check that is required (e.g., child abuse registry check, state or federal fingerprint check, FBI background check). For instance, HHS reported that as of February 2012, 40 states and territories required FBI fingerprint checks for center-based child care providers, while only 31 states and territories required such checks for providers in group child care homes. On September 19, 2011, before HHS issued the information memorandum on background checks, the Government Accountability Office (GAO) released a report on federal and state laws related to the employment of sex offenders at child care facilities. This report also examined 10 cases in which individuals who had been convicted of serious sexual offenses were subsequently employed or present at child care facilities. GAO found that in at least seven of these cases, the offenders used their access to child care facilities to offend again. (GAO notes that these cases focus only on individuals who were convicted of serious sexual offenses and cannot be generalized to all child care facilities.) In recent years, Congress has demonstrated some interest in requiring criminal background checks for certain child care providers. For instance, several related bills with related provisions were introduced in the 113 th Congress, including H.R. 1925 , S. 624 , S. 1086 . HHS requires states to assure that discretionary CCDBG funds will be used to supplement, not supplant, state general revenue funds for child care assistance for low-income families. While this is not a requirement in the CCDBG Act or accompanying regulations, federal appropriation laws typically make this stipulation. For instance, this stipulation was included in the FY2014 Consolidated Appropriations Act ( P.L. 113-76 ). Discretionary CCDBG funds are subject to the annual appropriations process. The 1996 amendments to the CCDBG Act authorized funding through FY2002 at an annual authorization level of $1 billion. Actual appropriations have typically surpassed the authorized level, most recently reaching roughly $2.358 billion for FY2014 (see Table 1 ). In years since FY2002, appropriations have been made without an authorization level. Meanwhile, the 1996 welfare reform law provided pre-appropriated mandatory CCDF funding to states from FY1997 to FY2002. The annual amounts of mandatory funding were $1.967 billion in FY1997; $2.067 billion in FY1998; $2.167 billion in FY1999; $2.367 in FY2000; $2.567 billion in FY2001; and $2.717 billion in FY2002. Because these funds were directly appropriated by the welfare reform law, the mandatory CCDF funding does not generally go through the annual appropriations process. Mandatory CCDF funding was provided through FY2005 (at the FY2002 rate of $2.717 billion annually) via a series of extensions; welfare reauthorization legislation was debated in each of these years, without reaching fruition. Finally, on February 8, 2006, a budget reconciliation bill ( S. 1932 , the Deficit Reduction Act), which included mandatory child care funding provisions, was passed into law ( P.L. 109-171 ). The law pre-appropriated $2.917 billion annually for each of FY2006-FY2010. Since FY2010, mandatory funds have again been provided through a series of extensions, as discussed throughout this section. The remainder of this section provides a detailed funding history for FY2013-FY2015, a summary of the American Recovery and Reinvestment Act of 2009 (ARRA), and a brief overview of other notable CCDF funding issues from FY1997 forward. Table 1 shows the amounts provided in discretionary and mandatory funding for each of FY1997-FY2014. On June 10, 2014, the Senate Appropriations Subcommittee for the Departments of Labor, HHS, Education, and Related Agencies (L-HHS-ED) approved an FY2015 appropriations bill by voice vote. The bill has not been marked up by the full committee. However, on July 23, the Senate Appropriations Committee released a copy of the subcommittee-approved bill and draft subcommittee report. These materials indicate that the subcommittee-approved bill would provide $2.458 billion in discretionary CCDBG funding. The House Appropriations Committee has not taken action on an FY2015 L-HHS-ED appropriations bill. On March 4, 2014, the Obama Administration released its initial FY2015 budget materials, requesting $2.417 billion for the discretionary CCDBG, an increase of $59 million (+2.5%) from the final FY2014 funding level of $2.358 billion. The FY2015 President's Budget proposed to maintain funding set-asides typically provided within CCDBG appropriations (e.g., child care resource and referral and school-aged child care activities, a national toll-free hotline and website, and other quality activities, including those to improve the quality of care for infants and toddlers). In addition, the FY2015 President's Budget proposed to reserve $200 million for new formula state grants to improve the quality of child care, including the child care workforce and measures of health and safety. The FY2015 President's Budget also requested a $750 million (+26%) increase in mandatory child care funds, for a proposed FY2015 mandatory funding level of $3.667 billion. Combined, the discretionary and mandatory funding levels requested in the FY2015 President's Budget totaled $6.084 billion, an increase of $809 million (+15%) from FY2014 actual. HHS estimated that this combined funding level would be sufficient for the CCDF to serve roughly 1.4 million children in FY2015. Notably, the FY2015 President's Budget called for additional increases in mandatory CCDF funds in future years, reaching an annual funding level of $5.917 billion by FY2024. The FY2015 President's Budget called for a reauthorization of the mandatory and discretionary CCDF funding streams, with the following broad principles for reform: strengthen health and safety standards and monitoring of child care providers, improve the quality of early childhood and afterschool settings, serve more low-income children in high-quality programs, support parent employment and parental choice, promote continuity of care, strengthen program integrity and accountability, and improve coordination and alignment across early childhood programs. On January 17, 2014, President Obama signed into law the Consolidated Appropriations Act, 2014 ( H.R. 3547 , P.L. 113-76 ), which provided $2.360 billion in discretionary CCDBG funding for FY2014. The final operating level for FY2014 was later reduced to $2.358 billion as a result of HHS transfers. The final discretionary operating level for FY2014 represents an increase of roughly $153 million (+7%) from the FY2013 post-sequester funding level of $2.206 billion. The FY2014 appropriations law retained set-asides within the CCDBG for certain quality activities, including activities to improve the quality of care for infants and toddlers. The law also reserved nearly $1 million for a competitive grant to operate a national toll-free hotline and website designed to provide consumer education and support to parents looking for child care in their communities. Funding for such a hotline has been provided (in one form or another) in every year since FY2000, with the exception of FY2011. Prior to the enactment of P.L. 113-76 , prorated FY2014 funding for the discretionary CCDBG was provided by two short-term continuing resolutions ( P.L. 113-46 and P.L. 113-73 ). Notably, however, Congress did not enact an FY2014 continuing resolution (CR) prior to the start of the fiscal year on October 1, 2013. This resulted in a funding gap and shutdown of the federal government that lasted until the first CR was signed into law on October 17, 2013. Anticipating the possibility of a funding gap, the Acting Assistant Secretary for Children and Families at HHS released a letter to state child care officials, clarifying that unspent CCDF funds from prior years would remain available for expenditure in accordance with existing obligation and liquidation timeframes. The letter also indicated that state matching and maintenance-of-effort funds spent on child care during a potential funding gap would likely count toward CCDF requirements once an FY2014 appropriation was provided, unless specified otherwise by Congress. Before the start of the fiscal year, the Senate Appropriations Committee approved an FY2014 appropriations bill ( S. 1284 , S.Rept. 113-71 ) for the Departments of Labor, HHS, Education, and Related Agencies (L-HHS-ED) on July 11, 2013. The L-HHS-ED bill provides annual discretionary funding for the CCDBG. The Senate Committee-reported bill proposed $2.500 billion in discretionary CCDBG funds for FY2014. The House Appropriations Committee did not take action on an FY2014 L-HHS-ED appropriations bill prior to the start of the fiscal year. Like discretionary CCDBG funding, mandatory child care funds were also subject to a funding gap at the beginning of FY2014. However, subsequent CRs ( P.L. 113-46 and P.L. 113-73 ) and the full-year consolidated appropriations act ( P.L. 113-76 ) ultimately extended mandatory child care funding at $2.917 billion through September 30, 2014. According to HHS, the FY2013 operating level for the discretionary CCDBG was $2.206 billion. This amount was $73 million less than the FY2012 funding level of $2.278 billion. The FY2013 operating level reflected amounts provided in the final FY2013 appropriations law ( P.L. 113-6 ), an across-the-board rescission of 0.2% required by Section 3004 of the final FY2013 appropriations law (as interpreted by the Office of Management and Budget (OMB)), reductions required by the sequestration ordered on March 1, and any transfers or reprogramming of funds pursuant to the authority of the HHS Secretary. "Sequestration" is an automatic across-the-board spending reduction process under which budgetary resources are permanently canceled to enforce budget policy goals. Under the Budget Control Act of 2011 ( P.L. 112-25 ), OMB was directed to implement a sequestration of FY2013 funding to enforce certain deficit reduction goals. The sequestration was originally scheduled to occur on January 2, 2013, but was postponed by the American Taxpayer Relief Act ( P.L. 112-240 ). OMB ultimately issued the sequester order on March 1. Before the passage of the first CR, both the House and Senate had initiated the FY2013 L-HHS-ED appropriations process. On July 18, 2012, the House Appropriations L-HHS-ED Subcommittee approved a bill for full committee consideration. As passed by the subcommittee, the bill would have provided $2.303 billion in discretionary CCDBG in FY2013. However, the bill was not taken up by the full committee. Meanwhile, on June 14, 2012, prior to action in the House, the Senate Appropriations Committee reported a bill to provide full-year FY2013 L-HHS-ED appropriations ( S. 3295 , S.Rept. 112-176 ). This bill would have provided $2.438 billion in discretionary CCDBG funds for FY2013. The Senate Appropriations Committee-reported bill included a new reservation of $90 million for activities to improve the quality of the early childhood care and education workforce. For FY2013, the authorization and appropriations for mandatory child care were extended via two temporary extensions: P.L. 112-175 extended funding through March 27, 2013, and P.L. 113-6 extended funding through September 30, 2013. Both extensions maintained mandatory child care funding at $2.917 billion, the same amount the program has received annually since FY2006. Unlike discretionary CCDBG funds, mandatory child care funds are exempt from sequestration. In FY2009, in addition to $2.127 billion in discretionary CCDBG funds provided by the FY2009 Omnibus Appropriations Act ( P.L. 111-8 ), the CCDBG received a further $2.0 billion in discretionary funds from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). The ARRA was signed into law by President Obama on February 17, 2009. The ARRA specified that the CCDBG funds should be used to supplement, not supplant, state general revenue spending on child care assistance for low-income families. The ARRA also specified that a sum of approximately $255 million be reserved, out of the total appropriated to CCDBG, for activities designed to (1) provide comprehensive consumer education to parents and the public, (2) increase parental choice, and (3) improve quality and availability of child care (such as resource and referral services). This sum augmented the amount that states were already required by law to use for such activities (not less than 4% of the total amount received by each state). Of the $255 million, nearly $94 million was reserved for activities designed to improve the quality of infant and toddler care. CCDF funding appropriated in the ARRA was made available for obligation by HHS through the end of FY2010. However, HHS opted to provide states with their full allocations in FY2009, nearly doubling discretionary CCDF allotments to states for that fiscal year. (The Appendix includes state-by-state funding allocations from both the FY2009 Omnibus and the ARRA in Table A-1 .) CCDF grantees were required to obligate, or commit, their ARRA funds by the end of FY2010 (September 30, 2010), but had until the end of FY2011 (September 30, 2011) to expend their ARRA awards. HHS reported that states and territories had spent roughly 95% of their ARRA allocations as of June 30, 2011. States reported spending the majority of CCDF ARRA funding on direct services (roughly 81% as of June 2011). For instance, states used these funds to lower parental co-payments, increase payment rates to child care providers, expand income eligibility thresholds, and add or extend eligibility to parents searching for jobs. Some states also reported using ARRA funds to avoid, shorten, or eliminate waiting lists for eligible children. According to HHS, cumulative state spending on direct services for children (using ARRA funds) was sufficient to provide services for an estimated 336,000 children. (This estimate includes both children who were already receiving subsidies—but who may have lost their subsidies in the absence of ARRA—and new children who were added to the caseload with ARRA funds.) In addition to spending on direct services, states used ARRA funds to expand investments in quality activities. For instance, states used ARRA funds to create or expand Quality Rating and Improvement Systems, support programs targeted to infants and toddlers, and improve state and local health and safety standards. Beginning in FY1997, the treatment of CCDBG funding in the appropriations process was changed to reflect states' actual obligation of money for the program. Prior to FY1997, the funds appropriated for the CCDBG only became available for obligation by the states in the last month of the year in which they were appropriated. As a result, most of a given year's appropriation was actually obligated during the next fiscal year. With the enactment of the FY1997 appropriations law, that practice was changed so that the CCDBG was officially advance funded by an entire year. In other words, the FY1997 appropriation became available for obligation at the beginning of FY1998 (rather than the end of FY1997). As a result of this change, only $19 million was appropriated in FY1997 specifically for FY1997; this amount was added to funds previously appropriated and available for obligation at the end of FY1996. The bulk of the FY1997 appropriation—$937 million—was to become available in FY1998. This practice of advance funding continued in FY1999-FY2001, and is shown in Table 1 , which displays discretionary and mandatory funds appropriated to the CCDF for FY1997-FY2014. Discretionary CCDBG funds are allocated among states according to a formula that is based on each state's share of children under age five, the state's share of children receiving free or reduced-price lunches, and state per capita income. Statute requires that 0.5% of appropriated funds be reserved for the territories, and between 1% and 2% be reserved for payments to Indian tribes and tribal organizations. In addition, regulations allow HHS to reserve up to 0.25% for the provision of technical assistance. States are not required to match these discretionary funds. Funds must be obligated in the year they are received or in the subsequent fiscal year, and the law authorizes the Secretary to reallocate unused funds. Table 2 displays the FY2014 discretionary CCDBG allocations. Federal law requires the Secretary of HHS to reserve between 1% and 2% of mandatory funds for payments to Indian tribes and tribal organizations. In addition, federal regulations allow HHS to reserve up to 0.25% for the provision of technical assistance. Once these amounts have been reserved, the remaining mandatory funds are allocated to states in two components. First, each state receives a fixed amount each year, equal to the funding received by the state under the child care programs previously authorized under AFDC in FY1994 or FY1995, or the average of FY1992-FY1994, whichever is greater. This amount equals $1.2 billion each year, and is sometimes referred to as "guaranteed mandatory" funds. No state match is required for these funds, which may remain available for expenditure by states with no fiscal year limitation. Second, remaining mandatory funds (after distribution of the "guaranteed" portion) are allocated to states according to each state's share of children under age 13. States must meet maintenance-of-effort and matching requirements to receive these funds. Specifically, states must spend all of their "guaranteed" federal entitlement funds for child care described above, plus 100% of the amount they spent of their own state funds in FY1994 or FY1995, whichever is higher, under the previous AFDC-related child care programs. Further, states must provide matching funds at the Medicaid matching rate to receive these additional entitlement funds for child care. If the Secretary determines that a state will not spend its entire allotment for a given fiscal year, then the unused amounts may be redistributed among other states according to those states' shares of children under age 13. Table 2 displays the FY2014 CCDF allocations for both the "guaranteed" mandatory and the federal share of mandatory matching. In addition to amounts provided to states specifically for CCDF, states may also transfer up to 30% of their TANF block grant allotment to the CCDF. Transferred funds must be spent according to the CCDBG Act rules. The net transfer from the FY2013 TANF allotment to the CCDF totaled nearly $1.4 billion (representing roughly 8% of the FY2013 TANF allotment). Nothing precludes a state from using TANF funds for child care services without formally transferring them to the CCDF, in which case the CCDBG Act rules do not necessarily apply. HHS has reported that in FY2013, states spent about $1.1 billion in federal TANF money on child care within the TANF program. (In addition, states reported spending $2.5 billion in FY2013 on child care through state TANF and separate state program (SSP) MOE funds.) The Secretary must coordinate child care activities within HHS, and, to the extent practicable, with similar activities in other federal agencies. The Secretary is also required to publish a list of child care standards every three years, and to provide technical assistance to states. The Secretary must monitor state compliance with the statute and state plans, and must establish procedures for receiving and assessing complaints against a state. Upon finding that a state is out of compliance with either the statute, regulation, or state plan, the Secretary is authorized to require that the state reimburse the federal government for any misspent funds, or to withhold the amount from the state's CCDF allotment for the next fiscal year, or to take a combination of these steps. States also must arrange for independent audits of their programs, and must repay the federal government for any funds that are found to have been misspent, or the Secretary may offset these amounts against future payments due to the state. In addition, states are now required to complete a case review every three years to check for improperly authorized payments. This new mandate is tied to " State Error Rate Reporting " requirements added to CCDF regulations in 2007. In September 2010, the Government Accountability Office (GAO) released a report on fraud in five state child care assistance programs. GAO investigators posing as parents and child care providers successfully billed for $11,702 in child care assistance for fictitious children. In addition, GAO examined closed case studies of fraud and abuse and interviewed parents waitlisted for child care assistance. GAO concluded that the five states under investigation lacked controls over billing and child care assistance processes when dealing with unregulated providers, leaving the programs vulnerable to fraud and abuse. However, GAO also noted that these results cannot be generalized beyond the five states included in the investigation or beyond unregulated child care providers. According to HHS administrative data, unregulated child care providers constituted roughly 19% of all providers receiving CCDF support in FY2010. In August 2010, prior to the release of the GAO report, HHS issued guidance regarding program integrity and financial accountability under CCDF. The program instruction provided state lead agencies with recommendations and resources for strengthening program integrity. It covered topics such as the verification and documentation of child and family eligibility, mechanisms for monitoring child care providers, and processes for recovering payments resulting from fraud. The program instruction also highlighted state responsibilities in conducting case records reviews to detect and reduce errors associated with eligibility determination, pursuant to the new regulation on state error rate reporting issued by HHS in September 2007. Following the enactment of the Improper Payment Information Act of 2002 ( P.L. 107-300 ), the Office of Management and Budget (OMB) identified CCDF as a program at risk of significant improper payments. As with other "high risk" programs, HHS was required to complete erroneous payment risk assessments for CCDF every three years. HHS took a number of steps to respond to this mandate, culminating in the publication of new regulations, effective October 1, 2007, on state requirements for error rate reporting. The new regulations specify that states must calculate, prepare, and submit to HHS a report of errors occurring in the administration of CCDF grant funds. In this report, states must establish target error rates (i.e., goals for reducing future errors) and discuss strategies for reducing error rates. In addition, states must report on state error rates (defined as the percentage of cases with an error and expressed as the total number of cases with an error compared to the total number of cases); percentage of cases with an improper payment (expressed as the total number of cases with an improper payment compared to the total number of cases); percentage of improper payments (expressed as the total amount of improper payments in the sample compared to the total dollar amount of payments made in the sample); average amount of improper payment; and estimated annual amount of improper payments. The CCDF error rate methodology requires that states conduct a comprehensive review of a random sample of case records to determine whether child care subsidies were properly authorized to eligible families. The methodology focuses on administrative errors and improper authorizations for payment made during the client eligibility determination process. States must conduct these reviews and report their findings to HHS once per every three-year reporting cycle. States are required to provide federal staff with access to, and the opportunity to participate and provide oversight in, case reviews and calculations of error rates. HHS uses a three-year rotation for measuring CCDF improper authorizations for payments. A stratified random sampling method was used for selecting states, with approximately one-third of the total of 52 states (50 states plus the District of Columbia and Puerto Rico) selected to participate in each year of a three-year cycle. CCDF error rate data are released annually by HHS in the department's Agency Financial Reports . Annual error rates actually represent three-year weighted national averages comprised of both over- and under-authorizations for payment. Most recently, HHS reported an FY2013 error rate of 5.9% ($306 million), down from 9.2% ($474 million) for FY2012. When netting out over- and under-payments, the net error rate for FY2013 was 5.0% ($260 million). Notably, the amount of improper authorizations for payment is not the same as actual improper payments rendered . HHS has indicated that, in general, the amount of actual improper payments rendered is about 17% lower, on average, than improper authorizations. Regulations state that improper payments identified during the case reviews are subject to federal disallowance procedures for misspent funds (that is, funds identified as having been improperly spent will be disallowed for the purposes of federal reimbursement). Improperly spent funds are subject to disallowance regardless of whether the state pursues recovery of such funds. Federal rules require states to recover improper child care payments that occur as the result of fraud. However, if the improper payment was not the result of fraud, as in cases of administrative error, federal rules give states discretion as to whether or not to recover misspent funds. Recovered funds may be used for activities specified in approved state plans, provided funds are recovered within the applicable obligation period. If, however, funds are not recovered until after the end of the applicable obligation period, recoveries must be returned to the federal government. In 2007, HHS published a final rule (effective October 1, 2007) that revised existing CCDF regulations on state match requirements. The purpose of the new rule was to increase state flexibility in making expenditures toward state CCDF match requirements. To this end, the rule amended requirements related to the use of public pre-kindergarten and privately donated funds. First, the final rule increased the amount of public pre-kindergarten expenditures that may be used as state match for CCDF. Previous regulations allowed that no more than 20% of a state's match requirement be fulfilled by public pre-kindergarten expenditures. Under the final rule, up to 30% of a state's CCDF match may come from public pre-kindergarten expenditures. Second, the rule amended requirements related to the use of privately donated funds. Prior to the new rule, CCDF regulations specified that privately donated funds would only qualify as state match for CCDF if they had been transferred to (or were under the control of) the state's lead agency or a single entity designated by the state to receive donated funds. The new rule amended previous regulations to permit states to designate multiple public and/or private entities as eligible to receive donated funds. However, the rule required that donated funds be certified by both (1) the state's lead agency for CCDF and (2) either the donor or the entity designated by the state to receive privately donated funds, as appropriate. In addition, the final rule maintained previous requirements related to private donations, which specify that such funds (1) must be donated without any restriction that would require their use for a specific individual, organization, facility, or institution; (2) may not revert to the donor's facility or use; (3) may not be used to match other federal funds; and (4) shall be subject to audit. Federal law specifies a set of data reporting requirements for states and territories administering CCDF programs. States and territories must submit quarterly reports to HHS with disaggregated data on children and families receiving CCDF assistance; aggregated data must be submitted to HHS annually. Federal law does not impose the same data reporting requirements on tribes and tribal organizations. However, federal regulations do require participating tribal lead agencies to submit aggregated data to HHS on an annual basis. Separately, the law also requires the Secretary of HHS to submit a report to Congress once every two years. This report is expected to contain a summary and analysis of the data submitted to HHS by lead agencies (including tribal lead agencies), as well as recommendations for Congress concerning efforts that should be undertaken to improve the access of the public to quality and affordable child care. The most recently released report to Congress is for both FY2006 and FY2007. Select program data and statistics for states and territories are available for FY1998 through FY2010 (preliminary) on the HHS website. Federal law specifically requires states and territories to collect, on a monthly basis, the following information on each family unit receiving assistance: family income; county of residence; gender, race, and age of children receiving assistance; whether the family includes only one parent; sources of family income, separately identified and including amounts; number of months the family has received benefits; the type of child care received; whether the child care provider was a relative; the cost of child care; and the average hours per week of care. States and territories report these disaggregated data to HHS on a monthly or quarterly basis (at grantee option), using the ACF-801 data collection form. HHS recently revised the ACF-801 to incorporate new data elements on child care providers, including unique provider identification numbers, quality rating scores, accreditation status, applicability of state or local pre-kindergarten standards, and other state quality measures. The revised data collection form was released for two rounds of public comments in 2011, before being finalized in spring 2012. The new form became mandatory for all states and territories beginning in October 2013. Separately, federal law requires states and territories to submit aggregated data to HHS every 12 months. The law requires these aggregated data reports to include the number of child care providers that receive funding under this program, separately identified by type; the monthly cost of child care services, and the portion that is subsidized by this program, identified by type of care; the number of payments made by the state through vouchers, contracts, cash, and disregards under public benefit programs, identified by type of child care provided; the manner in which consumer education information was provided and the number of parents to whom it was provided; and the total unduplicated number of children and families served by the program. States and territories submit these aggregated data to HHS annually on the ACF-800 form, which is due to HHS by December 31 st each year. Under the CCDBG Act, religious providers may receive assistance on the same basis as nonsectarian providers. However, religious providers may use funds for construction assistance, which is generally prohibited for other providers, to the extent such efforts are deemed necessary to bring facilities into compliance with health and safety requirements. Use of funds for religious activities, including sectarian worship or instruction, is generally prohibited under the CCDBG Act. However, this prohibition does not apply to funds received by child care providers in the form of child care certificates, if such sectarian child care services are freely chosen by the parent. Child care providers that receive CCDF funding may not discriminate in their admissions policy against a child on the basis of religion, with the exceptions of family child care providers (i.e., individuals who are the sole caregiver for children in a private home) or providers who receive assistance through child care certificates. However, sectarian providers may reserve unsubsidized slots for children whose families regularly participate in their organization's activities, unless 80% or more of their operating budget comes from federal or state funds, including child care certificates. In their employment practices, child care providers receiving assistance under the act may not discriminate on the basis of religion if the employee's primary responsibility is working directly with children in the delivery of child care services. However, in considering two or more qualified candidates, sectarian providers may select an individual who regularly participates in their organization's activities. In addition, sectarian organizations may require employees to adhere to their religious tenets or teachings and to rules forbidding the use of drugs or alcohol, unless 80% or more of their operating budget comes from federal or state funds, including child care certificates. The welfare reform law of 1996 ( P.L. 104-193 ) included a section on services provided by charitable, religious or private organizations under the TANF program. This provision also applies to child care services funded under TANF. The provision, commonly referred to as "charitable choice," is intended to allow states to provide services through charitable and religious organizations, without impairing the religious character of these organizations or the religious freedom of individuals who participate in the programs. The Secretary is required by law to reserve between 1% and 2% of all child care funds (both discretionary and mandatory), for payments to Indian tribes and tribal organizations. The Secretary is required to allocate among other tribes and organizations any funds that an Indian tribe or tribal organization does not use in a manner consistent with the statute. Indian tribes and tribal organizations are required to submit applications to receive these reserved funds. Applications must show that the organization seeking funds will coordinate with the lead agency in the state, that activities will benefit Indian children on reservations, and that reports and audits will be prepared. The Secretary, in consultation with the tribes and tribal organizations, bears the responsibility for developing minimum child care standards that reflect tribal needs and available resources that will apply in lieu of licensing and regulatory requirements otherwise applicable under state or local law. Notably, while the CCDBG Act generally prohibits use of funds for construction or renovation of facilities, the law does allow Indian tribes and tribal organizations to submit a request to the Secretary to use funds for these purposes. The Secretary may approve the request after a determination that adequate facilities are not otherwise available and that the lack of such facilities will inhibit the operation of child care programs in the future. The Secretary may not approve the request if it will reduce the level of child care services provided from the level provided by the tribe or organization in the previous year. A growing number of states use CCDF quality funds to create or support Quality Rating and Improvement Systems (QRIS). These systems are designed to assess, report, and improve the quality of early childhood programs. A QRIS can be used to rate providers against a set of measures selected to determine program quality. Data collected by a QRIS may be used to hold programs accountable for the quality of care they provide, to target technical assistance to programs in need of support, and to increase parental understanding of the quality of different child care programs. These systems often use simple three- or four-star rating scales to denote program quality on specific measures, such as child/staff ratios and staff credentials. While the key components (and benchmarks) of quality measured by QRIS can vary across states, five common elements of these systems include the following: Standards: Research-based indicators of quality in early childhood settings (e.g., health and safety requirements, staff qualifications, staff-child ratios). Standards are often linked to licensing and accreditation requirements. Accountability: Regular inspections are usually completed by trained observers. Research-based assessments such as an Environment Rating Scale (ERS) and the Classroom Assessment Scoring System (CLASS) may be used. Program Support: Providers may receive training, mentoring, or other forms of technical and financial assistance to encourage providers to participate in the rating system and to help their programs achieve higher levels of quality. Parent Education: Systems typically use simple rating scales (e.g., three- or four-star scales or a point-based scale) that are easily understood by parents seeking information on the quality of child care programs in their communities. Incentives: Financial incentives may be used to encourage providers to achieve higher levels of quality. These may include tiered subsidy reimbursement (i.e., paying a higher reimbursement rate to providers meeting higher standards of care), professional development grants to increase staff training and qualifications, and tax credits for parents who enroll children in rated programs. The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), appropriated $2.0 billion in discretionary child care funds in FY2009. Although the ARRA made these funds available for obligation through the end of FY2010, HHS opted to provide states with their full allocations from the ARRA in FY2009, nearly doubling discretionary CCDF allotments to states for that fiscal year. Table A-1 displays FY2009 CCDF allocations from all federal funding sources, including the funds allocated to states from the ARRA.
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The Child Care and Development Block Grant (CCDBG) provides subsidies to assist low-income families in obtaining child care so that parents can work or participate in education or training activities. Discretionary funding for this program is authorized by the Child Care and Development Block Grant Act of 1990 (as amended), which is currently due for reauthorization. Mandatory funding for child care subsidies authorized in Section 418 of the Social Security Act (sometimes referred to as the "Child Care Entitlement to States") is also due for reauthorization. In combination, these two funding streams are commonly referred to as the Child Care and Development Fund (CCDF). The CCDF is the primary source of federal funding dedicated solely to child care subsidies for low-income working and welfare families. The CCDF is administered by the Office of Child Care at the U.S. Department of Health and Human Services (HHS), and provides block grants to states, according to a formula, which are used to subsidize the child care expenses of working families with children under age 13. In addition to providing funding for child care services, funds are also used for activities intended to improve the overall quality and supply of child care for families in general. In recent years, both Congress and the Obama Administration have demonstrated an interest in reauthorizing or otherwise reforming the CCDF. On September 15, 2014, the House approved, by voice vote, the Child Care and Development Block Grant Act of 2014 (S. 1086, as amended). This bill would reauthorize the CCDBG Act through FY2020. It is an amended version of the CCDBG reauthorization bill (S. 1086, S.Rept. 113-138) that was approved by the Senate last March, by a vote of 96-2. Previously, in May 2013, HHS issued a proposed rule intended to overhaul existing regulations on the CCDF. A final rule has not yet been published. Discretionary child care funds are subject to the annual appropriations process. Congress did not enact FY2014 appropriations prior to the start of the fiscal year on October 1, 2013. This resulted in a funding gap and 16-day shutdown of the federal government. Subsequently, two short-term continuing resolutions (P.L. 113-46, P.L. 113-73) provided discretionary funding for the CCDBG until January 17, when the President signed into law a full-year consolidated appropriations act (P.L. 113-76). This law provided $2.360 billion in discretionary CCDBG funding for FY2014, which was reduced to $2.358 billion due to transfers within HHS. This funding level is about 7% more than the discretionary CCDBG's post-sequester FY2013 operating level of $2.206 billion and nearly 5% less than the FY2014 President's Budget request of $2.478 billion. Mandatory child care funds are not typically included in annual appropriation bills. Mandatory funds were directly appropriated (or pre-appropriated) for fiscal years 1997 through 2002 by the 1996 welfare reform law (P.L. 104-193), which created the mandatory component of the CCDF. Temporary extensions provided mandatory CCDF funding into FY2006. On February 8, 2006, a budget reconciliation bill was enacted into law (P.L. 109-171), increasing mandatory child care funding by $1 billion over five years (for a total of $2.917 billion for each of FY2006-FY2010). The authorization and pre-appropriations for mandatory child care funding were set to expire at the end of FY2010, but a series of six short-term extensions maintained mandatory child care funding at the same level ($2.917 billion) for FY2011-FY2013. Congress did not extend mandatory child care funding prior to the 16-day federal shutdown at the beginning of FY2014. However, mandatory child care funding has since been restored at the $2.917 billion level via temporary extensions, the most recent of which (in P.L. 113-76) provides mandatory child care funding through the end of FY2014.
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Casework in a congressional office refers to the response or services that Members of Congress provide to constituents who request assistance. Casework appears to be one of the more enduring representational activities; Members of Congress have been providing such service since the early years of the American republic. In contemporary times, thousands of constituents seek assistance annually from Members of Congress, with requests ranging from the simple to the complex. Members and their staffs help individual constituents deal with administrative agencies by acting as facilitators, ombudsmen, and, in some cases, advocates. Typical casework requests include the following: tracking a misdirected benefits payment; filling out a government form; applying for Social Security, veterans', education, and other federal benefits; explaining government activities or decisions; applying to a military service academy; seeking relief from a federal administrative decision; and seeking assistance for those immigrating to the United States or applying for U.S. citizenship. In addition to providing services to individual constituents, some congressional offices also consider their liaison activities between the federal government and local governments or businesses concerned about the effects of federal legislation or regulation to be casework. Other congressional offices may include interactions with communities and nonprofit organizations seeking federal grants or other assistance as casework. All congressional offices carry out some type of casework. As part of the process of determining how to carry out their congressional duties, Members of Congress determine the scope of their constituent service activities. As a consequence, the level and intensity of congressional casework may vary among Member offices. Casework is conducted for various reasons, including constituent demand and a broadly held understanding among Members and their staff that casework is integral to the representational duties of a Member of Congress. Others believe that casework activities can be part of an outreach strategy to build political support among constituents. Casework might also be seen by some as an evaluative stage of the legislative process. Some observers suggest that casework inquiries can provide Members of Congress with a micro-level view of executive agency activities, affording Members the opportunity to evaluate whether a program is functioning as Congress intended. Constituent inquiries about specific policies, programs, or benefits may also suggest areas in which programmatic or policy changes require additional institutional oversight, or further legislative consideration. One challenge to congressional casework is the widely held public perception that Members of Congress can initiate a broad array of actions resulting in a speedy, favorable outcome. The rules of the House and Senate, and laws and regulations governing federal executive agency activities, however, closely limit the extent of an intervention made on behalf of a constituent. When conducting casework, congressional staff cannot force an agency to expedite a case or act in favor of a constituent. Congressional staff may intervene to facilitate the appropriate administrative processes involved, encourage an agency to give a case consideration, and sometimes advocate for a favorable outcome. Subsequent sections of this report discuss House and Senate rules and guidelines, laws, and regulations affecting congressional casework, as well as the role of caseworkers. This report also provides sample outlines and document templates for establishing and managing congressional casework. Further casework materials are available at the CRS Casework Resources web page at http://crs.gov/resources/Pages/CS-Casework.aspx . Each chamber has rules and guidelines regarding its Members' casework activities. House rules regarding casework services are discussed in the House Ethics Manual . Senate Rule XLIII and the Senate Ethics Manual establish parameters for casework services in that chamber. In each chamber, at the request of a constituent or petitioner for assistance, a Member of Congress may do the following: request information or a status report; urge prompt consideration; arrange for interviews or appointments; express judgments; call for reconsideration of an administrative response that the Member believes is not reasonably supported by statutes, regulations, or considerations of equity or public policy; or perform any other service of a similar nature consistent with the provisions of the rules of the House or Senate. Senate Rule XLIII (3) prohibits the provision of casework assistance on the basis of contributions or services to organizations in which the Senator has a political, personal, or financial interest. Guidelines in the House Ethics Manual say that when contacting a federal agency on behalf of a constituent, a Member, officer, or employee of the House should not make prohibited, off the record comments, receive things of value for providing casework assistance, or improperly pressure agency officials. Finally, federal statute prohibits Members of Congress, chamber officers, and congressional staff from representing anyone before the federal government, except in the performance of their official duties. Casework is generally not something that draws Members of Congress or their staff, acting in their official capacity, into a proceeding before the courts. The Senate Ethics Manual describes constituent service as something that occurs in the executive branch and is silent on service before the courts. Guidelines in the House Ethics Manual provide a range of options to Members who might choose to participate in judicial proceedings. Decisions regarding staff employment in congressional offices rest with each Member of Congress, subject to applicable law and chamber rules. Some chamber administrative materials, such as the Member's Handbook (for the House) or the U.S. Senate Handbook (for the Senate), provide guidelines regarding what procedures must be followed to provide compensation, credentials, and general benefits such as health care and retirement programs to House or Senate employees. Those documents provide no guidance on how a congressional hiring entity might determine the necessity of, or criteria for, a position, or the fitness of an applicant for employment. Experienced congressional staff and other observers suggest that a successful congressional caseworker is primarily a problem solver. One study of congressional staff states that a "constituent services representative/caseworker" typically carries out the following duties: responds to casework inquiries from constituents; acts as a liaison with federal, state, and/or local agencies on behalf of constituents; acts as the grassroots representative for the Member within assigned areas of responsibility; and monitors and updates the Member and district director on district and local issues. To carry out their duties, congressional caseworkers typically communicate clearly with constituents about what can and cannot be done on their behalf; learn the laws and regulations affecting a constituent's case; build relationships with federal agency personnel; and serve as a neutral facilitator between the constituent and agency. No specialized training is required to become a congressional caseworker. Individuals who work as caseworkers come from a variety of backgrounds, including recently completed study or work experience in education, law, teaching, social work, political campaigns, government service, and the private sector. Observers suggest that most caseworkers enjoy working with people and have an interest in public service, but also note that the work can be challenging. Caseworkers typically learn the policies and procedures through which agencies operate to provide services or benefits, and work with constituents whose requests are sometimes made with a high level of personal and emotional engagement. Matters regarding the management of casework activities are at the discretion of individual congressional offices, subject to the rules of their respective chambers, relevant law, and the priorities of that office. Two laws, the Privacy Act of 1974 and the Health Insurance Portability and Accountability Act of 1996 (HIPAA), affect casework. The Privacy Act affects all constituents with casework inquiries that require interaction with a federal agency. HIPAA may affect constituents with casework inquiries that involve medical or other health-care information. These laws prevent a federal agency from sharing an individual's personally identifiable information with a congressional office without the individual's express permission. Each congressional office establishes its own policies and procedures regarding the provision of casework services. These are typically based on a number of factors, which may be weighed differently in each congressional office, and include the demands or needs of constituents for casework services; the type and nature of cases; the manner in which an office defines casework; office strategy for outreach, including decisions regarding the solicitation of casework; and Member priorities. Under the Privacy Act, each executive branch agency that maintains records containing an individual's personally identifiable information must have a release from that individual to share information with any other entity. In general, agencies cannot reply to a congressional inquiry without a Privacy Act release signed by the constituent requesting assistance. Most agencies will accept any signed document from a constituent stating that the constituent grants a Member of Congress access to any record held by an agency that will help resolve the constituent's inquiry. (Sample authorizations are included below.) Some agencies, however, issue their own forms and might prefer to have that form filed with them when a congressional office initiates a case inquiry. For example, the Internal Revenue Service (IRS) typically requests that congressional caseworkers ask constituents to return a signed copy of IRS form 8821, Tax Information Authorization. Constituent correspondence sent to a Member's office does not fall under the protections provided by the Privacy Act or any other statute safeguarding personally identifiable records. Nevertheless, due to the high probability of an expectation of privacy concerning these communications, and Member interest in maintaining the confidentiality of office activities, many congressional offices develop a policy for safeguarding the privacy of casework-related documents. Such a policy could include safeguarding casework correspondence and documentation in the office's physical and electronic files; securing electronic files through password protection and automatic backup procedures; and limiting access to casework correspondence files, including working drafts of correspondence, to office personnel. Rules promulgated under HIPAA give patients the right of access to their medical information and prohibit health plans and health-care providers from using or disclosing identifiable information to most individuals or entities without a patient's written authorization. Examples of constituent inquiries that might involve medical information include claims for benefits under the following programs: Social Security disability; veterans' programs; Medicare; disaster relief; medical services to military members injured on active duty, or to military members, their dependents, and retirees through TRICARE; workmens' compensation; and immigration. Some agencies have determined that congressional requests for medical information related to casework inquiries require a HIPAA release. HIPAA rules also require health plans and providers to give individuals the opportunity to object to the disclosure. Procedures for securing patient consent to release information or to provide information to third parties may vary from agency to agency. When medical or other health-care information must be released for a casework inquiry, the agency involved might accept a signed request from the constituent to the Member as a sufficient release, or it might forward a formal release form of its own design to the congressional office for endorsement by the constituent. Based on the priorities identified in individual congressional offices, many offices compile documentation to clarify policies related to casework. Such documentation could specify casework goals, management procedures, and expectations of staff. Having a manual or established protocol can help offices ensure consistency in their casework practices. This type of document is not required, and there is no congressional standard regarding its format or contents. All decisions regarding activities and operations in a Member's office are within the discretion of the Member, subject to chamber rules and relevant statute. Procedures are typically developed by modifying standardized outlines and protocols to a particular office, based on the priorities and goals of that office and the preferences and needs of the Member's constituents. The outline below suggests questions to help develop an office casework manual addressing those demands. Sample documents, which may be used in whole or in part, are also provided. This section of the manual could be where congressional offices explain their approach to constituent service. Information might include a consideration of the role of representation, casework as micro-level oversight, and political issues related to casework. This section could also explain the role of casework in relation to broader office goals and the caseworker's role in meeting those goals. Questions that might be addressed in this section include the following: What are the goals of the office? How does casework support or facilitate the achievement of those goals? Where does casework fit in terms of office priorities? This section could provide an overview of office organization and operations. Questions that might be addressed in this section include the following: What do caseworkers do? Will caseworkers work on specific agency/issue areas or will they all be generalists? Are caseworkers liaisons between the constituent and agency, or are they advocates for the constituent? Who supervises caseworkers? What is the extent of that supervision? To whom does that supervisor report? Where does casework fit in the office organization? This section could incorporate the rules and guidelines regarding casework of the House or Senate, as appropriate. Such documents could include Senate Rule XLIII and the Senate Ethics Manual , Chapter 8, "Constituent Services," available at http://ethics.senate.gov/downloads/pdffiles/manual.pdf , and the Ethics Manual for Members, Officers, and Employees of the U.S. House of Representatives ( House Ethics Manual ), Chapter 8, "Casework," available at http://ethics.house.gov/Media/PDF/2008_House_Ethics_Manual.pdf . In addition, this section could detail rules or procedures specific to the particular congressional office. Questions that might be addressed in this section include how to contact the Senate Ethics Committee or the House Ethics Committee, as appropriate; practices for storing casework records (paper-based and/or digital); a review of office security and personal safety procedures; and strategies for dealing with people who may be uncooperative, scared, angry, etc. Intake describes the process by which constituents request casework services and a congressional office prepares to respond. Intake procedures could define the information and materials needed from constituents, including the release of personal information under the Privacy Act of 1974 (sample forms below) and HIPAA, if necessary. Questions that might be addressed in developing procedures for the intake process include the following: Who is responsible in your office for intake (caseworkers, outreach or reception staff, everyone)? What training or protocols are necessary so that everyone charged with intake can do the job effectively? Will the office open a case file on the basis of a phone call, email, or a constituent visit to an office? How will case requests made during outreach and other public events be incorporated into the casework system? Does the office establish verification procedures to positively identify constituents? If so, what constitutes acceptable identification? What procedures must be established if constituents cannot produce appropriate documentation of their identity? What procedures might be necessary to obtain a privacy release from constituents who cannot read English or sign their own name? Will the office open a case on behalf of constituents represented by family members or other individuals who hold a power of attorney, or are legally appointed as a guardian to act on their behalf? Will the office open a case on behalf of a constituent represented by an attorney or other paid representative? If so, will the office work with the attorney, the constituent, or both? What procedures need to be in place to address potentially high-profile cases? How much time will the office allow between a constituent inquiry and a response by the office, such as an acknowledgment or a request for more information? How much time will the office allow for a constituent to reply to follow up? After that time has elapsed, will the office send a reminder letter or close the case file? How long will incomplete case files due to missing privacy release or other documentation from constituent remain active? What sort of casework/constituent correspondence management system (CMS) will be used? (Although a CMS likely has been chosen by the office, explain how it will be integrated, if at all, with casework management.) Who has access to the CMS for reviewing cases, updating records, and closing and archiving files? Following the intake process, it is generally necessary to determine the scope of the constituent's case and to set expectations between the caseworker and the constituent. Questions that might be addressed in developing procedures for working with constituents include the following: Will the office take original documents from constituents, or are copies sufficient? How will the office communicate with constituents? How will nonwritten contact be documented? How frequently will the office communicate with constituents to provide updates, status checks, or other information? How will the office communicate these expectations to the constituent? (See the samples below.) At the end of the intake process, it is necessary to identify and contact the appropriate agency to address the constituent's concerns. Many congressional offices maintain lists of the executive branch agencies they work with. If such lists are not available, preliminary information on agencies with congressional liaison offices can be obtained from Congressional Liaison Offices , at http://www.crs.gov/resources/liaisonoffices/ . Questions that might be addressed in developing procedures for working with executive branch agencies include the following: How much time will the office allow between establishing complete constituent information and contact with the agency? How much time will the office allow between initial agency contact and subsequent follow up? How much time will the office allow between receiving the agency's response and communicating the response to the constituent? What types of contacts (phone, email, written, face-to-face) are acceptable to make inquiries from the office and to receive responses from the agencies? Will individual caseworkers, a coordinator, or a supervisor maintain lists of agency contacts? In the event that the person responsible for maintaining those lists of contacts is not available, how will other staff contact the agencies? Is it necessary to establish specific protocols for working with individual agencies? (A list of agencies for which protocols might be developed is provided below.) A common concern regarding casework records is their maintenance while cases are open, and their disposition when cases are concluded. The House and Senate consider the records generated in a Member's office to be the personal property of the Member. As a consequence, policies regarding casework records are at the discretion of individual Member offices. The House Records Management Manual for Members notes that to "safeguard personal information, most Members will not transfer case files to a repository." The Manual notes that offices could keep permanently "reports summarizing the types of casework generated by the office as long as they contain no personal information about constituents (e.g., names or Social Security numbers)." When individual casework files are removed from office files, they "should be destroyed in a secure manner." In the Senate, records management guidelines suggest that all documents pertaining to a case should be kept together. Routine cases could be kept in the office as long as they are open, and for two years after they are closed, after which they may be destroyed. Cases that might be kept permanently include those with bearing on agency oversight or matters of interest to the Senator or state. Those records could be retained in the office as long as they are open, and for one year after they are closed, after which they may be transferred to an archival repository. Office casework manual. Chamber-appropriate ethics manual chapter on casework. Congressional Liaison Offices , at http://www.crs.gov/resources/liaisonoffices . Casework manuals and constituent services guides issued by the agencies for which the caseworker is responsible. Office-developed contact lists. Casework intake protocols. Instructions for accessing casework materials in physical or electronic files. Caseworker contact information. General agency contact information. Americans with Disabilities Act (ADA) Bankruptcy Child Support Consumer Credit Matters Copyright Information—Library of Congress Copyright Office Customs Department of Agriculture (USDA) Department of Commerce Department of Education (ED) Department of Health and Human Services (HHS) Department of Homeland Security (DHS) Department of Housing and Urban Development (HUD) Department of Justice (DOJ) Department of Labor (DOL) Department of State (DOS) Department of the Interior (DOI) Department of Transportation (DOT) Department of the Treasury (Treasury) Department of Veterans Affairs (VA) Environment Environmental Protection Agency (EPA) Equal Employment Opportunity Commission (EEOC) Federal Communications Commission (FCC) Federal Emergency Management Agency (FEMA) Federal Trade Commission (FTC) Flag Requests General Services Administration (GSA) Government Auctions Grants Greetings, Anniversary Greetings, Birthday Greetings, Marking Achievement Healthcare Healthcare, Military, Tricare Healthcare, Veterans' Home Mortgages Homeland Security/Federal Emergency Management Agency (FEMA) Homeland Security/Military, Coast Guard Housing Immigration Immigration, U.S. Citizenship and Immigration Services (CIS) Immigration, U.S. Immigration and Customs Enforcement (ICE) Information Requests, general Internal Revenue Service (IRS) Legal Issues Legislation, Constituent Opinion Legislation, Constituent Proposals Medicare Medicare Part A Medicare Part B Medicare, Part D, Prescription Drug Coverage Military/Homeland Security, Coast Guard Military/National Guard, Air Force Military/National Guard, Army Military/National Guard, Navy Military/Marine Corps Mortgages National Forests Office of Personnel Management (OPM) Passports Patent Information Patent and Trademark Office Post Office Prisons Rural Development Scheduling Service Academy Appointments Service Academy Appointments, U.S. Air Force Academy (Colorado Springs) Service Academy Appointments, U.S. Coast Guard Academy (New London) Service Academy Appointments, U.S. Merchant Marine Academy (King's Point) Service Academy Appointments, U.S. Military Academy (West Point) Service Academy Appointments, U.S. Naval Academy (Annapolis) Small Business Administration (SBA) Social Programs Social Security Student Education Financing Student Loans Travel Tricare U.S. Citizenship and Immigration Services (CIS) U.S. Customs and Border Protection (CBP) U.S. Immigration and Customs Enforcement (ICE) Unemployment United States Forest Service Veterans' Clinic Veterans' Hospitals Veterans' Services Veterans' Service Organizations (VSO) Visas/Entry Permits, Education Visas/Entry Permits, Emergency Visas/Entry Permits, Work Washington Visitors CRS In Focus IF10503, Constituent Services: Overview and Resources Congressi onal Liaison Offices , at http://www.crs.gov/resources/liaisonoffices CRS Video WVB00093, Introduction to Congressional Casework CRS Report RL33209, Casework in a Congressional Office: Background, Rules, Laws, and Resources CRS Report R44696, Casework in Congressional Offices: Frequently Asked Questions CRS Report CASEWORK, Constituent Services: Casework , Webpage, available at http://www.crs.gov CRS Report RL32113, Congressional Intervention in the Administrative Process: Legal and Ethical Considerations CRS Report RL33213, Congressional Nominations to U.S. Service Academies: An Overview and Resources for Outreach and Management CRS Report RS20500, Medical Records Privacy: Questions and Answers on the HIPAA Rule CRS Report RS22450, Procedural Analysis of Private Laws Enacted: 1986-2015 Sample Constituent Guide/Newsletter Piece/Outreach Handout Initial Correspondence with Constituents Opening a Case Simple Privacy Act Release Form Sample Privacy Act and HIPAA Release Form Case Information and Privacy Act Release Form Response Correspondence 1: Completed Response from Agency Response Correspondence 2: Partial/Interim Response from Agency
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In a congressional office, the term casework refers to the response or services that Members of Congress provide to constituents who request assistance. Each year, thousands of constituents turn to Members of Congress with a wide range of requests, from the simple to the complex. Members and their staffs help constituents deal with administrative agencies by acting as facilitators, ombudsmen, and, in some cases, advocates. In addition to serving individual constituents, some congressional offices also consider as casework liaison activities between the federal government and local governments, businesses, communities, and nonprofit organizations. Members of Congress determine the scope of their constituent service activities. Casework is conducted for various reasons, including a broadly held understanding among Members and staff that casework is integral to the representational duties of a Member of Congress. Casework activities may also be viewed as part of an outreach strategy to build political support, or as an evaluative stage of the legislative process. Constituent inquiries about specific policies, programs, or benefits may suggest areas where government programs or policies require institutional oversight or legislative consideration. One challenge to congressional casework is the widely held public perception that Members of Congress can initiate a broad array of actions resulting in a speedy, favorable outcome. The rules of the House and Senate, and laws and regulations governing federal executive agency activities, however, closely limit interventions made on the behalf of constituents. When performing casework, congressional staff cannot force an agency to expedite a case or act in favor of a constituent. However, congressional staff can intervene to facilitate the appropriate administrative processes, encourage an agency to give a case consideration, and sometimes advocate for a favorable outcome. This report discusses House and Senate rules and guidelines, laws, and regulations affecting congressional casework, as well as the role of caseworkers. It also provides sample outlines and document templates for implementing and managing congressional casework. Further casework materials are available at the CRS Casework Resources web page at http://crs.gov/resources/Pages/CS-Casework.aspx.
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Estimates of the number of Muslims in Europe vary widely, depending on the methodology and definitions used, and the geographical limits imposed. Excluding Turkey and the Balkans, researchers estimate that as many as 15 to 20 million Muslims live on the European continent. Muslims are the largest religious minority in Europe, and Islam is the continent's fastest growing religion. Substantial Muslim populations exist in Western European countries, including France, Germany, the United Kingdom, Spain, Italy, the Netherlands, and Belgium. Most Nordic and Central European countries have smaller Muslim communities. Europe's Muslim population is ethnically and linguistically diverse; Muslim immigrants hail from Middle Eastern, African, and Asian countries, as well as Turkey. Many Muslim communities have their roots in Western European labor shortages and immigration policies of the 1950s and 1960s that attracted large numbers of North Africans, Turks, and Pakistanis especially. In recent years, there have been influxes of Muslim migrants and political refugees from other regions and countries, including the Balkans, Iraq, Somalia, and the West Bank and Gaza Strip. Historically, European countries have pursued somewhat different policies with respect to managing their immigrant and minority populations. However, none has been completely successful. A disproportionately large number of Muslims in Europe are poor, unemployed, or imprisoned, and many feel a sense of cultural alienation and discrimination. For decades, countries such as Germany, Austria, and Switzerland viewed Muslim immigrants as temporary "guest workers." As a result, little effort was made at integration, and parallel societies developed. Britain and the Netherlands embraced the notion of multiculturalism—integration while maintaining identity—but in practice, this concept helped entrench discrete Muslim communities, functioning apart from the culture of the host country. Nor has France's assimilation policy prevented the segregation of its Muslim communities, as seen most vividly in the riots that erupted throughout France in the fall of 2005 in working class suburbs populated largely by North Africans. The protests in several European cities in early 2006 sparked by the publication in European newspapers of cartoons of the prophet Muhammad also highlight the disaffection and alienation that many European Muslims feel. Although the vast majority of Muslims in Europe are not involved in radical activities, Islamist extremists and fringe communities that advocate terrorism exist and reportedly have provided cover for terrorist cells. Europe's largely open borders and previously non-existent or lax terrorism laws have also allowed some Islamist terrorists to move around freely. Following the September 11, 2001 attacks on the United States, Germany and Spain were identified as key planning bases; numerous terrorist arrests were also made in Belgium, France, Italy, and the UK. The March 11, 2004, bombings of commuter trains in Madrid, Spain that killed 191 people were carried out by an Al Qaeda-inspired group of North Africans, mostly Moroccans resident in Spain. Even before terrorists struck London's mass transport system in July 2005, many analysts believed that the UK had become a breeding ground for Islamist extremists. Radical mosques in London apparently indoctrinated Richard Reid, the airplane "shoe bomber," and Zacarias Moussaoui, the "20 th " September 11 hijacker. UK authorities have named four young British Muslims as the perpetrators of the July 7, 2005 London attacks that killed 52 people, plus the four bombers, and injured over 700. Three of the alleged bombers were of Pakistani descent and had recently traveled to Pakistan, where some suspect they received terrorist training from remaining Al Qaeda operatives. On July 21, 2005, four Muslim immigrants tried but failed to set off four other explosions on London's metro and bus lines; no casualties resulted. And in August 2006, British police arrested several British Muslims suspected of involvement in a plot to detonate liquid explosives on airliners flying from the UK to the United States. Nationals aligning their beliefs with Al Qaeda or radical Islam are not unique to Europe. The United States has captured or identified several U.S. citizens with similar views in the course of the fight against terrorism. However, some assert that the failure of European governments to fully integrate Muslim communities into mainstream society leaves some European Muslims more vulnerable to extremist ideologies. Many experts say that some European Muslim youth, many of whom are second or third generation Europeans, feel disenfranchised in a society that does not fully accept them; they appear to turn to Islam as a badge of cultural identity, and are then radicalized by extremist Muslim clerics. Traditionally liberal asylum and immigration laws in Western Europe, as well as strong free speech and privacy protections, have attracted numerous such clerics and Middle Eastern dissidents. Some experts also believe that the recent wars in Afghanistan and Iraq have radicalized more European Muslims, and strengthened terrorist recruitment efforts. Many European Muslims claim common cause with suffering brethren in the Israeli-occupied Palestinian territories, as well as in Iraq, Chechnya, and elsewhere. They tend to view the "war on terrorism" as a war on Islam, and perceive an unjust double standard at work in the foreign policies of many European governments, especially those that supported the U.S.-led war in Iraq. Before being captured in September 2005, Al Qaeda training camp manager Abu Musab al-Suri noted in a communique that he had overseen the training of both Arab and non-Arab Muslims, including some individuals born or raised in Britain, the United States, and other Western countries. Al-Suri called upon the mujahideen in Europe to act quickly and strike the UK, the Netherlands, Italy, Denmark, Germany, France, and other countries with a military presence in Iraq, Afghanistan, or on the Arabian peninsula. Media reports indicate instances of French Muslim teenagers being recruited to fight in Iraq; German, Italian, and Spanish law enforcement authorities also report that they have disrupted efforts by Islamist extremists to recruit European youths for Iraq. In November 2005, a Belgian woman and convert to Islam blew herself up in an attempted suicide attack on U.S. forces in Iraq. Some analysts suggest that religious converts to Islam may be more susceptible to radicalization as a result of a mistaken desire to prove themselves in their new faith. Others note that Europe's physical location—within a few days driving distance to Iraq or Chechnya—makes it vulnerable to fighters returning from conflict zones who have either European roots or are unable to return to their countries of origin. Press reports suggest that Iraqis and others tied to the insurgency have been active in Europe. In December 2004, German authorities arrested three Iraqis suspected of plotting to assassinate the interim Iraqi prime minister during a visit to Berlin; the three Iraqis allegedly belong to Ansar al-Islam, which has organized strikes against U.S. troops and others in Iraq. In January 2006, a German court convicted an Iraqi man of both recruiting young men for the Iraqi insurgency and smuggling extremists from Iraq into Germany, Britain, and other European countries. Central and Eastern Europe has not been reported to be as important a haven for Al Qaeda and other terrorist groups; most countries in the region have not attracted significant numbers of Muslim immigrants. However, concerns have been raised about several countries in Southeastern Europe with large Muslim populations (e.g., Bosnia-Herzegovina). One legacy of the 1992-1995 war in Bosnia is the presence of Islamist fighters from other countries who stayed behind and became Bosnian citizens. Some Islamic charities that proliferated during and after the war reportedly served as Al Qaeda money-laundering fronts. Terrorist groups have also operated from Albania. At the same time, opposition to terrorism among indigenous Muslims in the Balkans has been strong. Most view themselves as part of Europe and are grateful for the U.S. role in defending them against Serbian aggression in the 1990s. U.S. officials say that efforts by Islamist extremists to recruit local Muslims have met with limited success, and they praise these countries' anti-terrorism efforts, especially after September 11. Nevertheless, some experts assert that Central and Southeastern Europe may pose a more significant threat than often acknowledged. The region's weak governing institutions and problems with organized crime and corruption may make it vulnerable to infiltration by terrorist groups. Observers caution that the Balkans in particular may play a role as a transit point for terrorists, a target area for recruitment, and a potential source of weapons or explosives. The November 2004 murder of Dutch filmmaker Theo van Gogh brought the issue of Islamist extremism in Europe to the forefront of European political debate. Van Gogh, an outspoken critic of the treatment of women in Islam, was killed by a 27-year-old Dutch citizen of Moroccan descent and a follower of radical Islam. Since the murder, many European officials and social commentators have proclaimed that multiculturalism in Europe has failed, and called for greater integration of Muslims and other immigrants into mainstream European society. They believe that Muslims and others must embrace the native cultures of their new countries, including secularism. Some European governments have been pursuing initiatives aimed at fostering integration and promoting secularism for several years. The French government, for example, has banned "conspicuous" religious symbols in public schools, including headscarves for Muslim girls, yarmulkes, and large crucifixes. Moderate Muslim groups in France supported the ban as a means to reduce tensions in the school system and in broader society. The UK is introducing new citizenship classes to ensure that immigrants can speak English and understand British history and culture. Other analysts say that countries such as Spain, Italy, and Germany need to do more to encourage Muslim immigrants to become citizens. Some European governments are trying to encourage moderate Muslim political voices and promote a greater role for them. Commentators note, for example, that there are few Muslim representatives in European parliaments. In 2003, Paris established an elected French Council of the Muslim Faith, an official advisory body that acts as the Muslim community's representative in dealings with the French government. French and British officials are also looking at ways to foster "homegrown imams" to minister to the needs of their Muslim communities, rather than relying on foreign imams whom they claim are often unfamiliar with the West or beholden to foreign interests. The Netherlands has reportedly created an "imam buddy system" that links foreign imams with Dutch volunteers to promote a better understanding among these imams of Dutch culture and society. Others argue that greater focus should be placed on addressing the lack of jobs and educational opportunities for Muslims, as well as racism. They say that racial violence against Muslims is on the rise in some European countries, such as the Netherlands, but governments have failed to acknowledge the scale of the problem. Several analysts suggest that mainstreaming Muslims into European society would not necessarily translate into an embrace of European ideals; some even question whether Islam itself is compatible with European political principles and values. They point out, for example, that two British Muslim suicide bombers in Israel in April 2003 were from comfortable middle-class, Westernized suburbs. Some Muslim groups in Europe say that certain efforts toward integration, such as the French headscarf ban, are counterproductive and only serve to increase the sense of discrimination among Muslims. In the wake of the London bombings, the UK government is consulting with British Muslims on how to best tackle extremism. Some Muslim leaders argue that Muslim communities must be more vocal against extremism, and actively counter rather than tolerate radical preachers. European governments have also sought to contain Islamist extremists and counter terrorists by tightening security measures and reforming immigration and asylum laws. UK and French security services have reportedly increased their monitoring of mosques; Germany has changed its laws to allow authorities to investigate religious groups; and France and Italy have expelled some Muslim clerics for hate crimes. Following the London attacks in 2005, the British government has sought to make it easier to exclude or deport foreign individuals who incite hatred. Also notable are European Union (EU) efforts to boost police and judicial cooperation, enhance intelligence-sharing, and strengthen external EU border controls. Security and border control services in new EU members in Central and Eastern Europe, although not quite as effective as their Western counterparts, are also improving as they seek to meet EU standards. In addition, the EU has been working to encourage good integration practices among its 27 member states and prevent radicalization. Law enforcement challenges remain throughout Europe, as elsewhere. Long-standing traditions against intelligence-sharing, rivalries among the various local and national security services, and different national laws continue to impede more robust EU cooperation. For example, full implementation of the EU-wide arrest warrant has been slowed in Poland and Cyprus because of court rulings that found the warrant incompatible with constitutional bans on extraditing their own nationals. European governments are also struggling with balancing their efforts to curtail Islamist extremists against well-established civil liberty protections, strong privacy rights, and democratic ideals. U.S. officials have expressed concerns since the 2001 terrorist attacks that Europe might be a launching point for future attacks on the United States and U.S. interests abroad. The Bush Administration and Members of Congress have welcomed European initiatives to curtail Islamist extremism and improve U.S.-EU counterterrorism cooperation in the hopes that such efforts will ultimately help root out terrorist cells in Europe and beyond. The United States and the EU have been placing increasing emphasis on cooperation in the areas of intelligence-sharing, border control, and transport security. Among other initiatives, the two sides have concluded agreements to improve container security and exchange airline passenger information. Nevertheless, some challenges remain; for example, differences persist in U.S.-EU data protection regimes and, at times, have complicated closer cooperation on travel security. Some terrorism experts and Members of Congress remain concerned about the U.S. Visa Waiver Program (VWP), despite steps taken to tighten passport requirements for participating countries. The VWP allows more than 15 million people a year short-term visa-free travel to the United States from 27 countries, most of which are in Europe. The VWP has become a sticking point in U.S.-EU relations; the EU would like the VWP to be extended to all EU members (currently 12 are excluded due to problems meeting U.S. immigration laws). Some Members of Congress oppose expanding or even continuing the VWP, noting that Islamist terrorists who hold European citizenship have entered the United States on the VWP (UK-born Richard Reid and French citizen Zacarias Moussaoui being two notable examples). Also, stolen passports from VWP countries are prized travel documents among terrorists, criminals, and immigration law violators, creating an additional risk. Other Members are more supportive of extending the VWP to new EU members, mostly in central and eastern Europe, given their roles as U.S. allies in NATO and in the fight against terrorism. Some experts also caution that eliminating or curtailing the VWP could impede transatlantic tourism and commerce. Some analysts contend that the presence of large Muslim communities in Europe may also be influencing the policy preferences of some European governments on contentious Middle East issues and contributing to U.S.-European divisions. They argue that Europe's growing Muslim population has made some European officials more cautious about supporting U.S. policies that risk inflaming their own "Muslim streets." They suggest that this is one reason why countries such as France and Germany opposed the U.S.-led war in Iraq. Meanwhile, Europe's struggle with its own identity as it grapples with integrating Muslims into European society has called into question Turkey's long-term EU prospects. Washington has long advocated EU membership for Turkey, a country of 70 million Muslims, as a way to anchor this strategic ally firmly in the West and debunk the notion of a clash of civilizations between Islam and the West.
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Although the vast majority of Muslims in Europe are not involved in radical activities, Islamist extremists and vocal fringe communities that advocate terrorism exist and reportedly have provided cover for terrorist cells. Germany and Spain were identified as key logistical and planning bases for the September 11, 2001 attacks on the United States. The March 2004 terrorist bombings in Madrid have been attributed to an Al Qaeda-inspired group of North Africans. UK authorities have named four British Muslims as the perpetrators of the July 2005 terrorist attacks on London; in August 2006, British law enforcement arrested several British Muslims suspected of plotting to blow up airliners flying from the UK to the United States. This report provides an overview of Islamist extremism in Europe, possible terrorist links, European responses, and implications for the United States. It will be updated as needed. See also CRS Report RL31612, European Counterterrorist Efforts: Political Will and Diverse Responses in the First Year After September 11, by [author name scrubbed] (pdf), and CRS Report RL33166, Muslims in Europe: Integration in Selected Countries, by [author name scrubbed] et al.
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Ongoing U.S. military operations against the Islamic State (which formerly referred to itself as the Islamic State of Iraq and the Levant, and is also commonly referred to as IS, ISIS, or ISIL) raise issues concerning the allocation of war powers between Congress and the President, including whether such operations have been (or are required to be) authorized by an act of Congress. In August 2014, President Obama ordered U.S. forces to commence airstrikes against IS targets in Iraq to assist the Iraqi government in combating the insurgent force, protect U.S. military and nonmilitary personnel in Iraq, and support certain humanitarian operations. On September 10, 2014, President Obama announced the pursuit of a strategy to "degrade and ultimately destroy" the Islamic State, including through the possible initiation of U.S. airstrikes against IS forces located in neighboring Syria. On September 23, 2014, the United States began airstrikes in Syria targeting IS forces and certain other groups within that country believed to be affiliated with Al Qaeda. The capture of significant portions of Iraqi territory in June 2014 by the Islamic State prompted significant military operations by U.S. forces in Iraq for the first time in more than three years. Between March 2003 and the end of 2011, the U.S. military forces had been deployed in Iraq first to remove the Saddam Hussein regime from power and then to assist the nascent post-Saddam government in responding to threats to the country's stability. Following the expiration of the U.S.-Iraq Security Agreement at the end of 2011, offensive U.S. military operations in Iraq were terminated and most U.S. forces were withdrawn from the country. In the wake of the successful offensive in northern and central Iraq by IS forces in June 2014, however, the Iraqi government requested U.S. assistance in responding to advancing IS forces, including through airstrikes. Shortly thereafter, the United States deployed military personnel to collect intelligence and logistical information regarding IS activities, advise Iraqi security forces, and bolster protection for U.S. personnel and facilities within Iraq. In early August, President Obama authorized U.S. forces to begin limited airstrikes against IS forces to stop further advances and to protect U.S. military and nonmilitary personnel, including those providing humanitarian assistance to Iraqi civilians trapped by IS-led forces on the Sinjar Mountain. A week later, President Obama authorized additional airstrikes to assist Iraqi forces in recapturing the Mosul Dam from IS forces. U.S. airstrikes were subsequently authorized in support of an operation to deliver humanitarian assistance to civilians located in the town of Amirli and to prevent an IS offensive against the Haditha Dam in Anbar Province. Continuing activities by the Islamic State, including the group's apparent responsibility for the execution of two U.S. journalists, led some policy makers to consider the possibility of expanding the scope of U.S. military action against the group, including potentially targeting IS forces located in Syria. In a public address on September, 10, 2014, President Obama announced the pursuit of a strategy to "degrade and ultimately destroy" the Islamic State, including through the escalation of U.S. airstrikes of IS forces in Iraq, as well as the possible initiation of U.S. airstrikes against IS forces located in neighboring Syria. On September 23, 2014, the United States began airstrikes in Syria targeting IS forces and the Khorasan Group, which is believed to be an element of Al Qaeda. Initially, the Obama Administration cited the President's authority under Article II of the Constitution as the legal basis for U.S. operations against the Islamic State. More recently, however, the Administration has claimed that the 2002 Authorization for Use of Military Force Against Iraq (2002 Iraq AUMF; P.L. 107-243 ) and the 2001 Authorization for Use of Military Force (2001 AUMF; P.L. 107-40 ) confer congressional authorization for military operations against the Islamic State. Some observers and Members of Congress have expressed disagreement with this interpretation, though it is unclear whether any dispute over application of these statutes to the Islamic State would give rise to a cognizable claim that would be resolved by the courts. As of the date of this report, Congress has not enacted legislation specifically authorizing U.S. force against the Islamic State. As part of the Continuing Appropriations Resolution, 2015 (2015 CR, P.L. 113-164 ), which was signed into law on September 19, 2014, Congress authorized the President to arm and train vetted elements of Syrian opposition groups, including for purposes of deterring attacks on the Syrian populace by the Islamic State, but the legislation expressly provides that it does not constitute statutory authorization for the introduction of U.S. forces into actual or imminent hostilities. Legislative proposals have been introduced, including H.Con.Res. 105 , passed by the House in July, and provisions within the House-passed version of the Department of Defense Appropriations Act, 2015 ( H.R. 4870 ), which appear intended to constrain the executive's ability to engage in certain types of military action in Iraq or Syria without congressional authorization. Other legislative proposals have been introduced that would expressly authorize the use of military force against the Islamic State, though in some instances these authorizations would limit the ability to deploy ground troops into combat operations, or would authorize force only for a limited period. This report addresses select legal questions raised by the use of military force against the Islamic State. Questions addressed in this report include potential sources (and limitations) of presidential authority to use military force against the Islamic State assuming the absence of express congressional authorization; the potential relevance of the 2002 Iraq AUMF, the 2001 AUMF, and the Continuing Appropriations Resolution, 2015 (2015 CR, P.L. 113-164 ); the constraints imposed by the War Powers Resolution upon U.S. military action that has not been authorized by Congress; and the applicability of the United Nations Charter to ongoing U.S. military strikes in Iraq and Syria. The report will be updated as warranted by events. Many of the legal issues discussed in this report concerning congressional oversight of U.S. military action are addressed in greater detail in CRS Report R41989, Congressional Authority to Limit Military Operations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. Further discussion regarding U.S. operations against the Islamic State in Iraq and Syria can be found in CRS Report R43612, The "Islamic State" Crisis and U.S. Policy , by [author name scrubbed] et al.; Iraq Crisis and U.S. Policy , by [author name scrubbed] et al.; and CRS Report RL33487, Armed Conflict in Syria: Overview and U.S. Response , coordinated by [author name scrubbed]. Until recently, the executive branch cited only to the President's independent authority under Article II of the U.S. Constitution as the legal basis for the military action taken against the Islamic State. Some observers and lawmakers questioned whether some or all of these actions are lawful without congressional authorization, and some wonder whether or at what point further military action would require express congressional approval. While the Executive has recently claimed that the 2001 AUMF and 2002 Iraq AUMF provide statutory authorization for military action against the Islamic State, questions remain as to whether the President possesses independent authority to order the use of force against the group even if these statutes are deemed to be inapplicable or are subsequently repealed or narrowed by legislation. The Constitution divides authority between Congress and the President on matters of war and the use of military force. Under Article I, Section 8, Congress has the power to declare war, tax and spend for the common defense, provide for the army and navy, make rules regulating the Armed Forces, and make rules concerning captures. Additionally, Congress has authority to make all laws "necessary and proper" for carrying out not only its own powers under Article I, Section 8 but also all of the powers vested by the Constitution in the executive and judicial branches as well. On the executive side, the Constitution vests the President with the "executive Power," and appoints him "Commander in Chief of the Army and Navy of the United States," and bound to "take Care that the Laws be faithfully executed." He is also required by oath to "faithfully execute the Office of President of the United States," and, to the best of his "Ability, preserve, protect and defend the Constitution of the United States." Although not explicitly made plain by the Constitution, he is also understood to be primarily responsible for carrying out the country's foreign affairs. The circumstances when the executive may order the use of force without congressional authorization have been the subject of long-standing inter-branch and scholarly debate. The executive has long asserted that the President has independent authority to conduct at least some military operations in the absence of an authorizing act of Congress, including protecting U.S. persons abroad (and possibly foreign nationals, as well), repelling attacks against the United States or its military forces, or defending a "national interest" of the United States. In legislative enactments, however, Congress has characterized the President's independent constitutional authority to introduce U.S. forces into hostilities as being significantly more limited in scope. Notably, the War Powers Resolution of 1973 declares Congress's view that The constitutional powers of the President as Commander-in-Chief to introduce United States Armed Forces into hostilities, or into situations where imminent involvement in hostilities is clearly indicated by the circumstances, are exercised only pursuant to (1) a declaration of war, (2) specific statutory authorization, or (3) a national emergency created by attack upon the United States, its territories or possessions, or its armed forces. Although U.S. courts have occasionally found the exercise of military power to be impermissible when it is found to exceed or conflict with relevant statutory authority, there has been little jurisprudence concerning the scope of presidential authority to order the use of force when Congress has neither expressly authorized nor prohibited military action. A determination of the permissibility of military action that has not been authorized by Congress may require consideration of Congress's will towards the President's action and an assessment of how the Constitution allocates the asserted power between Congress and the President. When the allocation of power between the executive and legislative branches is unclear, Congress's support for, or "inertia, indifference, or quiescence" to executive action, may be relevant to an assessment of the action's constitutional validity. In Dames & Moore v. Regan , the Supreme Court assessed the legality of presidential actions which fall within the "zone of twilight in which [the President] and Congress may have concurrent authority, or in which its distribution is uncertain." In such circumstances, the Court indicated that the validity of the President's action may depend on consideration of all circumstances which shed light on the views of the legislative branch towards the action. In Dames & Moore , the petitioners challenged an executive order by President Carter to establish regulations furthering compliance with the terms of a claim-settling executive agreement with Iran. Congress had not expressly authorized these measures via statute. Nonetheless, the Court found that Congress's historical treatment of similar matters had evidenced intent to accord the President broad discretion to act on the matter: Although we have declined to conclude that [the relevant statute] directly authorizes the President's suspension of claims for the reasons noted, we cannot ignore the general tenor of Congress' legislation in this area in trying to determine whether the President is acting alone or at least with the acceptance of Congress. As we have noted, Congress cannot anticipate and legislate with regard to every possible action the President may find it necessary to take or every possible situation in which he might act. Such failure of Congress specifically to delegate authority does not, "especially ... in the areas of foreign policy and national security," imply "congressional disapproval" of action taken by the Executive. On the contrary, the enactment of legislation closely related to the question of the President's authority in a particular case which evinces legislative intent to accord the President broad discretion may be considered to "invite" "measures on independent presidential responsibility." At least this is so where there is no contrary indication of legislative intent and when, as here, there is a history of congressional acquiescence in conduct of the sort engaged in by the President. The Court "has been careful to note that past practice does not, by itself, create power." However, in at least some instances, it appears that a history of congressional acquiescence to long-standing presidential practice in a particular field "may be treated as a gloss on 'Executive Power' vested in the President." In the case of military affairs, the executive has argued that there has been a "historical pattern of presidential initiative and congressional acquiescence" to the use of military force in certain situations where statutory authorization has not been given. Accordingly, the executive may claim that congressional inaction in this realm is entitled to a greater degree of legal significance than congressional acquiescence to executive action in another field. The executive branch, while taking the view that not all military action requires congressional authorization, has acknowledged that action of a certain intensity requires the approval of Congress (at least when such action is not done to defend the country from attack, etc.). In a 2011 opinion from the Department of Justice's Office of Legal Counsel concerning the legality of military action in Libya, for example, it was alleged that [T]he historical practice of presidential military action without congressional approval precludes any suggestion that Congress's authority to declare war covers every military engagement, however limited, that the President initiates. In our view, determining whether a particular planned engagement constitutes a "war" for constitutional purposes instead requires a fact-specific assessment of the "anticipated nature, scope, and duration" of the planned military operations. This standard generally will be satisfied only by prolonged and substantial military engagements, typically involving exposure of U.S. military personnel to significant risk over a substantial period. The executive's characterization of its constitutional authority to act militarily in the absence of congressional authorization, including whether congressional inaction constitutes "acquiescence" to presidential assertions of independent authority, has been criticized by some observers and Members of Congress. However, U.S. courts have not yet found the opportunity to consider the validity of these claims, in part because challenges to military actions that have not been unauthorized by Congress have typically been dismissed on procedural grounds without the reviewing court reaching the merits of the litigants' claims. Until recently, the Obama Administration had not cited to the 2002 Iraq AUMF in public statements concerning the legal basis for military action against the Islamic State. Indeed, shortly after the deployment of U.S. military forces to Iraq to provide logistical and other support to Iraqi security forces (but prior to the commencement of U.S. airstrikes against the Islamic State), the White House reaffirmed its support for the repeal of the 2002 Iraq AUMF. However, in a congressional notification submitted on September 23, 2014, the Administration cited to the 2002 Iraq AUMF as providing statutory authorization for at least some aspects of U.S. operations against the Islamic State in Iraq and Syria. Nonetheless, some have questioned whether the 2002 Iraq AUMF could be construed to provide statutory authorization for U.S. military action against the Islamic State and other security threats presently located in Iraq. The 2002 Iraq AUMF was enacted in response to the perceived threat posed by the regime of Saddam Hussein, and in particular the prospect that Iraq had or was acquiring weapons of mass destruction. However, the operative clauses of the 2002 law do not specifically refer to the Hussein regime. Rather, the authorizing language of the 2002 Iraq AUMF permits the President to use U.S. Armed Forces in certain specified instances, including to "defend the national security of the United States against the continuing threat posed by Iraq.... " Arguably, this language could be construed to cover any threat to U.S. national security interests posed by a new crisis in Iraq, even after the removal of the Hussein regime and the establishment of a new Iraqi government. Because the 2002 Iraq AUMF does not specifically define what constitutes a "threat" to the "national security of the United States," the statute arguably affords the President a fair degree of discretion in assessing the meaning and application of those terms. It might be possible, therefore, for some to argue that the IS insurgency, by threatening to impose a new government in Iraq at odds with U.S. interests, makes Iraq once again a direct threat to U.S. security. Accordingly, it might be argued that the operative language of the 2002 Iraq AUMF confers authority on the President to use force to respond to this threat. On the other hand, the context in which the 2002 Iraq AUMF was enacted, along with language found in the act's nonoperative clauses which reference the "current Iraqi regime," could be cited in opposition to arguments that the 2002 Iraq AUMF authorizes U.S. military action over a decade after Saddam Hussein's regime had been deposed. Moreover, the withdrawal of most U.S. forces from Iraq and the cessation of offensive military activities at the end of 2011 following the termination of the U.S.-Iraq Security Agreement, along with subsequent statements by White House officials that the 2002 Iraq AUMF is not used for current U.S. activities, provide grounds for interpreting the enactment as not being relevant to U.S. military action against non-government actors operating in Iraq in 2014. If the 2002 Iraq AUMF is interpreted to cover the IS threat in Iraq, it may also become necessary to address whether or to what extent the resolution authorizes military action against IS targets in Syria. The answer to that question may be dependent on whether the conflict in Syria is deemed to be part of the same armed conflict that is occurring in Iraq and whether this can be interpreted to be a continuation of the original threat posed by Iraq. If the answer to both these questions is yes, then the 2002 Iraq AUMF, which is not expressly limited to the territory of Iraq, may be read impliedly to cover that part of the threat emanating from Syria. On the other hand, it might still be argued that the threat IS operations in Syria pose to the Assad regime is not easily construed to be a threat posed against U.S. national security "by Iraq," and that the 2002 Iraq AUMF does not confer statutory authorization of U.S. actions against IS forces located in Syria. In a notification submitted to Congress on September 23, 2014, the Obama Administration cited to the 2002 Iraq AUMF (along with the 2001 AUMF and the President's independent constitutional authority) as providing legal authority for military operations against the Islamic State in both Iraq and Syria. Recently, the Obama Administration has claimed that the 2001 AUMF provides a separate statutory ground for military action against the Islamic State. The 2001 AUMF has been the primary domestic legal authority governing U.S. military action against Al Qaeda, the Taliban, and associated forces. The application of the 2001 AUMF to the Islamic State would likely turn upon the entity's relationship with covered groups (and in particular, Al Qaeda), and whether this relationship is sufficiently close for the group to be considered an "associated force." Following the terrorist attacks of September 11, 2001, Congress passed the 2001 AUMF, which granted the President the authority: to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons. The AUMF clearly authorizes the President to use military force against entities responsible for the terrorist attacks of 9/11, as well as certain entities that harbored them. Although no organization is expressly named by the AUMF, the statute has been construed by all three branches of government to authorize military action against Al Qaeda (the entity responsible for the 9/11 attacks) and the Taliban (the entity which harbored them); as well as other "associated forces" that have fought alongside these groups in hostilities against the United States. The AUMF's application to entities other than Al Qaeda and the Taliban has been the subject of some debate, particularly regarding the nature and degree of support that would result in another organization being deemed an "associated force." The AUMF has not been construed by either the executive or judicial branches as authorizing military action against an entity solely on account of its participation in terrorism—indeed, entities that might sympathize with Al Qaeda's goals, but have no ties to the group, have been understood to fall outside the scope of the AUMF. For their part, the officials within the executive branch have claimed that to be an "associated force," a group must be both (1) an organized, armed group that has entered the fight alongside al-Qa'ida or the Taliban and (2) a co-belligerent with al-Qa'ida or the Taliban in hostilities against the United States or its coalition partners. Accordingly, an assessment of whether the 2001 AUMF confers statutory authorization for military action against the Islamic State likely depends on the nature of the group's relationship with Al Qaeda or the Taliban, and in particular whether the group is properly considered an "associated force." Although antecedent entities to the Islamic State affiliated themselves with Al Qaeda, the precise nature of the relationship between the Islamic State of Iraq and the Levant/Islamic State and Al Qaeda leaders from 2006 onward is unclear. Current IS leaders have reportedly stated that the Islamic State is not an offshoot of Al Qaeda. The Obama Administration argues that the Islamic State is covered by the AUMF because it is a successor to the version of Al Qaeda responsible for the 9/11 attacks. According to this argument, what matters is that ISIL's antecedent, Al Qaeda in Iraq, was functionally part of Al Qaeda. A schism arose between at least two components of Al Qaeda—one of which now refers to itself as the Islamic State and the other which still calls itself Al Qaeda—with both claiming the mantle of Osama Bin Laden. Accordingly, the 2001 AUMF applies equally to both groups, notwithstanding the possibility that the Islamic State does not meet the definition for an "associated force." The legitimacy of this argument appears to depend on a factual assessment of the Islamic State's relationship with the entity responsible for the 9/11 attacks, especially at the time of those attacks. If it were part of Al Qaeda prior to splitting off into a separate group, it arguably continues to bear responsibility for the attacks and falls within the plain meaning of the 2001 AUMF. Such an assessment might also consider other factors related to the Islamic State's lineage, including the composition of its membership and leadership, its association with groups that have or had been affiliated with Al Qaeda, its perception of itself as a successor to the entity responsible for the 9/11 attacks, and its mission. While appropriations measures have sometimes been interpreted to provide authority for ongoing military operations that were not otherwise expressly covered by any legislation authorizing force, the measure in the Continuing Appropriations Resolution, 2015 (2015 CR §149, P.L. 113-164 ), authorizing aid to certain Syrian rebels appears to be written in a way that forecloses such a reading. While the relevant language authorizes assistance to appropriately vetted Syrian rebel groups, the type of assistance authorized expressly includes "training, equipment, supplies, and sustainment," which could be read to imply that only similar forms of assistance are authorized. Other types of assistance are not expressly prohibited. However, section 149(i) provides that Nothing in this section shall be construed to constitute a specific statutory authorization for the introduction of United States Armed Forces into hostilities or into situations wherein hostilities are clearly indicated by the circumstances. This language seems intended to preclude reading the provision as authorizing assistance in the form of a direct combat role. On the other hand, nothing in the 2015 CR prohibits the expenditure of funds for airstrikes against IS targets in Iraq or Syria. If these operations are separately authorized by the 2001 AUMF or the 2002 Iraq AUMF, then perhaps the availability of any funds in the 2015 CR that are permitted for use in support of operations under these authorizations, coupled with knowledge of their interpretation by the executive branch, could be construed to suggest congressional acquiescence to the Executive's characterization of a connection between operations against the Islamic State and other operations which Congress had already authorized. Enacted in 1973 over President Nixon's veto, the War Powers Resolution (WPR) was an effort by Congress to reassert its role in matters of war—a role that many Members believed had been allowed to erode during the Korean and Vietnam conflicts. The WPR provides a mechanism by which Congress may ostensibly force the President to withdraw U.S. forces from those hostilities which had not been authorized by a declaration of war or specific statutory authorization. In more than four decades since its enactment, however, the mechanisms to compel troop withdrawal have never been successfully employed. Moreover, successive presidential administrations have viewed aspects of the WPR as unconstitutionally trenching upon the executive's constitutional authority in matters of war and foreign relations. Nonetheless, the WPR appears to constrain the scope and duration of military action that may be taken against IS forces in the absence of legislative authorization. The WPR requires the President to consult with Congress "in every possible instance" prior to introducing U.S. Armed Forces into actual or imminent hostilities. A report is required to be submitted to Congress within 48 hours when, absent a declaration of war, U.S. Armed Forces are introduced into "hostilities or ... situations where imminent involvement in hostilities is clearly indicated by the circumstances." Congressional notification is also required within 48 hours, absent a declaration of war, when combat-equipped U.S. forces are deployed to a foreign nation, or deployed in numbers which substantially enlarge the amount of combat-equipped U.S. forces already stationed there. Section 5(b) of the WPR provides that after this report regarding the introduction of U.S. forces into actual or imminent hostilities is submitted (or after such date that it was required to be submitted), U.S. troops must thereafter be withdrawn within 60 days (or within 90 days in certain circumstances), unless Congress authorizes continued involvement by passing a declaration of war or some other specific authorization for continued U.S. involvement in hostilities. Moreover, Section 5(c) provides a means by which Congress may, at any time, compel the withdrawal of U.S. forces from unauthorized hostilities occurring outside the United States by means of a concurrent resolution. If the Administration's assertions that the introduction of U.S. Armed Forces into hostilities against the Islamic State are authorized under previous authorizations to use force are accepted, then the WPR provision for compelling the withdrawal of U.S. forces would seem to be inapplicable. On July 28, 2014, the House agreed to a concurrent resolution ( H.Con.Res. 105 ) which provides that "The President shall not deploy or maintain United States Armed Forces in a sustained combat role in Iraq without specific statutory authorization for such use enacted after the date of the adoption of this concurrent resolution." The concurrent resolution, if agreed to by the Senate, would appear to trigger the requirements of Section 5(c) of the WPR, and arguably provide a mechanism by which Congress could compel the President to terminate any "sustained combat role in Iraq" by U.S. forces. Existing jurisprudence concerning the legally binding nature of concurrent resolutions, however, casts doubt on such a measure being interpreted to have legal effect. There appears to be a general consensus that the constitutional validity of Section 5(c) is doubtful in the aftermath of the Supreme Court's ruling in the 1983 case of INS v. Chadha . In Chadha , the Court held that for a resolution to become a law, it must go through the bicameral and presentment process in its entirety. Accordingly, concurrent or simple resolutions, which are not presented to the President for his signature, could not be used as "legislative vetoes" against executive action. Although the Chadha Court did not expressly find WPR Section 5(c) to be unconstitutional, it was listed in Justice White's dissent as one of nearly 200 legislative vetoes for which the majority had sounded the "death knell," and most commentators have agreed with this assessment. It seems highly unlikely a concurrent resolution could legally compel the termination of U.S. military operations, notwithstanding the requirements of Section 5(c) of the WPR. Nonetheless, a concurrent resolution instructing the executive branch to terminate U.S. hostilities would seem to counter any executive branch arguments that Congress had "acquiesced" to the President's use of military force. Section 5(b) of the WPR, which provides for the termination of U.S. military action within 60 days of the President submitting (or having been required to submit) a report of the introduction of U.S. forces into actual or imminent hostilities, may constrain the executive's ability to use force against the Islamic State in the absence of further action by Congress. Although some legal observers have raised constitutional concerns regarding Section 5(b), the weight of opinion, including possibly within the executive branch, appears to recognize the provision as a facially permissible exercise of Congress's constitutional authority over matters of war. Nonetheless, even assuming that the provision is constitutionally valid, it does not necessarily act as a statutory constraint to military action. As an initial matter, Section 5(b) establishes a requirement for the withdrawal of U.S. troops when they were introduced into actual or imminent hostilities without congressional authorization , unless Congress subsequently enacts legislation providing authority for the use of force or extends the deadline for the withdrawal of U.S. troops . Accordingly, if the 2002 Iraq AUMF and 2001 AUMF are construed as authorizing military action against the IS, Section 5(b) of the WPR would not establish a deadline for the termination of U.S. military strikes against IS forces. For discussion of the applicability of these statutes to military action against the Islamic State, see supra at " Does the 2002 Iraq AUMF Authorize Military Action Against the Islamic State? " and " Does the 2001 AUMF Authorize Military Action Against the Islamic State? ". Moreover, assuming for the sake of argument that the 2001 AUMF or 2002 Iraq AUMF cannot be reasonably construed to cover military action against the Islamic State, it is unclear whether this would necessarily mean that all offensive military operations against the Islamic State would be required to cease within the period established under Section 5(b) of the WPR. The executive branch has submitted numerous reports "consistent with the War Powers Resolution" since June concerning U.S. military actions related to the IS. These reports have not specified whether they are believed to satisfy the WPR's requirements relating to the introduction of U.S. forces into actual or imminent hostilities (which would trigger the 60-day timeline for the termination of U.S. action under Section 5(b) of the WPR) or are intended to satisfy the notification requirements concerning the deployment of combat-equipped U.S. forces into a foreign country (which do not trigger the termination requirements). While the deployment of U.S. forces to Iraq in June for purposes of protecting U.S. facilities and personnel located away from active zones of combat could arguably be construed as not constituting the introduction of U.S. forces into actual or imminent hostilities, this argument appears less persuasive with respect to repeated U.S. airstrikes against the Islamic State that began in August. It might be argued that each of the reports "consistent with" the WPR is intended to ensure the activities described in each report trigger distinct 60-day termination requirements, in the event that such operations cannot be construed as having been authorized by the 2001 AUMF, the 2002 Iraq AUMF, or another statute. Such an interpretation, however, would seem to enable the executive to engage in unauthorized hostilities against an enemy force for an indefinite period, so long as it promptly submitted reports to Congress describing specific military actions that had been taken (e.g., the bombing of a particular enemy facility; a battle with enemy forces at a particular location), each of which was expected to last less than 60 days. This would appear to defeat the purpose of Section 5(b) of the WPR, which was to assure the termination of unauthorized military action after a specified time period even in the absence of action by Congress. Moreover, disagreement may arise between the political branches regarding the scope of military activities covered by Section 5(b). Such a disagreement occurred during U.S. operations in support of the NATO-led mission against Muammar al Qadhafi's regime in Libya. When U.S. operations continued beyond the 60-day deadline for unauthorized hostilities established by the WPR, some argued that Section 5(b) required their immediate termination unless authorization was obtained from Congress. The Obama Administration did not challenge the constitutionality of the WPR's requirement that unauthorized hostilities be terminated within 60 days, but claimed that this requirement did not apply to ongoing U.S. operations. The continued engagement in manned and unmanned aerial attacks upon Libyan targets, in the Administration's view, was sufficiently limited so as not to constitute "hostilities" under the WPR, because they "do not involve sustained fighting or active exchanges of fire with hostile forces, nor do they involve the presence of U.S. ground troops." The use of separate WPR reports for each anti-IS operation may be intended to prevent the 60-day clock from starting at all, by suggesting that the scope and duration of each operation is too limited to amount to "hostilities" within the meaning of the WPR, even though the operations might seem more substantial in the aggregate. The Obama Administration's interpretation of the WPR's application to military activity has been criticized by some observers as overly constrained. Neither the express language of the WPR nor the legislative history of the measure provide a precise indication as to the range of military activities intended to be covered by the term "hostilities," but the legislative history suggests that Congress intended the act to apply to significant military engagements, including at least some confrontations with belligerent forces that do not involve an exchange of fire. Moreover, at least as a matter of international legal practice, repeated military strikes by one sovereign entity against another entity may be deemed "hostilities," even if such actions do not expose the attacking force to serious threat of injury. Further, some have suggested that the Administration's analysis too narrowly focuses on the question of whether the U.S. operation can be construed as "hostilities" standing alone. Some argue that in assessing whether U.S. forces are currently engaged in hostilities, it is appropriate to consider the overarching military conflict, rather than simply the supporting role that U.S. forces play within these operations. Under this interpretation, it would be appropriate to consider U.S. actions in the broader context of the ongoing military action in Iraq, including military action not only directly involving the United States, but also Iraqi security forces and the Islamic State. Ultimately, however, it seems unlikely that the dispute will be definitively resolved by the courts. Although there have been several instances where Members of Congress have brought suit against the executive and argued that a particular military action contravenes the WPR or the constitutional allocation of war powers, in all cases where final rulings have been issued, these challenges have been dismissed without the reviewing court reaching the underlying merits of the litigants' claims. The courts have variously relied on the political question doctrine, the equitable/remedial discretion doctrine, ripeness, mootness, and congressional standing concerns as grounds for dismissal. The courts have made clear, however, that while formidable, none of the aforementioned procedural barriers constitutes an insurmountable obstacle to resolving the statutory or constitutional issues concerning war powers. All of the opinions to date indicate that the barrier to the exercise of jurisdiction stems from the posture of the cases, not some institutional shortcoming. Absent such an irreconcilable conflict, however, many believe it is unlikely that the courts will venture into this politically and constitutionally charged thicket. U.S. military strikes against the Islamic State that have occurred within the territory of Iraq have been undertaken with the consent of the Iraqi government and consequently would not constitute a use of force against Iraq. However, IS fighters "have used Syria both as a staging ground for attacks in Iraq and as a parallel theater of operations," leading U.S. policy makers to expand military operations to include strikes attacking IS personnel and assets within Syria as well. Syrian officials have stated that they would perceive military attacks by the United States or other outside forces as "act[s] of aggression" if they were not undertaken with the cooperation and consent of the Syrian government. The use of force in Syria without its consent or a U.N. Security Council resolution could have implications under international law. In general, international law prohibits one state from acting militarily within the territory of another without its consent. A few exceptions to this prohibition exist, most of which are premised upon a nation's inherent right to self-defense. Prior to World War II, states were recognized as having a sovereign right to use military force against other states to vindicate any number of wrongs. In drafting the United Nations (U.N.) Charter, member states sought to reduce the incidence of war by curtailing the rights of states to use force against one another. Article 2(4) of the U.N. Charter generally prohibits member states from using or threatening to use force "against the territorial integrity or political independence of any state." In the absence of authorization from the U.N. Security Council, the sole exception to this prohibition that is expressly recognized by the U.N. Charter concerns the use of force by Member States acting in collective or individual self-defense. Specifically, Article 51 preserves the "inherent right of individual or collective self-defence if an armed attack occurs against a Member of the United Nations, until the Security Council has taken measures necessary to maintain international peace and security." Read literally, Article 51's articulation of the right seems to preclude a state's use of force until after an armed attack has already commenced and not merely on the threat of any use of force, but some authorities regard the right as encompassing the previously existing inherent right of self-defense under customary international law, which many likewise regard as including a right to preemptive (or "anticipatory") self-defense in the event of an imminent attack. If the state on whose territory force is to be used gives its consent, there is no violation of Article 2(4) of the UN Charter and therefore no need to invoke a theory of self-defense. Accordingly, ongoing U.S. military actions against IS forces in Iraq do not raise concerns of a violation of Iraq's territorial integrity, as these actions have been undertaken with the consent of the Iraqi government. On the other hand, military action by the United States against IS forces and Al Qaeda associated groups in Syria, absent the consent of the Syrian government (or authorization by the U.N. Security Council), would appear to conflict with the requirements of the U.N. Charter unless it could be justified as an exercise of the inherent right of individual or collective self-defense that would be permissible under Article 51. The classic formulation of the right to use force in self-defense on the territory of a foreign state was set forth by U.S. Secretary of State Daniel Webster in connection with the famous Caroline incident. In 1837 British troops attacked a private American ship, the Caroline , while it was moored for the night on the New York side of the Niagara River, asserting that the ship was being used to provide supplies to insurrectionists against British rule in Canada who were based on an island on the Canadian side of the river. The United States protested this "extraordinary outrage" and demanded an apology and reparations. In the course of the ensuing diplomatic exchanges with the British Government, Secretary of State Daniel Webster asserted that an intrusion into the territory of another state can be justified as an act of self-defense only in those "cases in which the necessity of that self-defence is instant, overwhelming, and leaving no choice of means and no moment for deliberation." Moreover, he wrote that even if justified, the use of defensive force must be proportional to the threat, "since the act, justified by the necessity of self-defence, must be limited by that necessity, and kept clearly within it." The three conditions of necessity, proportionality, and immediacy (or imminence) are widely regarded as establishing the grounds for invoking the right to resort to force extraterritorially. The application of these conditions to military action by the United States against IS forces in Syria depends, in part, upon whether such action is characterized as an act of self-defense by the United States, or is characterized as a form of collective defense undertaken on behalf of the Iraqi government or another sovereign entity (or collection of entities). Whereas the Islamic State clearly constitutes an ongoing threat to the security and territorial integrity of Iraq and Syria, the nature of the threat the Islamic State presently poses to the United States is less direct or substantial (though arguments could be made that the group currently poses a threat to U.S. persons and personnel located in Iraq). Importantly, however, if U.S. military action against IS forces outside Iraq is justified as a form of collective defense, it would appear that Iraq or any other nation that the United States sought to defend would likely need to consent to military actions that the United States took on its behalf. Another possibility for resolving a possible conflict of sovereignty in order to justify the use of force in Syria without the consent of its government would be to justify intervention on the basis that Syria is "unable or unwilling" to remove the threat emanating from its territory. In present-day application, it is not clear whether the "unwilling or unable" test is understood to be a separate test from the Caroline test, an additional consideration (for example, an element of necessity), or a substitute for one of the factors, perhaps immediacy in the case of a continuing threat. In the context of the war against Al Qaeda and the Taliban, the Obama Administration has indicated that it views as lawful military operations outside of Afghanistan without the consent of the country in which they take place if a determination has been made that the country is unable or unwilling to deal with a threat to the United States. Although the "unwilling and unable" doctrine seems to be supported by precedent in U.S. practice, it is unclear whether an international consensus exists for when or whether it may validly be applied. The United States has reportedly informed the U.N. Security Council in accordance with Article 51 of the U.N. Charter that it has commenced military operations in Syria against the Islamic State and the Khorasan Group. In its letter, the Administration explains that the operations against the Islamic State are justified as measures of both individual and collective self-defense and emphasizes that the government of Iraq had requested U.S. assistance. Moreover, the letter applies the "unable and unwilling" test, asserting that "[t]he Syrian regime has shown that it cannot and will not confront these safe-havens effectively itself." With respect to the Khorasan Group, the letter notes "the terrorist threats that they pose to the United States and our partners and allies," suggesting that military strikes of those targets are also justified as measures of individual and collective self-defense. In a subsequent statement, UN Secretary-General Ban Ki-moon seemed to accept the "unable and unwilling" theory, noting in support of the operations that "the strikes took place in areas no longer under the effective control of that Government." It remains to be seen whether the airstrikes against Syria will gain sufficient acceptance among states as a valid exercise of self-defense in order to advance the legitimacy of the "unwilling and unable" doctrine in international law.
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Ongoing U.S. military operations against the Islamic State (which formerly referred to itself as the Islamic State of Iraq and the Levant, and is also commonly referred to as IS, ISIS, or ISIL) raise issues concerning the allocation of war powers between Congress and the President, including whether such operations have been (or are required to be) authorized by an act of Congress. In August 2014, President Obama ordered U.S. forces to commence airstrikes against IS targets in Iraq to assist the Iraqi government in combating the insurgent force, protect U.S. military and nonmilitary personnel in Iraq, and support certain humanitarian operations. In a public address on September 10, 2014, President Obama announced the pursuit of a strategy to "degrade and ultimately destroy" the Islamic State, including through the escalation of U.S. airstrikes against IS forces in Iraq, as well as the possible initiation of U.S. airstrikes against IS forces located in neighboring Syria. On September 23, 2014, the United States began airstrikes in Syria targeting IS forces and certain other groups within that country believed to be affiliated with Al Qaeda. As of the date of this report, Congress has not enacted legislation specifically authorizing U.S. force against the Islamic State. In enacting the Continuing Appropriations Resolution, 2015 (P.L. 113-164), which was signed into law on September 19, 2014, Congress authorized the President to arm and train vetted elements of Syrian opposition groups, including for purposes of deterring attacks on the Syrian populace by the Islamic State, but the legislation expressly provides that it does not constitute statutory authorization for the introduction of U.S. forces into actual or imminent hostilities. Initially, the Obama Administration cited the President's authority under Article II of the Constitution as the legal basis for U.S. operations against the Islamic State. More recently, however, the Administration has claimed that the 2002 Authorization for Use of Military Force Against Iraq (2002 Iraq AUMF; P.L. 107-243) and the 2001 Authorization for Use of Military Force (2001 AUMF; P.L. 107-40), provide congressional authority for military operations against the Islamic State. Some observers and Members of Congress have expressed disagreement with this interpretation, though it is unclear whether any dispute over application of these statutes to the Islamic State would give rise to a cognizable claim that would be resolved by the courts. This report addresses select legal questions raised by the use of military force against the Islamic State. Questions addressed in this report include potential sources (and limitations) of presidential authority to use military force against the Islamic State without express congressional authorization; the potential relevance of the 2002 Iraq AUMF, the 2001 AUMF, and the Continuing Appropriations Resolution, 2015; the constraints imposed by the War Powers Resolution upon U.S. military action that has not been authorized by Congress; and the applicability of the United Nations Charter to ongoing U.S. military strikes in Iraq and Syria. The report will be updated as warranted by events. Many of the legal issues discussed in this report concerning congressional oversight of U.S. military action are addressed in greater detail in CRS Report R41989, Congressional Authority to Limit Military Operations, by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. Further discussion regarding U.S. operations against the Islamic State in Iraq and Syria can be found in CRS Report R43612, The "Islamic State" Crisis and U.S. Policy, by [author name scrubbed] et al.; Iraq Crisis and U.S. Policy, by [author name scrubbed] et al.; and CRS Report RL33487, Armed Conflict in Syria: Overview and U.S. Response, coordinated by [author name scrubbed].
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The Low Income Home Energy Assistance program (LIHEAP), established by Title XXVI of the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ), is a program through which the federal government gives states, tribes, and territories annual grants to operate home energy assistance programs for low-income households. The LIHEAP statute provides for two primary types of program funding: regular funds (sometimes referred to as block grant or formula funds) and emergency contingency funds. Regular funds are allotted to states according to a formula prescribed by the LIHEAP statute. Emergency contingency funds may be released and allotted to one or more states at the discretion of the President and the Secretary of Health and Human Services (HHS). The first section of this report discusses LIHEAP program rules and benefits, including household eligibility and how funds may be used, and presents the most recent data available from HHS regarding household characteristics and benefit levels (see " Program Rules and Benefits "). The second section of this report discusses each category of LIHEAP funds and how they are distributed to states, tribes, and territories (see " Types of LIHEAP Funds "). The third section discusses LIHEAP funding and appropriations (see " LIHEAP Appropriations "). Appendix A describes the legislative history of energy assistance, leading up to and including the enactment of LIHEAP (see " Legislative History of Energy Assistance "). Finally, Appendix B contains tables showing recent LIHEAP allocations to the states, as well as appropriations for the program since its inception. Federal LIHEAP requirements are minimal and leave most important program decisions to the states, the District of Columbia, the territories, and Indian tribes and tribal organizations that receive federal funds (collectively referred to in this report as "grantees"). The law governing LIHEAP sets up most requirements as part of a list of "assurances" that grantees must make when they apply to HHS for funds. For example, grantees must make assurances about the sorts of energy assistance they will provide, who will be served, and how funds will be administered. The LIHEAP statute contains 16 assurances that govern various aspects of how the program operates at the state, tribe, or territorial level. This section discusses how grantees implement the assurances to provide energy assistance to low-income households. The LIHEAP statute outlines the ways in which grantees may use funds. Funds may be used to help households meet their home energy costs by making payments for heating and cooling expenses . All state grantees provide heating assistance to households, while a smaller number provide cooling assistance. See Table 1 . States must reserve funds to assist when households face an energy crisis , defined as "weather-related and supply shortage emergencies and other household energy-related emergencies." Within this definition, states determine the circumstances under which they will provide assistance. For example, generally states provide crisis assistance to households that are in danger of losing their heating or cooling due to problems with equipment, receipt of a utility shutoff notice, or exhaustion of a fuel supply. Funds may be used for low-cost weatherization projects. Grantees are limited to using 15% of their allotment for weatherization unless a grantee has a waiver from HHS for up to 25%. Grantees may use funds to provide services to reduce the need for energy assistance (e.g., needs assessment, counseling on how to reduce energy consumption) limited to 5% of the allotment. Funds may be used for program administration , limited to 10% of the allotment. See Table 1 for more information about the ways in which states use their LIHEAP funds. Basic Eligibility: Federal law sets out parameters that grantees must follow in establishing eligibility for LIHEAP assistance. The statute establishes households as the unit that is eligible for LIHEAP assistance (versus a family). A household consists of an "individual or group of individuals who are living together as one economic unit for whom residential energy is customarily purchased in common or who make undesignated payments for energy in the form of rent." Grantees must have a system in place for a household denied assistance to appeal. Eligibility Based on Income: Grantees have the option of setting LIHEAP eligibility for households at or below 150% of the federal poverty income guidelines or, if greater, 60% of the state median income. States may adopt lower income limits, but no household with income below 110% of the poverty guidelines may be considered ineligible. Eligibility Based on Receipt of Other Benefits: Grantees may separately choose to make eligible for LIHEAP assistance any household of which at least one member is a recipient of Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), benefits under the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps), or certain needs-tested veterans' programs. The LIHEAP statute does not impose an asset test in establishing eligibility, but states may choose to limit client assets. LIHEAP assistance does not reduce eligibility or benefits under other state or federal aid programs. For example, this means that a LIHEAP payment would not count toward the income or resources of a family applying for SNAP, housing assistance, or other types of assistance programs. Each year, the LIHEAP Clearinghouse, through a contract with HHS, makes available state eligibility guidelines on its website. Vulnerable and High-Need Populations: The LIHEAP statute requires that grantees conduct outreach to eligible households, "especially" households with elderly individuals, individuals with disabilities, or that have high energy burdens (home energy expenditures divided by income), to ensure that they are aware of LIHEAP availability. Grantees must further ensure that households with the lowest incomes, together with the highest home energy need in relation to income, receive the highest level of assistance. This provision was added to the law as part of the Human Services Amendments of 1994 ( P.L. 103-252 ) with the intention of ensuring that both income and energy burden together were considered so that grantees would target households that are "most drastically burdened" and who have the "highest health risk." Owners and Renters: Under the LIHEAP statute, grantees must treat owners and renters "equitably." The way in which renters pay utilities may differ from homeowners, where, in some cases, payments for heating and cooling are included in rent rather than paid directly by the tenant. However, this should not affect eligibility for LIHEAP. In addition, the issue of how to treat renters living in housing subsidized through the Department of Housing and Urban Development (HUD) has been raised in the past. In general, HUD housing subsidies are based both on rent levels and reasonable utility expenses. Tenants pay approximately 30% of their income toward the total rent and utility costs, and HUD subsidizes the remainder of the total. In cases where tenants pay their utilities directly (rather than as part of their rent), they are reimbursed for the HUD share of utilities through a utility allowance, which generally comes in the form of a rent reduction. In 1992, Congress enacted legislation to make clear that states may not automatically deny LIHEAP benefits to subsidized tenants who pay their utilities directly and receive utility allowances. However, states may take utility allowances into account when determining the amount of benefits subsidized renters may receive. On its website, the LIHEAP Clearinghouse compiles state policies regarding renters. Federal rules allow grantees to decide the mix and dollar range of benefits, choose how benefits are provided (e.g., to utilities or directly to households), and decide which agencies will administer the program. Grantees provide details to HHS about program operation via a state plan submitted each year, and they are to provide a method for public participation in the state plan's development. The state agency administering LIHEAP is to coordinate with other low-income programs, including the Department of Energy's Weatherization Assistance Program (WAP). To the extent possible, grantees are encouraged to follow WAP rules in order to increase consistency between the two weatherization components. LIHEAP grantees are also required to establish fiscal control and accounting procedures, which include a way of monitoring the assistance that is provided. At the state level, many LIHEAP administrative functions such as intake and application processing are often delegated to local level agencies. In the early years of energy assistance, prior to the existence of LIHEAP, funds were administered by local Community Action Agencies (CAAs). This relationship continued when LIHEAP was enacted in 1981. The LIHEAP statute provides that, if a state designates local agencies to administer the program, then they agree to "give special consideration" to public or private nonprofit agencies receiving funds for low-income energy assistance or weatherization prior to LIHEAP's enactment. According to the LIHEAP Clearinghouse, in 30 states CAAs are involved in administering funds, another 13 states have local programs administered by the counties, and the remaining states are either administered at the state level or by nonprofit groups. In most cases, LIHEAP benefits are given directly to utilities or fuel oil suppliers to be applied to recipients' accounts rather than directly to recipients. An exception to this may occur in cases of renters whose utility payments are included in rent and who do not have their own account. Unlike some other federal assistance programs, such as Medicaid or the Supplemental Nutrition Assistance Program (SNAP), simply being eligible for LIHEAP does not entitle a household to LIHEAP benefits. Available benefits are limited by the amount that Congress appropriates each year, so the number of households that are served in a given year depends both on appropriations and how grantees use their funding. In FY2014, an estimated 6.3 million households received heating and/or winter crisis assistance (the bulk of LIHEAP assistance that is provided). For the number of households receiving LIHEAP heating and winter crisis assistance from FY2000 through FY2014, see Table 2 . While the number of recipient households is down from a peak of 8.1 million in FY2010, the number of households served continues to be higher than in years preceding FY2009, a year when appropriations reached the highest level ever for the program. Appropriations reached $5.1 billion for LIHEAP in both FY2009 and FY2010, and $4.7 billion in FY2011, compared to $2.59 billion in FY2008. In the years leading up to FY2009, recipient households ranged between 5.0 and 5.5 million. The same trend can be seen in the percentage of federally eligible households that receive heating and/or winter crisis assistance. In the mid-2000s, prior to increased funding in FY2009, the percentage of federally eligible households receiving assistance hovered between 14% and 16%, settling at 16% for FY2006 through FY2008. However, in FY2009 and FY2010, with increased funding for LIHEAP, 21% and 22% of those households federally eligible under the LIHEAP statute were served, respectively. Since the peak of LIHEAP funding, the percentage of eligible households served settled again at 16% in FY2013 and FY2014. FY2010 through FY2012 saw the highest number of households receiving cooling and/or summer crisis assistance—1.1 million households in each year, compared to 900,000 in FY2009 and 800,000 in FY2014. Prior to FY2009, the number of households receiving cooling and/or summer crisis assistance reached a high point of 700,000 recipients in FY2006. See Table 3 . In terms of vulnerable populations, HHS estimates that of all households receiving LIHEAP heating assistance in FY2014 (the most recent data publicly available), about 33% had at least one member 60 years of age or older; about 38% had at least one member with a disability; and 19% included at least one child five years of age or younger. Households may include members in more than one of the three categories, and an estimated 74% of recipient-households were in at least one of the three categories. Although some states set LIHEAP eligibility as high as 60% of state median income, on average, LIHEAP households served have very low incomes. In FY2014, 68% of households receiving heating assistance had incomes at or below 100% of poverty and 76% of households receiving cooling assistance were at or below the poverty level. Apart from federal funding levels, a variety of factors help determine to what extent LIHEAP is able to meet its stated goal of assisting low-income households in meeting their home energy needs. These include the following: the cost of energy for a given household (influenced by energy price fluctuations and variation in kinds of fuels used); the amount of energy consumed (influenced by severity of the weather, energy efficiency of housing, and expected standards of comfort); and the number of eligible households (influenced by population size and health of the economy). The average LIHEAP benefit varies by state. For example, in FY2014, the most recent year in which data are available, the average heating benefit nationwide was $301, with a range from $78 (Oklahoma) to $1,024 (North Dakota). The average benefit for cooling assistance, available in 19 states in FY2014, was $336, ranging from $121 (Arkansas) to $1,246 (District of Columbia). One way of looking at LIHEAP benefits over time is to measure them in constant dollars. Each year, the HHS LIHEAP Home Energy Notebook presents average heating and winter crisis benefits in nominal dollars and constant 1981 dollars (the year in which LIHEAP was enacted). Until FY2009, when funding for the program increased by more than $2 billion compared to the previous fiscal year, the general trend in the constant dollar value of LIHEAP benefits since the program's beginning had been one of decline. In FY1981, the average heating and winter crisis benefit, measured in constant 1981 dollars, was $213. By FY1998, it had declined to $117, and although the average benefit reached $187 in FY2001, it generally declined again thereafter, with the exception of $171 in FY2006, when funding was higher than in the immediately preceding and subsequent years. In FY2009, the constant dollar value of the average LIHEAP heating and winter crisis benefit increased by about $58 from the previous year, to $209. Since then, the constant dollar value of the LIHEAP heating and/or winter crisis benefit has again declined, and by FY2014 was back down to $145. (See Table 2 .) The constant dollar value of the cooling and summer crisis benefit, which is available to a more limited number of households in fewer states, has fluctuated over the years. While the average benefit in 1981 was $129, in the years that followed the average benefit in constant 1981 dollars declined as low as $57 in FY1983 and $49 in FY1990. However, the average benefit grew from FY1990 levels, and by FY2000 and FY2001 the average benefit had reached $107. Between FY2004 and FY2008, the constant dollar value ranged from $72 (in FY2008) to $105 (in FY2006). After FY2009, when funding for LIHEAP increased significantly, the constant dollar value of cooling and summer crisis benefits rose to $142. In FY2014, the average constant dollar benefit was $118. See Table 3 . The LIHEAP statute authorizes several separate distributions of LIHEAP funds. The bulk of funds are distributed as "regular" funds, sometimes also referred to as formula or block grant funds. The regular funds are distributed via formula to the states and the District of Columbia. Tribes receive a share of state funding, while a percentage of regular funds is set aside for territories. The LIHEAP statute also authorizes emergency contingency funds, which may be distributed to one or more states, tribes, or territories at the discretion of the Administration. The statute also authorizes a smaller amount of funds for Leveraging Incentive grants, which are distributed to grantees that leverage nonfederal resources for their energy assistance programs. And a portion of Leveraging Incentive grants may be used for competitive Residential Energy Assistance Challenge (REACH) grants that grantees may use for various purposes that improve the energy security of vulnerable low-income families. Despite the different distribution methods, grantees may use each form of funding for the eligible activities under LIHEAP (e.g., heating and cooling assistance, emergency crisis assistance, and weatherization). When LIHEAP was created in 1981, the only funds available were regular funds, which were distributed to the states via a formula developed under the predecessor program to LIHEAP, the Low Income Energy Assistance Program (LIEAP, see Appendix A ). Regular funds continue to be distributed to the states via a formula, though it was changed in 1984 as part of the Human Services Reauthorization Act ( P.L. 98-558 ). The history and operation of the formula are complicated, and the issues are addressed in a separate report, CRS Report RL33275, The LIHEAP Formula , by Libby Perl. Tribes and territories are not directly included in the LIHEAP formula distribution, and the way in which they receive regular funds is described in more detail, below. Regular funds have not been authorized since FY2007, when they were authorized at $5.1 billion ( P.L. 109-58 ). Indian tribes and tribal organizations have the option to request that they receive and administer their own allotments of LIHEAP funds. Tribal allotments may be based on the number of low-income households (as defined by the LIHEAP statute) residing on a reservation and any adjacent trust land as a proportion of all low-income households in the state. Alternatively, a tribe may work out its funding level with the state and enter into an agreement for an amount to be allocated. A tribe's allotment is then taken from the state's LIHEAP allocation. See Table B-1 for states in which tribes receive set-aside funding. The LIHEAP statute provides that at least one-tenth, but not more than one-half of 1% of the total regular fund appropriation must be set aside for energy assistance in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. HHS sets the exact percentage of funds that goes to the territories. In FY2014, HHS set aside 0.5% of funding for the territories, the first time that funding had reached the maximum allowed by the statute. This set-aside has continued in appropriations since FY2014. Prior to FY2014, and since the inception of the program, the set-aside for territories had been approximately 0.134% of regular funds. This percentage was based on the amount of funding that the territories received under LIEAP, the predecessor program to LIHEAP. For that program, $2.5 million was made available to the territories. Prior to implementation of LIHEAP, in 1981, the territories asked HHS that more funding be provided. However, according to HHS, it decided to provide the same approximate percentage of LIHEAP funding to the territories as was provided as part of LIEAP, concluding that [HHS] should retain the funding levels originally proposed, since they are based on a congressional determination of need for the 1981 program, and the comments did not include any information demonstrating that changed conditions required a higher relative level of funding as compared to the States than existed in 1981. HHS allocates funds among the 5 territories based on population, with Puerto Rico receiving approximately 90% of funds. For recent allocations to the territories, see the last rows of Table B-1 and Table B-2 . Unlike LIHEAP regular funds, emergency contingency funds are not distributed by formula. Instead, they are to be distributed at the Administration's discretion "to meet the additional home energy assistance needs of one or more states arising from a natural disaster or other emergency." The two terms are defined as follows: "Emergency" includes a natural disaster; a significant home energy supply shortage or disruption; significant increases in the cost of home energy, home energy disconnections, participation in public benefit programs, or unemployment; or an "event meeting such criteria as the [HHS] Secretary may determine to be appropriate." A "natural disaster" is defined as "a weather event (relating to hot or cold weather)," floods, earthquakes, tornadoes, hurricanes, ice storms, or other events as determined by the Secretary. Since the creation of the emergency contingency fund, funds have been released to grantees for various reasons, including energy price increases, extreme periods of hot or cold weather, and damage caused by natural disasters. In cases of natural disasters, grantees may be flexible in the ways they assist households, particularly those without power due to damaged or destroyed homes. According to HHS guidance, funds may be used to pay for temporary shelter, for transportation to shelter, coats and blankets, as well as for utility reconnection and equipment replacement. Some form of emergency contingency funds was first appropriated in FY1991, although the funds were not authorized until enactment of the Human Services Amendments of 1994 ( P.L. 103-252 ). Like the genesis of federal energy assistance programs in general, appropriations for energy-related emergencies grew out of high heating oil prices coupled with cold temperatures. Congress voted to appropriate $200 million in FY1991 and referred to the program as an "Energy Emergency Contingency Fund" (see P.L. 101-517 ). Emergency contingency funding was permanently authorized at $600 million in FY1994, and it has remained authorized at that same level. From the time emergency contingency funds were authorized through FY2011, funds have been appropriated in every year with the exception of FY2003 (when funds appropriated in a previous year were available for distribution). Since FY2011, funds have not been appropriated for emergency contingency funds. In addition, just because funds are appropriated does not mean that the Administration releases them to grantees. In a number of years that funds were appropriated, HHS released only a portion of the funds available (see Table B-3 ). On occasion, LIHEAP emergency contingency funds have been designated as "emergency" for purposes of budget enforcement. For a period starting in FY1995, the LIHEAP authorizing statute provided that emergency contingency funds would be designated as emergency for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; P.L. 99-177 ), as amended by the Budget Enforcement Act (BEA) of 1990 (enacted as part of P.L. 101-508 ). (The BEA established statutory limits on discretionary spending. However, funds that were designated as an emergency by both the President and in statute were effectively exempt from the spending limits. ) Congress first designated emergency contingency funds as "emergency" for budget enforcement purposes in the FY1992 through FY1994 appropriations acts, and then incorporated the language into the LIHEAP statute upon the inclusion of the emergency contingency fund in the law. The BEA expired in 2002. While the Budget Control Act of 2011 (BCA; P.L. 112-25 ) further amended the law with new procedures to reduce the deficit, the statutory reference to LIHEAP emergency contingency funds as receiving an automatic emergency designation pursuant to the BBEDCA is no longer operative. The BCA allows for the possibility of an emergency designation as determined by Congress and the President each fiscal year, but the designation has not been used to fund LIHEAP. LIHEAP does not require grantees to match the federal funds they receive. However, a portion of LIHEAP funds may be used for grants based on the amount of outside funds that grantees obtain for energy assistance. These Leveraging Incentive grants were authorized in 1990, when P.L. 101-501 amended the LIHEAP statute to provide a separate funding authorization of $50 million ($30 million if regular funds appropriated are under $1.4 billion) for incentive grants to states that leverage nonfederal resources for their LIHEAP programs. Such resources might include negotiated lower energy rates for low-income households or separate state funds for energy assistance. States are awarded incentive funds in a given fiscal year on the basis of a formula that takes into account their previous fiscal year's success in securing nonfederal resources for their energy assistance program. In 1994 ( P.L. 103-252 ) the statute was further amended to provide that, of any Leveraging Incentive grants appropriated, up to 25% may be set aside for the Residential Energy Assistance Challenge Option (REACH). Under the REACH option states may be awarded competitive grants for their efforts to increase the efficiency of energy usage among low-income families and to reduce those families' vulnerability to homelessness and other health and safety risks due to high energy costs. The funding authorization for Leveraging Incentive and REACH grants is separate from regular funds, and the grants have not been authorized since FY2004. In practice, the set-aside for these initiatives has generally been around $22 million to $30 million with dollars taken from annual regular fund appropriations. However, since FY2013, funds have not been set aside for Leveraging Incentive and REACH grants. For a time, beginning in the mid-1980s, additional funds were available to LIHEAP grantees via funds recovered as the result of oil company overcharges that violated price controls instituted in 1973 as part of the Emergency Fuels and Energy Allocation Act ( P.L. 93-159 ). In cases where aggrieved parties could not be identified for reimbursement, funds were distributed to states to be used for energy efficiency purposes, including LIHEAP. Oil overcharge funds that were allocated to LIHEAP reached a peak of $174 million in FY1989, and had diminished to $200,000 by FY2008, the most recent year for which HHS has data available. In addition, the Social Services Block Grant program allows states to transfer up to 10% of funds to provide low-income home energy assistance, among other purposes. The Temporary Assistance for Needy Families program also gives states the discretion to use funds for home heating and cooling costs. The federal government's fiscal year, which runs from October 1 to September 30, is not ideally placed for a program like LIHEAP. Most states release the bulk of their LIHEAP funds during the winter months, shortly after federal appropriations are to be finalized. Further, in recent years, appropriations often have not been finalized until well after the fiscal year is underway. This may require states to enter the winter months without certainty as to the amount of funds they will receive. LIHEAP was not always funded exactly in concert with the federal fiscal year. Beginning in FY1990, for four years (through FY1993) Congress set aside a portion of the funding to be used as "delayed obligations" for the program, as described in appropriations documents, making them available on the last day of the fiscal year. The funds were for purposes of "starting up activities" for the following winter's program. These amounts were small initially, totaling $60 million in FY1990 ( P.L. 101-166 ) and $75 million in FY1991 ( P.L. 101-517 ), but growing to $406 million in FY1992 ( P.L. 102-170 ) and $688 million in FY1993 ( P.L. 102-394 ). Then, in FY1993, the LIHEAP statute was amended to change the way that the program was funded, recognizing the difficulty for grantees in running a program with little advance notice of the funding level for the coming year. The Augustus F. Hawkins Human Services Reauthorization Act of 1990 ( P.L. 101-501 ) provided that LIHEAP be funded on a program year cycle, from July 1 to June 30, with appropriations made in the fiscal year in which the program year started. This funding structure is referred to as "forward funding." According to the Senate committee report (where the forward funding provision originated), forward funding was meant to give grantees time to plan once they knew how much funding would be available. Despite the statutory language, Congress never actually appropriated funds for a program year as forward funding, and instead provided advance appropriations for LIHEAP. Advance appropriations for LIHEAP were made for the fiscal year subsequent to the year in which funds were appropriated. From FY1994 through FY2001, there were advance appropriations for LIHEAP in every year but one (FY1997). When the FY2001 appropriations law was enacted, it did not provide advance appropriations for FY2002, and advance appropriations for LIHEAP have not been provided since then. For FY2019, as in FY2018, the President's budget proposed no funding for LIHEAP. HHS budget justifications contained language similar to FY2018, saying that: The FY 2019 request does not include funding for LIHEAP, which is a decrease of $3.4 billion from the FY 2018 Continuing Resolution level. This continues the proposal from the FY 2018 President's Budget. In a constrained budget environment, difficult funding decisions were made to ensure that federal funds are being spent as effectively as possible. Some utility companies and state and local governments also provide heating and cooling assistance. Many states limit regulated utilities from discontinuing heat or cooling during specific timeframes such as certain winter/summer months and/or a certain number of consecutive days where the temperature drops below or increases above a certain level. The House Appropriations Committee released a draft bill to fund the Departments of Labor, Health and Human Services, and Education (LHHS) in FY2019 on June 14, 2018. The bill would provide the same level of funding for LIHEAP as in FY2018—$3.640 billion in regular funds. Also as in the previous year, the bill would distribute $678.5 million according to the statutory, or "new," LIHEAP formula, with the remainder, $2.962 billion, distributed using "old" formula percentages. (For more information about the LIHEAP formula, see CRS Report RL33275, The LIHEAP Formula , by Libby Perl.) As of the date of this report, the Senate Appropriations Committee had not yet released an LHHS bill. In FY2018, the appropriation for LIHEAP was $3.640 billion, provided as part of the FY2018 Consolidated Appropriations Act ( P.L. 115-141 ), enacted on March 23, 2018. The appropriation exceeded the FY2017 level of $3.390 billion by $250 million. As in FY2017, all funds were appropriated as regular funds, and the law provided that the majority of funds—$2.962 billion—be distributed according to the "old" LIHEAP formula. Before enactment of P.L. 115-141 , LIHEAP funding for FY2018 was provided through a series of continuing resolutions (CRs) that funded most federal programs at their FY2017 appropriations levels, less an across-the-board reduction of 0.6791%. On October 20, 2017, HHS announced that it was distributing just over $3 billion in FY2018 funds pursuant to the first CR. After enactment of P.L. 115-141 , HHS announced the distribution of the remainder of appropriated funds on April 23, 2018. For funds distributed to states, tribes, and territories, see Table B-1 . Prior to enactment of the CRs, the President's budget request proposed to eliminate funding for LIHEAP in FY2018. HHS budget justifications provided this explanation for no new funding for the year: The FY 2018 request does not include funding for LIHEAP. In a constrained budget environment, difficult funding decisions were made to ensure that federal funds are being spent as effectively as possible. Utility companies and state and local governments provide significant heating and cooling assistance. The majority of states prohibit utilities from discontinuing heat during the winter. FY2018 was the first time since LIHEAP's enactment that an administration proposed to eliminate funding for the program. See Table B-3 . Neither the House nor the Senate appropriations committees followed the President's proposal for FY2018 LIHEAP funding. The House Appropriations Committee approved its LHHS Appropriations bill ( H.R. 3358 ) on July 24, 2017. The bill proposed level funding for LIHEAP—$3.390 billion in regular funds, with $491 million allocated according to the "new" LIHEAP formula and the remainder according to the "old" LIHEAP formula. On September 7, 2017, the Senate Appropriations Committee approved its LHHS bill ( S. 1771 ). The bill would also have provided $3.390 billion in LIHEAP regular funds and the same "new" and "old" formula amounts. Both the House Appropriations Committee-reported bill and Senate Appropriations Committee-reported bill would have set aside $3 million for training and technical assistance, but neither specified an amount for leveraging incentive and REACH grants. Nor did H.R. 3358 or S. 1771 propose to appropriate emergency contingency funds (the last year emergency contingency funds were appropriated was FY2011). OMB determines the amount of LIHEAP funding that is released to the states pursuant to a CR. Despite the fact that the program is technically funded at the previous year's level, states do not necessarily receive the same amount of LIHEAP funding that they received in the previous year. This is due to a standard provision in continuing resolutions that states the following: [F]or those programs that would otherwise have high initial rates of operation or complete distribution of appropriations at the beginning of fiscal year 2018 because of distributions of funding to States, foreign countries, grantees, or others, such high initial rates of operation or complete distribution shall not be made, and no grants shall be awarded for such programs funded by this Act that would impinge on final funding prerogatives. The provision is meant to ensure that funds for a program that are released under a CR do not exceed the amount that is ultimately appropriated for it or effectively constrain Congress in its appropriations decision. Typically, states are eligible to receive their entire LIHEAP formula allocations in the first quarter of the fiscal year if they so choose, qualifying as a program "that would otherwise have high initial rates of operation or complete distribution of appropriations" at the beginning of the fiscal year as stipulated in the CR. OMB may gauge the amount of LIHEAP funding to release, in part, based on appropriations bills in the House or Senate or, in their absence, on the President's budget proposal. For example, if a proposed funding level in one chamber is lower than what is proposed in the other, then the amount subject to release could be based on the lower proposal (in the event that Congress would ultimately enact the lower funding level). In June 2010, the Government Accountability Office (GAO) released a report about the Low Income Home Energy Assistance Program (LIHEAP) entitled Low-Income Home Energy Assistance Program: Greater Fraud Prevention Controls Are Needed . The GAO report found instances of benefit payments to ineligible applicants based on various factors, including the use of Social Security Numbers (SSNs) from deceased or imprisoned individuals as well as the under-reporting of income or over-reporting of household members. In another instance, the GAO set up a fake utility company and through fake applicants was able to obtain LIHEAP benefits. GAO recommended ways in which HHS could prevent instances of fraud such as these in the future. Among the recommendations in the report were requiring applicants to provide SSNs and checking applicant information against various databases (e.g., Social Security Administration data, state vital records, and state directories of new hires). HHS reacted to the GAO report and its recommendations in several ways: The agency issued guidance that encouraged states to require LIHEAP applicants to divulge their SSNs. The LIHEAP statute and regulations do not require grantee states, tribes, and territories to collect SSNs or to verify applicant eligibility against specific databases, and not all states follow such verification procedures. Further, pursuant to the Privacy Act, HHS cannot require states to collect SSNs as part of the LIHEAP application process. However, the Tax Reform Act of 1976 ( P.L. 94-455 ) authorizes states to use SSNs in administering certain programs, including "general public assistance" programs, which HHS has interpreted to include LIHEAP. As a result, HHS released guidance that the law "authorizes States to require SSNs as a condition of eligibility for use in verifying the identity of individual applicants and their household members." As of FY2011, 40 states required LIHEAP applicants to provide SSNs, compared to 28 in FY2010. HHS released an Action Transmittal asking states to supplement the information they provide to HHS for FY2011 to show that they are working to prevent improper payments, fraud, waste, or abuse. The LIHEAP statute directs the HHS Secretary to establish regulations to prevent waste, fraud, and abuse. The regulations in turn require grantees to establish systems and procedures to prevent these activities among clients, vendors, and administering agencies. However, the same section of the statute also states that "[t]he Secretary may not prescribe the manner in which the States will comply with the provisions of this subsection." So while each year states must submit a plan to HHS in which they make "assurances" that they will comply with statutory requirements, there is no specific way that they must go about this. HHS suggested that states report on compliance monitoring, fraud reporting mechanisms, verifying applicant identities, cross-checking SSNs, and verifying applicant income, among others. HHS also assembled a Program Integrity Working Group to recommend ways in which the agency could address some of the issues raised. The working group released a report in April 2012. Among its recommendations were that (1) grantees require applicants to provide SSNs, but should provide for exceptions due to the emergency nature of LIHEAP, (2) HHS collaborate with other agencies, such as the Social Security Administration, to help with verification of identity and income, (3) HHS conduct a cost-benefit analysis of third party verification, and (4) grantees enter into vendor agreements that include provisions to prevent vendor fraud. At the direction of OMB, beginning in 2008, HHS staff, together with LIHEAP state directors, worked to arrive at a set of performance measures that would guide data collection and serve as a way of examining outcomes resulting from LIHEAP assistance. The performance measures are also intended to respond to some of the issues raised in the GAO report described in the previous section. States were first required to collect and report performance data for FY2016, though the data have not been made public. The type of performance data to be collected was published by HHS in a proposed information collection (and request for comment) on June 6, 2013, in the Federal Register and was amended slightly in a notice published a year later. There are three primary performance measures proposed. Each performance measure requires collection of several types of data. The Average Reduction in Energy Burden for Households Receiving Fuel Assistance: Within this measure, data collected and reported includes the average annual income of LIHEAP recipient households, average LIHEAP benefits, the number of LIHEAP recipient households that use each primary heating source, annual heating fuel consumption by LIHEAP recipient households, and electricity consumption for cooling. Requirements in the initial 2013 Federal Register notice to collect consumption data were made optional in the 2014 Federal Register notice. The Percent of Unduplicated Households Where LIHEAP Prevented a Potential Home Energy Crisis: Among the data collected for this performance measure are the number of households receiving utility past due or disconnect notices, the number receiving a notice from a bulk fuel vendor of an unpaid balance, the number of households who deplete deliverable fuel sources, and the number of households where LIHEAP benefits resulted in repair or replacement of heating or cooling equipment. The Percent of Unduplicated Households Where LIHEAP Benefits Restored Home Energy: This measure involves identifying households where LIHEAP receipt resulted in utility reconnection, purchase of bulk fuel, or repair or replacement of heating or cooling equipment. While LIHEAP state grantees are the entities required to collect and report the data to HHS, information on fuel and electricity consumption requires input from fuel vendors and utility companies. Appendix A. Legislative History of Energy Assistance LIHEAP was not the first federal energy assistance program created to help low-income households with their energy bills. Appropriations for home energy assistance initially came about in the 1970s at the time of the OPEC (Organization of the Petroleum Exporting Countries) Oil Embargo of 1973-1974. In the fall of that year, a number of countries in the Middle East stopped exporting oil to the United States, a stoppage that continued until March of 1974. Prices of heating oil rose, while supplies were restricted. What followed were several years in which Congress directed funds to assistance focused on lowering energy bills through weatherization and education. Later in the 1970s, assistance evolved to include crisis assistance for households facing shutoff or other emergencies, followed by a system of direct payments to subsidize the energy bills of low-income households. When LIHEAP was enacted, direct assistance for energy bills was the focus of the program, but all of these forms of assistance―weatherization, education, and crisis assistance―were made part of the program and continue to be eligible uses of funds. This appendix discusses the evolution of energy assistance in the 1970s and early 1980s, culminating in the creation of LIHEAP in 1982. Energy Assistance Programs Prior to LIHEAP The first federal funds for energy assistance were the outgrowth of a program that was created in Maine just after the start of the oil embargo by OPEC countries. In 1973, the Maine Office of Economic Opportunity applied to the federal Office of Economic Opportunity (OEO, the federal agency in charge of administering War on Poverty programs in the 1960s and 1970s) to fund a project they had conceived of called "Project Fuel." Energy costs, particularly the costs of heating oil and wood, were growing in Maine, and the state determined that it would assist low-income and elderly households in meeting their energy needs. OEO approved funding for the state at the end of 1973. Project FUEL used funding primarily to help "winterize" homes, but also to provide crisis counseling, and purchase fuel for use in emergency situations such as equipment breakdown or when dealers ran out of fuel. Project Fuel prompted what would become the first federal program to assist low-income households during the energy crisis, the Emergency Energy Conservation Program (EECP, P.L. 93-644 ) enacted as part of the Headstart, Economic Opportunity, and Community Partnership Act at the beginning of 1975. The law authorized the Community Services Administration (CSA, which replaced the OEO as part of the same bill) to use funds primarily for weatherization and conservation purposes, but also gave the authority to use funds for fuel voucher or stamp programs. Community Action Agencies, Community Development Corporations, state Offices of Economic Opportunity, and other public or private nonprofit organizations were eligible to apply to administer the funds. Congress first appropriated funds for the EECP in FY1975, $16.5 million, as part of a supplemental appropriations act ( P.L. 94-32 ). Funds for the Emergency Energy Conservation Program (to be used primarily for weatherization purposes) continued to be appropriated through FY1978. The EECP came to an end with the advent of the Weatherization Assistance Program (WAP), created in 1976 as part of P.L. 94-385 and administered by the Federal Energy Administration (the predecessor to the Department of Energy). WAP was meant to be a supplement to the EECP, not to replace it. However, the programs were similar. Community Action Agencies administered WAP funds and weatherized homes of low-income households. By FY1979, the Administration proposed that weatherization funds be made available only through the DOE program. In that year and thereafter, Congress stopped funding the CSA weatherization program and only appropriated funds to the DOE Weatherization Assistance Program. At the same time that weatherization assistance was phased out of the CSA, the agency began to administer direct assistance to low-income households to help pay their energy bills. In FY1977, as part of a supplemental appropriations act ( P.L. 95-26 ), $200 million was appropriated to be used through the CSA for a Special Crisis Intervention Program. P.L. 95-26 , which was debated and enacted in the spring of 1977, came just after an unusually cold winter in which both fuel usage and prices had been high, resulting in large numbers of consumers facing utility disconnection. Unlike previous funding for the EECP, which went primarily to fund weatherization, the FY1977 supplemental funding was to be used by the states for direct payments to utilities and fuel suppliers. The program allowed for up to $250 payments to utilities on behalf of customers whose power had been shut off or threatened with shut off, and up to $50 directly to households that could prove "dire financial need" as the result of having paid large fuel bills. Congress again appropriated funds to help households facing energy crises in FY1978 and FY1979 (see Table A-1 ). In FY1980, Congress expanded energy assistance by appropriating significantly more funding than had been made available in the past, a total of $1.6 billion provided through 2 different agencies. The impetus behind the rather dramatic increase in funding was, as in the early 1970s, the increase in energy prices, particularly heating oil. In 1979, the decontrol of domestic oil prices, together with an increase in OPEC oil prices, led to increases in the price of heating oil and kerosene. An article in the Congressional Quarterly describing the environment surrounding the passage of energy assistance legislation noted the "spectacular rise in the price of home heating oil" as "the biggest factor in the problems that led Congress to take action." In the summer and fall of 1979, the Senate Committee on Labor and Human Resources alone held 12 hearings on energy assistance legislation. Enactment of LIEAP, the Predecessor Program to LIHEAP Energy needs of low-income households continued to occupy the President and Congress after the appropriation of energy assistance funding for FY1980. One of the proposals to fund energy assistance for FY1980, S. 1724, the Home Energy Assistance Act (as reported by the Senate Committee on Labor and Human Resources), proposed a new energy assistance program to be authorized from FY1981 through FY1984. The program was enacted in April 1980 as the Low Income Energy Assistance Program (LIEAP) as part of the Crude Oil Windfall Profits Tax Act ( P.L. 96-223 ). LIEAP was to be funded by windfall profits taxes imposed as part of P.L. 96-223 and deposited in a Treasury account, but the law did not provide for the account to be established, so the program was funded by an appropriation. LIEAP was authorized at $3 billion for FY1981; $1.85 billion was appropriated for the program in that year ( P.L. 96-369 ). Like LIHEAP, the program that was to follow, LIEAP was a block grant program to states. Funds were primarily distributed to the states by formula, with a small amount ($100 million) reserved for crisis assistance. States could use funds to help low-income households pay home energy costs. While the term "home energy" included cooling assistance, states could only provide cooling assistance in cases of medical need. Eligible households were considered those at or below the Bureau of Labor Statistics lower living standard, an income level that exceeded the poverty level in most instances. Recipients of certain means-tested benefits—Aid to Families with Dependent Children (now TANF), Food Stamps (now SNAP), SSI benefits, and certain veterans' benefits—were eligible for LIEAP benefits. Payments could be made to fuel suppliers or utilities, residents, or both, at the discretion of the state. States had some discretion in setting up their programs, with the ability to determine the state and local agencies that would administer the program, who would receive payments, the amount of benefits, certification for eligibility, how to provide benefits to renters, and establishment of funds to emergencies (up to 3% of total). Most at issue in enactment of LIEAP was how funds would be distributed to the states, specifically whether states would receive the same share of funds, or if colder weather states would have preference. The formula established for LIEAP was complex and incorporated data that included temperatures, energy expenditures, and the number of low-income households. For more information about the LIEAP formula and how it pertains to LIHEAP, see CRS Report RL33275, The LIHEAP Formula , by Libby Perl. Enactment of LIHEAP In 1981, Congress enacted a new program, the Low Income Home Energy Assistance Program (LIHEAP), which replaced LIEAP. LIHEAP was similar to its predecessor program in that it was set up as a block grant to states, tribes, and territories to help low-income households meet their energy needs. LIHEAP maintained the same formula distribution as was set up under LIEAP. Unlike LIEAP, grantees were able to use funds for cooling expenses without a showing of medical necessity, as well as for weatherization. Grantees were given the option of setting eligibility at the higher of 150% of poverty or 60% of state median income (rather than the BLS lower living standard), and the program maintained eligibility for recipients of AFDC (now TANF), Food Stamps (now SNAP), SSI benefits, and certain veterans' benefits. The program was authorized at $1.875 billion from FY1982 through FY1984 and was funded at that level in its first year of operation. For historic LIHEAP funding levels, see Table B-3 . LIHEAP differed from LIEAP in that states were given more flexibility and had fewer administrative requirements in implementation. For example, under the new LIHEAP program, states were only required to report about households assisted annually, compared to quarterly under LIEAP, and HHS did not require uniform data collection or record keeping standards. Under LIEAP, states had to submit detailed changes in plans each time they wanted to modify benefit levels or the way in which funds were used. In applying for LIHEAP funds, the statute only required grantees to make assurances about the services they would provide, and HHS did not have the authority to dictate how states would accomplish program goals or to approve or disapprove state plans. Appendix B. Tables Showing LIHEAP Funding Levels In this appendix are two tables that show how LIHEAP funds have been distributed to the states, tribes, and territories during recent fiscal years, and an additional table showing historical funding levels from the time the program was created to the present. Table B-1 shows the amount of LIHEAP regular funds distributed to states, tribes, and territories pursuant to the FY2018 Consolidated Appropriations Act ( P.L. 115-141 ). Initially LIHEAP was funded through a series of CRs at FY2017 levels less an across-the-board reduction of 0.6791%. On October 20, 2017, HHS announced the first distribution of FY2018 funds to states, tribes, and territories, totaling more than $3 billion. After the final FY2018 appropriations bill was enacted, HHS announced distribution of remaining funds on April 23, 2018. Net allocations from the two distributions to the states are in columns (a) and (c) (i.e., the columns do not include funding for tribes) and tribal allocations are in columns (b) and (d). Allocations for the territories are in the last rows of the table, after the states. Column (e) shows total FY2018 funding for all grantees. Table B-2 shows the total amount of LIHEAP regular and emergency contingency funds distributed to each state from FY2008 through FY2017; the totals include funds distributed to tribes within the states. Funding for the territories is in the last rows of the table, after the states. Table B-3 provides historic funding levels for LIHEAP from the time the program was initially funded, in FY1982, through proposed funding in FY2019. The table shows authorization levels for LIHEAP regular funds, Administration budget requests for both regular and emergency contingency funds, the total amount of regular and emergency contingency funds appropriated in each fiscal year, and the total amount of emergency contingency funds distributed.
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The Low Income Home Energy Assistance Program (LIHEAP), established in 1981 as part of the Omnibus Budget Reconciliation Act (P.L. 97-35), is a program through which the federal government makes annual grants to states, tribes, and territories to operate home energy assistance programs for low-income households. The LIHEAP statute authorizes two types of funds: regular funds (sometimes referred to as formula or block grant funds), which are allocated to all states using a statutory formula, and emergency contingency funds, which are allocated to one or more states at the discretion of the Administration in cases of emergency as defined by the LIHEAP statute. States may use LIHEAP funds to help low-income households pay for heating and cooling costs, for crisis assistance, weatherization assistance, and services (such as counseling) to reduce the need for energy assistance. The LIHEAP statute establishes federal eligibility for households with incomes at or below 150% of poverty or 60% of state median income, whichever is higher, although states may set lower limits. The largest share of LIHEAP funding goes to pay for heating assistance. In FY2014, the most recent year for which data are available, approximately 49% of funds went to pay for heating assistance, 7% was used for cooling aid, 21% went to crisis assistance, and 9% was used for weatherization. Funds are also used for administration (9% in FY2014) and up to 10% of a state's allotment can be carried over for use in the next fiscal year (4% in FY2014). In FY2014, approximately 6.3 million households received heating and/or winter crisis assistance, and 800,000 received cooling and/or summer crisis assistance. For FY2018, the LIHEAP appropriation was $3.640 billion in regular funds, enacted as part of the FY2018 Consolidated Appropriations Act (P.L. 115-141), an increase of $250 million over the FY2017 funding level. Before enactment of P.L. 115-141, on March 23, 2018, LIHEAP had been funded through a series of continuing resolutions (CRs) at the FY2017 appropriations level of $3.390 billion in regular funds, less an across-the-board reduction of 0.6791% (P.L. 115-56). On October 20, 2017, HHS announced the first distribution of FY2018 LIHEAP funds under the CR, and on April 23, 2018, HHS announced the distribution of the remainder of funds appropriated pursuant to P.L. 115-141. For FY2018 funds distributed to states, tribes, and territories, see Table B-1. For FY2019, as in FY2018, the President's budget proposed to eliminate funding for LIHEAP (see Table B-3). As of the date of this report, the House Appropriations Committee had released its draft FY2019 funding bill for the Departments of Labor, Health and Human Services, and Education (LHHS), which proposed funding LIHEAP at its FY2018 level of $3.640 billion. The Senate Appropriations Committee had not yet released an FY2019 LHHS funding bill.
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A gricultural exports are important to both farmers and the U.S. economy. In 2016, U.S. agricultural exports totaled nearly $135 billion. Major U.S. agricultural exports, by value, were oilseeds and grains, meat and animal products, tree nuts, and fruit and vegetable products ( Figure 1 ). As U.S. agricultural production has grown faster than domestic demand, farmers and agriculturally oriented firms rely heavily on export markets to sustain prices and revenue. Accordingly, the 2014 farm bill (Agricultural Act of 2014, P.L. 113-79 ) authorizes a number of programs to promote farm exports. These programs are administered by the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA). This report also discusses how these programs comply with international trade rules under the World Trade Organization (WTO). Other federal agencies also play a role in supporting agricultural exports through various finance, insurance, and loan programs. Following an overview of USDA's export promotion programs, this report describes available research and analysis of the effectiveness of these programs, highlighting advocacy positions both for and against USDA's programs. These programs could become an issue for Congress in the next farm bill debate: Legislation introduced in both the House and the Senate seeks to double available annual funding for some of these programs, while others in Congress who have long opposed these programs have called for reduced funding and/or program elimination. Figure 1. USDA Agricultural Exports, 1989-2016Source: CRS from USDA trade (https://apps.fas.usda.gov/gats/default.aspx). USDA's FAS administers a series of programs to develop export markets for U.S. agricultural products. These programs are authorized in periodic omnibus farm bills. USDA administers two types of agricultural trade and export promotion programs: 1. Export market development programs assist U.S. industry efforts to build, maintain, and expand overseas markets for U.S. agricultural products. USDA administers five programs: the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for Specialty Crops (TASC) program. In general, these programs provide matching funds to U.S. organizations to conduct a wide range of activities, including information and market research, consumer promotion, counseling and assistance, trade servicing, capacity building, and market access support to potential U.S. exporters of agricultural products. 2. Export financing assistance programs , such as the Export Credit Guarantee Program (GSM-102) and the Facility Guarantee Program (FGP), provide payment guarantees on commercial financing to facilitate U.S. agricultural exports. These programs provide loan guarantees to lower the cost of borrowing to foreign countries to buy U.S. agricultural products. GSM-102 guarantees repayment of commercial financing by approved foreign banks, mainly of developing countries, for up to two years for the purchase of U.S. farm and food products. FGP guarantees financing of goods and services exported from the United States to improve or establish agriculture-related facilities in emerging markets. Table 1 and Table 2 and provides additional information on these programs. The 2014 farm bill reauthorized many of these programs and extended their funding through FY2018. Funding for USDA's market development and export assistance programs is mandatory through the borrowing authority of the Commodity Credit Corporation (CCC) and therefore is not subject to annual appropriations. Annual mandatory CCC funding for USDA's export market promotion programs is authorized at approximately $255 million (not including reductions due to sequestration). MAP and FMDP account for more than 90% of authorized funding for USDA's export market promotion programs. In recent years, as reported by USDA, annual funding allocations for these two programs have averaged about $200 million (FY2014-FY217), reflecting sequestration reductions and other reductions. However, both MAP and FMDP require some type of contribution or (in some cases) matching funds by USDA's industry partners. Contributions by industry partners have been increasing, accounting for more than 70% of total MAP and FDMP funding in 2014. Estimated total available funds for these two programs (of combined public and private funding) was roughly $680 million (based on USDA-reported data for 2014) ( Figure 2 ). USDA reports program administration costs for MAP and FMDP at between $6.3 million and $7.0 million. USDA's GSM-102 export credit guarantee program facilitates commercial bank financing of up to $5.5 billion of U.S. agricultural exports annually. The program's total guarantee value has been reported at $2.1 billion in FY2016 and about $3.5 billion in FY2017. Under the program, CCC does not provide financing per se but guarantees payments due from foreign banks and buyers—usually guaranteeing 98% of the principal payment due and interest rates based on a percentage of the one-year Treasury rate. Given that the program's repayment terms (from nine to 18 months), budgetary outlays are mostly associated with administrative expenses totaling about $7 million annually. As a member of the WTO, the United States has committed to abide by WTO rules and disciplines, including those that govern the use of and funding for export subsidies as well as domestic farm support measures. Both export subsidies and domestic farm support measures were subject to reduction commitments under WTO's Agreement on Agriculture (AoA), which entered into force in 1995. AoA also requires that member countries notify the WTO Committee on Agriculture annually with respect to export subsidies and other forms of agricultural domestic support measures. USDA's market development and export assistance programs, however, were not subject to commitment reductions, nor are they notified to the WTO under rules governing notification of export subsidies or domestic farm support measures. Under WTO rules, market research and promotion services are generally considered to be "green box" policies and not subject to commitment reductions. Such services mostly provide information and technical assistance, involve public-private partnerships, and (unlike export subsidies) do not lower prices to foreign buyers. As a justification for exemption from WTO rules, some also continue to cite a provision initially included in the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement, Article 8). The provision (now lapsed) identified certain "Non-Actionable Subsidies" to include generic research and promotion. By contrast, some export subsidies are considered "amber box" and are subject to limits under WTO rules. Export subsidies include direct subsidies (e.g., "payments-in-kind, to a firm, to an industry, to producers of an agricultural product, to a cooperative or other association of such producers, or to a marketing board, contingent on export performance"); the sale or disposal for export by governments of agricultural products at below-market prices; payments financed from the proceeds of government taxes imposed on an agricultural product; subsidies to reduce the costs of marketing exports of agricultural products; and internal transport and freight charges on export shipments, among other types of subsidies. The SCM Agreement's Annex I (Illustrative List of Export Subsidies) item (j) further lists among other types of export subsidies [t]he provision by governments (or special institutions controlled by governments) of export credit guarantee or insurance programs, of insurance or guarantee programs against increases in the cost of exported products or of exchange risk programs, at premium rates which are inadequate to cover the long term operating costs and losses of the programs. Export subsidies were further addressed as part of both the WTO's Bali Ministerial Decision (December 2013) and the Nairobi Ministerial Decision (December 2015). Member countries agreed to exercise "utmost restraint" with regard to the use of export subsidies and other forms of "export competition" policies that have the effect of subsidizing exports in international markets. "Export competition" policies include direct export subsidies, export credits, export credit guarantees or insurance programs, international food aid, and agricultural exporting state trading enterprises. The Nairobi Ministerial Decision also specified certain terms and conditions for conformity regarding export financing support: Maximum repayment terms should be no more than 18 months, and such support should be self-financing (via fees or contract premiums charged). To obtain a guarantee, an exporter has to pay premium rates (i.e., fees) charged to program beneficiaries and should adequately cover the long-term operating costs of the program, thus avoiding imparting an implicit subsidy benefit. Fees are generally calculated on the basis of guaranteed value, according to a schedule of rates applicable to different credit terms and repayment intervals. U.S. trade officials have long argued that the U.S. export credit guarantee programs are consistent with WTO obligations and not subject to reduction commitments. Furthermore, the United States has asserted that the AoA (Article 10.2) reflects the deferral of disciplines on export credit guarantee programs until the next WTO multilateral negotiating round (Doha Round). The United States' most recent U.S. notification to the WTO concerning its export subsidy commitments covers 2014 and shows zero outlays and zero quantities of subsidized agricultural products for the year. Nevertheless, as part of the 2014 farm bill ( P.L. 113-79 , §3101), Congress shortened the loan term on which export credit guarantees would be made available from 36 months to 24 months in order to conform to U.S. WTO commitments. In practice, USDA currently limits the term of loan guarantees under GSM-102 to a maximum of 18 months. Congress also authorized USDA to make other changes to the GSM-102 program to meet the terms and conditions of the 2010 Memorandum of Understanding (MOU) between Brazil and the United States related to the WTO cotton dispute. (See text box on next page for more information on the dispute.) USDA implemented subsequent changes to the program in 2014, further addressing repayment terms and guarantee fees, among other changes. In general, the United States abides by the Organization for Economic Cooperation and Development Arrangement on Officially Supported Export Credits (OECD Arrangement) in its export credit financing activities involving other federal agencies. The OECD Arrangement establishes minimum interest rates, maximum repayment terms, guidelines for classifying risks, and other terms and conditions for government-backed export financing. Export credit financing that is covered by the OECD Arrangement is generally exempt from the WTO SCM Agreement. The SCM Agreement has been interpreted to indicate that, for non-agricultural products, an export credit practice in conformity with the OECD Arrangement on export credits shall not be considered as an export subsidy prohibited by the SCM Agreement. USDA has commissioned a number of economic studies to assess the effects of USDA's export market development programs on U.S. agricultural exports, export revenue, and other economy-wide effects, including impacts on the farm economy, macroeconomic output, and full-time U.S. civilian jobs. These studies utilize various approaches, including computable general equilibrium models, IMPLAN (IMpact Analysis for PLANning) input-output models, and benefit-cost ratios, among other types of methodological approaches. These studies often yield widely differing results. Similar studies have not been conducted to assess the effectiveness of USDA's export credit programs. Most studies measure the "economic return ratio," or the ratio of the estimated returns compared to the estimated costs. Economic return estimates from these studies range from $24 to $37 for each dollar spent on FAS's market development programs (generally focused on MAP and FMDP). A summary of these studies is posted at https://www.agexportscount.com/resources/ . USDA's most recent commissioned study suggests that MAP and FMDP return $28 for each dollar spent on these programs. This updates a 2010 USDA-commissioned study that estimated that U.S. food and agricultural exports increased by $35 for every additional $1 spent by government and industry on market development. Other estimates by USDA indicate that FAS market development programs return $37 for each dollar spent on the programs. The National Association of State Departments of Agriculture (NASDA) finds that the return on investment from MAP is $24 for every $1 spent in foreign market development. These studies make additional claims regarding the broader economy-wide returns in terms of farm revenue, economic output, and full-time U.S. jobs. USDA's most recently commissioned study states that spending on MAP and FMDP resulted in increased export volumes, higher prices, and greater farm income levels. These studies regularly include other estimates such as changes in economic output, gross domestic product, labor income, and U.S. economic welfare. Specifically, USDA's most recent study concludes that from 2002 to 2014, MAP and FMDP added $12.5 billion to export value and added $1 billion to $2 billion to farm income on average annually (depending on the modeling approach used). The study also concludes that MAP and FMDP added up to 240,000 full- and part-time jobs across the entire U.S. economy over the 2002-2014 period. Because the estimated benefits of USDA's programs are large relative to the cost of these programs, some contend that the programs are vastly underfunded from an economic optimization standpoint. Over the years, the U.S. Government Accountability Office (GAO) has raised many questions regarding USDA's export promotion programs. These reports have generally been critical of USDA-reported estimates of the economic effects of its export market development programs on U.S. agricultural exports, export revenue, and other economy-wide effects. The most recent of these reports, in 2013, expressed ongoing concerns about USDA's assessment methodologies for estimating program effectiveness, citing the need for improved methods and cost-benefit analysis. Regarding the study USDA commissioned in 2010, GAO concluded that methodological limitations may affect the accuracy and magnitude of USDA's estimated benefits. GAO criticized this study because "the model used to estimate changes in market share omitted important variables and, second, a sensitivity analysis of key assumptions was not conducted for that and another model that the study used," among other types of concerns. These criticisms may have prompted USDA's more recent 2016 commissioned study. GAO's report further highlighted that USDA's program funding has been spent on a consistent set of participants and in a consistent group of countries. It also confirmed that industry contributions often exceed matching contribution requirements ( Figure 2 ). GAO also noted the potential (despite management efforts) for duplication risks and cited the need to improve reporting requirements for program participants. Previously, in a 1997 report, GAO concluded that "no conclusive evidence exists that these programs have measurably expanded aggregate employment and output or reduced the trade and budget deficits." GAO also concluded that there is "limited evidence" of benefits to the U.S. agricultural sector in terms of farm income and employment. GAO identified a "lack of transparency" in participant reporting as contributing to the limitations in USDA's analysis. GAO further noted that "there are widely divergent views about the amount of leverage these programs provided in the past." GAO's recommendations focused on the need for USDA to develop more systematic information on the potential strategic value of USDA's export assistance programs. In its 1997 review, GAO also noted that other economic factors are often more important in influencing export markets, such as expanding global markets and rising demand for U.S. products, making it difficult to determine how USDA's export assistance programs may be influencing U.S. export markets. Other economic studies reviewed as part of GAO's 1997 review indicate that evidence is mixed regarding the relevance of export assistance program, especially in terms of impacts to the overall economy, the U.S. agricultural sectors, and specific products. A 1999 GAO review further concluded that "few studies show an unambiguously positive effect of government promotional activities on exports." Other studies GAO reviewed found "no evidence that advertising and promotion expenditures had an expansionary effect" on foreign demand for some agricultural products. Other GAO assessments of USDA's export assistance programs have been similarly critical. During the 1990s, GAO testified and made recommendations to Congress on a range of issues regarding USDA's export programs, including the need for USDA to improve its agricultural trade office operations and program management and strategic planning, as well as the need to assess the benefits of these programs and provide assurances that public funds are being spent effectively. USDA's Office of Inspector General (OIG) also conducted a review of USDA's export market development programs to determine whether these programs foster expanded trade activities in the exporting of U.S. agricultural products. The review focused on data and information collection under MAP. OIG recommended that USDA "identify those areas where tracking and analyzing specific data would be useful to the agency's efforts to expand exports of U.S. agricultural products, and based on this documented analysis, implement a formal system to track this information." This included implementing "methodologies to ensure participants conduct periodic program evaluations to effectively measure their accomplishments with MAP funding" in addition to implementing standard reporting requirements. OIG also recommended that USDA conduct more outreach and provide information on foreign trade constraints and business opportunities. The Coalition to Promote U.S. Agricultural Exports consists of more than 75 organizations representing farmers, ranchers, fishermen, forest product producers, cooperatives, small businesses, regional trade organizations, and the state departments of agriculture that are actively supporting the continuation and expansion of USDA's export market development programs. (Other sponsor groups include the Coalition to Promote Agricultural Exports, the Agribusiness Coalition for Foreign Market Development, and the U.S. Agricultural Export Development Council). The coalition continues to express its support for MAP and other USDA export programs, building on its efforts in prior years. In anticipation of the next farm bill debate, legislation introduced in both the House and Senate (Cultivating Revitalization by Expanding American Agricultural Trade and Exports Act, or CREAATE Act, H.R. 2321 / S. 1839 ) would double annual funding for MAP and FMDP to $400 million and $69 million, respectively, by 2023. The coalition supports doubling funding for MAP and FMDP. NASDA also supports doubling annual MAP funding. Researchers point out that government intervention is warranted in the case of market promotion to address market failure and to avoid the "free rider" problem. For example, in this case, if no single exporter has an incentive to spend his/her own resources on export market promotion, this could result in underinvestment in the market. Researchers also note that, alternatively, if someone were to invest in export market promotion, others would not see the need to contribute and instead would "free ride" (i.e., benefit from market promotion efforts without paying for it). Others cite the need to proactively promote U.S. exports to communicate to foreign buyers what differentiates U.S. farm products from those of other global suppliers and to offset subsidies offered by some U.S. competitors, such as in the European Union. Some in Congress have long opposed some of USDA's export and market promotion programs, especially MAP, and have called for their elimination and/or reduced program funding. President Trump's FY2018 budget also proposes to eliminate both MAP and FMDP. MAP has also been targeted by outside groups, including the Heritage Foundation, Citizens Against Government Waste, Taxpayers for Common Sense, and National Taxpayers Union (NTU). Previous legislation has sought to limit federal spending on some export promotion programs through the appropriations process. For example, an amendment (S.Amdt. 3323, Flake) to the FY2015 Agricultural Appropriations minibus bill ( H.R. 4660 , 113 th Congress) would have prohibited USDA from spending money to fund QSP. The amendment was not agreed to. Another amendment ( H.Amdt. 480 , Flake) to the FY2012 Agricultural Appropriations House bill ( H.R. 2112 , 112 th Congress) would have prohibited USDA from using available funds to carry out MAP. That amendment was also not agreed to. Other Members of Congress have proposed legislative changes to MAP as well. During the 2014 farm bill debate, an amendment (S.Amdt. 1007, McCain/Coburn) to the Senate farm bill ( S. 954 , 113 th Congress) would have (1) reduced MAP funding by 20%, (2) prohibited the use of funding for certain activities (including animal spa products; reality television shows; cat or dog food or other pet food; wine, beer and spirits tastings, festivals, or other related activities; and cheese award shows and contests); and (3) required USDA to disclose annually all MAP-related travel-related expenses. No vote was taken on the amendment. Some contend that MAP funding is corporate welfare that subsidizes overseas advertising. These critics point to funding provided to some large companies—including Welch Food, Sunkist Growers, Blue Diamond Growers, Sunsweet, Sun-Maid, Cal-Pure Pistachios, and Ocean Spray—as well as other large producer groups such as the California Wine Institute, Brewers Association, Cotton Council International, and the Pet Food Institute. GAO reported that, in 2011, about 85% of MAP funding was spent on overseas promotion of generic commodities while the remaining 15% was spent to promote branded products. In addition to USDA's export financing assistance through GSM-102 and FGP, other federal agencies also provide assistance to U.S. agricultural exporters such as the Export-Import Bank (Ex-Im Bank) and the Small Business Administration (SBA). These agencies provide support to both agricultural and non-farm exporting companies. However, data and information are not publicly available to indicate the extent to which these agencies have provided support to agricultural exporters. Ex-Im Bank, a wholly owned U.S. government corporation, finances and insures U.S. exports of goods and services in order to support U.S. jobs. It aims to do so when the private sector is unwilling or unable to finance exports alone at commercially viable terms and/or to counter financing offered by foreign countries through their counterparts to Ex-Im Bank. Ex-Im Bank takes the lead in financing and insuring non-agricultural U.S. exports but also plays a role in supporting agricultural exports through its finance and insurance programs. Structurally, agricultural export support through Ex-Im Bank and USDA takes place through separate operations. However, by statute, Ex-Im Bank's agricultural export support is influenced by USDA's programs and positions. Specifically, Ex-Im Bank's charter states that it must supplement, but not compete with, private capital or the CCC agricultural commodity programs. In addition, the charter requires Ex-Im Bank, in carrying out its agricultural export support, to (1) consult with the Secretary of Agriculture, (2) take into consideration any recommendations that the Secretary of Agriculture makes against Ex-Im Bank financing the export of a particular agricultural commodity, and (3) consider the importance of agriculture commodity exports to the U.S. export market and the nation's trade balance in deciding whether or not to provide agricultural export support. Ex-Im Bank's charter also requires the bank, when providing agricultural export support, to seek to minimize competition in government-backed export financing. It is further required to cooperate with other U.S. government agencies to seek international agreements to reduce what it refers to as government-subsidized export financing. The United States has negotiated with other OECD members on agreed disciplines for government-backed export credit financing. In terms of agriculture, historically, the view was that Ex-Im Bank focused on export financing of agricultural equipment and inputs, while USDA focused on export financing of agricultural commodities. However, Ex-Im Bank's role in supporting agricultural exports appears to have evolved to include agricultural commodities and consumables (e.g., grain, soil additives) through its short-term insurance program; livestock through its short- or medium-term programs; the export of agricultural equipment (various machinery, such as seeders and combines), through its medium-term financing; and the export of goods and services for agricultural projects (e.g., meat processing facilities) through project financing. Ex-Im Bank's short-term export credit insurance programs are comparable to USDA's GSM-102 program in their availability to support U.S. agricultural commodity exports. Ex-Im Bank's direct loan, loan guarantee, and insurance programs have been characterized as comparable to USDA's FGP in their availability to support U.S. agricultural capital goods exports. Support for agricultural goods and services by Ex-Im Bank constitutes a small share of Ex-Im Bank's total authorizations and estimated total U.S. exports supported. In addition, it is significantly less than the amount that USDA directs to agricultural export financing. For instance, in FY2016, Ex-Im Bank authorized over $190 million (out of $5 billion in total authorizations) to support nearly $520 million of U.S. agricultural exports (out of $8 billion in total U.S. exports estimated to be supported by Ex-Im Bank). In comparison, GSM-102 program's total guarantee value was $2.1 billion in FY2016 and $3.5 billion in FY2017. Other differences between USDA and Ex-Im programs vary also in terms of mission, eligibility, repayment terms, and specific program requirements. Given that Ex-Im Bank and USDA both support U.S. agricultural exports through similar tools, policymakers have periodically raised questions about whether their activities are duplicative. On one hand, the agencies have different missions and have fashioned their programs accordingly to serve different constituencies. As such, the programs have different features. For example, if USDA-supported export financing is unavailable due to program restrictions or the sales contract terms proposed by the foreign buyer, Ex-Im Bank support may be an alternative. On the other hand, the diffusion of agricultural export financing services across two agencies may cause confusion for U.S. businesses and raise inefficiencies in the provision of government services. SBA administers several types of programs to support small businesses, including loan guarantee and venture capital programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. With respect to international trade, SBA provides financial assistance, technical assistance, and grants to states for the purposes of supporting small businesses (generally defined as firms with fewer than 500 employees) involved in international trade. SBA serves all businesses defined as "small" by the agency, and it makes no distinction among exporters in different industries for the purposes of its trade and export promotion programs. SBA has three variations of its broader financing programs that are targeted to exporters: 1. The Export Express loan program, which provides working capital or fixed asset financing for small businesses that will begin or expand exporting, 2. The Export Working Capital loan program, which provides financing to support export orders or the export transaction cycle from purchase order to final payment, and 3. The International Trade loan program, which provides long-term financing to support small businesses that are expanding because of growing export sales or have been adversely affected by imports and need to modernize to meet foreign competition. All of SBA's loan guarantee programs require personal guarantees from borrowers and share the risk of default with lenders by making the guarantee less than 100%. Compared to its more general purpose business loan guarantees, though, SBA provides a higher rate of guarantee on the principal value of loans issued through its export financing programs (ranging from 75% to 90% in the trade loans, depending on the purpose and size of the loan, compared to 50% to 85% in the more general business loan guarantee programs). SBA provides loan guarantees for small businesses that cannot obtain credit elsewhere. In FY2016, SBA guaranteed $1.55 billion in loans to 1,550 small business exporters. In terms of technical assistance, SBA's Office of International Trade works in coordination with SBA district offices, resource partners (such as Small Business Development Centers), and U.S. Export Assistance Centers to provide technical assistance to small businesses that are looking to start exporting or already export. SBA also awards grants to states through its State Trade Expansion Program (STEP) for various activities intended to increase the number and volume of small business exports, such as participation in foreign trade missions, trade show exhibitions, or export training workshops. SBA's most recent round of STEP awards for FY2017 totaled $18 million.
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Agricultural exports are important to both farmers and the U.S. economy. With the productivity of U.S. agriculture growing faster than domestic demand, farmers and agriculturally oriented firms rely heavily on export markets to sustain prices and revenue. The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79) authorizes a number of programs to promote farm exports that are administered by the U.S. Department of Agriculture (USDA). There are two main types of agricultural trade and export promotion programs: 1. Export market development programs assist efforts to build, maintain, and expand overseas markets for U.S. agricultural products. Programs include the Market Access Program (MAP), the Foreign Market Development Program (FMDP), the Emerging Markets Program (EMP), the Quality Samples Program (QSP), and the Technical Assistance for Specialty Crops Program (TASC). 2. Export financing assistance programs provide payment guarantees on commercial financing to facilitate U.S. agricultural exports. Programs include the Export Credit Guarantee Program (GSM-102) and the Facility Guarantee Program (FGP). Annual funding for USDA's export market promotion programs is authorized at about $255 million (not including reductions due to sequestration). In addition, USDA's export credit guarantee programs provide commercial bank financing of up to $5.5 billion of U.S. agricultural exports annually. Funding for USDA's programs is mandatory through the Commodity Credit Corporation and is not subject to annual appropriations. USDA has commissioned a number of economic studies to assess the effects of its export market development programs on U.S. agricultural exports, export revenue, and other economy-wide effects. Most studies measure the "economic return ratio" or the ratio of the estimated returns compared to the estimated costs. USDA's most recently commissioned study claims that MAP and FMDP return $28 for each dollar spent. USDA's studies also claim broader economy-wide returns in terms of farm revenue, economic output, and full-time jobs. However, the U.S. Government Accountability Office (GAO) has raised many questions regarding USDA's export promotion programs. GAO's reports have generally been critical of USDA-reported estimates of the economic effects of USDA's programs on U.S. agricultural exports, export revenue, and other economy-wide effects. The most recent GAO report expressed ongoing concerns about USDA's assessment methodologies for estimating program effectiveness, citing the need for improved methods and cost-benefit analysis. USDA's Office of Inspector General (OIG) also conducted a review of its export market development programs and recommended certain changes with regard to data and information collection by program participants. In anticipation of the next farm bill debate, legislation introduced in both the House and Senate (Cultivating Revitalization by Expanding American Agricultural Trade and Exports Act or CREAATE Act, H.R. 2321/S. 1839) would progressively double annual funding for MAP and FMDP to $400 million and $69 million, respectively, by 2023. The Coalition to Promote U.S. Agricultural Exports and the National Association of State Departments of Agriculture also support doubling funding for MAP and FMDP. However, some in Congress have long opposed USDA's export and market promotion programs, especially MAP, calling for its elimination and/or reduced program funding. President Trump's FY2018 budget proposes to eliminate both MAP and FMDP.
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On December 22, 2006, President Bush signed P.L. 109-449 ( S. 362 ), establishing NOAA and Coast Guard programs to manage marine debris and address its adverse effects on endangered species. On December 9, 2006, the Senate agreed to the House-amended S. 362 . On December 9, 2006, the House passed the Senate-amended H.R. 5946 . On December 7, 2006, the Senate passed H.R. 5946 , amended to incorporate language (1) requiring a study of sea turtle excluder devices in shrimp trawls, and (2) implementing the Agreement on the Conservation and Management of the Alaska-Chukotka Polar Bear Population. On December 6, 2006, the Senate passed H.R. 4075 , after amending this bill to incorporate language implementing the Agreement on the Conservation and Management of the Alaska-Chukotka Polar Bear Population. (This report replaces CRS Issue Brief IB10144, The Endangered Species Act (ESA) in the 109 th Congress: Conflicting Values and Difficult Choices , by [author name scrubbed] et al.) The 1973 ESA ( P.L. 93-205 , as amended; 16 U.S.C. §§1531-1543) was a comprehensive attempt to protect species at risk of extinction and to consider habitat protection as an integral part of that effort. A stated purpose of the ESA is to protect the ecosystems of which listed species are a part. Under the ESA, species of plants and animals (both vertebrate and invertebrate) may be listed as either endangered or threatened according to assessments of the risk of their extinction. More flexible management can be provided for species listed as threatened. Distinct population segments may also be listed as threatened or endangered, but only of vertebrate species. Consequently, some populations of chinook, coho, chum, and sockeye salmon in Washington, Oregon, Idaho, and California are protected under the ESA, even as other healthy populations of these same species in Alaska are not listed and may be commercially harvested. More limited protection is available for plant species under the ESA. Once a species is listed, powerful legal tools, including penalties and citizen suits, are available to aid species recovery and protect habitat. Use of these tools, or the failure to use them, has led to conflict. The ESA is administered by the Department of the Interior's Fish and Wildlife Service (FWS) for terrestrial and freshwater species and some marine mammals, and by the National Marine Fisheries Service (NMFS; also popularly referred to as NOAA Fisheries) in the Department of Commerce's National Oceanic and Atmospheric Administration (NOAA) for the remaining marine and anadromous species. The U.S. Geological Survey's Biological Resources Division conducts research on species for which FWS has management authority; NMFS conducts research on the species for which it is responsible. As of September 20, 2006, a total of 1,132 species of animals and 747 species of plants had been listed as either endangered or threatened, of which the majority (567 species of animals and 744 species of plants) occur in the United States and its territories and the remainder only in other countries. Of the 1,311 U.S. species (an increase of 49 species since December 31, 2002), 1,070 are covered in recovery plans (an increase of 70 species since December 31, 2002). Of the U.S. species, 475 have designated critical habitat (CH) in some portion of their range. At times, efforts to protect and recover listed species are controversial; declining species often function like the proverbial canary in the coal mine, by flagging larger issues of resource scarcity and altered ecosystems. Past resource debates in which ESA-listed species were part of larger issues include Tennessee's Tellico Dam (water storage and construction jobs versus farmland protection and tribal graves, as well as snail darters); Pacific northwest timber harvest (protection of logging jobs and communities versus commercial and sport fishing, recreation, and ecosystem protection, as well as salmon and spotted owls); and Texas's Edwards Aquifer (allocation of water among various users with differing short- and long-term interests, as well as several spring-dependent species). Species may be listed on the initiative of the appropriate Secretary or by petition from an individual, group, or state agency. The Secretary must decide whether to list the species based only on the best available scientific and commercial information, after an extensive series of procedural steps to ensure public participation and the collection of scientific information. In deciding whether a species needs the protections of the ESA, the Secretary may not take into account the economic effects that listing may have; economic and other considerations are taken into account in structuring alternatives for assisting the species after listing. In addition, FWS and NMFS may identify selected species by adding them to a list of "candidate species" believed at sufficient risk to warrant protection, but such protection is precluded by work to protect listed species. As of September 13, 2006, there were 279 species on the list of candidate species. With certain exceptions, if a species is listed, the Secretary must designate critical habitat (CH) in areas where the species is currently found or which might provide additional habitat for the species' recovery. However, if the publication of this information is not prudent (e.g., might encourage vandals or collectors), the Secretary may decide not to designate CH. The Secretary may postpone designation for up to one year after listing, if the information is not determinable (16 U.S.C. §1533). As of June 16, 2006, FWS had designated CH for 36% of listed domestic species. As a practical matter, CH has not been designated for most listed species largely because FWS prefers to allocate its limited resources to listing new species, based on its regulation (50 C.F.R. §402.02) that takes away much of the legal value of designating CH to the recovery of the species. Yet FWS consistently loses legal challenges for failure to designate CH, and several courts have found the regulation in question to be an erroneous interpretation of the law, because it does not take into account the duty to avoid adverse modification of CH. Others have asserted the value of CH; for example, scientists with the Center for Biological Diversity published a study in April 2005, concluding that CH designation enhances species recovery. On April 28, 2006, the Keystone Center's ESA Working Group on Habitat released a report on habitat protection and the ESA. One of the conclusions of participants in this study was that identification of the habitat that species require to recover is better done in the context of recovery planning, after more rigorous analysis and deliberation have been completed, rather than at the time of listing. CH is frequently misunderstood by the public as posing a significant direct restriction on private landowners' authority to manage land. While a landowner may experience some additional procedures and possible restrictions on land management because of the presence of an ESA-listed species (through the ESA's prohibitions on taking a listed species), and the presence of CH may shed light on whether "harm" has occurred, the duty to avoid adverse modification of CH is an express obligation only for federal agencies and actions, or private (nonfederal) actors in actions with a federal nexus (i.e., actions that involve any federal funding, permit, or license). (See also " Issues in the 109 th Congress ," below.) The ESA contains prohibitions on the "take" of endangered species; take means to "harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect or attempt to engage in any such conduct" (16 U.S.C. §1532; harassment and harm are further defined in regulation at 50 C.F.R. §17.3). There has been controversy over the extent to which habitat modification is prohibited. A 1995 Supreme Court decision held that the inclusion of significant habitat modification was a reasonable interpretation of the term "harm" in the ESA. The ESA provides civil and criminal penalties for violations. Proposed actions that may have adverse impacts on listed species may be permitted in two ways. First, under §7 of the ESA, if federal agency actions (or actions of a nonfederal party that require an agency's approval, permit, or funding) may affect a listed species, the federal agency must ensure that those actions are "not likely to jeopardize the continued existence" of any endangered or threatened species, nor to destroy or adversely modify CH. To review the possible effects of their actions on listed species and CH, federal agencies must consult with the appropriate Secretary. If the Secretary finds that an action would jeopardize a listed species or destroy or adversely modify CH, the Secretary must suggest reasonable and prudent alternatives that would avoid these harms. Pending completion of the consultation process, agencies may not make irretrievable commitments of resources that would foreclose any alternatives. The Secretary issues a written statement, called a biological opinion , that may allow the agency or the applicant to take individuals of a species incidental to otherwise lawful activities without triggering the ESA's penalties, subject to terms and conditions specified in the opinion (16 U.S.C. §1536), or may conclude that jeopardy cannot be avoided, in which case the agency may seek an exemption for the action from the Endangered Species Committee. For actions without a federal nexus (i.e., no federal funding, permit, or license), the appropriate Secretary may issue permits under §10 of the ESA to allow the incidental take of species during otherwise lawful actions. An applicant for a permit must submit a habitat conservation plan (HCP) that shows the likely impact of the planned action; steps to be taken to minimize and mitigate the impact; funding for the mitigation; alternatives that were considered and rejected; and any other measures that the Secretary may require. The use of this section has been vastly expanded, and streamlined procedures are provided for activities with minimal impacts (50 C.F.R. §17.22). Proponents of a federal action may apply for an exemption from the prohibition against jeopardy for that action (not for a species). Under the ESA, a high-level Endangered Species Committee (commonly called the "God Squad") decides whether to allow a project to proceed despite likely harm to a species. To date, this process has been little used and only one exemption (Grayrocks Dam, WY) has been granted and carried out. The committee is required to accept the President's determination (under specified circumstances) on an exemption in declared disaster areas. The ESA committee must grant an exemption if the Secretary of Defense determines that an exemption is necessary for national security (16 U.S.C. §1536). DOD has claimed that requirements under the ESA conflict with its readiness activities, but DOD has not requested any exemptions to date. (See also " Issues in the 109 th Congress ," below.) Other statutes may provide for waivers of ESA provisions; for example, §102(c) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 provides for a waiver of the ESA (and NEPA) to the extent the Attorney General determines is necessary to ensure expeditious construction of barriers and roads at borders. In the 109 th Congress, §2(b) of H.R. 3693 would have waived ESA provisions to the extent the Secretary of Homeland Security deemed necessary to prevent illegal border crossings. In addition, Section 2(b)(2)(A) of H.R. 5235 asserted that P.L. 108-148 , the Healthy Forests Restoration Act of 2003, exempted certain actions by federal land management agencies from ESA consultation and would require a National Academy of Sciences study of the impacts of P.L. 108-148 . Section 3 of H.R. 5678 would have waived ESA review and consultation for certain pipeline repair and replacement activities where best practices have been developed or adopted by an interagency committee. 50 C.F.R. §402.05 provides for ESA procedures in case of emergencies, basically requiring only very informal consultations during an emergency with more complete consultation after the emergency has passed. According to FWS, any hurricane-related federal activities in presidentially declared disaster areas would trigger the emergency consultation provisions of the ESA. Specifically, for the 2005 Gulf of Mexico hurricanes, FWS stated that restoring "any infrastructure damaged or lost due to the hurricane back into the original footprint does not require ESA consultation with the Service." In the 109 th Congress, S. 2079 / H.R. 4200 would have authorized emergency procedures to comply with ESA §7 for pre-approved management practices for federal land damaged by a catastrophe (§104(e)) and for catastrophic event research and recovery projects (§105(c)). The House passed H.R. 4200 (amended) on May 17, 2006. The Senate Agriculture Committee's Subcommittee on Forestry, Conservation, and Rural Revitalization held a hearing on H.R. 4200 on August 2, 2006. The appropriate Secretary generally must develop a recovery plan for the survival and conservation (defined in §3(3) of the ESA as "to bring any endangered species or threatened species to the point at which the measures provided pursuant to this Act are no longer necessary"—i.e., recovery) of a listed species; these plans are not binding on federal agencies or others, but rather serve as guidelines. At first, recovery plans tended to cover popular species, like birds or mammals, but a 1988 amendment forbade the Secretary from favoring particular taxonomic groups (16 U.S.C. §1533). The federal government may acquire land to conserve/recover listed species, and the ESA authorizes money from the Land and Water Conservation Fund for land acquisition (16 U.S.C. §1534). The appropriate Secretary must cooperate with the states in conserving protected species and must enter into cooperative agreements to assist states in their endangered species programs, if the programs meet certain specified standards. If there is a cooperative agreement, the states may receive federal funds to implement the program, but must normally provide a minimum 25% match. Under the 1988 amendments, the Cooperative Endangered Species Conservation Fund was authorized to provide state grants. While regular annual deposits to this fund are set by a formula (16 U.S.C. §1535(i)(1)), spending from the fund requires annual appropriation. Other provisions specify exemptions for certain captive raptors and their progeny, regulate subsistence activities by Alaskan Natives, prohibit interstate transport and sale of listed species and parts, control trade in parts or products of endangered species owned before the ESA went into effect, and specify rules for establishing experimental populations (16 U.S.C. §1539). For the United States, the ESA is the domestic implementing legislation for the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES; TIAS 8249), signed by the United States on March 3, 1973; and the Convention on Nature Protection and Wildlife Preservation in the Western Hemisphere (the Western Hemisphere Convention; 50 Stat. 1354; TS 981), signed by the United States on October 12, 1940. CITES parallels the ESA by dividing its listed species into groups, according to the estimated risk of extinction, but uses three major categories (called Appendices), rather than two. In contrast to the ESA, CITES classifies species based solely on the risk that trade poses to their survival. The ESA makes violations of CITES violations of U.S. law if committed within U.S. jurisdiction (16 U.S.C. §1538). The ESA also regulates import and export of controlled products and provides some exceptions. On August 18, 2003, FWS published a draft policy for enhancement-of-survival permits for foreign species listed under the ESA. The permits would allow imports of endangered species into the United States for scientific research and for the enhancement of survival of the species in their range country (i.e., the country where the population of the species in question naturally exists). The comment period on this draft policy has closed, but FWS has not yet published its final policy. In addition, the Multinational Species Conservation Fund (MSCF) in FWS benefits tigers, the six species of rhinoceroses, Asian and African elephants, marine turtles, and great apes (gorillas, chimpanzees, bonobos, orangutans, and the various species of gibbons). This fund supports conservation efforts benefitting these species, often in conjunction with efforts under CITES. In the 109 th Congress, P.L. 109-363 reauthorized and amended the Neotropical Migratory Bird Conservation Act ( P.L. 106-247 ; 16 U.S.C. §§6101 et seq.) to increase the federal share of costs for projects funded (Title III) and reauthorized the Great Ape Conservation Act of 2000 ( P.L. 106-411 ; 16 U.S.C. §§6301 et seq.) to provide grants and emergency assistance to address conservation needs (Title VII). A number of other bills were considered in the 109 th Congress: Several bills would have expanded species eligible for assistance from the MSCF by creating a Flagship Species Conservation Fund ( H.R. 93 ), a Great Cats and Rare Canids Conservation Fund ( H.R. 1707 ), and a Crane Conservation Fund ( S. 943 / H.R. 3520 ). S. 270 would have established a framework for legislative and executive consideration of unilateral economic sanctions against foreign nations, such as could be imposed in relationship to CITES. H.R. 3469 would have provided measures to improve the conservation of coral reef species and further the obligations of the United States under CITES. The answer to this question depends on what is measured. Since a major goal of the ESA is the recovery of species to the point at which ESA protection is no longer necessary, this seems a good starting point. Since the ESA was enacted in 1973, 40 U.S. and foreign species have been delisted. The reasons cited by FWS are (a) recovery (17); (b) extinction (9, but some may have been extinct when listed); (c) new understanding of the taxonomy of the species, making some ineligible for listing under current law (7); and (d) new information, including a determination that erroneous data were provided to FWS at the time of listing (7). Recovered species include alligators, peregrine falcons (two subspecies), and three species of kangaroos. Extinct species include the dusky seaside sparrow, Guam broadbill (a bird), and two small fish living in desert springs. However, it can be quite difficult to prove whether extraordinarily rare species are simply that or, in fact, are already extinct. For example, a rare shorebird thought by many to be extinct was rediscovered in a remote area of Canada a few years ago; it might just as easily have quietly gone extinct without being rediscovered. Rare species are, by definition, hard to find. Some have asserted that the ESA is a failure since only 17 species have been delisted as recovered, as of January 25, 2006. Others note that full recoveries are relatively few because the two principal causes of extinction—habitat loss and invasive non-native species—are increasing. In addition, some scientific studies have demonstrated that most species are listed only after they become very depleted (e.g., median population of 407 animals for endangered vertebrates, according to one study), thereby making recovery difficult. Another measure of "success" might be the number of species that have stabilized or increased their populations, even if the species are not actually delisted. If this standard is used, the ESA could be considered a success, since a large number (41%, according to one study) of listed species have improved or stabilized their population levels after listing. Other species (e.g., red wolves and California condors) might not exist at all without ESA protection, and this too might be considered a measure of success, although these species are still rare. On May 17, 2005, the House Committee on Resources released an oversight report entitled Implementation of the Endangered Species Act of 1973 . It reviewed and critiqued various ways that recovery might be measured. One approach is to look at what proportion of the recovery objectives identified in species recovery plans have been achieved. Table 1 indicates how recovery has progressed related to the length of time since species were listed. On September 8, 2006, GAO released report GAO-06-730, entitled Endangered Species: Many Factors Affect the Length of Time to Recover Select Species . This report examined federal efforts to recover a nonprobability sample of 31 species. GAO determined that, while many factors affected the recovery of species, recovery plans played an important role in the recovery of all but one of the species examined. Critics claimed the GAO study was biased by the selection of species examined. ESA reauthorization has been on the legislative agenda since the funding authorization expired in 1992, and bills have been introduced in each subsequent Congress to address various aspects of endangered species protection. The issues considered in the 109 th Congress included effects of the ESA on private and federal land use, how to better promote species recovery, agency use of scientific information, specific regional resource conflicts, and other matters. Below are descriptions of some of the issues that were most commonly raised. With limited exceptions, FWS or NMFS must designate CH at the time a species is listed. However, some critics argue that CH designation places undue burdens on landowners or that it has little conservation benefit. Others argue (and the courts have largely agreed) that FWS and NMFS have misinterpreted and failed to enforce the current statute. There are also disagreements over the value and timing of CH designation. (See " Critical Habitat ," above, and " ESA Listing Caps, New and Old ," below.) In the 109 th Congress, §5 of H.R. 3824 would have repealed the designation of CH and labeled current areas of CH as areas of special value for recovery planning purposes. The House Committee on Resources reported this bill (amended) on September 27, 2005 ( H.Rept. 109-237 ), and the House passed it (amended) on September 29, 2005. H.R. 1299 would have modified the CH definition as well as the process for determining and designating CH. H.R. 1837 would have limited CH designation for some aquatic habitats. S. 2110 would have designated any habitat of an endangered species or a threatened species that is considered to be CH in accordance with the priority system. The ESA requires that determinations of species status be made "solely on the basis of the best scientific and commercial data available ..." In several recent situations, legal, economic, and social disputes have resulted from actions under the ESA. Examples of these controversies include the Canada lynx, Florida panthers, and Klamath River Basin suckers and coho salmon. Critics in some of these disputes suggest that the science supporting ESA action has been insufficiently rigorous or mishandled by the agencies. Many rare and endangered species are little studied because they are hard to find or because it is difficult to locate enough of them to support scientific research. There may be little information on many species facing extinction, and only limited personnel or funds available to conduct studies on many of the less charismatic species, or those of little known economic import. What should be done in such instances? Some suggest that considerations other than species conservation should prevail; others seek to change the current posture of the law by changing the role of science. These considerations are complicated by the costs and time required to acquire more complete data, particularly in connection with many lesser-known species. The ESA does not elaborate on this question, but some assert that, given the protective purpose of the ESA—to save and recover species—and the wording of "best ... data available ," arguably dwindling species are to be given the benefit of the doubt and a margin of safety provided. This is the position taken on page 1-7 of the Endangered Species Consultation Handbook , which states that efforts should be made to develop information, but if a biological opinion must be rendered promptly, it should be based on the available information, "giving the benefit of the doubt to the species," with consultation possibly being reinitiated if additional information becomes available. This phrase is drawn from H.Rept. 96-697, p. 12 (1979), which states that the "best information available" language was intended to allow FWS to issue biological opinions even when information was incomplete, rather than being forced to issue negative opinions. The report also states that if a biological opinion is rendered on the basis of inadequate information, the federal agency proposing an action has the duty to show its actions will not jeopardize a species and a continuing obligation to make a reasonable effort to develop information, and that the statutory language "continues to give the benefit of the doubt to the species." Section 515 of P.L. 106-554 , known as the Information Quality Act or the Data Quality Act, directs the Office of Management and Budget (OMB) to issue government-wide guidelines to federal agencies to ensure and maximize the quality, objectivity, utility, and integrity of information disseminated by federal agencies. OMB published final guidelines on February 22, 2002. The Department of the Interior and FWS have both issued additional guidelines that are available through their websites, and a process is established for interested persons to seek correction of information. Even before these latest guidelines, FWS had promulgated guidance on information quality and peer review procedures—issues that also have been addressed in recent legislation. FWS and NMFS developed an Interagency Cooperative Policy on Information Standards Under the Endangered Species Act. Under this policy, FWS and NMFS are to receive and use information from a wide variety of sources, including from individuals. Submitted information may range from the informal—oral, traditional, or anecdotal—to peer-reviewed scientific studies, and hence the reliability of the information can vary widely. Agency biologists are to review and evaluate all information impartially for purposes of listing, CH designation, consultation, recovery, and permitting actions, and to ensure that any information used by the agencies to implement the ESA is "reliable, credible, and represents the best scientific and commercial data available." Agency biologists are to document their evaluations of all information and, to the extent consistent with the use of the best scientific and commercial data available, use primary and original sources of information as the basis for recommendations. In addition, agency managers are to review the work of FWS and NMFS biologists to "verify and assure the quality of the science used to establish official positions, decisions, and actions..." Additionally, a companion document, the Interagency Cooperative Policy for Peer Review in Endangered Species Act Activities, notes that, in addition to the public comments received on proposed listing rules and draft recovery plans, the Services are also to formally solicit expert opinions and peer review to ensure the best biological and commercial information. For listing decisions, the agencies are to solicit the expert opinions of three specialists and summarize these in the record of final decision. Special independent peer review can also be used when it is likely to reduce or resolve an unacceptable level of scientific uncertainty. Courts that have considered the "best data available" language have held that an agency is not obliged to conduct studies to obtain missing data, but cannot ignore available biological information, especially if the ignored information is the most current. Nor may an agency treat one species differently from other similarly situated species, nor decline to list a dwindling species and wait until it is on the brink of extinction in reliance on possible but uncertain future actions of an agency. "Best scientific and commercial data available" is not a standard of absolute certainty, reflecting Congress's intent that FWS take conservation measures before a species is conclusively headed for extinction. If FWS does not base its listings on speculation or surmise or disregard superior data, the imperfections of the studies upon which it relies do not undermine those studies as the best scientific data available—"the Service must utilize the best scientific ... data available , not the best scientific data possible ." Judicial review can also help ensure that agency decisions and their use of scientific data are not "arbitrary or capricious" and that regulations are rationally related to the problems causing the decline of a species, especially when other interests are adversely affected. In Arizona Cattle Growers Association v. United States Fish and Wildlife Service , the court stated that the evidentiary bar FWS must clear is very low, but it must at least clear it. In the context of issuing Incidental Take Permits under §10(a), this ruling means the agency must demonstrate that a species is or could be in an area before regulating it, and must establish the causal connection between the land use being regulated and harm to the species in question. Mere speculation as to the potential for harm is not sufficient. An agency must consider the relevant facts and articulate a rational connection between these facts and the choices made. One express purpose of the ESA is to "provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved" (16 U.S.C. §1531(b)). As open space dwindles and increasing human populations put pressures on our wildlands and natural resources, the conservation of species and their habitats may highlight underlying resource crises and economic conflicts. Public values and affected economic interests may be complex and sometimes at odds. The situations described below are some of the situations that have been the subject of recent congressional oversight and legislative interest. In the 109 th Congress and reflecting several of these regional conflicts, the House Resources Subcommittee on Water and Power held an oversight hearing on June 22, 2005, focusing on the effect of the ESA on water supplies. Controversy erupted in 2001 when the Department of the Interior's Bureau of Reclamation announced it would not release water from part of its Klamath irrigation project to approximately 200,000 acres of farm and pasture lands within the roughly 235,000-acre project service area. The operational change sought to make more water available for three fish species under ESA protection—two endangered sucker species, and a threatened coho salmon population. The Klamath Project straddles the Oregon/California border and has been the site of increasingly complex water management issues involving several tribes, fishermen, farmers, environmentalists, and recreationists. Upstream farmers point to their contractual rights to water from the Klamath Project and to hardships for their families if water is cut off. Others assert that the downstream salmon fishery is more valuable and that farmers could be provided temporary economic assistance, while salmon extinction would be permanent. Still others assert that there are ways to serve all interests, or that the science underlying agency determinations is simply wrong. Specifically at issue is how to operate the Bureau's project facilities to meet irrigation contract obligations without jeopardizing the three listed fish. The Trinity River diversion from the Klamath basin to central California also has ramifications for the Bureau's role in the Central Valley Project. Various 10-year and annual operation plans, and associated biological assessments (by the Bureau) and biological opinions (by FWS and NMFS) have been criticized and defended. Salmon protection in the Pacific Northwest in general presents many difficult choices, especially because of recent droughts and the connection between regional hydropower facilities and fishery management decisions. NMFS officials have listed a total of 26 distinct population segments (called evolutionarily significant units or ESUs) of Pacific salmon and steelhead trout as either threatened or endangered, and are working with state, local, and tribal officials, as well as the public, to implement recovery measures addressing habitat restoration and other concerns. Recent controversies and litigation have focused on three issues: (1) biological opinions on operation of the Federal Columbia River Power System (FCRPS) as it relates to retaining (or removing) four dams on the lower Snake River, and how properly to factor the presence of the dams into evaluations of jeopardy; (2) whether or not salmon produced in hatcheries should be included in listed ESUs of Pacific salmon; and (3) the role and extent of CH designation in the recovery of Pacific salmon. Interim decisions of the federal district court for Oregon have invalidated NMFS's approach to evaluating jeopardy to salmon from dam operations on the Columbia and Snake Rivers, and ordered increased spills of water to assist transit of juvenile salmon to the sea. In the 109 th Congress, S. 232 would have authorized the Bureau of Reclamation to assist in implementing fish passage and screening facilities at nonfederal water projects in the Columbia River Basin to meet the Bureau's ESA obligations. On March 10, 2005, the Senate Committee on Energy and Natural Resources reported S. 232 ( S.Rept. 109-31 ); the Senate passed it on July 26, 2005. H.R. 1615 would have required a National Academy of Sciences analysis of federal salmon recovery efforts and a Government Accountability Office study of the effects of partially removing four lower Snake River dams, and would have authorized partial removal of these four dams under certain conditions. Section 103 of S. 2432 / H.R. 5006 would have designated salmon restoration areas in California. H.R. 6377 and S. 4084 would have authorized implementing the San Joaquin River Restoration Settlement providing for the reintroduction of spring-run chinook salmon below Friant Dam. Efforts to hold back water necessary for the Rio Grande silvery minnow from competing New Mexico water users (primarily the city of Albuquerque and irrigators) ignited considerable controversy. At issue is the operation of two Bureau of Reclamation water projects on the Middle Rio Grande: the San Juan-Chama Project and the Middle Rio Grande Project. The New Mexico District Court held that withholding water from irrigators for ESA-related purposes was permissible under the water contracts at issue. Congress halted implementation and an agreement regarding the minnow has been negotiated. In the 109 th Congress, §121 (Title I, Corps of Engineers) of P.L. 109-103 authorized certain activities related to the Middle Rio Grande Endangered Species Collaborative Program (MRGESCP). S. 1540 would have directed the Secretary of the Army and the Secretary of the Interior to establish the MRGESCP to improve water management and contribute to the recovery of endangered species in the Middle Rio Grande, NM. S. 2254 would have directed the Corps of Engineers to carry out restoration projects along the Middle Rio Grande in consultation with the MRGESCP. In 50 C.F.R. §402.04, "counterpart" regulations are authorized that allow an action agency to determine unilaterally whether its actions are likely to adversely affect listed species, thereby avoiding §7 consultation with FWS or NMFS. Although the regulation has been on the books for years, it has not been used until recently, and hence its validity has not yet been tested in the courts. Several new counterpart regulations have recently been finalized and suits challenging the regulations have been filed. New counterpart pesticide regulations were finalized on August 5, 2004, for Environmental Protection Agency (EPA) regulatory actions on pesticides, such that when the EPA is taking action under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA; P.L. 80-104; 7 U.S.C. §§136, et seq.), the EPA and FWS may execute an alternative consultation agreement under which the EPA will decide whether a proposed FIFRA action is likely to adversely affect a listed species or critical habitat. The EPA may make this determination without informal consultation with, and written concurrence from, the FWS Director. If the EPA makes such a determination, no further consultation is required. There is to be FWS oversight of the consistency of EPA's determinations with the ESA. Under 50 C.F.R. §402.43, the EPA may ask FWS for information on listed species that may be present in an area that might be affected by the FIFRA action, including the applicable environmental baseline for each species or habitat, and under new §402.44, the EPA may request FWS personnel to assist in an effects determination and must use its "best efforts" to include the FWS representative in relevant discussions. These two regulations appear to apply with or without an alternative consultation agreement. Critics note that the EPA has a poor record on consultations, and fear that the new self-consultation process will allow more harm to listed species. Supporters counter that the new process will increase EPA flexibility and efficiency. On August 24, 2006, U.S. District Court Judge John Coughenour overturned EPA counterpart regulations relating to pesticides, ruling that these regulations did not conform to the plain language or intent of the ESA §7 by excusing federal action agencies from engaging in consultation with FWS or NMFS. In addition, he held that it was illegal for FWS or NMFS to allow EPA to use emergency consultation procedures for FIFRA §18 actions. Judge Coughenour let stand the process of "optional formal consultation" in which NMFS or FWS can adopt EPA effects determinations as their own. Counterpart regulations also were finalized December 8, 2003, among the Forest Service, the Bureau of Land Management, the Bureau of Indian Affairs, the National Park Service, FWS, and NMFS, to streamline consultation on projects supporting the National Fire Plan (NFP). The alternative consultation process contained in these counterpart regulations eliminates the need to conduct informal consultation with FWS or NMFS, and eliminates the requirement to obtain written concurrence from FWS or NMFS for those NFP actions that the action agency determines are "not likely to adversely affect" any listed species or designated CH. The presence of endangered species on private property is sometimes welcomed by owners. Builders, for example, have been known to market a new residential development in part on the basis of the wildlife present on undeveloped parts of the tract. Still, the prohibitions in §9 (private actions) and §7 (federal nexus) may at times frustrate the economic desires of owners of land or other property. This has long been a rallying cry for the ESA's detractors, who assert that restrictions under the ESA routinely "take" property in the constitutional sense of the term. Conflicts between the ESA and property owners come about despite the existence of ESA mechanisms intended to soften its impact on property owners. Under the Fifth Amendment, property cannot be "taken" by the United States without just compensation. The Supreme Court has long tried, with limited success, to define which government actions affect private property so severely as to effect such a "taking." In briefest outline, government actions usually are deemed a taking when they cause either a permanent physical occupation of private property or a total elimination of its economic use. When the government restriction removes only part, but not all, of the property's use or value, a three-factor balancing test is used. Although these factors have been little explicated by the courts, it is clear that for a taking to occur, the property impact must be severe. Moreover, except for physical takings, the property impact is assessed with regard to the property as a whole, not just the regulated portion. More than a dozen court decisions have addressed takings challenges to ESA restrictions on land or other property, with all but one finding no taking. These cases have involved restrictions on timber cutting, reductions in water delivery to preserve instream flows needed by listed species, restrictions on shooting marauding animals resulting in loss of livestock, and prohibitions on the transport or sale of endangered species. In several of these cases, the taking claim failed because it was filed in the wrong court or was not "ripe." Where taking claims were reached by the court, they were rejected principally because the economic impact was insufficient as to the property as a whole, or because of the longstanding principle that the government is not responsible for the actions of wild animals. In the one decision favoring the property owner, ESA-related cutbacks in water delivered by a state reclamation project to water districts were held a taking by the United States of state-contract-created water rights. This decision has been controversial for several reasons, including the Department of Justice's settlement of the case (for $16.7 million) despite arguments pressed on it from several quarters that the case was incorrectly decided. ESA critics want the ESA amended to afford compensation for a broader range of property impacts than the Constitution provides—perhaps by specifying a fixed percentage of ESA-related property value loss, above which compensation must always be paid. Similar provisions have been included in bills of previous Congresses. In the 109 th Congress, §14 of H.R. 3824 would have required federal compensation for property owners who forgo use of property following determinations that continued use would not comply with prohibitions on taking ESA-listed species. The House Committee on Resources reported this bill (amended) on September 27, 2005 ( H.Rept. 109-237 ), and the House passed it (amended) on September 29, 2005. Opponents of an explicit compensation standard counter that the ESA should not be singled out for a more property owner-friendly standard than other statutes' or the Constitution's. More fundamentally, they note that property rights have never been absolute, and that regulation has long been noncompensable as long as the impact on the property owner is not severe. The likely consequences of a generous compensation threshold—added federal costs and/or a chill on ESA implementation—are among the issues slowing action on ESA reauthorization. However, both proponents and opponents of the ESA favor enacting incentives (primarily tax benefits) to encourage landowner cooperation. Also in the 109 th Congress, §3 of H.R. 411 would have awarded compensation for ESA activities that eliminate or reduce grazing privileges. H.R. 3166 would have authorized the waiver of grazing permits in designated CH and provide compensation for waived permits. S. 2110 would have provided a variety of tax benefits. S. 4087 would have provided a tax credit to individuals who entered into agreements to protect endangered and threatened species habitat. Former Interior Secretary Babbitt initiated actions to decrease ESA conflicts in several ways. Joint FWS and NMFS policies streamlined permit procedures for small landowners, and other initiatives encouraged landowners to increase protection for populations of listed species on their land. Under safe harbor agreements, landowners who increased suitable habitat could return to "baseline conditions" without penalty. No surprises agreements provided landowners with greater certainty regarding activities that might otherwise trigger penalties—an incentive for landowners to develop Habitat Conservation Plans (HCP), since a landowner properly implementing such an agreement is assured that there will be no further costs or restrictions on the use of the property to benefit the species covered by the HCP, except by mutual consent or in unforeseen circumstances in which changes may be implemented by the government without costs borne by the landowner. Modifications to the no surprises rule required revoking an incidental take permit if the permitted taking would be inconsistent with the survival and recovery of the relevant listed species, and the inconsistency was not remedied in a timely fashion. These rules were reproposed and finalized in response to litigation, but may still present issues raised previously. Federal managers also focused on listing species as threatened rather than endangered, to allow FWS to take advantage of the ESA's more flexible provisions for protecting threatened species. While administrative changes have been made within the framework of existing law, there is great interest among some groups in codifying many of these changes in an amended ESA. Others are critical of HCP agreements as difficult to enforce, virtually lacking monitoring, and locking the government into inflexible long-term positions that sometimes are based on inadequate knowledge. In the 109 th Congress, §365 of P.L. 109-58 , the Energy Policy Act of 2005, established a pilot project in WY, MT, CO, UT, and NM to better coordinate certain actions among federal agencies, including consultations and the preparation of biological opinions under ESA §7. In addition, P.L. 109-294 ( S. 260 ) expanded the authority of the Secretary of the Interior to assist private landowners in restoring, enhancing, and managing endangered and threatened species habitat on private land through the Partners for Fish and Wildlife Program. A number of additional bills were introduced in the 109 th Congress: H.R. 3300 would have authorized species recovery agreements obligating the federal government to make annual payments or provide other compensation for activities that improve the recovery of listed species; S. 1497 would have required the Secretary of the Interior to provide incidental take permits to public electric utilities that adopt measures to mitigate hazards to eagles and other migratory birds; S. 2110 would have codified the no surprises policy; and Section 106(b) of H.R. 6064 and §205(c) of H.R. 6193 would have authorized the Secretary of Agriculture to provide incentive payments to landowners through the Wildlife Habitat Incentive Program to protect or restore the habitat of federally or state-listed endangered, threatened, and candidate species. In the 109 th Congress, bills were introduced in both the House and Senate to reauthorize and amend the ESA. The House Committee on Resources reported H.R. 3824 (the Threatened and Endangered Species Recovery Act of 2005, amended) on September 27, 2005 ( H.Rept. 109-237 ); the House passed H.R. 3824 (amended) on September 29, 2005. S. 2110 , the Collaboration for the Recovery of Endangered Species Act, was introduced on December 15, 2005. Proponents of both bills said that they were designed to make the ESA more effective by redefining the relationship between private and public property uses and species protection, implementing new incentives for species conservation, and removing what some see as undue land use restrictions. Thus, both proposals contained provisions meant to encourage greater voluntary conservation of species by states and private landowners, a concept that has been supported by many observers. Further, both proposals would have modified or eliminated certain procedural or other elements of the current ESA that some have viewed as significant protections and prohibitions, including: eliminating or changing the role of "critical habitat" (CH) (which would eliminate one aspect of the current consultation process); making the listing of all threatened and endangered species more difficult or less likely; expanding §10 permits allowing incidental take (which could incur a greater need for agency oversight and enforcement); and expanding state rather than federal implementation of ESA programs (which might make oversight more difficult). Proponents of these changes argued that tighter listing standards would enable a better focus on species with the most dire needs, and that other measures would achieve recovery of more species. Critics argued that proposed changes would create gaps in the ESA safety net of protections and prohibitions. P.L. 109-183 ( S. 1578 ) reauthorized Upper Colorado and San Juan River Basin endangered fish recovery programs. P.L. 109-225 ( S. 1165 ) expanded Hawaii's James Campbell National Wildlife Refuge to protect habitat for endangered waterbirds. P.L. 109-449 established NOAA and Coast Guard programs to manage marine debris and address its adverse effects on endangered species. Additional measures were considered by the 109 th Congress: Section 212 of S. 2012 and §209 of H.R. 5051 would have required a study of sea turtle excluder devices in shrimp trawls; S. 2012 was reported by the Senate Committee on Commerce, Science, and Transportation on April 4, 2006 ( S.Rept. 109-229 ), and was passed by the Senate (amended) on June 19, 2006. On December 7, 2006, the Senate passed H.R. 5946 , after amending this measure to substitute language from amended S. 2012 . The House passed the amended H.R. 5946 on December 9, 2006, with the turtle excluder language in §212. S. 2013 and §17 of H.R. 4075 , as passed by the House on July 17, 2006, would have implemented the Agreement on the Conservation and Management of the Alaska-Chukotka Polar Bear Population. The Senate Committee on Commerce, Science, and Transportation reported S. 2013 on February 27, 2006 ( S.Rept. 109-217 ); the Senate passed this measure (amended) on June 6, 2006. On December 6, 2006, the Senate amended H.R. 4075 to insert the language of S. 2013 and passed the amended H.R. 4075 . On December 7, 2006, the Senate amended H.R. 5946 to insert the language of S. 2013 as Title IX, and passed the amended H.R. 5946 . On December 9, 2006, the House agreed to the amended H.R. 5946 . Section 1505 of S. 732 , as reported on April 6, 2005 ( S.Rept. 109-53 ), by the Senate Committee on Environment and Public Works, would have authorized state programs for mitigating highway and surface transportation impacts, including those affecting endangered and threatened species. H.R. 4857 would have required that certain electricity consumers be informed of ESA compliance costs; the House Committee on Resources held a hearing on this bill on March 16, 2006, and reported the bill on September 28, 2006 ( H.Rept. 109-693 ). H.R. 3110 would have amended the ESA to treat distinct population segments of the Eastern oyster as separate species. On July 19, 2005, the House Committee on Resources held an oversight hearing on ESA listing of this species. S. 164 would have facilitated acquisition of UT lands to protect desert tortoise. H.R. 2323 would have promoted southern sea otter recovery and research. H.Res. 249 celebrated the rediscovery of the ivory-billed woodpecker in Arkansas. H.R. 2779 would have amended the ESA to enable federal agencies to rescue and relocate threatened or endangered species in certain circumstances where flood control levees are reconstructed, maintained, or repaired. S.Res. 219 would have designated March 8, 2006, as "Endangered Species Day." S.Res. 431 designated May 11, 2006, as "Endangered Species Day"; the Senate agreed to S.Res. 431 on April 5, 2006. Section 203 of H.R. 3908 would have amended the Internal Revenue Code to exempt payments from gross revenue for landowner incentive programs that conserve species or protect habitat. S. 3611 would have authorized the Secretary of the Interior to implement the Platte River Recovery Implementation Program for Endangered Species in the Central and Lower Platte River Basin. Section 209 of H.R. 6193 would have directed the Secretary of Agriculture to establish a pilot program to recover California endangered or threatened plant species. H.R. 6241 would have amended the Marine Mammal Protection Act to authorize the taking of California sea lions to protect endangered and threatened salmon species in the Columbia River drainage. Section 1505(c) of H.R. 3 , as agreed to by the Senate on May 17, 2005, would have provided for state mitigation funds to benefit endangered and threatened species; however, these provisions were not retained in the conference agreement, subsequently enacted as P.L. 109-59 . Appropriations play an important role in the ESA debate, providing funds for listing and recovery activities as well as financing FWS and NMFS consultations that are necessary for federal projects. In addition, appropriations bills have served as vehicles for some changes in the ESA. Table 2 shows recent ESA funding. The FY2006 Department of the Interior, Environment, and Related Agencies Appropriations Act, P.L. 109-54 , provided $271.9 million for FWS's ESA activities. Overall, FY2006 FWS funding for ESA and related programs is $6.5 million less than the President's request, and $11.8 million more than the FY2005 appropriations level. FY2006 funding for ESA programs administered by NMFS was provided in the Science, State, Justice, Commerce, and Related Agencies Appropriations Act, P.L. 109-108 . Provisions in P.L. 109-148 ( H.R. 2863 , the Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act) rescinded unobligated balances of $2 million from FWS's Landowner Incentive Program and $1 million from the Cooperative Endangered Species Conservation Fund. For FY2007, FWS appropriations are provided in H.R. 5386 , which passed the House (amended) on May 18, 2006; the Senate Committee on Appropriations reported this bill (amended) on June 29, 2006 ( S.Rept. 109-275 ). The 109 th Congress did not complete action on FY2007 appropriations for either FWS or NMFS. An April 2005 GAO study found that, although FWS spends almost half of its recovery funds on highest priority species, factors other than a species' priority ranking (e.g., regional office workload, opportunities for partnerships to maximize scarce recovery funds), in practice, determine how funding is allocated. GAO found that FWS does not have a process to routinely assess funding decisions to ensure that they are appropriate. Beginning in FY1998, Congress enacted annual limits ( caps ) on funding FWS could use for its ESA listing function. This appropriations language limits FWS discretion to transfer funds to finance additional listings, so that if courts mandate agency action on listing certain species, other listings may not be able to be funded. FWS supported these limits to assure that funding for other agency programs could not be diverted to finance additional ESA listing activities. However, courts have held that budget constraints do not excuse an agency from compliance, in some circumstances. These limits have been approved by Congress in succeeding fiscal year appropriations bills. P.L. 109-54 , FY2006 Department of the Interior appropriations, limits listing activities to $18.13 million, of which no more than $12.852 million could be used for activities related to critical habitat designation. For FY2007, the Bush Administration proposed limiting listing activities to $17.759 million, of which no more than $12.581 million could be used for activities related to critical habitat designation; the House agreed with the Administration's request, while the Senate Committee on Appropriations has reported limiting listing activities to $17.859 million, of which no more than $12.672 million could be used for critical habitat designation.
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The 109th Congress considered numerous proposals to amend the Endangered Species Act (ESA; P.L. 93-205, 16 U.S.C. §§1531-1543). Major issues in recent years have included changing the role of science in decision-making, modifying critical habitat (CH) procedures, incorporating further protection and incentives for property owners, and increasing protection of listed species, among others. In addition, many have advocated enacting as law some ESA regulations promulgated during the Clinton Administration. The ESA has been one of the more contentious environmental laws. This may stem from its strict substantive provisions, which can affect the use of both federal and nonfederal lands and resources. Under the ESA, species of plants and animals (both vertebrate and invertebrate) can be listed as endangered or threatened according to assessments of their risk of extinction. Once a species is listed, powerful legal tools are available to aid its recovery and protect its habitat. The ESA may also be controversial because dwindling species are usually harbingers of broader ecosystem decline: the most common cause of listing species is habitat loss. The authorization for spending under the ESA expired on October 1, 1992. The prohibitions and requirements of the ESA remain in force, even in the absence of an authorization, and funds have been appropriated to implement the administrative provisions of the ESA in each subsequent fiscal year. In the 109th Congress, H.R. 3824 and S. 2110 proposed to extensively amend and reauthorize the ESA; the House passed H.R. 3824 (amended) on September 29, 2005. Proponents of both bills argued that they were designed to make the ESA more effective by redefining the relationship between private and public property uses and species protection, implementing new incentives for species conservation, and removing what some see as undue land use restrictions. However, critics argued that proposed changes created gaps in the ESA safety net of protections and prohibitions. The 109th Congress enacted legislation that (1) established a pilot project in Wyoming, Montana, Colorado, Utah, and New Mexico to better coordinate consultations and the preparation of biological opinions under ESA §7 (P.L. 109-58); (2) authorized certain activities related to the Middle Rio Grande Endangered Species Collaborative Program (P.L. 109-103); (3) reauthorized Upper Colorado and San Juan River Basin endangered fish recovery programs (P.L. 109-183); (4) expanded a Hawaiian National Wildlife Refuge to protect habitat for endangered waterbirds (P.L. 109-225); (5) expanded the authority of the Secretary of the Interior to assist private landowners in restoring, enhancing, and managing endangered and threatened species habitat on private land through the Partners for Fish and Wildlife Program (P.L. 109-294); (6) reauthorized and amended the Neotropical Migratory Bird Conservation Act and the Great Ape Conservation Act of 2000 (P.L. 109-363); and (7) established programs to manage marine debris and address its adverse effects on endangered species (P.L. 109-449). This report also identifies additional bills that were introduced in the 109th Congress to address specific concerns related to how the ESA is implemented and how endangered species are managed.
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Federal surface transportation programs are a major component of national spending on transportation capital infrastructure. According to a Government Accountability Office (GAO) report, 46% of all U.S. highway capital spending in FY2002 was attributable to federal funding. Likewise, it is the availability of federal transit funding that has provided the possibility of bus and rail transit projects in many communities during the last few decades. Structurally, surface transportation legislation normally consists of multiple separate legislative titles which can be viewed as the principal programs and their funding mechanism; highways, highway safety, transit, motor carrier safety, research, planning, hazardous materials transportation, rail, and finance. Additional titles are sometimes included in reauthorization legislation, that are often unrelated to transportation (as is the case of certain tax provisions in SAFETEA). It should be pointed out that the term "program" has multiple meanings in a discussion of federal surface transportation policy. The larger federal-aid highway program, for example, consists of a number of separate programs, such as the surface transportation program (STP). Funds in the various programs are distributed on the basis of formulas (known as apportioned programs in highway parlance) and on a discretionary basis (also referred to as the allocated programs in the highway program). The majority of funding in the overall surface transportation bill, and the vast majority of highway funding, goes to the so-called "core" highway programs. SAFETEA increases the number of these core programs from five to six: interstate maintenance (IM), national highway system (NHS); surface transportation program (STP); bridge and bridge maintenance; congestion, mitigation, and air quality (CMAQ); and the new highway safety improvement program (HSIP) are all apportioned programs. A seventh program, called the equity bonus (EB) (which replaced the TEA-21 minimum guarantee program), is sometimes also referred to as a core program. Most remaining highway funding goes to the allocated programs, such as federal lands highways, which are ostensibly under the control of the Federal Highway Administration (FHWA), but in recent practice have been largely earmarked during the annual appropriations process. The structures of the highway safety, research, and transit programs also include a mix of formula and discretionary programs. In the transit program, for example, about half of all funding is distributed directly to transit operators by the urbanized area formula program and the non-urbanized area formula program. Each of the major programs also includes planning, environmental, and other elements that are major subjects of discussion during reauthorization debates. Federal highway, highway safety, and transit programs are subject to periodic reauthorization. Prior to passage of SAFETEA, the most recent authorization was the Transportation Equity Act for the 21 st Century (TEA-21, P.L. 105 - 278 ), which provided funds for the period FY1998-FY2003. After October 1, 2003 all federal surface transportation programs continued to operate on the basis of 11 short term extension acts. Although there have been numerous short term reauthorizations in the history of these programs, there is a consensus in the surface transportation community that long-term reauthorizations, such as that afforded by TEA-21, better accommodate the long-term planning needs and construction horizons associated with the provision of highway and transit infrastructure. Reauthorization by short-term extensions created a great deal of uncertainty about the likelihood of future funding in the highway and transit community. Highway and transit interests at the state and local level, and in the private sector, have, therefore, welcomed passage of SAFETEA even though delays in its passage have converted it from a six-year bill to a just over a four-year bill expiring in FY2009. Federal funding for surface transportation is closely linked to the revenue stream provided by the highway trust fund. The trust fund is in fact two separate accounts—highways and mass transit. The primary revenue sources for these accounts are the 18.4 cent per gallon tax on gasoline and a 24.4 cent per gallon tax on diesel fuel. Although there are other sources of revenue for the trust fund, these fuel taxes provide about 90% of the income to the funds. Of these amounts, the transit account receives 2.86 cents per gallon and 0.1 cent per gallon is reserved for an unrelated leaking underground storage tank (LUST) fund. Over the almost 50 year life of the trust fund there have been several increases in the level of taxation. The last increase in the fuel tax occurred in 1993 (all of these funds were not actually deposited into the trust fund initially, but were deposited in the Treasury general funds for deficit reduction purposes until FY1998). For almost 50 years the trust fund has been a reliable source of funding for surface transportation. In FY2004, for example, the highway account received tax revenues of $31 billion, while the mass transit account received $5 billion. For most of its history the trust funds have collected more than has been expended relative to the size of the program defined by Congress. This situation has been changing in the last few years. The FY2004 limitation on obligations was set at $33.6 billion and the FHWA total appropriation was $34.5 billion, both amounts of which are higher than the revenues collected for the fiscal year. For a number of reasons, however, the trust fund's unexpended balance remains substantial, but is declining. Because of this trend there is some uncertainty at the moment about the long term outlook for the financial health of the trust fund. This is in spite of the fact that the American Jobs Creation Act of 2004 ( P.L. 108 - 357 ), passed in the closing days of the 108 th Congress, provided the trust fund with additional future income by changing elements of federal gasohol taxation. These changes could provide the trust fund with an additional $4 billion per year starting in FY2005. As mentioned earlier, both the House and Senate had passed reauthorization legislation in the 2 nd Session of the 108 th Congress and a Conference Committee was formed. The Conference Committee, Congressional Leadership, especially in the House, and the Administration were unable to reach agreement about total program funding for the next reauthorization period. This was largely because some Members of Congress backed a level of project funding larger than the Bush Administration was willing to support. Part of the Administration's objection related to the above debate about the future health of the trust funds vis-à-vis the Administration's adamant objection to raising fuel taxes either now or in the future. Some Members of Congress, on the other hand, had identified a number of mechanisms, including the now adopted gasohol changes, other tax changes, and rescissions that they felt would support a larger program. The gasohol changes by themselves, however, would not have been sufficient to fund the program size desired by many Members. Conferees on SAFETEA considered a number of tax and other changes that would increase revenues to the trust fund and/or offset additional highway and transit spending. Several of these provisions are included in the finance title of the act. The revenue increases in this title are viewed as quite modest and derive mostly from cutting back on tax fraud and by transferring some Treasury general fund revenues associated with transportation related activities to the trust fund. It was believed at time of passage, that the changes identified in SAFETEA when combined with the changes in gasohol legislation enacted in 2004, and enhanced by expected economic growth, would be sufficient to finance the $286.4 billion program created by the act. (CRS contacts: John Fischer and Robert Kirk) TEA-21 changed the way the highway trust fund relates to the Federal Unified Budget in two ways: first by creating new budget categories and second by setting statutory limitations on obligations. The act amended the Balanced Budget and Emergency Deficit Control Act of 1985 to create two new budget categories: highway and mass transit. The act further amended the budget process by setting the limitation on obligations for each fiscal year from FY1999 to FY2003 in authorizing rather then appropriations legislation. In addition, TEA-21 provided a mechanism, Revenue Aligned Budget Authority (RABA), to adjust these amounts in the highway account, but not the transit account, so as to correspond with increased or decreased receipts in highway generated revenues. The provision also adjusts the highway program authorization level to correspond with this change. It should be pointed out, all of the above notwithstanding, that annual revenues and expenditures affecting the balances in the trust fund accounts remain part of the overall annual federal deficit calculation. The net effect of the changes was to set a predetermined level of funding for core highway and transit programs, referred to in TEA-21 as a discretionary spending guarantee. These categories are separated from the rest of the discretionary budget in a way that prevents the use of funds assigned to these categories for any other purpose. These so called "firewalls" were viewed, in the TEA-21 context, as guaranteed and/or minimum levels of funding for highway and transit programs. Additional funds above the firewall level could be made available for highway and transit programs through the annual appropriations process, but for the most part this did not occur except in FY2003. SAFETEA has retained this budget format largely unchanged. Most of the debate about SAFETEA was about money and its distribution. At the end of the day, SAFETEA provides quite a bit of additional money, $286.4 billion in guaranteed spending authority, for the six-year period FY2004-FY2009. This is a significant increase over the level in TEA-21 which provided $218 billion over the six-year period FY1998-2003. A direct comparison between the two bills, however, is difficult for a number of reasons that are beyond the scope this report. Suffice it to say that SAFETEA represents a significant funding increase for all federal surface transportation programs, though not as much of an increase as many of the legislation's original authors had hoped for. In reality, SAFETEA is a five-year bill, FY2004 is history and, at time of passage, only two months remained in FY2005. A more useful representation of SAFETEA, therefore, is that it provides just over $244 billion in guaranteed spending authority between FY2005-FY2009. As Table 1 shows, all major programs affected by the legislation receive significant new funding (the exempt obligation category is provided for equity bonus and emergency funding purposes and does not reflect a program per see). Total annual spending increases occur in each year and total spending in FY2009 is almost 23% higher than spending in FY2005. A summary of funding for major programs and activities can be found at the end of this report in Appendix . Even more detailed programmatic information, to the subprogram level, can be found at http://www.fhwa.dot.gov/ safetealu/ fundtables.htm The House version of what became SAFETEA contained a so-called "re-opener" provision that would have required that Congress reconsider the total amount of funding available at a specified later date. The Bush Administration strongly objected to this provision and it was not included in the final act. As mentioned earlier, TEA-21 created a spending mechanism intended to adjust annual highway program obligations to reflect changes in revenue in the highway trust fund. The expectation was that this would provide for increases in obligational authority, although the law did allow for reductions in funding if trust fund revenues decreased. In its first three years, RABA provided significant additional spending authority. In FY2003, however, the RABA computation called for a program reduction. Congress choose, through the appropriations process, not to reduce spending and instead increased it. As a result of this experience there was a push to change the way RABA was calculated to make revenue swings less dramatic, especially in the negative direction. SAFETEA changes how RABA is calculated primarily by using a two year calculation rather than the single year called for in TEA-21. In addition, it puts off RABA calculations until FY2007 and reduces the likelihood of spending reductions by requiring that no reductions occur so long as the unexpended balance in the highway trust fund exceeds $6 billion. Historically, transportation policy battle lines have often formed along regional rather than partisan alignments. The regional character of transportation policy is evident in the debate over the so-called "equity" of distribution of federal highway aid among the states. Since 1982 Congress has included legislative provisions in every surface transportation reauthorization act to remedy these perceived funding distribution concerns through a variety of minimum guarantee provisions. For many years, some states (mostly Southern as well as some midwestern and western states) have complained that they receive significantly less federal highway aid than their highway users pay in federal highway taxes to the highway trust fund (HTF). These states, referred to as donor states, have pressed for legislative remedies that would assure them a higher share rate-of-return, most recently 95%, on their tax payments to the Treasury. Donee states, states that receive more federal highway aid than they pay in federal highway taxes, have not opposed equity provisions per se but have opposed any reduction in their existing shares. The basic donor state argument is a relatively straightforward call for equity or fairness. Donor state advocates generally contend that for too many years they have been subsidizing the repair and improvement of donee state infrastructure, especially the older highway infrastructure in the Northeast. Most also argue that they are more road dependent and do not benefit from federal transit spending to the same degree as some donee states. Southern and western donor states also argue that they are fast growth areas, relative to most donee states, and that, consequently, their needs are as great or greater. Finally, they argue that with the completion of the Interstate Highway System there is no valid rationale for the donor-donee disparity. Donee state advocates argue that fairness should not be separated from needs. They assert that the age of their highway infrastructure, especially in the Northeast, the high cost of working on heavily congested urban roads, and the limited financial resources in large sparsely populated western states justify their donee status. They also argue that there are needs that are inherently federal rather than state and that a national highway network cannot be based solely on state or regional boundaries. Donee states also argue that Midwestern and southern states spend less local and state money on highways than donee states, and chide them for pleading for federal funds when they are unwilling to ante up their own resources. In a broader sense, the debate over equity remedies has implications for a number of overarching issues. An equity guarantee of a 95% rate of return could, in the minds of some, leave little room for addressing other or additional transportation needs that are uniquely federal, such as the Federal Lands Highway program. Also, the role of the federal government vis-à-vis the states comes into question as the minimum guarantee approaches 100%. At what point does the federal role become so limited that converting the Federal aid highway program to a revenue sharing or a block grant program make sense? Another controversial issue is whether the MG should be broadened, as some states have proposed, to include Federal Transit Administration programs. The 109 th Congress faced a difficult policy problem in resolving the seemingly contradictory goals of meeting donor state demands for a higher rate-of-return and donee state demands to be held harmless at a time when the HTF revenue base was expected to be insufficient to easily fund both goals. Part of the problem was that a bill that simply reduced the shares of donee states to increase the shares of donor states would have had difficulty overcoming a filibuster by donee states in the Senate. To construct a minimum guarantee (MG) mechanism that could overcome this obstacle, previous reauthorization bills had included "hold harmless" provisions that maintained certain base shares for all states. This meant that part of the process of bringing donor state shares up to the MG percentage required increasing the overall federal highway program size, usually by a significant amount (since donee state funding could not be reduced). In other words, providing equity remedies that keep both donor and donee states reasonably content has been accomplished by giving more money to all states but giving even more to donor states to bring their shares up to a designated per cent share, 90.5% during TEA21. Providing equity in this way has been very expensive in dollar terms, the minimum guarantee program under TEA21, in fact, became the largest highway program. In the end, the constraints of limited funding availability and the practical politics of getting the surface transportation legislation through both houses of Congress, resulted in a modest and gradual increase in the guaranteed rate-of-return to the states. SAFETEA replaces the entire TEA-21 MG program with an "Equity Bonus" program (EB). Basically, the individual program formulas will determine the initial apportionments and then the equity bonus funding will be added to these levels to bring donor states up to their guaranteed rate-of-return levels. The act directs the Secretary of Transportation to allocate to the states for each of the fiscal years 2005 through 2009 sufficient funds to ensure that each state receives at least a return of 90.5% for FY2005-2006, 91.5% for FY2007, and 92% for FY2008-2009, on their estimated payments to the highway account of the HTF. The act keeps nearly all the programs subject to MG under TEA-21 (IM, NHS, STP, CMAQ, HBRR, Recreational Trails, Appalachian Development Highway System, High Priority Projects, and metropolitan planning) subject to the equity provision, as well as three new formula programs, the Coordinated Border Infrastructure Program, the Safe Routes to School Program, the Highway Safety Improvement Program, and the existing rail-highway grade crossing program. The EB program also includes a number of hold harmless provisions that provide that certain states will receive the greater of the annual percent return described above or their share of total apportionments over the six-year life of TEA-21. To be held harmless the state must meet one or more of the following criteria, the state must: have a population density of less than 40 people per square mile and at least 1.25% of their total acreage must be under federal jurisdiction; have a population less than one million people; have a median household income less than $35,000; have a fatality rate on Interstate Highways in 2002 of greater than 1.0 per 100 million vehicle miles traveled; or have an indexed state motor fuel excise tax rate that is more than 150% of the federal motor fuel excise tax rate. There are twenty-seven states that qualify under these criteria: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, District of Columbia, Florida, Idaho, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Vermont, Utah, West Virginia, Wisconsin, and Wyoming. The EB program also guarantees that no state may receive less than a set percentage of its average annual TEA-21 apportionments for each fiscal year. In effect, this sets an annual percentage floor, relative to a state's TEA-21 average apportionment, beneath which no state can fall. The annual percentage floors are as follows: 117% for FY2005, 118% for FY2006, 119% for FY2007, 120% for FY2008, and 121% for FY2009. The programmatic distribution of Equity Bonus Program funds to the states is as follows. Each year the first $2.639 billion is apportioned to the STP, except that certain set-asides such as for Transportation Enhancements and some population-based sub-state allocations do not benefit from this distribution. Any Equity Bonus funds above $2.639 billion are distributed to the six core programs: IM, HBRR, NHS, STP, CMAQ, and the HSIP. The distribution among these programs is based on the ratio of each program's apportionment to the total apportionment of all six programs for each state. FHWA analysis indicates that over the five-year life of SAFETEA the EB program distributions will cost $40.9 billion. (CRS contacts: Robert Kirk and John Fischer) Funds for all of the programs discussed here are apportioned to the states on an annual basis using formulas found in SAFETEA. As a result they are sometimes referred to as the "apportioned" programs. In some instances, apportioned programs are also referred to as formula programs. Under TEA-21 most highway funding was reserved for five major apportioned programs, which are usually referred to as the core programs. They, along with the minimum guarantee, accounted for the vast majority of highway spending: 86% of the FY2003 authorized amount. SAFETEA increases the number of these core programs from five to six: interstate maintenance (IM), national highway system (NHS); surface transportation program (STP); highway bridge and bridge maintenance (HBRR); congestion, mitigation, and air quality (CMAQ); and the new highway safety improvement program (HSIP). A seventh program, the equity bonus (EB)(which replaced the TEA-21 minimum guarantee program), is sometimes referred to as a core program. The majority of funding in the overall surface transportation bill, and the vast majority of highway funding, goes to the so-called "core" highway programs. In addition to the core programs there are a couple of additional and much smaller apportioned programs that existed in TEA-21, and are continued in SAFETEA, e.g.: metropolitan planning and the recreational trails program. Although many potential new programs were considered during reauthorization only a very few were finally included in SAFETEA. In addition to the HSIP, creates two new formula programs: the Coordinated Border Infrastructure Program (CBI), which replaces the TEA-21 discretionary program of the same name; and the Safe Routes to School Program (SRSP). Under TEA-21, most of the funds distributed under the Federal-Aid Highway program were apportioned to the states based on apportionment formula factors set forth for the individual programs under Title 23 of the U.S. Code. Some of these programs' formulas include a combination of weighted factors such as lane miles, vehicle miles traveled, and estimated tax payments to the highway account of the HTF. Others are primarily based on a single factor such as the relative state share of total cost to repair or replace deficient bridges (HBRR) or weighted non-attainment and maintenance area population under the Clean Air Act (CMAQ). Although SAFETEA did not make major changes in the existing program formulas, the act did make some adjustments that are of note. The act eliminates the 10% safety STP set-aside that existed under TEA-21. The act continues the STP Transportation Enhancements set-aside but sets it as the greater of 10% of the funds apportioned to a state or the amount set-aside for FY2005. Adjustments were also made to the underlying calculation under CMAQ of weighted non-attainment and maintenance areas for ozone under the new 8-hour area standards. SAFETEA also creates a $20 million NHS set-aside for the construction of ferry boats and ferry terminal facilities in Alaska, New Jersey, and Washington. National Highway System set-aside for the Territorial Highway Program is set at $40 million for FY2005-FY2006 and at $50 million annually for FY2007-FY2009. The off-system bridge program set-aside minimum is maintained at 15% but the 35% ceiling is removed. The formula distribution is weighted 33 1/3%, in the ratio of total federal lane miles in each state to the total lane miles of the federal-aid highways (FAHP) in all states; 33 1/3%, in the ratio of total FAHP vehicle miles traveled (VMT) in the state to total VMT on all FAHP highways; 33 1/3%, in the ratio of the annual number of fatalities on the federal-aid system in each state to the number of annual fatalities on the federal-aid system in all states. The minimum payment to each state is set at 0.5%. The Railway-Highway Crossings program is funded through a takedown from HSIP but is distributed differently to the states. Crossings funding is distributed 50% based on the same formula distribution formula that existed when crossings were part of the STP and 50% based on the ratio that the number of public railway-highway grade crossings in each state bears to the total number of public railway-highway grade crossings in all states. The act also requires that from the amounts made available for HSIP, beginning in FY2006, $90 million annually be set aside by the states, according to the share of each state to the total amount apportioned, to be used only for construction and operational improvements on high risk rural roads. Under TEA-21, this was an allocated (discretionary) program. Under SAFETEA, the funds are to be apportioned to states along the Canada-U.S. and the Mexico-U.S. borders under the following formula: 20% in the ratio of incoming commercial truck crossings in a state to the total incoming commercial truck crossings in all border states; 30% in the ratio that incoming personal vehicle and bus crossings into a state to the total of incoming personal vehicle and bus crossings in all border states; 25% in the ratio of total weight of incoming cargo in a state to the total weight of incoming cargo in all border states; and 25% of the ratio that the total number of ports-of-entry in a state bears to the total number of ports-of-entry of all border states. Funds are to be apportioned among the states in the ratio that the total student enrollment in primary and middle schools in each state bears to the total student enrollment in primary and middle schools in all the states. No state is to receive an apportionment of less than $1 million. (CRS contact: Bob Kirk and John Fischer) All non-apportioned highway programs are subject to allocations that are based on criteria established in highway authorization and appropriation law. They also may be, and usually are, subject to congressional earmarking. In TEA-21 all of the programs in this category were smaller than the core programs, although there were some programs with significant funding levels. The same remains true in SAFETEA. The largest allocated program in SAFETEA is for congressionally mandated high priority projects (earmarks) that are specifically designated in the act. Other relatively large programs in the allocated category are the federal lands program, the interstate maintenance discretionary program, the bridge discretionary program (for FY2005 only), and the transportation and community and system pilot preservation program (TCSP). SAFETEA contains a few new large allocated programs. Among these are a new transportation improvement program, a redefined national corridor infrastructure program (formerly part of the national corridor planning and development and coordinated border infrastructure program), and a new program for projects of national or regional significance. All of these programs are subject to 100% earmarking in the act. The text of the act, however, contains a project selection criteria for the projects of national and regional significance and creates an operating framework for these projects that is somewhat different from the other allocated programs. Created by highway legislation primarily in the 1990s, innovative financing mechanisms attempt to use the guarantee of future highway funds as a way to speed project completion and to leverage additional funds for highway projects. There are three mechanisms currently in use: grant anticipation revenue vehicles (GARVEEs); credit assistance available as a result of the Transportation Infrastructure Finance and Innovation Act (TIFIA); and state infrastructure banks (SIBs). Each of these mechanisms has specific strengths and weaknesses that have been studied and described by GAO, CBO, and FHWA. SAFETEA makes changes in two of the federal innovative finance programs: TIFIA and the SIB program. Most of the changes may be viewed as perfecting changes in the programs but other changes are more significant. This program provides three types of federal financial assistance for major transportation projects: secured loans, loan guarantees, and standby lines of credit. SAFETEA both reduces the minimum project size threshold from $100 million to $50 million and also lowers the minimum project threshold for intelligent transportation system projects from $30 million to $15 million. The act provides $122 million annually to support TIFIA's leveraging activities. Under the SIB program, federal funds are used to help capitalize state infrastructure revolving funds. Under TEA-21, the program was limited to four states, Missouri, Rhode Island, California, and Florida. SAFETEA allows any state to enter into an agreement with DOT to establish SIBs eligible to be capitalized with federal funds drawn from core highway program funds. SAFETEA consolidates most of the tolling provisions in Section 1604. The act authorizes four tolling programs as well as an additional provision concerning the tolling of HOV lanes. Section 1143 of the revenue title of the act, which concerns private facility bonds and is discussed under bonding, is also expected to have an impact on tolling. The program is continued under current law at the level of 15 tolling projects. The act authorizes $11 million for FY2005 and $12 million annually for FY2006-FY2009 with the stipulation that for each of the years FY2006-FY2009 $3 million is to be made available for non-tolling congestion pricing pilot projects. This program was continued under current law. Both House and Senate bill provisions that would have changed the program were dropped during Conference. This new program directs the Secretary of Transportation to carry out 15 demonstration projects to permit states, public authorities, or public or private entities designated by the states to collect a toll at an existing toll facility, or any highway, bridge, or tunnel (including facilities on the Interstate System) to 1) manage high levels of congestion; 2) reduce emissions in a non-attainment area or maintenance area; or 3) to finance the expansion of a highway for the purpose of reducing traffic congestion by adding lanes on the Interstate System. It is assumed that most of the funding will go for HOT (high occupancy toll) lanes. The use of revenues is restricted to use for debt service, a reasonable return on any private financing, and toll facility operating and maintenance costs. If the toll facility is annually certified as adequately operated and maintained, excess revenues may be used for any other purpose relating to federal-aid highway or transit projects. Facilities that charge tolls under this program may set tolls that vary in price according to time of day or level of congestion, as appropriate to improve air quality or to manage congestion. High occupancy vehicle (HOV) facilities that charge tolls under this section are required to vary in price according to time of day or level of traffic. Fees collected on these express lanes are to be collected only through the use of noncash electronic technology. The act establishes a pilot toll program which allows the Secretary of the Department of Transportation to permit a state or compact of states to collect tolls on an Interstate System highway, bridge, or tunnel for the purpose of constructing Interstate System highways. The pilot program would permit the collection of fees on only three facilities on the Interstate System. An interested state or compact of states must demonstrate that financing the construction of the facility with the collection of tolls under the program is the most efficient and economical way to advance the project. States will not be allowed to enter into an agreement with a private person under which the state is prevented from improving or expanding the capacity of public roads adjacent to the toll facility to address conditions resulting from traffic diverted to such roads from the toll facility, including excessive congestion, pavement wear, and increased traffic accidents, injuries, or fatalities. Revenues may be used only for debt service, a reasonable rate of return for private investors, and operating and maintenance costs, including resurfacing, restoring, and rehabilitating the toll facility. Interstate Maintenance program funds may not be used on a facility for which tolls are being collected under the program. Section 1121 of the act allows state departments of transportation to allow vehicles, not otherwise eligible for HOV use, to pay a toll charged by the agency to use the HOV lanes (including HOV lanes on the Interstate System). The provision requires the state agency to 1) establish a program to address how motorists can enroll and participate in the toll program; 2) develop, manage, and maintain a system that will automatically collect the toll; 3) establish policies and procedures to manage demand (i.e. traffic levels) by varying the toll amount charged; and 4) establish policies and procedures to enforce violations of use of the facility. Section 1121 also allows for the tolling of "low emission and energy-efficient vehicles" at a preferential rate for HOV use. The act amends Section 142 (a) of the Internal Revenue Code of 1986 to allow the issuing of tax-exempt private activity bonds to finance highway projects and rail-truck transfer facilities. This allows state and local governments to issue tax exempt bonds to finance the activities of "private persons" (meaning the federal government or other individual entities other than state or local governments) to construct such facilities. The act qualifies three categories of projects for tax-exempt facility bonding: any highway project that receives assistance under any Title 23 (highways); any international tunnel or bridge that likewise receives federal assistance under Title 23; and any truck-train transfer facility project which receives federal assistance under either Title 23 or Title 49 (mass transit). A $15 billion limit is placed on the aggregate face amount of the bonds that can be issued. The conference report does not estimate how much infrastructure could be created using the leverage of this provision. If utilized up to the limit, the impact of this provision could be substantial. By way of comparison, only California will receive more than $15 billion in formula highway assistance from SAFETEA. This bonding provision may be the most important tolling provision in SAFETEA. Although the act does not require that projects using private activity bonds be supported by tolls, it is unlikely that this would not be the case unless some other revenue mechanism related to facility use could be created. (CRS contacts: John Fischer and Bob Kirk) The ADHP is a road building program intended to break Appalachia's regional isolation and encourage Appalachian economic development. It is not considered part of the federal-aid highway program per se, but receives its funding from the highway trust fund. The program is administered under the auspices of the Appalachian Regional Commission. Funds are apportioned by the Department of Transportation to the member states based on their "cost to complete" estimates of the approved Appalachian Development Highway System (ADHS). In terms of road miles, 85% of the ADHS roads are either completed or under construction (as of the end of 2004). The ADHS 2002 Cost to Complete Report estimated the additional federal funds needed (from FY2004 onward) to complete the system at $4.47 billion. Under TEA-21 the ADHP received $450 million in contract authority annually. The program also received significant additional funding through the appropriations process during the TEA-21 years. ADHP funds are available until expended and provide an 80% federal share. SAFETEA provides $470 million annually for the ADHP. The act prohibits the use of toll revenues as credits for non-federal matching funds on ADHP-funded projects. The level of earmarking in SAFETEA is exponentially larger in terms of both numbers of projects and dollar terms then was the case in TEA-21. For starters, SAFETEA contains at least 5,092 separate earmarks for congressional high priority projects (HPPs) with a value of over $14.8 billion (there are several additional blank, but nonetheless numbered earmarks in the conference report). This compares with 1,849 similarly labeled earmarks in TEA-21 with a value of $9.4 billion. The HPPs are not the only earmarks in the highway title of the act (Title I). Three new earmarked categories have been created. The first, projects of national and regional significance, provides almost $1.8 billion for 25 projects. The individual earmarks in this category are mostly larger then those in the HPP program and, as the name of the program suggests, are larger in scope. A second set of earmarks is provided for national corridor infrastructure improvements. This category lists 33 earmarks valued at over $1.9 billion. The corridor infrastructure program is not new, but was not earmarked in previous authorizing legislation. The final earmarked category is for transportation improvements. There are 465 projects listed with over $2.5 billion in dedicated funding. This is a totally new program and there is no explanation in the conference report as to how, or if, the projects in this list are supposed to differ from those in the HPPs program. It should be noted that individual projects may appear in more then one earmarking list and that they may receive different amounts of funding in each instance. The above does not represent the full extent of earmarking in the act. There are also 32 individually listed earmarks throughout the highway title of the bill (Title I). These have a total value of almost $774 million. At least 25 earmarks can also be found in the research title of the bill (Title V) requiring an additional $241.6 million in funding. The other largely earmarked program in the act is in the transit title. The bus and bus facilities program contains 662 specific projects with almost $1.6 billion in funding. There are at least 39 additional stand-alone earmarks in the text of the rest of the transit title valued at just over $191 million. By some estimates the total amount of earmarking in the bill exceeds $24 billion, although an exact accounting is difficult at best for definitional reasons. Much of the discussion about earmarks since passage of the bill has been focused on how earmarking effects the Equity Bonus calculation. By congressional parlance there are two types of earmarks in the bill for EB purposes, those "below the line," meaning they are part of the annual EB process and those above the line projects, meaning they are not. This computation significantly affects state shares because some states have received considerably more earmarked funds on a proportional basis than others. Of the highway title (Title I) earmarks the HPPs are below the line. The other three earmarked programs are above the line and miscellaneous earmarks in the highway title are above the line. Transit earmarks are not part of the EB calculation. Transportation Enhancements (TE) program activities (Sec. 1122) are nearly identical to those under TEA-21. The TE program funds 12 major categories of projects: 1. pedestrian and bicycle facilities; 2. pedestrian and bicycle safety and education activities; 3. acquisition of scenic and historic easements and sites (including historic battlefields); 4. scenic or historic programs including tourist and welcome centers; 5. landscaping and other scenic beautification; 6. historic preservation; 7. rehabilitation and operation of historic transportation building, structures, or facilities; 8. preservation of abandoned railway corridors (including conversion and use of the corridors for or bicycle trails); 9. inventory, control, and removal of outdoor advertising; 10. archeological planning and research; 11. environmental mitigation of runoff pollution and provision of wildlife connectivity; 12. establishment of transportation museums. The funding mechanism for TE program activities has been modified. Under TEA-21, 10% of funds apportioned to a state were required to be available only for TE activities. Under SAFETEA (Sec. 133(d)(2)), funding for the TE program is the greater of 10% of the funds apportioned to a state under the Surface Transportation Program (STP) for a fiscal year, or the amount that was apportioned to a state in FY2005. Because STP funding is set to rise under P.L. 109 - 59 , the 10% set-aside for TE activities ensures that additional funding will become available for enhancement projects. The TCSP program, established under TEA-21 and reauthorized under SAFETEA, is designed to assist in planning, developing, and implementing strategies to integrate transportation, community, and system preservation plans and practices, and identify private sector-based initiatives to improve such relationships. TCSP funding was authorized for projects that aimed to improve the efficiency of the transportation system; reduce environmental impacts of transportation; reduce the need for costly future public infrastructure investments; ensure efficient access to jobs, services, and centers of trade; and examine development patterns and identify strategies to encourage compatible private sector development patterns. State, tribal, regional, and local governments would be eligible to receive TCSP grants. Sec. 1117 of P.L. 109 - 59 provides a six-year total funding authorization of $270 million for the TCSP program, with $25 million authorized for FY2005 and $61.25 million authorized for FY2006-FY2009. This is substantially more than was authorized under TEA-21 ($120 million), but significantly less than the $454 million appropriated during the life of TEA-21 (additional funds were added above the TEA-21 authorized level during the annual appropriations process in some years). Under TEA-21, TCSP spending was authorized at $20 million for FY1999 and $25 million per year for FY2000 through FY2003. As envisioned in TEA-21, competitive grants were awarded in FY1999. For FY2000 to FY2003, TCSP projects were earmarked in the annual transportation appropriations bills. TCSP funding amounted to $13.5 million in FY1999, $31.1 million in FY2000, $46.9 million in FY2001, $273 million in FY2002, and $89.5 million in FY2003. SAFETEA continues to provide a significant level of funding for bicycle and pedestrian programs that encourage a greater number of non-motorized trips, and pedestrian and cyclist safety, health, and education programs. The major federal program that has supported pedestrian and bicycle mobility since the passage of ISTEA is the Transportation Enhancements (TE) program (23 USC §133(b)(8)), which is unchanged with respect to provisions for bicyclists and pedestrians. That program permits states to allocate TE funds for (1) provision of facilities for pedestrians and bicycles, (2) provision of safety and educational activities for pedestrians and bicyclists, and (3) preservation of abandoned railway corridors (including the conversion and use thereof for pedestrian or bicycle trails). Between FY1992 and FY2004, 55% of TE funds were programmed for these three activities. Provision of pedestrian and bicycle facilities accounted for 46.3% of programmed TE activities through FY2004. A number of other programs within Titles 23 and 49 USC also provide for the construction of bicycle and pedestrian facilities associated with road and transit projects. The Safe Routes to School Program is a new program under SAFETEA. It requires the Secretary of Transportation to establish and carry out a program to enable and encourage children, including those with disabilities, to walk and bicycle to school; to make bicycling and walking a safer and more appealing transportation alternative, thereby encouraging a healthy and active lifestyle from an early age; and to facilitate the planning, development, and implementation of projects and activities. The Safe Routes to School Program will be funded at $612 million for FY2004-FY2009. Funding is to be apportioned among the states based on the ratio of total student enrollment in primary and middle schools in each state relative to the total student enrollment in primary and middle schools in all the states. Each state would receive a minimum apportionment of no less than $1 million per fiscal year and the Secretary is directed to set aside not more than $3 million for the administrative expenses of the Secretary in carrying out the program. Each state's apportionment would be administered by the state's department of transportation. The federal share of the cost of projects and activities under the Safe Routes to School Program is 100%, and funds ware to remain available until expended. Funds are not transferable and will remain available until expended. In P.L. 109 - 59 , agencies eligible for funding under this program include state, local, and regional agencies, including nonprofit organizations, that demonstrate an ability to meet the requirements of the program. Funds apportioned under the program may be used for planning, design, and construction of infrastructure-related projects that will substantially improve the ability of students to walk and bike to school. Projects include sidewalk improvements, traffic calming and speed reduction improvements, on-street bicycle facilities, off-street bicycle and pedestrian facilities, pedestrian and bicycle crossing improvements, secure bicycle parking facilities, secure bicycle parking facilities, and traffic diversion improvements in the vicinity of schools. Funds allocated to states under this program may also be used for noninfrastructure-related (or behavioral) activities to encourage walking and bicycling to school, such as public awareness campaigns and outreach to press and community leaders, traffic education and enforcement in the vicinity of schools, student sessions on bicycle and pedestrian safety, health, and environment, and funding for training, volunteers, and coordinators of safe routes to school programs. Non-infrastructure-related spending should not be less than 10% and not more than 30% of the amount apportioned to a state for the program. Each state receiving an apportionment under this program is required to use a sufficient amount of the apportionment to fund a full-time position of coordinator of the state's safe route to school program. The Secretary is required to make grants to a national nonprofit organization engaged in promoting safe routes to schools to operate a national safe routes to school clearinghouse; to develop information and educational programs on safe routes to school; and to provide technical assistance and disseminate techniques and strategies used for successful safe routes to school programs. Funding for the clearinghouse would come from the Secretary's administrative expenses set aside. Section 1404 also establishes a task force to study and develop a strategy for advancing safe routes to school programs nationwide. The results of the study are to be transmitted to Congress not later than March 31, 2006. (CRS contact: Glennon Harrison) SAFETEA provides $45.3 billion in guaranteed funding for transit for the five-year authorization period (FY2005-FY2009). Including FY2004 transit funding, the six-year total is $52.6 billion, a 46% increase over the $36 billion guaranteed for transit in TEA-21. Within the overall increase, Congress shifted the share of funding going to various parts of the transit program. The share of transit funding going to the Urbanized Area Formula Program shrank from 47.9% under TEA-21 to 44.0%, while the share going to the Non-Urbanized (i.e. rural) Formula Program increased from 3.3% under TEA-21 to 5.2%. Relatedly, the share of total transit formula funding going to four of the largest (in terms of population) states shrank by nearly 8% (though the share of the largest state in terms of population, California, increased by 1.2%), while the share going to the 40 least-populated states (plus the District and territories) increased by 11.1%. Generally, the act made only minor changes to the structure of the federal transit program. As described below, a few new programs were added, several new funding categories were created within existing programs, and some changes were made to existing programs. Other provisions in the act include a requirement that all federal agencies in the National Capital Region offer their employees a transit pass as a transportation fringe benefit (Section 3049); a provision making the alternatives analysis required as part of the New Starts program eligible for FTA grants (Section 3037), with 18 such studies earmarked for FY2006-FY2007; and earmarks for the Bus and Bus Facilities Program for FY2006-FY2009 (in TEA-21, there were no earmarks for that program for the last three years of the authorization period, leaving the earmarking during those years to the appropriations committees). These two programs provide a total of $1.7 billion in additional funding (about a 10% addition over the FY2006-FY2009 period) to the Urbanized Area Formula and Non-Urbanized Area Formula programs (Section 3038). Half of the funds under this pair of programs are apportioned to states according to population forecasts for 15 years beyond the date of the most recent Census, and are distributed to both urbanized and non-urbanized areas within each recipient state according to the ratio between urban and rural population within that state. The other half of the funding is distributed to urbanized areas in states whose population densities exceed 370 persons per mile. This is a formula program to increase the availability of transportation services to persons with disabilities, "including transportation to and from jobs and employment support services" (Section 3019). It is authorized at a total of $339 million over the period FY2006-FY2009. This program will not be subject to the labor protection provisions of 40 U.S.C. 533(b) that apply to most other transit programs. This is a discretionary grant program to provide transportation alternatives to the private automobile in national parks and public lands, in order to protect those areas and to provide access to those areas for everyone, including persons with disabilities (Section 3021). It has a total authorization of $97 million. This program will be exempt from the labor protection provisions of 40 U.S.C. 533(b) that apply to most other transit programs. A new formula program was created within the Urbanized Area Formula Program, funded by a one-percent set-aside of the Urbanized Area Formula Program authorized funding (providing approximately $150 million total over the FY2006-FY2009 period)(Section 3034). This program provides additional funding for small (under 200,000 in population) urbanized areas that provide a level of transit service comparable to that provided by urbanized areas with populations between 200,000 and 1 million. The areas of transit service that are measured for this program are: passenger miles per vehicle revenue mile and vehicle revenue hour; vehicle revenue miles and hours per capita; and passengers and passenger miles per capita. This program is a response to an issue created by the formula for urbanized areas under 200,000 in population: unlike the formulas for larger urbanized areas, the formula for urbanized areas under 200,000 in population does not include any performance factors. One reason for this difference was to relieve transit providers in small areas of the burden of having to collect and report the same amount of data about their operations as agencies in the larger areas. But one result of the difference in treatment is that small areas that provide higher-than-average levels of transit service do not receive a level of funding that recognizes their efforts, compared to other small areas that do not offer a comparable level of service. Section 3033 of TEA-21 directed DOT to study the issue. DOT concluded that sufficient issues existed to consider changes in the Urbanized Areas Formula Program apportionment formulas to reward the extra effort of these transit-intensive areas. This change will have the effect of shifting approximately 1% of funding from urbanized areas over 200,000 in population to those under 200,000 in population. This program is a new category within the New Starts program, which funds new fixed-guideway transit systems or extensions to existing systems (Section 3011(a)5309(e)). New Starts projects seeking less than $75 million in federal funding (Small Starts) will be subject to a streamlined evaluation process, with fewer evaluation categories, compared to those projects seeking $75 million or more in federal funding. This program is authorized at $200 million annually for FY2007-FY2009. The exemption from the evaluation process for projects seeking less than $25 million in federal funding is eliminated. The federal share for New Starts projects (80%) was not changed. $45 million was set aside from the Non-Urbanized Area Formula Program for grants to Indian tribes for public transportation on Indian reservations (Section 3013(c)). Also, 20% of the Non-Urbanized Area Formula program funding will now be apportioned according to a state's share of the nation's total non-urbanized land area. The remaining 80% of the program's funding will continue to be apportioned according to a state's share of the nation's total non-urbanized population. (CRS Contact: [author name scrubbed]) The act authorizes a total of $90 million for magnetic levitation train deployment for FY2005-FY2009 (Section 1307; the authorization is in Section 1101(a)(18)). That is more than the $60 million in contract authority provided for maglev deployment under TEA-21 (TEA-21 also authorized an additional $950 million for this program that was never appropriated). Of the authorized funding, 50% is for a maglev project between Las Vegas and Primm, Nevada, and 50% is for a maglev project east of the Mississippi River. Under the TEA-21 deployment program, maglev projects in Pennsylvania and Maryland were selected to compete for the available funding. The explanatory language in the conference committee report on SAFETEA notes that the Committee intends for this program to be administered as a new program and not as the continuation of any previously authorized program. The act reauthorizes the Swift Rail Act, expanding the eligible expenses from "planning" to "development" of high-speed rail corridors (Section 9001). It continues the current authorized level of funding: $70 million annually for corridor development, and $30 million for high-speed rail technology improvements, for FY2006-2013. The act authorizes a total of $50 million over the period FY2005-FY2009 for the elimination of rail-highway grade crossing hazards in high-speed rail corridors (Section 1103(f)). The act directs the Secretary of Transportation to make grants to the Alaska Railroad for capital rehabilitation and improvements benefitting passenger transportation (Section 9006). No specific amounts are authorized for these grants; the act authorizes "such sums as may be necessary." Another provision (Section 3034(d)(2)) provides that the amount apportioned to the Anchorage urbanized area under the Urbanized Areas Formula Program "shall be available to the Alaska Railroad for any costs related to its passenger operations." The act requires the Federal Railroad Administration (FRA) to establish a program to review continuous welded rail joint bar inspection data from railroads and FRA track inspectors, and directs FRA to require track owners using continuous welded rail track to improve the identification of cracks in rail joint bars (Section 9005). FRA is also directed to develop regulations for appropriate design standards for pressurized tank cars, and recommend ways to reduce the risk of catastrophic fracture of pressurized tank cars constructed before 1989. (CRS contact: [author name scrubbed]) SAFETEA authorizes a new categorical grant program for highway safety, the Highway Safety Improvement Program (HSIP)(Section 1401). This program subsumes the existing roadway hazard elimination program (23 U.S.C. 152), which funded such projects as installing barriers and guard rails. Under TEA-21 the Section 152 program and the Section 130 program (elimination of hazards at rail-highway grade crossings, such as by installing warning lights and gates), which focused on elimination of infrastructure hazards, were funded through a 10% set-aside from the Surface Transportation Program. This amounted to $560 million in FY2005. Of that amount, under TEA-21 criteria states were required to spend an amount equal to at least the amount provided in 1991 for hazard elimination (at least $317 million annually: $155 million for rail-highway hazard elimination and $162 million for other general roadway hazard elimination). States could use the remainder on other highway projects if they certified it was not needed for safety improvements. The new HSIP Program is authorized at $1.2 billion in FY2006, rising to $1.3 billion by FY2009. This funding is apportioned by a formula using three ratios: one-third of the funds are apportioned based on a state's share of total lane-miles of federal-aid highways; one-third based on a state's share of total vehicle miles traveled on federal-aid highways; and one-third based on a state's share of fatalities on the federal-aid highway system. No state will receive less than 0.5% of the funding apportioned for this program. The HSIP has two set-asides: $220 million is each year is reserved for rail-highway grade crossing hazard elimination (Section 130), with its own apportionment formula; and $90 million each year is reserved for projects on high risk rural roads (rural roads having fatality and incapacitating injury rates above the statewide average for such roads). In both cases, states that demonstrate to the Secretary's satisfaction that they have met all their needs for safety projects on grade crossings or on high risk rural roads can use their share of those funds for other safety projects. States are required to prepare a strategic highway safety plan. The overall program authorization is $1.2 billion in FY2006, rising to $1.3 billion by FY2009 The act, as mentioned earlier, also creates a new Safe Routes to Schools program (Section 1404) to fund infrastructure projects that increase the safety of children within two miles of primary and middle schools, in order to encourage children to walk or bike to school. The funding is apportioned by formula based on student enrollment, with a minimum of $1 million for each state. At least 10%, but not more than 30%, of the program funds are to be spent for programs dealing with behavior and other non-infrastructure projects. The program is authorized at $54 million in FY2005, rising to $183 million in FY2009. The act creates a new grant program to promote seat belt use (Section 2005). States that enact a primary seat belt law after December 31, 2002 would receive a grant (states that have already enacted a primary seat belt law will also receive a smaller grant under this program). Alternately, a state that achieves a seat belt use rate of 85% or more for two years is also eligible for a grant under this program. The grant funds may be used for a variety of highway safety purposes; the federal share for projects funded by these grants is 100%. The program is authorized at $125 million annually for FY2006-FY2009. The act also expands a grant program to reduce the rate of motorists driving while impaired by alcohol (Section 2007). To receive a grant, a state must have an alcohol-related fatality rate of 0.5 or less per 100 million vehicle miles traveled, or must be carrying out a series of programs, described below, to discourage driving while impaired. For FY2006, a state must be carrying out 3 of the specified programs, for FY2007a state must carry out 4 of the programs, and for FY2008 and FY2009 a state must be carrying out 5 of the specified programs. The specified programs are: check points or saturation patrols; a prosecution and adjudication program; annually increasing the percentage of drivers involved in fatal accidents whose blood is tested for its alcohol content; more severe penalties for drivers convicted of driving with a blood alcohol content of 0.15% or higher (compared to those convicted with lower levels of blood alcohol); a program for effective alcohol rehabilitation or courts that specialize in driving while impaired cases that emphasize close supervision of high-risk offenders; an effective strategy for preventing drinking by persons under age 21; an administrative license revocation system; and a program that returns "a significant portion" of fines collected for driving under the influence of alcohol to communities for comprehensive programs to prevent impaired driving. The grants may be used to fund any of the specified programs, or certain other related expenses. There is also a set-aside of up to 15% of the funds for this program for grants to the 10 states with the highest rates of impaired driving-related fatalities. The program has a total authorization of $555 million over the authorization period. Other new programs in the act include a motorcyclist safety grant program (Section 2010) to fund safety training and education programs (authorized at $6 million for FY2006-2008, $7 million for FY2009); and an incentive grant program for states that require children between 50 and 65 pounds to be in appropriate child restraints (Section 2011, authorized at $6 million for FY2006-2008, $7 million in FY2009). The act also directs that DOT establish standards to reduce vehicle rollover crashes, to reduce the incidence of occupants being thrown from vehicles in rollover crashes, to increase the roof strength of passenger vehicles to protect occupants in rollover crashes (Section 10301), and to enhance passenger motor vehicle occupant protection in side impact crashes (Section 10302). (CRS Contact: [author name scrubbed]) ITS, often consisting of communication systems, sensors or monitoring equipment, and computers, is used in highway or transit projects, facilities, or operations with the intention of improving their performance or safety. For example, ITS enables traffic management centers to receive real-time video and other measures or indicators of traffic flow, incidents, events, or crashes, as well as roadway and weather conditions. Such information can help operators redirect traffic, coordinate emergency response, or improve the operation and coordination of the surface transportation system. During the later years of TEA-21, the direct federal investment in ITS totaled about $230 million per year. (That amount does not include federal aid highway funds allocated by the states to deploy ITS.) Of that annual total, around $100 million was for ITS research and around $120 million was for deployment of ITS. SAFETEA provides $110 million annually for ITS research (Section 5101). The ITS deployment program is terminated after FY2005; ITS project costs are now eligible expenses in several of the core highway programs. The act provides for advancing and testing new technologies, improving ITS standards and architecture, and conducting training, including a requirement for the DOT to develop a national ITS program plan (Section 5301). (CRS Contact: [author name scrubbed]) Both the short- and long-term, research and development, as well as technology deployment activities (RD and TD) have a role in helping to reduce the various challenges that affect the performance or operation of the nation's surface transportation systems. These challenges include congestion, security, loss of life and injury due to traffic crashes, degradation of environmental or life quality (e.g., suburban sprawl), and the continual need for infrastructure rehabilitation. The federal role in RD and TD seeks to advance and accelerate the use of improved or safer technologies, processes, policies, vehicles, and infrastructure to reduce these challenges. In the surface transportation arena, the federal role is primarily administered or overseen by the FHWA, FTA, NHTSA, and the Research and Innovative Technology Administration (RITA). In terms of the transportation budget, two of the largest efforts of RD and TD pertain to ITS and FHWA's RD and TD program (discussed below). This section deals primarily with funds used to support FHWA-administered programs. FHWA conducts an extensive RD and TD program that involves all aspects of the highway system. For these activities, Title V of SAFETEA authorizes roughly $295 million per year, up from roughly $200 million annually under TEA-21. For each of the years FY2005-FY2009, SAFETEA authorizes the following amounts for transportation research and education: $169.4 million for surface transportation research, development, and deployment; $26.7 million for training and education, $27 million for the Bureau of Transportation Statistics, and $69.7 million for the University Transportation Research Program. (SAFETEA also authorizes research, development, and testing funds for transit and motor carrier activities as well as for a variety of other technological objectives.) Research funds are used primarily to advance and deploy technologies intended to improve highway pavements, structures, roadway safety, and study highway policies. Some of the technology deployment funds are earmarked for specific types of research or projects, and much of the university-oriented funds are earmarked for specific institutions. Many state and industry experts assert that FHWA's RD and TD funds are of fundamental importance to the states and their long-term ability to maximize the effective use of federal aid funds. (CRS contact: [author name scrubbed]) Title IX of SAFETEA, "Rail Transportation," addresses three issues with respect to freight rail transportation: infrastructure capacity, rail-to-rail competition, and grade crossing conflicts. In light of increasing international trade volumes and growing congestion on certain parts of the nation's highway system, Congress has been considering the capability of the freight railroads to expand their infrastructure capacity to handle more freight. Freight railroads primarily finance their infrastructure needs without government aid. Congress has been evaluating how, and under what circumstances, it might be appropriate for the federal government to assist the railroads in expanding their networks. Another rail issue is the increasing frequency of freight train traffic through the middle of some towns and city neighborhoods. More frequent trains have increased delays for motor vehicle traffic at grade crossings. While railroads have reduced the total number of railway miles they maintain in service, they are utilizing their remaining track more intensely in an effort to improve operating efficiency. A further congressional issue of a perennial nature since price deregulation of the rail industry in 1980 is the captive shipper question. Some Members of Congress, who have rail shippers in their district served by only one railroad, are concerned with the high rail rates and poor rail service they contend these shippers receive. All of these rail issues have been debated in the context of stand alone legislation introduced in the 109 th Congress but SAFETEA also reflects these issues in title IX of the act. For example, section 9007 requests the Transportation Research Board of the National Academies to report to Congress on the performance of the nation's rail system in terms of service quality and rates, the railroads' ability to meet projected demand, and the effectiveness of public policy in balancing the need for railroads to earn adequate revenues with those of shippers for reasonable rates and adequate service. Congress also provided the following two funding mechanisms in title IX of SAFETEA that are intended, at least partially, to address these issues. SAFETEA (section 9003) expands a federal loan and loan guarantee program authorized in TEA-21 for rehabilitating and improving rail track. The RRIF Program expands tenfold from $3.5 billion to $35 billion in total value of available loans. Of the $35 billion total, $7 billion is reserved for smaller, regional and short-line railroads (non-Class I railroads). SAFETEA also amends existing program language to expedite loan availability. Section 9003 states that the Secretary of Transportation "shall" provide loans rather than "may" provide loans. It also states that the Secretary shall not require collateral from a loan applicant or that the loan applicant have previously sought a loan from another source, and requires the Secretary to approve or disapprove a loan within 90 days. Significantly, with respect to rail-to-rail competition and those shippers who refer to themselves as "captive" to one railroad, section 9003 states that a loan my be issued "solely for the purpose of constructing a rail connection between a plant or facility and a second rail carrier, limited option rail freight shippers that own or operate a plant or other facility that is served by no more than a single railroad." Finally, SAFETEA adds "enhancing rail infrastructure capacity and alleviating rail bottlenecks" to the list of priorities that the Secretary should consider in issuing RRIF loans. SAFETEA (section 9002) creates a new federal grants program for relocating rail track or grade separating rail track that is interfering with a community's motor vehicle traffic flow, its quality of life, or its economic development. The program authorizes $350 million for each of fiscal years 2006 through 2009. At least half of the grants awarded must not be more than $20 million each and the federal share is not to exceed 90% of the total cost of a project. Enhancing rail infrastructure capacity and eliminating grade crossings were also funded in SAFETEA through project earmarks. Under "Projects of National and Regional Significance" (section 1301), SAFETEA provides $90 million for improving a rail line connecting Virginia seaports and Ohio, $100 million for further planning of a freight rail tunnel under New York harbor, $100 million to improve rail connections and eliminate grade crossings in the Chicago area, $125 million to eliminate grade crossings on a rail line in communities east of Los Angeles, $14 million for further study of a plan to relocate El Paso rail yards out of the city, and $15 million to relocate a rail line connection to the Port of Portsmouth, Virginia in order to eliminate grade crossings. SAFETEA directs that DOT conduct a comprehensive study of the nation's rail transportation system since its deregulation in 1980, including the service levels, service quality, and rates of the major railroads, the projected demand for freight rail service and constraints on meeting that demand, and "the effectiveness of public policy in balancing the need for railroads to earn adequate returns with those of shippers for reasonable rates and adequate service" (Section 9007). Section 1306 of SAFETEA creates a new grant program entitled "Freight Intermodal Distribution Pilot Grant Program" that provides $6 million in grants for each of fiscal years 2005 through 2009 for improving freight mobility around U.S. international ports, inland ports, and intermodal freight facilities. The pilot program designates a total of six projects that are located in Oregon, Georgia, California, Alaska, and North Carolina to carry out the program. SAFETEA continues the Recreational Trails Program (RTP), initially authorized under ISTEA and expanded under TEA-21, as a state-administered, federal-aid program to help states develop and maintain recreational trails for motorized and non-motorized trail uses. The RTP provides funds for all types of recreational trail use, including hiking, running, bicycling, equestrian use, wheelchair use, snowmobiling, four wheel driving, off-road motorcycling, all-terrain riding, and other off-road vehicle use. RTP funds may not be used for property condemnation, constructing new trails for motorized use on National Forest or Bureau of Land Management lands unless the project is consistent with resource management plans, or facilitating motorized access on otherwise non-motorized trails. In §1101(a)(8), SAFETEA authorizes a total of $370 million in contract authority for the RTP for FY2005-2009 ($60 million FY2005, $70 million for FY2006, $75 million for FY2007, $80 million for FY2008, and $85 million for FY2009). The measure also sets a specified level of $840,000 annually for administrative expenses. Funds are allocated to the states by legislative formula: 50% equally among all eligible states and 50% in proportion to the amount of off-road recreational fuel use. Under SAFETEA, the RTP is subject to the same annual obligation limitation as other federal-aid highway programs. States are required to use 30% of their RTP funds for motorized trail uses, 30% for non-motorized trail uses, and 40% for diverse trail uses. SAFETEA eliminates the discretionary waiver from the 30% provisions, typically requested through state trail advisory committees for motorized and nonmotorized projects, but retains the small state exemption for any state with a total land area of less than 3.5 million acres. The "sliding scale" provision in 23 U.S.C. §120(b) provides for additional federal share under the federal-aid highway program in states with large amounts of federal lands. SAFETEA amends the program to change the federal share for RTP projects from a strict 80% to the sliding scale share used in some other federal-aid highway programs. Additionally, SAFETEA encourages, but does not require, states to use youth conservation or service corps in the construction and maintenance of recreational trails. SAFETEA amends the existing category of permissible uses for RTP funding to expand use of educational funds for non-law enforcement trail safety, trail use monitoring patrols, and trail-related training, but in an amount not to exceed 5% of the apportionment made to the state for the fiscal year. A new provision, 23 U.S.C §206(b)(2)(F), permits funding for trail condition assessment for accessibility and maintenance. ISTEA and TEA-21 required RTP sponsors to complete environmental compliance documentation before applying for RTP funds. SAFETEA permits pre-approval planning and environmental compliance costs to be credited toward the non-federal share for RTP projects, limited to costs incurred less than 18 months prior to project approval. (CRS contact: [author name scrubbed]) Before final design, property acquisition, or construction on a highway or transit project can proceed, DOT (i.e., FHWA or FTA) must comply with certain environmental review requirements, including those of the National Environmental Policy Act of 1969 (NEPA, 42 U.S.C. 4321 et seq.). NEPA requires all federal agencies to consider the environmental impacts of proposed federal actions. To ensure that environmental impacts are considered before final decisions are made, NEPA requires DOT to prepare an environmental impact statement (EIS) for any federally funded action that significantly affects the quality of the human environment. Projects for which it is not initially clear whether impacts will be significant require the preparation of an environmental assessment (EA). If, it is determined, at any time during the assessment, that a project's impacts will be significant, an EIS must be prepared. Projects that do not individually or cumulatively have a significant social, economic, or environmental effect, and which DOT has determined from past experience have no significant impact, are processed as categorical exclusions. (For more detailed information about the NEPA process, see CRS Report RL32024, Background on NEPA Implementation for Highway Projects: Streamlining the Process , by [author name scrubbed].) Another requirement that is generally carried out within the context of the NEPA process is compliance with Section 4(f) of the Department of Transportation Act of 1966. Section 4(f) requirements apply to the use of publicly owned parks and recreation areas, wildlife and waterfowl refuges, and to publicly or privately owned historic sites of national, state, or local significance. The law prohibits the use of a Section 4(f) resource for a transportation project unless there is no "prudent and feasible" alternative to do otherwise, and the project includes all possible planning to minimize harm to the resource. Some Members of Congress have expressed concerns that the environmental review process for large, complex highway and transit projects can be inefficient, leading to delays in completion of those projects. To address this concern, "Environmental Streamlining" provisions were included in TEA-21. Although not defined by the statute, FHWA defines environmental streamlining as the timely delivery of federally funded transportation projects, while protecting and enhancing the environment. Because major transportation projects may be affected by dozens of federal, state, and local environmental requirements, administered by multiple agencies, improved interagency cooperation was identified by Congress as a critical element to the success of environmental streamlining. The streamlining provisions of TEA-21 required the Department of Transportation (DOT) to develop and implement a "coordinated environmental review process" for highway projects that either do have, or may have, a significant impact on the environment (approximately 9% of all highway projects fall into one of these categories). This coordinated review process encouraged full and early participation by all relevant federal and state agencies required to participate in a highway project. Since the passage of TEA-21, numerous administrative activities have been undertaken to facilitate streamlining. However, some Members of Congress expressed the need for further legislation to expedite the environmental review process required of highway construction and transit projects. As a result, SAFETEA includes provisions intended to further streamline the environmental review process. The provisions deal primarily with NEPA and Section 4(f) requirements, but could also be used to expedite compliance with other environmental requirements. (For detail about the NEPA process, Section 4(f) requirements, and streamlining provisions in SAFETEA, see CRS Report RL33057, Surface Transportation Reauthorization: Environmental Issues and Legislative Provisions in SAFETEA-LU (H.R. 3) , by [author name scrubbed].) Unlike TEA-21, the term "streamlining" is not used in SAFETEA. However, the intended effect is the same—to expedite compliance with certain environmental requirements, primarily NEPA and Section 4(f). With regard to NEPA, many of the provisions in SAFETEA codify existing regulatory requirements, such as: specifically designating DOT as the lead agency for surface transportation projects; specifying the role of the lead and cooperating agencies; and allowing deadlines for decision-making to be set. Following are key SAFETEA provisions related to streamlining that change existing statutory or regulatory requirements: The establishment of a new entity in the NEPA process, referred to as a "participating agency," that includes those that intend to submit comments on NEPA documentation in addition to those that meet the definition of a cooperating agency; The establishment of procedures to be followed by lead and participating agencies for the collaborative development of the project's statement of purpose and need and project alternatives, including the establishment of deadlines on comments; The establishment of a 180-day statute of limitation on judicial claims on final agency actions related to environmental requirements; Authorization to allow the use of transportation funds to help agencies required to expedite the environmental review process; The establishment of a dispute resolution process when agencies disagree on elements of the environmental review process; Authorization to allow states to determine whether certain classes of projects may be processed as categorical exclusions; and Authorization to allow the establishment of state pilot programs to allow participating states to assume certain federal responsibilities regarding compliance with environmental laws. With regard to Section 4(f), under §6009(a), SAFETEA allows for the use of publicly owned parks and recreation areas, wildlife and waterfowl refuges if it is determined that such use would result in "de minimis impacts" to that resource. That determination must receive concurrence from the official with jurisdiction over that resource (e.g., the U.S. Fish and Wildlife Service, the National Park Service, or applicable state or local park authorities). SAFETEA similarly allows for the use of a publicly or privately owned historic site if a de minimis impact determination is made in accordance with provisions of the National Historic Preservation Act (16 U.S.C. 470f). Further, §6009(b) requires DOT, within one year, to issue regulations clarifying factors to be considered and standards to be applied in determining whether alternatives are "prudent and feasible" under the Section 4(f) requirements. Also related to Section 4(f) requirements, §6007 of SAFETEA specifies that, under administrative procedures established under §106 of the National Historic Preservation Act, the Interstate System cannot be considered a "historic site" under provisions of Section 4(f). It may still be determined that individual elements of the Interstate System possess an independent feature of historic significance that may still be protected under Section 4(f) requirements. (CRS contact: [author name scrubbed]) In the year following the Clean Air Act Amendments of 1990, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) directed the Secretary of DOT to establish and implement a Congestion Mitigation and Air Quality Improvement (CMAQ) program. The primary purpose of the CMAQ Program is to reduce emissions from highway travel, as a means to assist states in complying with the National Ambient Air Quality Standards (NAAQS). In particular, it authorized funding for programs and projects intended to reduce carbon monoxide (CO) and ozone. Specific types of projects eligible for CMAQ funds include, but are not limited to: transportation control measures; inspection and maintenance programs for auto emission controls; the purchase of publicly owned, alternative fuel vehicles; traffic flow improvements; and pedestrian and bicycle facilities and programs. ISTEA established a formula to apportion CMAQ funds based largely on a state's population and pollution reduction needs. The population of each area in a state that is a not meeting the NAAQS for ozone and/or CO is multiplied by a weighting factor based on the level of nonattainment (e.g., moderate, serious, severe) with the NAAQS. States with no maintenance or nonattainment areas for ozone or CO are guaranteed a minimum apportionment of 0.5 percent of each year's authorized CMAQ funds. TEA-21 expanded the program to allow the use of CMAQ funds for projects and programs intended to reduce certain types of particulate matter (PM). TEA-21 did not, however, change the apportionment formula based on ozone and CO. Therefore, states with maintenance or nonattainment areas for only PM receive the guaranteed minimum CMAQ funding. CMAQ funding for FY2005-FY2009 totals $8.6 billion. This compares to a total of $8.1 billion in funding authorization for the six fiscal years under TEA-21. SAFETEA amends the CMAQ apportionment formula under 23 U.S.C. §104(b)(2) and the CMAQ program requirements under 23 U.S.C. §149(b). Under § 1808(b), SAFETEA expands program funding eligibility requirements to specifically allow the following projects to be eligible for CMAQ funds: advanced truck stop electrification systems; projects that will improve transportation systems management and operations; integrated, interoperable emergency communications equipment; and diesel retrofits (under §1808(d), SAFETEA includes a directive that diesel retrofit projects will have funding priority over other projects). SAFETEA changes the requirements applicable to states receiving the minimum apportionment to allow them to use CMAQ funds for projects that would otherwise meet CMAQ eligibility requirements (§1808(c)). Under §1808(f), SAFETEA directs DOT, in consultation with EPA, to evaluate and assess a representative sample of CMAQ projects to determine their impacts on air quality and congestion levels and to ensure the effective implementation of the program. Directs DOT to maintain and disseminate a database describing project impacts (no direct funding is provided for the evaluation or the database). (For detail on provisions related to the to the CMAQ program, see CRS Report RL33057, Surface Transportation Reauthorization: Environmental Issues and Legislative Provisions in SAFETEA-LU (H.R. 3) , by [author name scrubbed].) (CRS contact: [author name scrubbed]) Under the Clean Air Act, areas that have not attained one or more of the six National Ambient Air Quality Standards must develop State Implementation Plans (SIPs) demonstrating how they will reach attainment. As of May 2005, at least 124 areas with a combined population of 159 million people were subject to the SIP requirements. Section 176 of the Clean Air Act prohibits federal agencies from funding projects in these areas unless they "conform" to the SIPs. Specifically, projects must not "cause or contribute to any new violation of any standard," "increase the frequency or severity of any existing violation," or "delay timely attainment of any standard." Because new highways generally lead to an increase in vehicle miles traveled and related emissions, both the statute and regulations require that an area's Transportation Improvement Program (TIP), which identifies major highway and transit projects an area will undertake, demonstrate conformity each time it is revised (i.e., at least every two years). Highway and transit projects cannot receive federal funds unless they are part of a conforming TIP. While conformity has been required for more than a decade, the impact of the conformity requirements is expected to grow in the next few years for several reasons. The growth of emissions from SUVs and other light trucks and greater than expected increases in vehicle miles traveled have both made it more difficult to demonstrate conformity; recent court decisions have tightened the conformity rules; and the implementation over the next three years of more stringent air quality standards (both for ozone and for fine particles such as those found in diesel exhaust) will mean that additional areas are subject to conformity. Thus, numerous metropolitan areas could face a temporary suspension of highway and transit funds unless they impose sharp reductions in vehicle, industrial, or other emissions. In a 2003 survey, the Government Accountability Office (GAO) found that, over the previous six years, only 5 metropolitan areas had had to change transportation plans in order to resolve a conformity lapse; but about one-third of local transportation planners surveyed expected to have difficulty demonstrating conformity in the future. (See U.S. GAO, Environmental Protection: Federal Planning Requirements for Transportation and Air Quality Protection Could Potentially Be More Efficient and Better Linked , April 2003.) The Clean Air Act provides no authority for waivers of conformity, and the only grace period allowed has been for one year following an area's designation as nonattainment. Only a limited set of exempt projects (mostly safety-related or replacement and repair of existing transit facilities) can be funded in lapsed areas. The rules do not even allow funding of new projects that might reduce emissions, such as new transit lines. These limitations are among the issues of concern. In addition, many have raised concerns about a mismatch between the SIP, TIP, and long range transportation planning cycles, and have called for less frequent, but better coordinated demonstrations of conformity. In its 2003 report, the GAO recommended that "relevant federal agencies ... consider extending the three-year time frame between required [long range] transportation plan updates and asking the Congress to amend the Clean Air Act to change the conformity rules to match ...." This recommendation was generally supported by transportation planners and highway builders, but opposed by environmental groups and air quality planning officials. As enacted, P.L. 109 - 59 requires less frequent conformity demonstrations (at least every four years instead of every two years), and will shorten the planning horizon over which conformity must be demonstrated to 10 years in many cases, instead of the former requirement of 20 years. The local air pollution control agency will need to be consulted and public comments solicited if the planning horizon is to be shortened. The law also establishes a 12-month grace period following a failure to demonstrate conformity before a lapse would be declared. (For additional information, see CRS Report RL32106, Transportation Conformity Under the Clean Air Act: In Need of Reform? , by [author name scrubbed].) (CRS contact: Jim McCarthy)
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On August 10, 2005, President Bush signed the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users (SAFETEA-LU or SAFETEA) (P.L. 109-59). This act reauthorizes federal surface transportation programs through the end of FY2009. The reauthorization was long overdue, given that the previous long term authorization, the Transportation Equity Act for the 21st Century (TEA-21) (P.L. 105-206) expired on September 30, 2003. The reauthorization debate was primarily characterized by two interrelated issues, money and how that money would be distributed among the states. The 108th Congress came close to a bill with a surface transportation Conference Committee in place. In the end, however, conferees were unable to reach agreement either among themselves or with the Bush Administration as to how large the six-year reauthorization package would be in dollar terms. The Conference was also unable to agree on a solution to the long standing donor-donee state funding distribution question, with donor states insisting on a 95% return on fuel tax revenues and donee states insisting that increased funding for donor states not come at their expense. In the 109th Congress, the same issues threatened to undermine a Conference Committee that began meeting in June 2005. This time, however, all parties found ways in which to compromise. Most importantly, the Administration allowed total funding in the bill to rise to $286.4 billion for the six-year authorization period (in actuality the act provides $244.1 billion for the five years remaining before FY2009). This increase allowed the conferees to ultimately guarantee all states an eventual 92% rate of return, an improvement on the existing 90.5% rate, while at the same time holding 27 states harmless (meaning they will not receive less actual money than they have in the past). With these key compromises in place many of the objections to the bill disappeared and the conference report was agreed to on July 29, 2005. In addition to money issues, the act addressed a number of other issues. These included the creation of a new consolidated safety program, enhanced environmental streamlining regulations, changes in clean air conformity regulations, funding for transit new starts, expanded reliance on innovative financing and tolls, and spending on congressional high priority projects (earmarks). This report will be updated as warranted by congressional actions.
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The conference report on the National Defense Authorization Act for FY2010 defense authorization bill ( H.R. 2647 ), as well as a compromise version of the FY2010 defense appropriations bill ( H.R. 3326 ) that was agreed to by House and Senate negotiators in lieu of a conference report, largely support proposals by the Obama Administration to terminate some major weapons programs that were designed for traditional combat—such as the Air Force's F-22 fighter. The rationale for these cuts, according to Secretary of Defense Robert Gates, was to allow DOD to focus more resources on equipment better suited to the type of operations underway in Iraq and Afghanistan. The House approved the authorization conference report on October 8 by a vote of 281-146. The Senate approved the conference report October 22 by a vote of 68-29 and the President signed the bill into law ( P.L. 111-84 ) on October 28. In lieu of a conference report on the FY2010 defense appropriations bill, House and Senate negotiators agreed on a compromise amendment to the Senate-passed version of the bill, which would appropriate $497.7 billion for the DOD base budget (covering all accounts except military construction) and $128.2 billion for FY2010 war costs. The House passed that compromise version of the bill December 16 by a vote of 395-34. The Senate approved it on December 18 by a vote of 88-10. The President signed the bill on December 19 ( P.L. 111-118 ). Neither the FY2010 defense authorization act nor the companion defense appropriations bill covered funds that will pay for President Obama's decision, announced December 1, to increase by 30,000 the number of U.S. troops deployed in Afghanistan. The bills do cover funds to pay for operations in Afghanistan and Iraq that already were underway prior to the December 1 announcement that additional forces would be deployed. (See " War Costs and Issues ," below.) The enacted versions of both the authorization and appropriations bills fund continued development of an alternate engine for the F-35 Joint Strike Fighter. The Office of Management and Budget (OMB) had warned in its official Statement of Administration Policy (SAP) on each of the defense bills that the President might veto any bill that continued the alternate engine program. Defense Secretary Robert Gates echoed that warning in an October 13 letter to the chairman and ranking minority member of the House Defense Appropriations Subcommittee. The Administration's veto threats concerning the alternate engine program were more ambiguous than the flat, unqualified declaration by President Obama earlier in the year that he would veto any bill that funded continued production of the F-22. In the case of the alternate engine program, both OMB and Secretary Gates said that the President's senior advisors would recommend a veto of any bill that would "seriously disrupt" the F-35 program, which, Administration officials contend, the alternate engine program might do. For details on the alternate engine issue, see " Defense Authorization Conference ," below. The Administration had taken a less adamant stance in its opposition to provisions of the defense appropriations bill which would continue production of the C-17, a wide-body cargo jet. Like OMB, Secretary Gates said that he "strongly objects" to the Senate bill's addition of $1.5 billion for 10 C-17s and to the House bill's addition of $674 million for three of the planes. Neither OMB's Statement of Administration Policy (SAP) nor Secretary Gates's letter contained any explicit warning that President Obama might veto the defense bill over that issue. The compromise final version of H.R. 3326 would add to the budget request $1.5 billion for 10 C-17s. On the other hand, both OMB and Secretary Gates warned that the President's senior advisers would recommend that he veto the DOD appropriations bill if it included funds to continue procurement of VH-71 helicopters, which were intended to transport the President and other senior officials. The Administration cancelled the project because of cost overruns, but the House version of the appropriations bill added $400 million to complete work on five of the aircraft that already are under construction. The compromise final version of the appropriations bill added $100 million to the VH-71 program. For details on the C-17 and VH-71 issues, see " Compromise Version of Defense Appropriations Bill (H.R. 3326) ," below. The conference report on H.R. 2647 authorizes a total of $680.2 billion for military activities of DOD and defense-related activities of other federal agencies. The total authorization, which is $14.9 million higher than the Obama Administration requested, includes $550.2 billion for the so-called "base budget"—all DOD activities other than combat operations in Iraq and Afghanistan—and $130.0 billion for "overseas contingency operations," including operations in Iraq and Afghanistan. The House and Senate Armed Services Committees each had added to the versions of the authorization bill they reported to their respective chambers authorization to continue production of the F-22 and to continue development of an alternative engine for the F-35 Joint Strike Fighter. In a July 13 letter to Senate Armed Services Committee Chairman Carl Levin, President Obama said he would veto any defense bill that continued F-22 procurement. But regarding other programs that one or both chambers of Congress acted to fund over the Administration's objections, the Administration stated its objections in terms that were less unequivocal. For example, in the SAPs regarding versions of the defense authorization bill drafted by the House Armed Services Committee and by the Senate Armed Services Committee , OMB said the President's senior advisors would recommend that he veto any bill that would "seriously disrupt" the F-35 program. The version of H.R. 2647 passed June 25 by the House authorized both procurement of additional F-22s and development of the alternative F-35 engine. The Senate dropped both authorizations before passing its version of the bill ( S. 1390 ) on July 23. The conference report on the authorization bill would terminate the F-22 but would allow the alternate engine program to continue. The defense authorization conference report also incorporated, with some modifications, Senate-passed provisions that broaden federal jurisdiction over "hate crimes" to include crimes motivated by the victim's actual or perceived gender, sexual orientation or gender identity. Previously, federal jurisdiction over hate crimes extended to crimes motivated by the victim's real or perceived race, color, national origin, or disability. For additional information, see " Hate Crimes (Title XLVII) ," below. The conference report also included, with modifications, several provisions relating to the treatment of detainees, including those currently held at Guantanamo Bay Naval Station. Among these were provisions relating to the operation of military commissions established to adjudicate the cases of detainees. For additional information, see " Military Commissions, Detainees and Guantanamo Bay ," below. (For additional highlights of H.R. 2647 , see " National Defense Authorization Act (H.R. 2647, S. 1390) ," below.) In lieu of a conference report on the FY2010 defense appropriations bill ( H.R. 3326 ), House and Senate negotiators agreed on a compromise version of the bill, which they drafted as an amendment to the version of the bill that the Senate had passed October 6. The compromise version—which is, in effect, the equivalent of a conference report version—would appropriate $497.7 billion for the DOD base budget and $128.2 billion for FY2010 war costs. The House passed that compromise version of the bill December 16 by a vote of 395-34. The Senate passed it on December 19 by a vote of 88-10 and the President signed the bill later that day ( P.L. 111-118 ). The compromise version of H.R. 3326 includes $350 million to cover the cost of providing a 3.4% pay raise for military personnel in FY2010, as authorized, rather than the 2.9% raise included in the Administration's budget request. The compromise bill, like the House-passed and Senate-passed versions of H.R. 3326 , concurred with most of the Obama Administration's proposals to terminate or reduce funding for several high-profile weapons programs, including production of the F-22 fighter and of the CSAR-X search and rescue helicopter. However, the compromise version also included $465 million to continue development of the alternate engine for the F-35 fighter and $1.5 billion to purchase 10 C-17 cargo jets, two additions to the budget request which the Administration had opposed. The compromise bill also added $100 million to the amount requested for the effort to develop the VH-71 helicopter, intended as a transport for the President and other senior officials. The Administration had cancelled the program because of cost overruns, requesting in the FY2010 budget only funds to terminate the program. The House version of H.R. 3326 included $400 million to complete the manufacture of the first five VH-71s, an addition to which the Administration objected. The compromise version of the bill would add $100 million to the amount requested to close down the VH-71 project, with the additional funds to be used to salvage for future use some of the technologies developed for the cancelled program. The compromise bill would cut $900 million from the $7.46 billion requested to support the training and equipping of Afghanistan's army and police force while adding $900 million to the $5.46 billion requested for the purchase of Mine-Resistant, Ambush-Protected (MRAP) vehicles. (For additional highlights of H.R. 3326 , see " FY2010 Defense Appropriations Bill ," below.) The compromise version of H.R. 3326 included provisions temporarily extending—in most cases through February 28, 2010—current policies or expiring provisions of law relating to 10 non-DOD federal programs or activities: Two temporary changes in Small Business Administration loan guarantee programs intended to make loans more attractive to borrowers and lenders; The USA PATRIOT Act ( P.L. 107-56 ); the National Flood Insurance Program; Medicare physicians payments (to defer, through February 28, 2010, a scheduled 21.2% reduction); Surface Transportation Authorization relating to highway, mass transit, highway safety and motor carrier safety programs of the Department of Transportation; Unemployment insurance; COBRA health insurance premium subsidy; Satellite television copyright license; Supplemental Nutrition Assistance Program (SNAP); Poverty guidelines of the Department of Health and Human Services that determine eligibility for certain means-tested assistance programs, including Medicaid. The President's FY2010 request of $533.7 billion for the DOD base budget is $20.4 billion higher than the total of $513.3 billion the Obama Administration cites as the total appropriated for the DOD base budget in the regular FY2009 appropriations process. In an April 6 press conference, Defense Secretary Robert M. Gates said this nominal increase of 4% would amount to an increase in real purchasing power of 2%, taking into account the cost of inflation. (See Table 1 .) The American Recovery and Reinvestment Act of 2009 (ARRA, H.R. 1 , P.L. 111-5 ), also known as the "economic stimulus" package, provided an additional $7.5 billion in DOD appropriations for FY2009, bringing the FY2009 discretionary appropriations for the Pentagon to a total of $520.7 billion. Compared with this amount, the FY2010 request would amount to an increase of $13.0 billion, a nominal increase of 2.5% (not adjusted for inflation). Comparison of the FY2010 DOD base budget request with the corresponding appropriation for FY2009 is complicated by the fact that the Administration is funding in the FY2010 base budget several activities that were covered by war cost supplemental appropriations bills in FY2009 and prior years. In an April 7 conference call with Internet defense reporters, Secretary Gates said the total amount of funding shifted into the base budget was about $13 billion, which included ongoing costs of expanding the Army and Marine Corps, increased funding for medical research and quality-of-life improvements for military personnel. However, in testimony before the Senate Defense Appropriations Subcommittee on June 9, after the Administration's detailed budget request had been released, Secretary Gates said the amount of funding shifted into the base budget was $8 billion, rather than the $13 billion he had cited earlier. Setting aside those funds allocated to costs that were not included in the FY2009 DOD base budget (for the sake of an apples-to-apples comparison), President Obama's FY2010 request for the DOD base budget includes about $520.7 billion, which is roughly $7.4 billion more than was appropriated for DOD in the regular appropriations process. If the $7.4 billion provided to DOD in FY2009 by the economic stimulus package is added to the regular FY2009 appropriations, the FY2009 appropriation and the FY2010 request are roughly the same. Comparison of President Obama's FY2010 DOD base budget request with the FY2010 budget projected by the Bush Administration is uncertain because the budget outline made public on February 26 listed only an aggregate total for the DOD base budget, without specifying whether or not that sum included each of several elements of DOD funding that might or might not reasonably be included and which could affect the total by several billions of dollars. In his April 7 conference call with reporters, Secretary Gates said that the comparable Bush Administration projection of the FY2010 DOD base was $524 billion. By that standard, President Obama's FY2010 request is nearly $10 billion higher. However, since the Obama request includes about $8 billion for programs that the Bush Administration did not fund in the DOD base budget, the Obama request is about $2 billion higher than the Bush projection, on an apples-to-apples basis. In the fall of 2008, DOD reportedly drew up a projected FY2010 base budget request that was $57 billion higher than the request the Bush Administration had projected in February 2008. That larger request, details of which were not published, was not subjected to the regular budget review process within the executive branch. Although the Administration's detailed budget request was not transmitted to Congress until May 7, 2009, Congress began acting on the annual defense authorization bill only about a month later than it typically does. The House Armed Services Committee reported its version of the bill ( H.R. 2647 ) on June 18, 2009 and it was passed by the House on June 25. The Senate Armed Services Committee reported its version of the bill ( S. 1390 ) on July 2 and the Senate passed the bill July 23. The conference report on H.R. 2647 was filed October 7 and the House adopted it on October 8 by a vote of 281-146. The House Defense Appropriations Subcommittee reported its version of the FY2010 defense appropriations bill on July 16. The House Appropriations Committee reported the bill H.R. 3326 on July 24 and House passed it on July 30.The Senate Appropriations committee reported its amended version of the bill on September 10 and the Senate passed the bill September 6 by a vote of 93-7. In lieu of a conference report on the FY2010 defense appropriations bill, House and Senate negotiators agreed on an amendment to the Senate-passed version of H.R. 3326 that would appropriate $497.7 billion for the DOD base budget and $128.2 billion for war costs. The House passed that compromise version of the bill December 16 by a vote of 395-34. The Senate passed it December 19 by a vote of 88-10 and the President signed the bill later on December 19 ( P.L. 111-118 ). The Obama Administration's request for $130 billion for operations in Iraq and Afghanistan during FY2010 was submitted to Congress with the FY2010 base budget request on May 7, 2009 and has been considered as part of DOD's overall request for the year. That request reflected the Administration's review of U.S. strategy for both wars that was completed in March 2009, but not the new debate about President Obama's December 1, 2009 announcement that he intended to deploy about 30,000 additional troops to Afghanistan in the first half of 2010. Although President Obama said in his December 1 speech that the additional deployments are "likely to cost us roughly $30 billion for the military this year," some press reports have suggested the cost could run as high as $35 billion. DOD is in the process of developing its supplemental request to cover additional costs in FY2010 according to testimony by Secretary of Defense Gates. While there was some speculation that the Administration would propose that additional war funding be included in the still-pending FY2010 DOD Appropriations Act, both Congressman Murtha and Senator Inouye, chairs of the House and Senate Appropriations Committee, respectively, reportedly objected. The Administration is likely to submit a FY2010 Supplemental to Congress in early February 2010 along with DOD's regular and war requests for FY2011. It is not clear whether DOD will assume in its war funding request for FY2011 any decrease in the number of troops in Afghanistan. The President said in his December 1 speech that the United States would "begin the transfer of our forces out of Afghanistan in July of 2011" as part of handing over responsibility to Afghan forces but did not specify any timeline, which may be decided after the Administration conducts a full-scale evaluation in December 2010. The current debate about potential increases in troop levels in Afghanistan began with the appointment of General Stanley McChrystal to the position of overall U.S. and NATO Commander in Afghanistan on June 15, 2009 after the dismissal of his predecessor General David McKiernan, reportedly because of concerns about rising levels of violence in Afghanistan. Tasked to re-assess U.S. military strategy, General McChrystal submitted his report to Secretary of Defense Gates on August 31, 2009, which Secretary Gates passed along to the President. Citing worse-than-anticipated conditions in Afghanistan, the report said that additional resources would be necessary to carry out a full-fledged counterinsurgency strategy focusing on population protection. In addition, the report argued that the "eventual success" of this proposed new strategy would require "capable Afghan governance capabilities and security forces." At the direction of the Secretary of Defense, this assessment did not include a specific request for additional resources. In response to the McChrystal report, the White House began its own wide-ranging strategy review, which reportedly included not only General McChrystal's approach but may have also included a counter-terrorism approach focusing more on Pakistan where most al Qaeda are located, along with training of more Afghan Security Forces, an option that Vice President Biden was said to favor. According to White House National Security Advisor, General Jim Jones, the maximum al Qaeda presence in Afghanistan is "less than 100 operating in the country. No bases, no ability to launch attacks on either us or our allies," with the problem being "sanctuaries across the border" in Pakistan. According to Afghan government and U.S. military estimates, there are some 10,000 to 15,000 Taliban in Afghanistan plus an additional 2,000 Afghan insurgents from other factions. On October 8, 2009, Secretary Gates passed along to the President General McChrystal's troop request, a document separate from the earlier strategy assessment. According to press reports, the White House ultimately considered several options for Afghanistan ranging from a low option of 10,000 to 15,000 to train Afghan forces and possibly conduct more counter-terrorism operations on the border to 40,000 to conduct counter-insurgency in the southern and eastern parts of the country to a high option of 80,000 to conduct counter-insurgency operations throughout the country. In all cases, high priority was placed on training and assisting Afghan Security Forces. An October report by a UN monitoring commission found widespread fraudulent voting affecting as much as one-third of the votes during the August 2009 presidential election in Afghanistan which raised concerns about the legitimacy of the Karzai government. This played an important part in the While House policy debate over the last three and a half months. White House Chief of Staff Rahm Emanuel said that the main question is not "how many troops you send, but do you have a credible Afghan partner." On October 21, under heavy U.S. pressure, President Karzai agreed to a runoff election with his chief rival Abdullah Abdullah to be conducted on November 7, 2009. The runoff was scheduled for November 7, 2009, but asserting that fraud was likely in the runoff, Abdullah dropped out of the race on November 1, and Afghanistan's Independent Election Commission declared Karzai the winner on November 2, 2009. Appearing to welcome a resolution of the issue, the United States congratulated Karzai and praised Abdullah for diplomatic restraint. Karzai was inaugurated on November 19, 2009 with Secretary of State Clinton in attendance. On December 1, 2009, President Obama announced his intention to deploy an additional 30,000 troops to Afghanistan in addition to the 68,000 already approved, almost all of which were in-country as of late November. In testimony, Secretary of Defense Gates stated that the President had given him flexibility to deploy 10% more troops or a total of 33,000 to Afghanistan to provide "enablers," such as engineers, medevac, and road clearance teams. This could bring total U.S. forces in Afghanistan to 101,000. In addition, NATO announced a commitment to deploy an additional 5,000 to 7,000 troops to Afghanistan, which could bring the total close to General McChrystal's 40,000 request. As of late October, 2009, NATO allies had about 36,000 troops in Afghanistan. The Afghan Army has about 89,000 troops. That would bring the total number of troops in Afghanistan from the U.S., NATO allies, and the Afghan army to more than 190,000. If 30,000 more U.S. troops are approved, plus NATO contributes an additional 5,000, that would bring the total to almost 230,000 Afghan and foreign troops in-country, with an additional 81,000 in the Afghan police forces also contributing to security. Some Members of Congress have raised concerns about deploying additional troops, and recent public opinion polls suggest that a bare majority approve the President's new plan with Americans divided almost evenly about whether the buildup is too high or about right. The FY2010 National Defense Authorization Act enacted on October 28, 2009 ( P.L. 111-84 ) and the FY2010 DOD Appropriations Act signed by President Obama on December 19 ( P.L. 111-118 ) deal only with the $130 billion war cost estimate that was based on the Administration's strategy review in the spring of 2009 and was included in the FY2010 budget request sent to Congress on May 7. That request was based on the Administration's adoption, last spring, of a withdrawal plan for Iraq under which the number of troops in-country would be reduced from about 140,000 in February 2009 to between 35,000 and 50,000 by August 31, 2010. Under that plan, all U.S. troops are slated to be out of Iraq by December 31, 2011, to comply with the U.S.-Iraq Security Agreement that went into effect on January 1, 2009. At the same time, President Obama decided to increase the number of troops in Afghanistan by 21,000 above the total already approved by former President Bush before he left office. (Before leaving office, President Bush approved an increase of about 13,000 troops in Afghanistan on top of the 33,000 in country as of September 2008.) With President Obama's increase, the number of troops in Afghanistan is slated to average 68,000 during FY2010, which represents a 68% increase above the previous year. The $130 billion currently requested for operations in Iraq and Afghanistan in FY2010 is $15.8 billion or 11% lower than the amount appropriated for FY2009 primarily because average troop strength for both wars was expected to be about 19% lower than the previous year; the reduction of troops deployed in Iraq was expected to more than offset the original plan to maintain troop strength in Afghanistan at 68,000. War costs make up 21% of the $629.7 billion requested for DOD, a share that is slightly lower than in FY2009. On August 13, 2009, the Administration submitted an amended war funding request that reallocated $1 billion within the original $130 billion request to cover the cost of "temporarily" adding 22,000 Army military personnel in FY2010 and FY2011. According to the Administration, the additional troops were intended to "increase the number of troops available to deploy while also helping the Army to end the practice of retaining soldiers beyond their period of obligated service," a practice often referred to as "stop-loss." This budget amendment did not change the Administration's plans for troop deployment levels to Afghanistan or Iraq. To cover the cost of the additional personnel, the budget amendment re-allocated $1 billion from procurement funds to military personnel and operation and maintenance accounts. Of the additional 22,000 troops, 15,000 would be deployed in FY2010, and the remaining 7,000 the following year. House and Senate authorization action on H.R. 2647 and S. 1390 , respectively, and House appropriations action on H.R. 3326 were completed before this August 13 budget amendment was submitted and therefore reflect the original request. The Senate's version of the DOD Appropriations Act did, however, reflect the amended request, and the conference is likely to do so as well. According to DOD, its request included $60.8 billion for Operation Iraqi Freedom and $65.4 billion for Afghanistan or Operation Enduring Freedom, and $3.9 billion for non-DOD classified activities. DOD funding would be allocated 48% for Iraq and 51% for Afghanistan in FY2010, compared to a split in FY2009 of 65% for Iraq and 35% for Afghanistan. In testimony, Secretary of Defense Gates stated that this war funding request did not include about $8 billion for activities that are expected to persist beyond the Afghanistan and Iraq wars but which had been included in earlier war-funding bills. According to the Secretary, DOD shifted funding to the base budget for activities considered likely to persist, such as monies for increased strength levels in the Army, recruiting and retention, more funds for Intelligence, Surveillance and Reconnaissance, countering threats from Improvised Explosive Devices (IEDs), longer-term medical care such as Traumatic Brain Injury and psychological health, and "Global Train and Equip" funds for countries facing terrorist threats. If Secretary Gates had not transferred this $8 billion into the base budget in FY2010, on an "apples-to-apples" basis, with no other changes, the FY2010 war request would be $8 billion lower than in FY2009. In addition, CRS estimates that reductions in average monthly troop strength from 186,000 in FY2009 to 152,000 in Iraq and Afghanistan could reduce war costs by an additional $7.7 billion. Taking these two factors into account, CRS estimates that DOD's FY2010 request of $130 billion could be reduced by some $15.7 billion. In the FY2010 war funding request, total military personnel funding declined from the FY2009 level since planned decreases in troop strength for Iraq are expected to more than offset planned increases in troop levels in Afghanistan. Operation and maintenance (O&M) funding, however, remained at the same level in FY2010 as in FY2009 and FY2008 despite the planned decline in overall troop levels in the coming year. After remaining about the same in FY2008 and FY2009, overall troop strength for Iraq and Afghanistan was expected to fall by almost 20% in FY2010. According to DOD's final FY2009 war cost report, O&M average monthly obligations averaged $11.4 billion a month for both operations in FY2009 compared to 13.4 billion in FY2008, a 15% overall decline. Average monthly obligations for Iraq decrease by 30% from $10.9 billion to $7.5 billion while those for Afghanistan increase by 44% from $2.7 billion to $3.9 billion. In the last month (September) of FY2009, DOD obligations spiked to $11.9 billion, substantially above the $6.7 billion average for the rest of the year, a pattern similar to last year when DOD obligated its remaining funds at the end of the fiscal year. Despite the fact that average monthly troop strength for both operations was slated to decrease by 20%, DOD requested almost identical amounts for military personnel and operation and maintenance in FY2010. The decline in FY2010 primarily reflects a lower DOD request for Mine Resistant Ambush Protected (MRAP) vehicles that cost $16.8 billion in FY2009 to purchase the full requirement. Instead, DOD is funding a lighter, cheaper version of the MRAP—an all-terrain fighting vehicle—expected to be more effective in Afghanistan. Lower procurement spending also reflects a decision by DOD to return to its traditional definition of reconstitution, repairing equipment and funding as war costs only the replacement of equipment lost in combat rather than using war funds to upgrade equipment. Table 4 summarizes congressional action on the Administration's FY2010 war funding request. For congressional action at the account level, see the Appendix . The conference report on the FY2010 Authorization request ( H.R. 2647 / P.L. 111-84 ) largely supports DOD's funding request as did both the House and Senate authorizing committees. (See Table 7 . ) Significant instances in which the conference report on the authorization bill changed DOD's funding request include: reducing funding in procurement accounts by $625 million from the original request to provide for the temporary 22,000 increase in Army end-strength requested in a budget amendment; reducing DOD's $1.5 billion request for the Commanders' Emergency Response Program to $1.3 billion, following the Senate recommendation; adding $600 million to DOD's request for $5.5 billion (thus authorizing $6.1 billion) in funding for a new lighter-weight Mine Resistant Ambush Protected Program (MRAP) vehicles for Afghanistan to meet DOD's revised requirement; together with an additional $600 million in DOD's base budget, these funds would purchase the requirement of 6,466 vehicles; and funding almost all of the $1.4 billion in military construction for Afghanistan but adding funds for several projects at Bagram Air Force Base the cost of which was offset by reduced funding for troop or contingency housing at various bases in Afghanistan. Significant policy changes made in the authorization conference report include: deleting DOD funding requested for the Pakistan Counterinsurgency Capability Fund, but allowing transfers from funds appropriated to the State Department; transferring the $600 million requested in DOD's base budget for the Joint Improvised Explosive Device Defeat Fund from DOD's base budget, considered to be an "enduring" requirement, to Title XV war funding, because the authorizers consider the organization to be a temporary one; and not providing $115 million for Guantanamo Bay detainee relocation because of lack of a plan, which was the position taken by both the House and the Senate. The authorization conference report also extends several war-related authorities and associated reporting requirements created since the 9/11 attacks, including: a one-year extension of the Commanders' Emergency Response Progam requiring 15-day advance notifications for expenditures, setting a $1.3 billion cap on the program, and allowing funds to be used to reintegrate individuals renouncing violence into Afghan society in section 1222 (a program similar to the Sons of Iraq or Concerned Local Citizens groups in Iraq); a one-year extension (and a $1.6 billion cap) on coalition support funds with an expansion in the types of logistical support that can be provided to nations aiding U.S. military operations to include specialized training, supplies, and equipment as requested by the Administration; Section 1223 of the conference report continues to require 15-day advance notifications of specific expenditures and quarterly reports on the program; this authority appears similar to that in the Pakistan Counterinsurgency Fund; an expansion and modification of reporting requirements in Section 1202 for DOD support for special operations support to foreign nations; an extension in Section 1203 of reporting requirement for foreign-assistance related programs carried out by DOD; a requirement in Section 1204 for a report by March 1, 2010 on the relationship between DOD authorities to train, equip and build the capacity of foreign nations compared to Foreign Assistance Act authorities; and a limitation in Section 1206 of funds that can be used to build the capacity of foreign military forces to $75 million in FY2010 and $75 million in FY2011. Based on recommendations of both chambers, the authorization conference report extends and adds various reporting requirements for Afghanistan, Iraq, and Pakistan as described below. The conference report on H.R. 2647 includes new reporting requirements (or extends current requirements) relating to Pakistan including the following: Section 1232 requires a new DOD report assessing Pakistan's progress toward long-term security and stability, including timelines for Pakistan to demonstrate effectiveness in defeating, eliminating safe havens for, and preventing the return of Al Qaeda in Pakistan. The report is to be submitted every 180 days concurrently with the Afghanistan security report (originally required under Section 1217, P.L. 110-417 and under Section 1230, P.L. 110-181 , that was most recently submitted in June 2009); Section 1231 requires that DOD and State Department assess alternatives to reimbursements to Pakistan for logistical, military and other support that would encourage Pakistan to focus on counterterrorism and counterinsurgency operations. The report is due 180 days after enactment; and Section 1224 requires a quarterly report listing individual projects using funds transferred to DOD from the State Department's new Pakistan Counterinsurgency Fund (which the Administration and both chambers agreed would be appropriated to the State Department rather than DOD beginning in FY2010), as well as an assessment by DOD of whether Pakistan is making "concerted efforts" to confront the Al Qaeda, Taliban and insurgent threats. The conference report on H.R. 2647 adds or extends existing requirements for the following reports relating to Afghanistan: Section 1236 expands and extends to FY2011 the semi-annual report, "Progress Toward Security and Stability in Afghanistan" and expands the scope of that report to include new sections relating to NATO and non-NATO countries that participate in the International Security Assistance Force (ISAF). Those new sections of the report are to cover (1) agreements or commitments by ISAF participants on goals, strategies, resource and force requirements and pledges of troops and resources, (2) progress in ending the ability of the insurgency to establish safe havens in Afghanistan, and (3) coordination of reconstruction and development activities; Section 1235 requires that DOD contract for a study of force levels needed to secure the southern and eastern regions of Afghanistan; Section 1225 requires that DOD certify that it has established a program to register and monitor the end use of defense articles and services transferred to Afghanistan and Pakistan before making transfers although the requirement can be waived for 120 days by the Secretary of Defense for vital U.S. interests; and Section 1228 requires an assessment and report on the scope, character, and DOD funding of "community-based security programs" in Afghanistan within 120 days of enactment. The conference report on H.R. 2647 requires the following reports on Iraq: Section 1227 requires a report within 90 days of enactment or by December 31, 2009 that estimates within the following 90 days: personnel levels in Iraq, DOD equipment remaining in the country, and the likelihood of completing transfer or removal of equipment by the December 31, 2011 deadline, along with an assessment of U.S. detainee operations, and a listing of factors used by DOD to assess risks associated with the drawdown and any decisions to modify the pace; and Section 1230 requires a report within 180 days of enactment on the feasibility and desirability of establishing uniform procedures to provide monetary assistance to civilian foreign nationals for losses, injuries, or death related to U.S. combat activities, as well as the types of guidelines that could be established and the total amount disbursed thus far. The enacted authorization ( P.L. 111-84 ) also requires the following reports concerning Iraq, Afghanistan, and Pakistan: Section 1226 requires within 180 days of enactment a report by the Government Accountability Office (GAO) assessing DOD's campaign plans, which is to be updated periodically through December 2011 for Iraq and through September 30, 2012 for Afghanistan; and Section 1234 requires notification 15 days in advance of transferring U.S. equipment to Iraq and Afghanistan, and a quarterly report describing the equipment, requirement, and any potential impact on U.S. forces; the section also limits to $750 million the total value of the equipment that can be transferred. In lieu of a conference report on the FY2010 DOD appropriations bill (H.R. 3326), House and Senate negotiators agreed on a compromise version of the bill which was drafted as an amendment to version passed by the Senate. The compromise version of the bill, like the House and Senate versions, would provide $128.2 billion for the war in FY2010, some $400 million less than DOD requested. In addition to war funds in H.R. 3326 , the Administration requested an additional $1.4 billion for war-related construction in the FY2010 Military Construction, Veterans Affairs and Related Agencies appropriations bill. That request was approved in the versions of the bill passed by the House ( H.R. 3082 ) and the Senate ( S. 1407 ) and in the conference report on the bill, which was enacted as Part E of the Consolidated Appropriations Act of 2010 ( H.R. 3288 ). Concerned that the services "cannot accurately budget for Operations Enduring Freedom and Operations Iraqi Freedom," in light of the fact that the nature of military operations is likely to change significantly, the House-passed version of H.R. 3326 put aside some $14.6 billion or 20% of DOD's requested Operation and Maintenance funds in the Overseas Contingency Operations Transfer Fund and required that DOD inform the four congressional defense committees 15 days in advance of any transfers from the fund. The Senate version of H.R. 3326 does not transfer any funds to this account. The compromise version would put $5 billion of the requested O&M funds into the transfer fund. The House and the Senate versions of H.R. 3326 also differed in their treatment of funding for vehicles designed to improve force protection. The House cut $1.9 billion from DOD's $5.44 billion request for a Mine-Resistant Ambush Protected Vehicle Fund arguing that the FY2009 Supplemental included advance funding for MRAP vehicles. In the Senate version of H.R. 3326 , an additional $1.2 billion was added to the MRAP request to cover purchase of additional MRAP All-Terrain vehicles (M-ATV) for use in Afghanistan based on a recently identified "urgent unfunded need." The compromise version of the bill would provide a total of $6.28 billion, including an additional $825 million for M-ATVs. Both the House and Senate versions of the bill would have transferred funds from the base budget to Title IX's war funding. In the case of the House, there was a largely undistributed transfer of $2.6 billion from military personnel funding in DOD's base budget to Title IX's war funding to reflect the "significant Military Personnel costs of U.S. Overseas Contingency Operations." The Senate version, on the other hand, would have transferred about $250 million in O&M funds from activities for supporting soldiers and their families (e.g., Wounded Warrior, childcare centers, family services) and from the Joint Improvised Explosive Device Fund (JIEDDF) into Title IX, which would reverse DOD's proposal to transfer funds to the base budget for activities expected to continue for the long-term. The compromise bill transferred $850 million in military personnel funding from the base budget to Title IX, while rejecting the Senate's proposal to transfer certain O&M funds from the base budget to Title IX. Both the House and Senate Appropriations Committee reports cited concerns about management and oversight of the Commanders Emergency Response Program (CERP), from which commanding officers can distribute funds for small reconstruction projects. Both versions of the bill cut DOD's $1.5 billion CERP request. The House cut the request by $200 million and the Senate by $300 million. The compromise version of the bill would provide $1.2 billion for CERP and would required DOD to submit to Congress additional reports on the use of the funds. Like the defense authorizing committees, the House and Senate Appropriations Committees did not provide in their FY2010 defense funding bill funds for the Pakistan Counterinsurgency Capability Fund, assuming this program would be funded in the State Department. While the House version of H.R. 3326 approved the Administration's request for an additional $7.5 billion to train Afghan Security Forces, the Senate version cut that request by $900 million, transferring the funds to purchase additional MRAP All Terrain vehicles. The Senate argued that these funds are not needed now because they would not be spent in FY2010. The compromise version of the bill incorporated the Senate bill's reduction to the request. Both the House and the Senate Appropriations Committees had denied the request for funding to transfer detainees from Guantanamo Bay on the grounds that the Administration has not identified a plan for the future of the detention facility. DOD had included these funds in the Iraq Freedom Fund. In recent years, some senior military officers , as well as research groups and advocacy organizations, have argued that defense spending needs to be substantially higher in the next few years to avoid drastic cuts in major weapons programs or in the size of the force. Many have called for a baseline defense budget, not including war-related costs, pegged to about 4% of Gross Domestic Product (GDP)—an amount that would be anywhere from $62 to $169 billion per year higher over the next few years than the Administration plan. Senator James M. Inhofe and Representative Trent Franks—members, respectively, of the Senate and House Armed Services committees—summarized the case for such an increase in identical joint resolutions ( S.J.Res. 10 and H.J.Res. 3 ) introduced on Feb. 12, 2009 which call for a base defense budget equal to at least 4% of GDP. The fundamental case for meeting the 4% target is that, since the end of the Cold War, DOD's budget and force structure have declined significantly while the tempo of operations has increased—to include sustained combat operations—and the geographic scope of operations has broadened. These arguments for a substantial increase in the defense budget, however, come at a time when, by historical standards, military spending seems very robust. Between FY1998, when the post-Cold War decline in defense spending hit bottom, and FY2009, the baseline Department of Defense budget, not including war costs, increased by almost 40% above inflation (see Table 5 ). Adjusting for inflation, the FY2009 baseline DOD budget was more than $100 billion, or about 20%, greater than the average during the Cold War (measured from the end of the Korean War in FY1954 through FY1990). Funding for weapons acquisition (procurement plus R&D) in FY2009 was more than $45 billion—or about one-third—higher than the annual Cold War average. The apparent disconnect between the size of the budget and the appeals for more money appears even more striking when amounts that have been appropriated for war costs are added to the equation. On top of a baseline DOD budget that grew from $255 billion in FY1998, in FY2009 prices not adjusted for inflation, to $528 billion in FY2009, supplemental appropriations for war-related costs climbed from $19.4 billion in FY2001, as an initial response to the 9/11 attacks, to $63 billion in FY2003, the year of the Iraq invasion, to an estimated $189 billion in FY2008. While large portions of the supplementals have been consumed by war-related operating costs, substantial amounts have also been devoted to buying new equipment, particularly for the Army and the Marine Corps. Although the bulk of this acquisition has been for force protection, communications, and transportation, the effect has been to modernize much of the basic equipment stock of both services, in effect augmenting their baseline budgets. The fact that so large a level of spending appears to the military services to be so inadequate has several explanations—and the policy implications are, accordingly, matters of varying interpretation. Following are some of the contributing factors. Future baseline budgets are widely expected to decline: The Administration plan to cut the deficit in half by the end of President Obama's first term includes limits on defense as well as non-defense spending. White House budget projections accommodate an increase of about 5% above inflation in the FY2009 DOD budget, but project a cumulative decline of about 3% between FY2009 and FY2012. Many unofficial projections of the deficit situation are less sanguine than the Administration's, so many analysts expect, at best, a flat baseline defense budget for the foreseeable future. Increased costs in part of the budget, therefore, will necessarily come at the expense of resources available in other areas. Supplemental appropriations are expected to decline: Although plans to withdraw from Iraq are uncertain, the military services expect that supplemental appropriations will come down within a few years. Costs for training and equipment maintenance that have been covered in supplementals would, then, migrate back into the baseline budget at the expense of other programs, and money to further upgrade ground forces would have to be found elsewhere. Costs of military personnel have grown dramatically in recent years: Since the end of the 1990s, Congress has approved substantial increases in military pay and benefits, including pay increases of ½ percent above civilian pay indices in seven of the past eight years, three rounds of "pay table reform" that gave larger raises to personnel in the middle grades, increased housing allowances to eliminate on base and off-base disparities, DOD-provided health insurance for Medicare-eligible military retirees (known as Tricare for Life), concurrent receipt of military retired pay and veterans disability benefits that had earlier been offset, elimination of a reduction in retiree survivor benefits that had occurred at age 62, and large increases in enlistment and reenlistment bonuses and special pays. Although bonuses and some other payments may decline in the future, most of the past increases in pay and benefits have been built into the basic cost of personnel. CRS calculates that uniformed personnel now cost 40% more, per capita, after adjusting for inflation, than in FY1999. Operating costs continue to grow above base inflation: Historically, military operation and maintenance budgets, which pay for everything from personnel training, to weapons repairs, to facility operations, to health care, have increased relative to the size of the force by about 2.7% per year above inflation. These increases are not as large as in some areas of the civilian economy, such as health care, but they do not reflect gains in productivity that are common in other sectors of the economy. Continued growth in operating costs, which is now widely seen as a fact of life in defense planning, erodes the availability of resources for weapons modernization and other priorities. Increasing generational cost growth in major weapons programs: It is generally expected that new generations of weapons will be more expensive than the systems they replace as weapons technology advances. The rate of generational cost growth, however, is becoming a matter of increasing concern within the Defense Department. New stealthy aircraft, multi-mission ships, advanced space systems, and networked missiles, guns, and vehicles appear to be getting more expensive than their predecessors at a greater rate than in the past. Unless budgets increase more rapidly than costs, trade-offs between the costs of new weapons and the size of the force may be required. Poor cost estimates: The difficulties engendered by accelerating intergenerational weapons cost growth are exacerbated by poor cost estimation. The Government Accountability Office has documented frequent, substantial increases in costs of major defense systems compared to original development estimates. A side-effect of inaccurate cost projections is an increased instability in the overall defense budget, which entails inefficient production rates for major weapons programs and increased costs due to changing production plans. New requirements based on the lessons of Iraq and Afghanistan: The wars in Iraq and Afghanistan have led to very large increases in equipment requirements for ground forces, particularly for force protection, communications, and transportation. National Guard combat units that earlier were equipped with older systems cascaded from active units are now seen as part of the rotation base that require equally modern equipment. Full sets of current equipment are expected to be available not only for next-to-deploy units, but also for units as they begin to reset from overseas rotations. A key lesson of the war is that what used to be called "minor procurement" for ground forces was substantially undercapitalized. A broader range of national security challenges: A common presumption before 9/11 was that forces trained and equipped for traditional conflicts between national armies would be able to cope with what were seen as less demanding other challenges such as stability operations. Now Secretary Gates and other prominent defense leaders maintain that forces must be designed not only for traditional conflicts, but for insurgencies and other irregular wars, support of allies, threats of catastrophic attacks by non-state actors with weapons of mass destruction, and entirely new kinds of disruptive attacks on specific U.S. and allied vulnerabilities. The effect has been to broaden requirements without, necessarily, an attendant offsetting reduction in older force goals. When these factors are taken as a whole, it is not so surprising that military planners discover some shortfalls. For Congress, it may not be so certain that the principal answer to all these problems is to provide more money for defense. More money is one alternative. Other alternatives may include backing away from plans to add 92,000 active duty troops to the Army and Marine Corps; shifting resources among the military services to reflect new challenges rather than allocating them roughly the same proportions every year; reviewing requirements for expensive new technologies in view of the presence or absence of technologically peer or near peer competitors; and shifting resources from military responses to global threats toward non-military means of prevention. Secretary Gates stated that the budget decisions that he announced on April 6, 2009, were intended to "reshape the priorities of America's defense establishment." Those decisions focused almost exclusively on "means," rather than on desired "ends" based on policy decisions, or "ways" designed to utilize given means to achieve desired ends. That emphasis on resources, together with the relatively broad scope of the announced programmatic decisions, raises key questions about the relative weight of strategy and budget in driving defense priorities. Secretary Gates stressed that the April 6 announcement reflected a line of strategic thinking dating back 18 months, and captured in the June 2008 National Defense Strategy, other Department of Defense official documents, and speeches and statements. This continuum of strategic thought appears to be based on several major premises: The "wars we're in"—Iraq and Afghanistan—are broadly indicative of the kinds of challenges that the United States is most likely to face in the future. Those challenges include preparing for "hybrid warfare," in which both state and non-state actors blend cutting-edge technologies (usually associated with state-based militaries) with irregular approaches and/or non-conventional approaches usually associated with guerrilla groups. Recent examples of hybrid warfare cited by DOD officials include Hezbollah's operations against Israel in 2006 and the use of sophisticated Explosively-Formed Penetrators by insurgents in Iraq. DOD should enhance and better institutionalize the capabilities required to meet these sorts of challenges by adjusting investments and by rebalancing the force accordingly. While conventional challenges persist, the nation's current and projected advantages allow room for assuming greater risk in that area. On April 6, Secretary Gates echoed the 2008 National Defense Strategy : "Although U.S. predominance in conventional warfare is not unchallenged, it is sustainable for the medium term given current trends." DOD is operating in a resource-constrained environment, in which "running up the score" in one area—maintaining unnecessary redundancy—requires a decision not to do something else. Partnerships—with other U.S. Government agencies and with international friends and allies—will play an increasingly important role in the preparation for, and execution of, future operations. The decisions Secretary Gates announced April 6, timed to inform the FY 2010 budget request, were somewhat off cycle with Congressionally-mandated defense strategic review processes. This lack of synchronization raises some questions about the extent to which the decisions were strategically informed. In theory, national security strategy issued by the White House sets the parameters for the national defense strategy issued by DOD as part of the Quadrennial Defense Review (QDR) process, and defense strategy in turn shapes budget choices. The Goldwater-Nichols Act of 1986 established the permanent requirement for the President to submit a national security strategy report to Congress annually. That report is ordinarily due on the date the President submits the budget for the following fiscal year, but in the first year of a new Administration, it is due 150 days after the President takes office. The due date this year fell on June 19, 2009. In turn, legislation requires that DOD conduct a QDR during the first year of every Administration, with a requirement to submit a report based on that review to Congress in the year following the year in which the review is conducted, but not later than the President submits the budget for the next fiscal year. The due date for this QDR would fall in early February 2010. The QDR is intended to be a rigorous, inclusive review process that weighs assessments of the strategic environment, requirements, and gaps and overlaps in current capabilities. Further, by law, the QDR report must include "a comprehensive discussion of the national defense strategy of the United States." That defense strategy, in turn, is required to be "consistent with the most recent national security strategy." In practice, the Obama Administration appears to be broadly on track with the prescribed strategy cycle. However, that cycle may not be well-adapted for informing budget priorities in the first year of a new Administration. The most recent National Security Strategy (NSS) was issued by the Bush Administration in March 2006. Senior Administration officials have noted that the Obama Administration is unlikely to publish a new NSS in time to help shape the 2010 QDR. However, officials have indicated that an ongoing national security review process—led by the National Security Council and intended to establish priorities and produce classified, internal guidance to departments and agencies—would likely set parameters for the QDR process. DOD issued the most recent National Defense Strategy in June 2008, under the signature of Secretary Gates, as a stand-alone document, separately from a QDR process. Secretary Gates has stressed repeatedly that the 2008 NDS will undergird the 2010 QDR process, the findings of which would be used to inform budget decision-making for FY2011. DOD officials have stated that, despite the absence of a concurrent QDR or NDS process, the budget decisions announced on April 6 were developed over the course of three months, in a rigorous, inclusive way that included "not only the chiefs and secretaries of the Services, but also the [Combatant] Commanders." DOD has reportedly continued the practice launched under the previous Administration, following the 2006 QDR, of holding frequent, inclusive sessions with senior DOD civilian and military leaders, chaired by the Deputy Secretary of Defense and the Vice Chairman of the Joint Chiefs of Staff, to consider strategic priorities, specific programs and initiatives, and Departmental processes. Senior DOD leaders have also stated that the scope of the April 6 decisions was not comprehensive, and that several categories of issues were deferred to the forthcoming QDR process. Secretary Gates indicated that he had deferred consideration of some specific issues—including amphibious capabilities, a follow-on bomber, and strategic (nuclear) requirements—for which sufficient "analysis and understanding" had not yet been available. Vice Chairman of the Joint Chiefs of Staff General James Cartwright added that some broader and more fundamental issues had also been deferred to the QDR—including "how to shift and manage risk," including, for example, how to think about potential trade-offs between very different sets of capabilities." On April 6, 2009, roughly a month before the details of the FY2010 budget were released, Secretary Gates announced several key recommendations all of which were incorporated into the Administration's FY2010 budget request released May 7. Gates said this "unorthodox" procedure was warranted by the scope and significance of the decisions and by his desire to publicize them as elements of his effort to change DOD's strategic direction. To improve the quality of life for military personnel and their families, Gates announced four recommendations which, in sum, required $13 billion in the FY2010 base budget for activities that previously had been funded in supplemental appropriations bills. Secretary Gates recommended that the FY2010 budget complete the ongoing expansion of the Army and Marine Corps, halt further personnel reductions in the Air Force and Navy (possibly at end-strength levels of 330,000 and 329,000 respectively), and fund these end strength levels at a cost of $11 billion. Until recently, the Army had a permanent active component end strength of 482,400 while the active component Marine Corps had a permanent end strength of 175,000. As recently as the 2006 Quadrennial Defense Review (QDR), DOD maintained that these strengths were adequate. However, the reality of fighting a multi-front war for more than five years with an all volunteer force eventually compelled the administration to reexamine its end strength position. Having resisted previous congressional calls to permanently increase the end strength for the Army and the Marine Corps, on January 19, 2007 DOD announced that it would seek approval to increase the permanent end strength of both services. As reflected in both the FY2008 President's budget request and the FY2008 National Defense Authorization Act (NDAA), the Army's revised authorization cap is 547,400 by 2012, an increase of 65,000 over the previous baseline of 482,400. The Marine Corps' revised authorization cap is 202,000 by 2011, an increase of 27,000 over the previous baseline of 175,000. It was anticipated that both services might achieve their higher authorization levels by the end of FY2009, three years earlier than required for the Army and two years earlier than required for the Marine Corps. The Air Force has been drawing down personnel for the past several years to fund equipment modernization programs. At the end of FY2004, the Air Force had a personnel strength of 376,600 with a plan to reduce by 60,000 personnel and achieve an end strength of 316,600 by the end of FY2009. However, on June 8, 2008, the Secretary of Defense announced the end of the Air Force drawdown. While the FY2009 NDAA authorized and funded the Air Force at 317,050, DOD is committed to stabilizing the Service at a strength of approximately 330,000. The Navy, on the other hand, has been downsizing by 8,000 to 10,000 personnel a year for the past six to seven years, attempting to reach a goal of 329,000, the number required to sustain 313 ships and approximately 3,800 aircraft. The Navy ended FY2008 with a personnel strength of 332,228 and projects achieving the goal of 329,000 by the end of FY2009. Secretary Gates stated his intention to provide increased funding for troops and their families by requesting increases of: $400 million above the FY2009 level for medical research and development; $300 million above the FY2009 level for programs addressing the wounded, ill and injured, traumatic brain injury, and psychological health; and $200 million above the FY2009 level for improvements in child care, spousal support, lodging, and education. Existing programs that previously had been funded through supplementals would be funded in the base defense budget in FY2010. Secretary Gates stated that the department would spend over $47 billion on healthcare in FY2010. In his April 6 statement, Secretary Gates did not mention any proposals to include cost saving proposals in the FY10 budget submission. The earlier pre-decisional budget document released by the White House on March 6, 2009 did not reference any such proposal either. However, in an April 7 press conference, Secretary Gates stated that the Defense Health Program request would be fully funded in the FY2010 budget request, unlike previous years in which legislative proposals for cost savings had been included in the budget as offsets to budgetary needs. Secretary Gates further stated his intention to work with Congress to enact legislation to better control health care spending. In its FY2007, FY2008, and FY2009 budget submissions, the DOD proposed increases in Tricare enrollment fees, deductibles, and pharmacy co-payments for retired beneficiaries not yet eligible for Medicare. These actions were justified by DOD as necessary to constrain the growth of health care spending as an increasing proportion of the overall defense budget in the next decade. Congress has passed legislation each year to prohibit the proposed fee increases. Congress sought advice on how to constrain military health care cost growth in crafting the FY 2007 John Warner National Defense Authorization Act. The FY2007 national defense authorization required the establishment of a DOD Task Force on the Future of Military Health Care, composed of military and civilian officials with experience in health-care budget issues, to examine and report on efforts to improve and sustain defense health care over the long term including the "beneficiary and Government cost sharing structure required to sustain military health benefits." Another provision of the same act (section 713) required the Government Accountability Office (GAO) in cooperation with the Congressional Budget Office (CBO) to prepare an audit of the costs of health care to both DOD and beneficiaries between 1995 and 2005. The Task Force on the Future of Military Health Care submitted its final report in December 2007. It found that existing cost-sharing provisions jeopardize long-term taxpayer support and recommended phased-in changes in enrollment fees and deductibles that would restore cost-sharing relationships that existed when Tricare was created. For instance, this would mean that average enrollment fees for the average under-65 retiree family would gradually rise from $460 per year to $1,100 per year. In July, 2008, the Presidentially directed Tenth Quadrennial Review of Military Compensation (QRMC) issued its report on deferred and noncash compensation for members of the uniformed services. The QRMC recommended that Tricare Prime premiums for single retirees under age 65 be set at 40% of Medicare Part B premiums (which vary by the enrollee's adjusted gross income). Tricare Standard/Extra premiums for single retirees would be set at 15% of Part B premiums. Family rates would be set at twice the single rate regardless of family size. Tricare deductibles would be linked to Medicare rates with copayments waived for preventative care and prescription drug payments limited to no more than two thirds of the average copayment faced by civilians at retail pharmacies. In addition, the QRMC recommended that health care for retirees under age 65 be financed through accrual accounting in order to illuminate how current staffing decisions will affect future costs. In January, 2009, DOD's Military Health System Senior Oversight Committee (SOC) issued a report responding to the recommendations of the Task Force on the Future of Military Health Care. The SOC response rejected some of the Task Force's specific cost-sharing recommendations, but did state that "DOD will continue to ask for congressional authority to charge fees and copays in an effort to maintain both a generous health care benefit and a fair and reasonable cost-sharing arrangement between beneficiaries and DOD." If the Obama Administration decides to pursue this option, details might be included in the official budget submission expected in May or in the DOD's national defense authorization legislative package. Asserting that DOD is culturally conditioned to focus on preparation for conventional combat against forces similar to those fielded by the United States, Secretary Gates said a second set of his recommendations were intended to institutionalize within the defense establishment capabilities that are vital to waging irregular warfare, as U.S. forces currently are doing in Iraq and Afghanistan. Secretary Gates, himself a former Director of Central Intelligence, has indicated his intention to increase intelligence, surveillance, and reconnaissance (ISR) support to the warfighter by some $2 billion within the base budget. This initiative reflects the expanding use of ISR systems, especially unmanned aerial vehicles (UAVs), in Iraq and Afghanistan to locate targets that can be attacked with minimal damage to innocent civilians or property. DOD notes that "the number of deployed UAS [unmanned aerial systems] has increased from approximately 167 aircraft in 2002 to over 6,000 in 2008, while defense investment in UAS capabilities has dramatically grown from $284 million in Fiscal Year 2000 to $2.5 billion in Fiscal Year 2008." Gates recommended funding to field and sustain 50 continuous orbits of Predator -class and the more capable Reaper -class UAVs, along with manned ISR platforms, such as the turbo-prop aircraft used by Army brigade-level commanders in Iraq (as part of Task Force Odin), to provide situational awareness—locating adversaries and even IEDs. The Gates initiative is designed to include the acquisition of key tactical ISR systems in the base budget rather than in supplementals. Reliance on supplemental funding is seen as resulting in insufficient ISR resources to meet ongoing operational demands in Iraq and Afghanistan and elsewhere. Gates also announced plans for more extensive R&D on ISR systems, with emphasis on systems that provide links between warfighters and national systems. No details were provided. The day after Gates set forth his ISR recommendations, the Director of National Intelligence (DNI), Dennis Blair, announced that his office and DOD have agreed on a plan to deploy new imagery satellites whose design will evolve from current satellites and increase the use of commercially available imagery. Current satellites are approaching the end of their operational lifespan; a previous replacement approach (known as Future Imagery Architecture) was cancelled in 2005 as a result of technical difficulties and cost-overruns and thus new systems are required. Media reports indicate, however, that some Members favor an alternative approach to the one approved by the DNI, one based on new systems that the Administration currently judges to be technologically immature. Although Blair's announcement did not mention the cost of the satellite program (which will be funded in the classified National Intelligence Program (NIP)), some media accounts suggest that costs of the new systems will approach $10 billion. In his April 6 statement, Secretary Gates said he was recommending an increase of $500 million "to boost global capacity efforts.... training and equipping foreign militaries to undertake counter terrorism and stability operations." Such an increase in funding for building global partnership capacity under "Section 1206" of the FY2006 National Defense Authorization Act (NDAA), P.L. 109-163 , as amended, would require Congress to once again raise the authorized limit. The current authorized amount is $350 million. Some expect that DOD may also propose extending Section 1206 authority to allow support of a wider array of partner nation security forces than currently is permitted. Both the proposed increase in the Section 1206 authorized funding level and an expansion of the types of foreign security personnel eligible for Section 1206 assistance would be consistent with DOD's original proposal for building global partnership capacity legislation in 2005. At that time, DOD requested authority, beginning in FY2006, to spend up to $750 million per fiscal year to assist foreign military and security forces, including armies, guard, border security, civil defense, infrastructure protection, and police forces. From the start, Section 1206 authority has been highly controversial, with some policymakers judging that the Secretary of State should retain authority over foreign military and security force training. As a result of disagreements over bestowing a new, global "train and equip" authority on DOD, Congress substantially scaled back DOD's request in 2005 action. As originally enacted in P.L. 109-163 , Section 1206 spending authority was limited to $200 million per year and only foreign military forces were eligible for assistance. The new Section 1206 authority also contained several restrictions, making it subject to existing human rights and other restrictions elsewhere in law. Congress has amended Section 1206 authority twice. In the FY2007 NDAA ( P.L. 109-364 ), Congress raised the authorized spending limit to $300 million. P.L. 109-364 also amended Section 1206 to require the concurrence of the Secretary of State for all expenditures. In action on the FY2009 Duncan Hunter National Defense Authorization Act ( P.L. 110-417 ), Congress extended Section 1206 authority through FY2011, raised the spending limit to $350 million, and made those funds available across fiscal years, and included maritime security forces among those eligible to receive assistance. It rejected the Bush Administration's proposal to make Section 1206 authority permanent, to extend eligibility to broad array of foreign police and other security forces, and to increase the funding cap to $750 million. Secretary Gates proposed reducing from 48 to 45 the number of active duty Brigade Combat Teams the Army will create as it reorganizes its combat force from 10 divisions (each numbering between 10,000 and 18,000 soldiers) to a larger number of brigades, each comprising between 3,000 and 5,000 troops. Unlike older brigades, which typically have to borrow various specialists from other units in order to deploy overseas, the new Brigade Combat Teams are intended to be organizationally independent, including on their rosters all the personnel they would need for deployment. By reorganizing its force into a larger number of smaller units, the Army hoped to give soldiers more time at their home bases between deployments (called "dwell time"). Moreover, since the new units are self-sufficient, the Army also hoped to eliminate the use of Stop Loss orders, which require personnel to remain on active duty after the end of their enlistment when their particular skills are needed. The Army began restructuring from a division-centric organization to brigade-centric units shortly after September 11, 2001. The original concept, as outlined in the FY2006 Quadrennial Defense Review (QDR) was to transform the active Army into 42 Brigade Combat Teams and 75 Modular Support Brigades. In 2007, when a decision was made to add 65,000 soldiers to the Army's force structure (increasing active duty end strength from 482,400 to 547,400), six Brigade Combat Teams and eight Modular Support Brigades were added to the planned brigade-centric reorganization. At that point, the plan was to create 48 Brigade Combat Teams and 83 Modular Support Brigades by 2013. Secretary Gates recommended increasing by 2,800 or 5% the number of personnel assigned to Special Operations Forces, which are units trained to perform small-scale, often clandestine military operations. How the proposed personnel increase will be spread among the Services and a target date for completing the expansion were not announced. Gates also recommended unspecified increases in the purchase of transport and aerial refueling aircraft that are adapted to special operations missions. The FY2006 Quadrennial Defense Review (QDR) increased the number of active duty Special Forces Battalions by one-third and established a 2,600-strong Marine Corps Special Operations Command, a capability that did not previously exist in the Marine Corps. The qualification and training requirements for special operations personnel are lengthy and have a high failure rate. As a result, manning an enlarged force structure for special operations personnel takes more time than manning conventional combat units. Secretary Gates recommended adding to the base budget $500 million to increase the number of helicopters that could be deployed, with most of the funds intended to increase the number of Army helicopter pilots recruited and trained. Gen. Martin Dempsey, USA, chief of the Army's Training and Doctrine Command (TRADOC) is reported to have said the additional funds would address the complaints of U.S. commanders in Afghanistan, who say they have the helicopters they need but not enough trained personnel to fly and maintain them. Currently, the Army trains about 1,200 helicopter pilots annually, but it needs nearly 1,500, Dempsey reportedly said, adding that an additional $500 million would allow him to close the gap in two years. Navy shipbuilding plans have emerged in recent years as a matter of particular congressional concern. The ship-procurement rate for the last 17 years has been well below the average annual rate that would be needed over the long term to achieve and maintain the Navy's planned 313-ship fleet. Many observers believe the Navy's long-term shipbuilding plan is unaffordable. Certain Navy shipbuilding programs in recent years have experienced significant cost growth, construction delays, and construction deficiencies. Some Members of Congress who track Navy shipbuilding have expressed growing concern and frustration about the situation. Secretary Gates linked various shipbuilding proposals to different aspects of his overall strategic vision, justifying some of them in terms of conventional force modernization requirements, others in terms of acquisition reform, and still others in terms of his effort to institutionalize within DOD thinking a higher priority for irregular warfare. His proposed actions concerning Navy ships did not go as far as some observers had expected or speculated in terms of proposed reductions or cutbacks. In particular, Secretary Gates did not propose a near-term and permanent reduction in the size of the Navy's aircraft carrier force from 11 ships to 10, and he did not propose the cancellation of second and third Zumwalt (DDG-1000) class destroyers. Some of Secretary Gates's proposed actions simply confirmed existing Navy plans for certain shipbuilding programs, or were consistent with recent press reports about emerging Navy plans for those programs. The following section discuss in more detail Secretary Gates's recommendations concerning various classes of vessels under development or under construction. Instead of proposing a near-term and permanent reduction in the size of the carrier force from 11 ships to 10, Secretary Gates proposed that the schedule for procuring new carriers be stretched out somewhat, to a rate of one carrier every five years. The previous schedule called for procuring one carrier approximately every 4.5 years (a combination of four- and five-year intervals). The stretching out of the carrier procurement schedule, Secretary Gates said, would place carrier procurement "on a more fiscally sustainable path." He stated that his proposed schedule would permit the Navy to maintain an 11-carrier force through about 2040, after which the force would decrease to 10 ships. In announcing the proposal to stretch out the carrier procurement schedule (and his proposals regarding the CG(X) cruiser, the 11 th LPD-17 amphibious ship, and the Mobile Landing Platform ship), Secretary Gates stated, "The healthy margin of dominance at sea provided by America's existing battle fleet makes it possible and prudent to slow production of several major surface combatants and other maritime programs." Although the Navy under Secretary Gates's proposed carrier-procurement schedule is generally to maintain an 11-carrier force through 2040, the force is projected to temporarily drop to ten ships for a 33-month period in 2012-2015. This temporary drop has been projected for years and is not a result of Secretary Gates's proposed carrier-procurement schedule. The drop would occur because the aircraft carrier Enterprise (CVN-65) is scheduled to retire in 2012 at age 51, and its replacement, the Gerald R. Ford (CVN-78), is not scheduled to enter service until 2015. Secretary Gates's proposal for shifting carrier procurement to one ship every five years would defer the procurement of the next aircraft carrier, CVN-79, by one year, from FY2012 to FY2013. Such a one-year deferral could increase the cost of both CVN-79 and Virginia-class submarines under construction at that shipyard. A one-year deferral in the procurement date of CVN-79 could also reduce the amount of advance procurement funding that is to be requested for the ship in FY2010. The FY2010 budget request included funds to complete the third destroyer of the DDG-1000 class, which was authorized but only partially funded in FY2009, as well as funds to purchase an additional destroyer of the DDG-51 class. In his April 6 press conference, Secretary Gates stated that that the plan to fund both ships in FY2010 depended on, "being able to work out contracts to allow the Navy to efficiently build all three DDG-1000 class ships at Bath Iron Works in Maine and to smoothly restart the DDG-51 Aegis Destroyer program at Northrop Grumman's Ingalls shipyard in Mississippi. Even if these arrangements work out, the DDG-1000 program would end with the third ship and the DDG-51 would continue to be built in both yards." He added that "If our efforts with industry are unsuccessful, the department will likely build only a single prototype DDG-1000 at Bath and then review our options for restarting production of the DDG-51. If the department is left to pursue this alternative, it would unfortunately reduce our overall procurement of ships and cut workload in both shipyards." Secretary Gates's proposal regarding destroyer procurement was one of several program actions that he cited after saying, of DOD's acquisition and contracting processes: "The perennial procurement and contracting cycle—going back many decades—of adding layer upon layer of cost and complexity onto fewer and fewer platforms that take longer and longer to build must come to an end," he told reporters April 6. "There is broad agreement on the need for acquisition and contracting reform in the Department of Defense. There have been enough studies. Enough hand-wringing. Enough rhetoric. Now is the time for action." Soon after Secretary Gates's April 6 news conference, it was reported that the Navy had reached an agreement with Bath Iron Works and Northrop to have Bath build all three DDG-1000s. Under the agreement, Northrop would build the first two DDG-51s to be procured under the DDG-51 restart, and Bath would build the third DDG-51. Secretary Gates proposed a delay in the start of the CG(X) cruiser program "to revisit both the requirements and acquisition strategy" for the program. The Navy wants to procure CG(X)s to replace its 22 Ticonderoga-class Aegis cruisers, which are projected to reach their retirement age of 35 years between 2021 and 2029. In announcing this proposal (and his proposals on the aircraft carrier procurement schedule and on delaying procurement of the 11 th LPD-17 amphibious ship and the Mobile Landing Platform ship), Secretary Gates said, "The healthy margin of dominance at sea provided by America's existing battle fleet makes it possible and prudent to slow production of several major surface combatants and other maritime programs." Secretary Gates recommended continuation of the planned procurement of Littoral Combat Ships (LCSs) which he described as, "a key capability for presence, stability, and counterinsurgency operations in coastal regions." This was one of several recommendations he made after stating: "Our contemporary wartime needs must receive steady long-term funding and a bureaucratic constituency similar to conventional modernization programs. I intend to use the FY10 budget to begin this process." The FY2010 budget requested funding for three more LCSs, consistent with prior Navy planning and represent no change to the program: The LCS program was scheduled to increase from two ships in FY2009 to three ships in FY2010 as part of a plan to ramp up the annual LCS procurement rate to an eventual level of five or more ships per year, and the Navy has planned a total of 55 LCSs since 2006. The LCS program was restructured in 2007 following revelations of significant cost growth and construction problems. The program continues to be a program of particular oversight focus for Congress. The Seapower and Expeditionary Forces subcommittee of the House Armed Services Committee, for example, held a hearing on March 10, 2009, to review the status of the program. On September 16, 2009, the Navy announced another restructuring of the LCS program, cancelling its plan to build several ships to each of two competing designs before selecting one of the two for further production. Under the Navy's new plan, it would choose between the two designs during FY2010 and would procure two LCS ships in FY2010 (instead of the three included in the FY2010 budget request). Laying the groundwork for a potentially dramatic change in DOD planning, Secretary Gates proposed deferring from FY2010 to FY2011 the procurement of two ships intended to support amphibious landings, saying he wanted to, "assess costs and analyze the amount of these capabilities the nation needs." Secretary Gates drew the point more sharply during a speech to the Naval War College on April 17, citing amphibious landings as one example of areas in which he wanted the QDR to be "realistic about the scenarios where direct U.S. military action would be needed." As recently as 1991, he acknowledged, the threat of a large-scale amphibious assault by U.S. Marines on the coast of Kuwait played a useful role in tying down Iraqi forces while the actual U.S.-led attack came overland from Saudi Arabia. But he added: "We have to take a hard look at where it would be necessary or sensible to launch another major amphibious action again. In the 21 st century, how much amphibious capability do we need?" Pending analysis of that issue by the QDR, Secretary Gates recommended deferring the planned funding in FY2010 of an 11 th San Antonio (LPD-17) class amphibious ship and the first Mobile Landing Platform—a ship intended to function as a pier on which cargo ships could transfer their loads to amphibious landing craft. Procurement of LPD-17s has been a topic of congressional interest in recent years. Secretary Gates's proposal could increase the cost of the 11 th LPD-17 and the MLP in then-year dollars, if not also in real (inflation-adjusted) dollars. Secretary Gates did not recommend any change in planned procurement of Joint High Speed Vessels (JHSVs), high-speed sealift ships the production of which is just beginning. He announced that, "to improve our inter-theater lift capability," pending delivery of the first JHSV, DOD would charter two existing ships of this kind, in addition to two it currently has under charter. The chartered ships of this type all have been foreign-built. As with his shipbuilding recommendations, Secretary Gates cited different rationales for his various recommendations about aircraft programs, justifying some of them in terms of the need to affordably modernize U.S. conventional forces and citing others as necessary steps toward acquisition reform. Secretary Gates basically reaffirmed the existing plan for fighter procurement, except for a slight reduction in the number of F/A-18-type planes for the Navy to be funded in FY2010. He thus rejected a vigorous campaign by proponents of the Air Force's F-22 to continue production of that aircraft which supporters maintain has a uniquely potent blend of speed and stealthiness. Instead, Secretary Gates and Joint Chiefs of Staff Vice Chairman Gen. James E. Cartwright, called for a force made up of the planned 187 F-22s, plus thousands of the cheaper and less stealthy F-35s, and several hundred missile-armed Reaper and Predator UAVs. The UAVs would replace many of the 250 older fighters, mostly F-16s, that Secretary Gates plans to retire. This marks the first time that senior DOD officials have identified UAVs as major components of the U.S. combat force rather than as support equipment. Secretary Gates recommended buying 30 F-35s in FY2010, an increase from the 14 funded in FY2009, with an increase in funding from $6.9 billion to $11.2 billion. He called for buying 523 F-35s in FY2010-14 and a total of 2,443 of the aircraft over the program's life. This procurement profile matches the current F-35 program of record for FY09 and FY10, although $11.2 billion is higher than the $8.4 billion originally planned for FY2010. Purchasing 513 aircraft over the five year defense plan is a slight increase (28 aircraft) over the current program, but the projected total purchase of 2,443 remains the same as previously planned. The Government Accountability Office (GAO) reported in March that DOD sought to increase the five-year purchase plan by 169, and criticized the $33 billion effort as creating "very significant financial risk" in part due to a lack of flight testing prior to procuring large numbers of the aircraft. Secretary Gates recommended no further procurement of F-22s, thus ending the program at 187 planes—the 183 funded thus far plus four planes requested in the FY2009 supplemental appropriation. Ending production at 183 matches the program of record for the F-22 Raptor ; the four additional aircraft requested are intended to replace combat aircraft losses. In follow-on comments, Secretary Gates stated that advice from Combatant Commanders and the Air Force indicated "no military requirement for F-22s beyond.... 187." Air Force Chief of Staff, General Norton Schwartz, stated during his confirmation hearings in 2008, that his personal position was that the right number of F-22 aircraft was greater than 183 but less than the 381 that the Air Force had been arguing for. However, he subsequently avoided public statements on the matter. Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, said in December 2008 that the Air Force had discussed with him a plan to purchase 60 additional aircraft, but deferred further discussions to the new Presidential administration. On April 13, 2009 the Air Force's civilian and military leadership, acknowledging the difficult budget environment and new risk assessments by DOD, formally endorsed Secretary Gates's proposal to complete F-22 procurement at 187 aircraft. Congress has generally supported the F-22 in the past. In FY2009, Congress added to the budget request $523 million that could be used for advanced procurement of an additional lot of F-22s should the administration choose to do so. Secretary Gates recommended buying 31 F/A-18 Super Hornets for the Navy in FY2010, without specifying the mix of models. FY2009 Navy budget documents indicate a planned FY2010 request for 18 F/A-18E/F Super Hornets and 22 EA-18G Growlers — a version of the plane modified for electronic warfare — in all, a total of 40 aircraft. If, as most observers believe, Secretary Gates includes EA-18Gs in his recommendation for a revised FY-10 purchase, then 31 aircraft represent a reduction of nine Super Hornets and Growlers from the previous DOD budget. Congress has generally funded the F/A-18 as requested, with some modification to the mix of "E," "F," and "G" models to be procured. Secretary Gates recommended that the Air Force remain on its current schedule to develop a new aerial refueling tanker (KC-X) to replace the KC-135, which is the Air Force's top acquisition priority. A contract to develop and build the KC-X was awarded to Northrop Grumman in February 2008, but after the GAO upheld a formal protest by competitor Boeing, Secretary Gates cancelled the competition and called for a "cooling off" period, deferring all program decisions to a new presidential administration. The new competition began September 24, 2009, with the issuance of a draft Request for Proposals, the final version of which is expected in January, 2010. While some in Congress support a "split" buy, i.e., having both companies build new tankers, Secretary Gates remains opposed, citing high costs and potential problems the Air Force might encounter by maintaining two separate training programs and logistics operations for the tanker fleet. Congress has expressed strong support for replacing the aging KC-135 fleet, but has disagreed with DOD on how this might best be accomplished. Over the past three legislative sessions, Congress urged DOD to increase the proposed rate of KC-X production and has created a Tanker Replacement Transfer Fund to give DOD flexibility in using procurement, O&M, and R&D funds to support KC-X acquisition. Secretary Gates recommended ending procurement of the C-17 Globemaster III long-range cargo jet after production of the 205 planes already in service or funded. Ending production at 205 aircraft matches the program of record for the C-17 Globemaster III. Potential questions may arise over what analysis was used for this conclusion. In 2008, the incoming commander of United States Transportation Command, General Duncan McNabb, stated that the strategic airlift requirement (33.95 million ton miles/day (MTM/D)) set by mobility studies in 2005 could be met with 205 C-17s, 52 modernized C-5Bs, and 59 C-5As. Secretary Gates recommended termination of two high-profile helicopter programs, justifying both proposals as part of his effort to reform DOD's acquisition process. He recommended terminating the VH-71 helicopter, intended to transport the President and other senior officials, on the basis of its troubled acquisition history and large cost overruns. While post-9/11 security concerns gave the program a certain "urgency," the long timelines for delivery of fully capable helicopters (slated for initial deployment in 2017) work against that argument, he said. He also decided against purchasing the first lot of less capable "Increment 1" aircraft, stating they would only last five to ten years, although it is unclear why their useful life would be so much less than other models of helicopters. Over the past three legislative sessions, Congress has expressed concern over noteworthy cost increases, schedule delays, and foreign influence on the program. Over this time period, Congress cut approximately $300 million of the $2 billion from the Navy's R&D accounts for the VH-71. Secretary Gates also recommended terminating the Air Force Combat Search and Rescue helicopter (CSAR-X) and called for reviewing the requirement the aircraft was designed to meet. His rationale for terminating the CSAR-X helicopter program jibes with a commonly held belief that the process by which DOD defines the requirements a new weapon is supposed to meet does not adequately force the military services to make hard decisions or trade off capabilities among themselves. The debate over whether search and rescue (SAR) missions require a specialized aircraft has been in progress for several years and was most recently raised by former Pentagon Acquisition Chief John Young. In an interview in November 2008, Mr. Young stated that DOD "... [has] a lot of assets that can be used in rescue missions with planning, so I don't necessarily just automatically rubber-stamp the CSAR-X requirement." The Air Force countered that it has twice won approval for a dedicated CSAR aircraft from the Joint Requirements Oversight Council (JROC), the high-level DOD panel that approves the requirements a new weapons program is supposed to meet. The service argued that CSAR was a critical shortfall at the beginning of combat operations in Afghanistan in 2001, that specially-trained CSAR forces were used far more often than recognized, and that using non-specialized forces for CSAR missions would result in increased U.S. casualties. Further statements by Secretary Gates indicate that DOD might also consider making CSAR a joint capability, thereby changing the organization and acquisition process for any dedicated assets. Secretary Gates recommended in his April 6 statement that DOD restructure the ballistic missile defense (BMD) program to focus more on rogue-state and theater ballistic missile threats and maintain and improve existing long-range BMD capabilities. These recommendations seem to align with Secretary Gates's broader strategic thinking about the types of foreign threats the United States is most likely to face (e.g., "hybrid warfare," where U.S. troops could be threatened by state and non-state actors armed with short-range ballistic missiles). Additionally, Secretary Gates's stated objective is to adjust DOD investments and rebalance the overall force, especially in the resource constrained era he acknowledges. This seems to reflect his argument that the United States should focus more attention on shorter range BMD investments. He also wants to improve our existing U.S. long-range BMD system without necessarily acquiring more of that same capability pending DOD review of the need for additional interceptors and whether more future-oriented programs could better supplement the overall BMD capability. To accelerate deployment of defenses against theater ballistic missiles—those without intercontinental range—Secretary Gates recommended adding to the FY2010 budget $700 million to field more SM-3 (Standard Missile 3) and THAAD (Terminal High Altitude Area Defense) BMD interceptors, and about $200 million more to convert six additional Aegis ships to provide BMD capabilities. He added that this would basically fund the maximum production capacity of the production lines for the SM-3 and THAAD, which are coming out of the testing phase and moving into full-rate production. The SM-3 is the anti-missile interceptor used by Navy cruisers and destroyers equipped with the powerful Aegis radar and missile control system. Secretary Gates recommended not increasing the current number of long-range ground-based interceptors deployed in Alaska, as had been planned. Currently, there are slightly more than two dozen of these interceptors deployed in Alaska and California in the event of missile attacks against the United States from North Korea or Iran. Secretary Gates said it was important "to robustly fund continued research and development to improve the capability we already have to defend against long-range missile threats." In response to questions about plans to construct a third missile defense site in Europe, Joint Chiefs of Staff Vice Chairman Gen. James Cartwright, USMC, said there are "sufficient funds in '09 that can be carried forward to do all of the work that we need to do at a pace that we'll determine as we go through the program review, the quadrennial defense review, and negotiations with those countries." Further details were not offered at that time. Secretary Gates also recommended cancelling the Multiple Kill Vehicle (MKV) program because of its significant technical challenges and the fresh need to look at the requirements for that system. The MKV is seen by some as enhancing the capability of long-range interceptors for mid-course BMD in the future. On September 17, 2009, President Obama cancelled the plan to deploy a long-range missile defense system in Poland and the Czech Republic. Instead, DOD plans to acquire a network of mobile radars and interceptor missiles, including the SM-3 intended to defend Europe against Iranian missiles of short and medium range. The President said U.S. intelligence agencies had concluded that Iran's effort to develop long-range ballistic missiles was taking longer than had been assumed while it was moving more quickly than had been forecast to develop missiles that could fly far enough to hit Europe, but not far enough to hit U.S. territory. Secretary Gates recommended on April 6 various program changes regarding boost-phase defense (i.e., efforts aimed at destroying attacking ballistic missiles shortly after they launch). He recommended cancelling the second ABL (Airborne Laser) prototype aircraft and shifting the focus of that program to further research and development. He said the ABL program was not ready for production, that it had "significant affordability and technology problems, and the program's proposed operational role is highly questionable." Also, in response to a question about whether there might be changes in the BMD acquisition process, Gen. Cartwright, said that "what will change is we're going to start to shift and understand in that first phase what the leverage and potential opportunities are in the boost-phase, focus on the threats.... and start to reassess what it is and what we can do in the boost-phase for long-range." In response to Secretary Gates's recommendations, several senators wrote to the Secretary expressing their approval of the increases to THAAD and SM-3, but voicing concern about the proposed cut to missile defense funding, stating that it could "undermine our emerging missile defense capabilities to protect the United States against a growing threat." At a media roundtable on April 7, 2009, Secretary Gates said "perhaps we can persuade them that all is not as bad as they seem to think" if he could show them the proposed changes to THAAD and SM-3, the sustained work on long-range systems for mid-course BMD, and the continued funding of R&D for boost-phase interception. On April 6, 2009, Secretary Gates announced that he intended to significantly restructure the Army's Future Combat Systems (FCS) program, the Army's plan to modernize its entire suite of combat equipment. Specifically, he said, DOD would accelerate the process of "spinning out" to all brigade combat teams (BCTs) technologies developed in the FCS program that were ready for deployment. However he said he would cancel the manned ground vehicle (MGV) component of FCS, which was intended to field eight separate tracked combat vehicle variants built on a common chassis that would eventually replace several existing combat vehicles, including the M-1 Abrams tank, the M-2 Bradley infantry fighting vehicle, and the M-109 Paladin self-propelled artillery system. Secretary Gates said he was concerned that there were significant unanswered questions in the FCS vehicle design strategy and that despite some adjustments to the MGVs, that they did not adequately reflect the lessons of counterinsurgency and close quarters combat in Iraq and Afghanistan. Secretary Gates was also critical that the FCS program did not include a role for Mine-Resistant, Ambush-Protected (MRAP) vehicles that have been used successfully in current conflicts. There are a number of policy implications flowing from Secretary of Defense Gate's decision to restructure the FCS program. In essence, the Army was told to "go back to the drawing board" on this almost decade-old program once described as the "centerpiece" of Army modernization. Because the Army has focused exclusively on FCS for well over a decade, there has probably been little thought given to alternatives to the eight MGVs that were to be developed under the FCS program. DOD officials expressed misgivings that the Army had neither taken into account "the lessons learned of the operational realities in Iraq and Afghanistan" in the design of FCS MGVs nor carefully considered whether "one class of vehicles could in fact cover the range of operations that we envision are going to be the reality of the future." Another point of contention is that the FCS program did not adequately address the role of MRAPs—a vehicle that the Army considers interim protection for soldiers in combat. MRAPs, while providing excellent protection to soldiers, are transport vehicles and are not fighting vehicles like the Abrams , Bradleys , Strykers, or the proposed FCS MGVs, so determining a more permanent role for these vehicles may prove challenging. Another implication will likely be developmental timelines. Should a decision eventually be made to develop and procure new non-MGV-based variants to replace the Abrams , Bradley , and Paladins , there will likely be questions raised about a decade long or greater development and procurement cycle, as was the case of the FCS program. There might also be resistance to an all-encompassing "systems of systems" FCS-like developmental effort for Army vehicle modernization, although commonality between platforms to reduce costs and improve maintainability and support could likely be viewed favorably. Secretary Gates left unchanged the current plan to continue development and production of the Expeditionary Fighting Vehicle (EFV), an amphibious armored combat vehicle for the Marine Corps. But he said a decision on the future of that program, like the future of planned amphibious landing ships, would await the results of the QDR. Congress has generally viewed the FCS program with a degree of skepticism due to its ambitious scope, significant price tag, and heavy reliance on theoretical and unproven technologies. In addition, the FCS program's reliance on defense industry lead systems integrators (LSIs) to develop and manage much of the program has also come under significant congressional scrutiny. Congress has been supportive of the Army's recent decision to focus the FCS program on "spinning out" sensor and unmanned aerial and ground systems, and networking technology to its Infantry Brigade Combat Teams and might be expected to support DOD's decision to accelerate these efforts. Congress has also been concerned about the development of the FCS Network, including complimentary programs to develop new software-programmable radios and satellites to accommodate the vast amounts of information needed by FCS-equipped units. In this regard, Congress has legislated a number of studies and testing requirements to insure that the FCS Network will be fully functional and not vulnerable to either attack or disruption. Secretary Gates did not mention restructuring the FCS Network, so it is possible that work on the network not related to FCS manned ground vehicles will continue with a commensurate level of congressional oversight. The decision to not fund the development of FCS MGVs could be a more contentious issue in Congress. One combat vehicle in the FCS MGV family—the Non-Line-of- Sight Cannon (NLOS-C)—is a congressionally-mandated program, requiring the Army to produce a total of 18 NLOS-C Initial Production Platforms by the end of 2011. One possible point of contention could be the necessity to build all 18 of these NLOS-Cs if DOD does not intend to procure additional NLOS-Cs. Other potential issues include the possible resumption and continuation of the M-1 Abrams and M-2 Bradley lines if the Army does not indentify successors during the re-evaluation of its vehicle modernization program. In regards to the Army's re-evaluation of its vehicle modernization program, Congress might be expected to play a significant role in this process, as it not only may provide them with an opportunity to shape Army capabilities and force structure, but could also ensure that the eventual acquisition of any new ground combat systems is in line with proposed acquisition reform measures. The conference report on the annual congressional budget resolution ( S.Con.Res. 13 ) includes a recommended ceiling on FY2010 budget authority and outlays for the "national defense" function of the federal budget that matches President Obama's request. The budget resolution's ceilings on budget authority and outlays for national defense and other broad categories (or functions) of federal expenditure are not binding on the Appropriations committees, nor do they formally constrain the authorizing committees in any way. However, the budget resolution's ceilings on the so-called "050 function"—the budget accounts funding the military activities of DOD and the defense-related activities of the Department of Energy and other agencies—have in the past indicated the general level of support in the House and Senate for the President's overall defense budget proposal. The House version of the budget resolution ( H.Con.Res. 85 ), adopted April 2, set the FY2010 budget authority ceiling for the 050 "national defense" function at $562.0 billion and provided a separate allowance of $130.0 billion—the amount requested for war costs—under function 970 ("overseas deployments and other activities"). Those two ceilings add up to $692.0 billion. The Senate version of the budget resolution ( S.Con.Res. 13 ), also adopted April 2, set the budget authority ceiling for the 050 national defense function at $691.7 billion and did not set a separate ceiling for overseas deployments. In the reports accompanying their respective resolutions, the House and Senate Budget committees each indicated that the ceilings recommended were intended to accommodate President Obama's FY2010 DOD budget request. The conference report on the final version of the budget resolution ( H.Rept. 111-89 ) follows the House version's pattern of setting separate ceilings for a national defense base budget and for overseas deployments. The House adopted the joint resolution April 29 by a vote of 233-193. The Senate adopted it the same day by a vote of 53-43. The conference report on the defense authorization bill ( H.Rept. 111-288 ) was filed on October 7, 2009 and was adopted by the House on October 8 by a vote of 281-146. The Senate adopted the conference report October 22 by a vote of 68-29 and the President signed it into law ( P.L. 111-84 ) on October 28. The conference report authorizes a total of $680.2 billion for military activities of the Department of Defense (DOD) and defense-related activities of other federal agencies. The total authorization, which is $14.9 million higher than the Obama Administration requested, includes $550.2 billion for the so-called "base budget"—all DOD activities other than combat operations in Iraq and Afghanistan—and $130.0 billion for "overseas contingency operations," including operations in Iraq and Afghanistan. The House version of the FY2010 defense authorization bill, H.R. 2647 , was reported by the House Armed Services Committee on June 18, 2009 ( H.Rept. 111-166 ) and passed by the House June 25 with relatively few changes. It would have authorized $550.5 billion for the DOD base and defense-related programs of the Energy Department, which is $348.0 million more than the President requested. For war costs, the House bill would have authorized $130 billion, as requested, but would redistribute some funds within that total bringing the total authorized by the House-passed bill to $680.5 billion. On July 2, 2009, the Senate Armed Services Committee reported its version of the FY2010 defense authorization bill, S. 1390 ( S.Rept. 111-35 ), which would have authorized $551.1 billion for the DOD base budget and related Energy Department programs, $864.8 million more than the President requested. The Senate bill would have authorized $129.3 billion, for war costs, which is $740 million less than the request, bringing the total authorized by S. 1390 to $680.3 billion. The Senate bill also would require the Administration to cut a total of $500 million (to reflect unspecified "management efficiencies") from the total DOD authorization, thus reducing the bill's total authorization to $679.8 billion. The Senate passed the bill July 23. Funding levels authorized by H.R. 2647 as passed by the House, by S. 1390 as passed by the Senate, and by the conference report on H.R. 2647 are presented in Table 7 . Funding levels authorized for selected programs by each version of the authorization bill are summarized in Appendix . Following are highlights of the versions of the FY2010 defense authorization bill passed by the House and Senate as well as the conference report: Both the House and Senate versions of the authorization bill supported most elements of the Obama Administration's plan to shift the focus of anti-missile defense efforts by slowing or terminating work on some technologically advanced systems while increasing the planned procurement of Aegis and THAAD interceptors designed to cope with near-term missile threats. During House action on H.R. 2647 , the $9.3 billion missile defense program was the component of the DOD budget request that was most extensively debated, both in the Armed Services Committee and on the House floor. Several Republican-sponsored amendments that would have increased funding for various missile defense programs were rejected in both venues. The Senate bill also supported the Administration's principal missile defense decisions. Like both House and Senate versions of the bill, the conference report supports Secretary Gates's proposals to cap the number of Ground-based Interceptors (GBI) deployed in Alaska and California at 30, instead of deploying a total of 44. Secretary Gates, Missile Defense Agency chief Lt. Gen. Patrick J. O'Reilly and other military commanders have said that 30 operationally effective GBIs are sufficient given the current and prospective threat over the next five years or so from Iran and North Korea. Secretary Gates has said that the cap at 30 would be revised upward if the threat assessment changes. Others, however, believe the threat of long-range ballistic missile attack from Iran and North Korea is more imminent and question whether 30 deployed GBIs are sufficient. However, the conference report would add to the budget request authorization for $20 million to sustain the vendor base for components that could be used to manufacture additional GBIs. The conferees said a GBI test plan adopted by DOD late in the summer of 2009 would require purchase of seven additional GBIs. The conference report also would require the Secretary of Defense not to allow a break in the GBI production line until DOD completes a detailed review of the ground-based missile defense system, including an assessment of the number of GBI's needed to sustain it over 20 years of service (Sections 232-233). Like both House and Senate versions of the bill, the conference report supports the Administration's proposal to cancel the Multiple Kill Vehicle (MKV) and Kinetic Energy Interceptor (KEI) programs and construction of a second Airborne Laser (ABL) prototype aircraft (although the existing ABL plane would be retained for research). The Government Accountability Office (GAO) has faulted each of these programs for significant technical, cost and operational challenges. Some missile defense supporters contend that cancelling the KEI and relegating the ABL to a research program will leave the country without an active program to destroy attacking ballistic missiles in their boost-phase or shortly after their launch. Secretary Gates has said that the requirement for a boost-phase BMD program is being looked at as part of the current BMD Review and the Quadrennial Defense Review (QDR), expected to be completed later this year. Meanwhile, the Administration has said it wants to pursue an Ascent Phase BMD program designed to destroy attacking missiles shortly after their rocket motors burn out in the boost-phase. Because this effort is new, few details are available. Like the House version of the bill, the conference report on H.R. 2647 would require the Defense Secretary to report to Congress the details and strategy behind the Ascent Phase effort (Section 238). When the Obama Administration released its FY2010 defense budget request, it still was reviewing the Bush Administration's plan to deploy in Europe a radar in the Czech Republic and interceptor missiles in Poland that are intended to intercept missiles launched from Iran at Europe or the United States. According to Secretary Gates, unspent funds appropriated in FY2009 for the so-called "third site" (the other two being the GBI sites in Alaska and California) plus an additional $50.5 million requested in the FY2010 budget would allow the project to go forward if the Polish and Czech parliaments ratify basing agreements reached with the United States in 2008. But the Administration also said that the proposed third site is one of several options on the table for dealing with potential missile attacks from Iran. The House and Senate bills both would authorize a total of $353.1 million from funds available for fiscal years 2009 and 2010 to develop missile defenses in Europe either to continue with research, development, test and evaluation of the proposed radar and interceptor site in Poland and the Czech Republic pending Czech and Polish ratification of the agreements, or to develop an alternative integrated missile defense system to protect Europe from threats posed by all types of ballistic missiles, subject to certain conditions. On September 17, 2009, President Obama cancelled the plan to deploy a long-range missile defense system in Poland and the Czech Republic. Instead, DOD plans to rely on a network of mobile radars and interceptor missiles, including cruisers and destroyers equipped with the Aegis radars and SM-3 missiles to defend Europe against Iranian missiles of short and medium range. The President said U.S. intelligence agencies had concluded that Iran's effort to develop long-range ballistic missiles was taking longer than had been assumed while it was moving more quickly than had been forecast to develop missiles that could fly far enough to hit Europe, but not far enough to hit U.S. territory. The conference report authorizes DOD to use a total of $309.0 million from funds available in fiscal years 2009 and 2010 for the European defense system proposed by the President in September, except for any required military construction. The conference report also would require an independent assessment of the cost and effectiveness of the new plan. As for military construction for the European defense system, the conference report would rescind $151.2 million authorized in FY2009 for construction in Poland and Czech Republic associated with the old plan. Construction projects required by the new European missile defense plan would have to be requested and authorized by Congress in the year the work was expected to begin, the conferees said. The conference report also adds $23.2 million to the $168.7 million requested for procurement of SM-3 missiles. It also requires from the Navy (as one part of a broader, long-term plan for shipbuilding) a report on the number of additional Aegis warships required by the new European defense plan based on the SM-3 missile. Both House and Senate versions of the authorization bill supported the Administration's budget proposal for major shipbuilding programs. However, the Senate Armed Services committee was more critical than its House counterpart of the Navy's management of its shipbuilding program for surface combatant ships. The Senate version, which was debated as S. 1390 , included a provision that would require the Navy to prepare an detailed acquisition strategy for purchasing surface combatants, supported by a battery of analyses. The conference report expanded the scope of the required report. The Senate bill also would have repealed a provision of the FY2008 national defense authorization act ( P.L. 110-181 ) that would require that future cruisers, destroyers and large amphibious landing ships be nuclear-powered. The conference report did not include that provision. Both versions of the bill accepted the decision, recommended by senior Navy leaders in 2008 and embraced by the Obama Administration, to buy only three guided missile destroyers of the DDG-1000-class, instead of the seven ships that had been planned, and to resume procurement of DDG-51 class destroyers, 62 of which are in service or under construction. Accordingly, the House and Senate versions each would have authorized, as requested, $1.08 billion to complete the third DDG-1000, $539 million to continue development of that class and $1.91 billion for one DDG-51. The House bill would have added $100 million to the $329.0 million requested for components to be used in DDG-51s to be funded in future budgets, but this was dropped from the conference report. Both versions of the bill authorized, as requested, $340.0 million to continue development of the CG(X) class of cruisers to replace existing Aegis cruisers which are slated for retirement beginning in the early 2020s. However, the conference report retains a Senate provision that would allow the Navy to spend only half those funds until the service produces the surface combatant acquisition plan (and supporting analyses) that the bill requires. The conference report would add $15 million to the portion of the CG(X)-related R&D budget that funds development of the very powerful radar planned for the ship (instead of adding $50 million as the Senate bill did). As requested, both bills temporarily waived a law requiring the Navy to keep 11 carriers in service, thus allowing the number of flattops to drop to 10 between 2013, when the Enterprise is slated for retirement after 48 years of service, and 2015, when the Gerald R. Ford is scheduled to enter the fleet. The older ship would have required a very expensive overhaul if it had to be kept in service during those two years. The House Armed Services Committee questioned Secretary Gates's recommendation to slow the rate at which future carriers are built to replace those being retired, a policy that would permanently reduce the carrier force from 11 ships to 10 after 2040. The House committee added to H.R. 2647 a provision (Section 122) requiring the Navy to submit a report on the effects of funding a new carrier at the proposed slower rate of one ship every five years instead of the previous plan under which some future carriers would have been funded only four years apart. The House provision also bars the Navy from spending funds authorized by the bill in a way that would make it impossible to fund the next two carriers four years apart, as had been planned. The conference report requires the report on the effect of slowing the rate of carrier construction, as described in the House bill. The conference report did not include the associated House provision restricting the use of funds, but conferees included report language saying they "expect" the Navy not to take any action that would preclude building the next two carriers at four-year intervals until it completes the required report. Both versions of the bill authorized construction of three additional Littoral Combat Ships, as requested. H.R. 2647 also included a provision, requested by the Administration, that would liberalize the cost-cap of $460 million per LCS set by existing law, by allowing the cap to be adjusted for inflation and by excluding certain costs. However, the House committee also added to that bill a provision (Section 121) authorizing the Navy to compile a technical data package that would allow it to put the contracts for these ships up for bid by other contractors if the two shipyards currently building LCS ships would not contract to build the FY2010 ships within the limits of the revised cost cap. On September 16, 2009, the Navy announced a restructuring of the LCS program, cancelling its plan to build several ships to each of two competing designs before selecting one of the two for further production. Under the Navy's new plan, it would choose between the two designs during FY2010. In addition, the Navy announced that, instead of buying three LCS ships in FY2010 (as provided for in the budget request), it would contract with the winning contractor to buy two ships in FY2010 as part of a so-called "block buy" of up to 10 ships to be funded through FY2014. The conference report authorizes the revised program, including two ships to be funded in FY2010 for which it authorizes the same amount as had been requested for three LCS vessels ($1.38 billion). It also would raise the cost-cap on the ships (while giving the Secretary of the Navy significant discretion to waive the cap) and it would require the competing shipyards' bids to include delivery to the Navy of a technical data package that would allow it to put the contracts for these ships up for bid by other contractors. The House and Senate versions of the bill both concurred in Secretary Gates's recommendations to terminate development of the CSAR-X combat rescue helicopter and the VH-71 presidential helicopter and to end procurement of C-17 wide-body cargo jets. Each bill rejected several of Gates's recommendations concerning combat aircraft. Neither the House nor Senate version of the bill authorized funds for procurement in FY2009 of additional F-22 fighters—funding for which was adamantly opposed by the President. By a vote of 31-30, the House Armed Services Committee had added to the Administration's request an authorization of $368 million to buy long lead-time components that would allow procurement in FY2011 of 12 additional F-22 fighters. H.R. 2647 would have funded the F-22 add-on without increasing the total amount authorized by cutting $368.8 million from the $5.5 billion requested for environmental cleanup of Energy Department sites associated with the nuclear weapons program. The Senate Armed Services Committee voted 13-11 to include in S. 1390 authorization of $1.75 billion to purchase seven additional F-22s in FY2010. Of that total, $32.3 million was money appropriated for F-22 procurement in FY2009 but not spent by the Obama Administration. In floor action, however, by a vote of 58-40, the Senate adopted an amendment to the bill that would reverse the committee's action, stripping the $1.75 billion from the F-22 program and reallocating it to the budget accounts the Armed Services Committee had reduced to cover the cost of the F-22 addition. The Senate acted after President Obama said unequivocally that he would veto any bill that would fund additional F-22s. The conference report dropped the $368 million for long lead-time procurement the House bill would have authorized. However, it retained in modified form a House provision that would require the Secretary of the Air Force to ensure the preservation of unique tooling that would be needed to resume F-22 production in the future. Rejecting a position taken by both the Bush and Obama Administrations, the conference report added to the budget request authorization of funds ($560 million) to continue developing an alternate engine for the single-engine F-35 Joint Strike Fighter. H.R. 2647 would have added a total of $603 million to continue developing the alternate engine and prepare for its production. The bill would have offset that increase by cutting from the request two of the 30 F-35s requested (a $308 million reduction) and approving only two-thirds of a proposed management reserve fund for the program (a further reduction of $156 million). The Senate Armed Services Committee included in S. 1390 an increase of $438.9 million to continue development of the alternate engine, offsetting that addition by cutting the proposed management reserve by $156 million, the same amount the House bill cut from that request. Facing an Administration threat to veto any defense bill that funded continuation of the alternate engine project, the Senate adopted by voice vote an amendment to S. 1390 eliminating authorization to continue work on the alternate engine. This came after it rejected by a vote of 38-59 an amendment that would have reaffirmed the Armed Services Committee's action. The House bill would have delayed Secretary Gates's plan to retire 249 older combat jets, most of which are assigned to Air Force Reserve and Air National Guard units. It would have shifted from other parts of the Air Force budget request a total of $344.6 million to continue operating those planes. The bill (Section 1047) also would have prohibited their retirement until 90 days after the Secretary of the Air Force submits to the Senate and House Armed Services committees a report detailing how the Air Force will fill the gaps left by the retirement of those planes and what missions it will assign to the bases and personnel associated with the aircraft. The conference report retains the requirement for a report, but would bar retirement of the planes for 30 days after the report (rather than 90) and does not fund continued operation of the planes in the interim. The House version of the bill also would have required (Section 133) the Secretary of Defense to report on alternative plans to prevent a prospective shortfall in Air Force fighters (as the service retires old planes more quickly than it fields new F-35s) by purchasing so-called "4.5 generation" fighters, that is, types currently in service, such as F-15s, F-16s and F/A-18s, that are equipped with improved radars and other upgrades. The conference report retains that provision with modifications (Section 131). The House and Senate versions of the bill each included provisions designed to put pressure on DOD to sign a multi-year contract for additional F/A-18E/F fighters, in order to reduce a prospective shortfall in carrier-based fighters. The House bill would have authorized a multi-year contract to buy additional F/A-18 variants (including the single-seat "E" model, the dual-seat "F" model and the EF-18G, which is a version of the plane equipped to jam enemy radars). It also would have increased from $51.4 million to $159.4 million the amount authorized in FY2010 for long lead-time components to be used in planes that could be funded in FY2011. The House bill directed the Congressional Budget Office to compare, in terms of cost and effectiveness, the purchase of new F/A-18E/Fs with the refurbishing of older model F/A-18s. It also added to the bill a provision (Section 1051) expressing the sense of Congress that the Navy should field at least 10 carrier air wings, each equipped with at least 44 strike fighters. The Senate Armed Services Committee, predicting that ongoing DOD studies would make the case for a signing a multi-year contract to buy new F/A-18E/Fs rather than refurbishing older planes, argued that the Navy should buy 18 of the "E" and "F" model planes in FY2010—as it earlier had planned to do—rather than reducing the production run to nine planes, as the Administration's budget proposed. Accordingly, S. 1390 would have authorized $1.57 billion for 18 F/A-18E/Fs, an increase of $560 million over the request. The conference report authorizes a multi-year contract for F/A-18 type aircraft and authorizes funding in FY2010 for 18 of the planes, rather than the 9 requested, adding $512.3 million to the amount requested. The House and Senate Armed Services committees both endorsed Secretary Gates's recommendation to terminate development within the Army's Future Combat Systems (FCS) program of several new kinds of manned ground combat vehicles, including a self-propelled howitzer. However, both panels proposed reductions in the amounts authorized for the payments required to cancel existing contracts on those projects. The House version of the bill authorized $100 million of the $426.8 million requested to terminate those parts of the program, arguing that unspent FCS funds appropriated for FY2009 would cover the balance of the termination costs. The Senate committee cut $381.8 million of the FCS termination request and authorized the remaining $45 million to continue developing "active protection systems"—small weapons mounted on combat vehicles to intercept approaching missiles. The conference report made smaller reductions in the proposed FCS termination costs than either the House or Senate bill, authorizing $215.8 million of the $426.8 million requested to terminate the ground combat vehicles projects. Like the House and Senate versions of the bill, the conference report authorizes the $2.12 billion requested to continue developing other components of FCS. The conference report incorporates a Senate provision (which was very similar to a House provision) requiring the Army to create two new programs—one to develop a new self-propelled cannon and one to develop a family of other ground combat vehicles—and to report on its plans to acquire those new systems. Like the Senate bill, the conference report also would require DOD to contract with a non-governmental organization to assess the research needed to develop technologies that would be required by a new generation of ground combat vehicles. In its report on H.R. 2647 , the House Armed Services Committee offered specific recommendations for how the Army should modernize its combat vehicle fleet in the absence of FCS, taking into account the large amounts spent to modernize existing vehicles in recent years. The committee recommended that current fleet of M-1 tanks, Paladin cannons and Stryker armored combat vehicles should be given upgrades—including some technologies developed as part of FCS, such as the "active defense system" intended to shoot down approaching anti-tank missiles. Two other types of armored carriers—Bradleys and the older M-113s—should be candidates for replacement by new vehicles, the committee said. The conference report directed the Army to give priority to upgrading the existing Paladin howitzer. As authorized by both the House and Senate versions of the bill, the conference report authorizes, as requested, $293.5 million to continue development of the Marine Corps' Expeditionary Fighting Vehicle (EFV), an armored amphibious troop carrier designed to carry Marines ashore from transport ships more than 20 miles offshore. The House Armed Services Committee, which has criticized the EFV design as being too vulnerable to so-called improvised explosive devices (IEDs), insisted that the Marines explore various modifications that would give troops inside an EFV at least the same level of protection against IEDs as they would have riding in the heaviest Mine-Resistant, Ambush-Protected (MRAP) vehicles. The committee directed the Secretary of the Navy to give the congressional defense committees a report on EFV survivability options. Like the House and Senate bills, the conference report authorizes, as requested, a total end-strength of 1.41 million personnel for active-duty members of the four armed forces, an increase of 40,227 over the FY2009 level. This total includes limits of 547,400 for the Army and 202,100 for the Marine Corps, which mark the achievement by those two services three years earlier than planned of a decision to increase their combined end-strengths by a total of 92,000 personnel over their FY2007 levels. The conference report, like the House and Senate bills, also authorizes the Army to increase its end-strength by an additional 30,000 active-duty personnel through FY2012. Like the House and Senate versions, the conference report also authorizes a 3.4% increase in basic pay for military personnel, which is one-half of a percentage point above the Administration's request. This would be the eleventh consecutive year that legislation has given the military a pay raise that equals or exceeds the Labor Department's Employment Cost Index (ECI), a measure of private sector wage growth. The House bill would freeze implementation of the National Security Personnel System (NSPS) and the parallel Defense Civilian Intelligence Personnel System (DCIPS), both of which are pay-for-performance systems affording managers more flexibility in hiring and determining compensation for employees than the federal government's General Schedule. The Senate version of the bill, was silent on the DCIPS but would have eliminated NSPS unless the Secretary of Defense certified that its termination would not be in the best interest of DOD and provided a schedule for making changes "to improve the fairness, credibility and transparency" of NSPS. The conference report terminated NSPS and required that all employees currently covered by that system transition by January 1, 2012 back to their previous personnel system. The House bill would have terminated all on-going "A-76" competitions to determine whether jobs currently performed by federal employees should be out-sourced to private contractors. The Senate bill would have terminated A-76 competitions that had exceeded certain time limits. The conference report terminates no on-going competitions, but imposes a moratorium on beginning new A-76 competitions until DOD complies with certain existing legal requirements, a contingency which, in effect, would bar new competitions through October 15, 2010, according to the conferees. The House version of the bill would have funded an initial increment of an initiative, proposed by President Obama, to expand the number of disabled military retirees entitled to "concurrent receipt" of both their military retired pay and disability-based stipends from the Department of Veterans Affairs. Since 2001, Congress has taken several steps to liberalize a general policy (the roots of which date from 1891) requiring disabled military retirees to forego an amount of their retired pay equal to the amount of any veterans disability stipend. Under congressional budget rules, the cost of the Administration proposal would have to be offset by a either a reduction in already-mandated expenditures or an increase in revenue. A funding offset large enough to cover the cost of the President's concurrent receipt proposal through FY2010 was provided by a bill ( H.R. 2990 ) the House passed June 24 by a vote of 404-0. The text of H.R. 2990 was incorporated into the defense authorization bill by H.Res. 572 , the rule governing floor action on the defense bill, which the House adopted June 24 by a vote of 222-202. Neither the Senate version of the bill nor the conference report acted on the concurrent receipt issue. The conference report includes, in modified form, several provisions in the Senate version of the bill that amend the Military Commissions Act of 2006 ( P.L. 109-366 ), which codified rules under which military tribunals could try non-U.S. citizens detained in the course of the war against terrorism (Sections 1801-07). Regarding military commissions, some key provisions of the final version of H.R. 2647 include the following: Military commissions would have jurisdiction over "alien unprivileged enemy belligerents," a class of persons defined somewhat differently from "alien unlawful enemy combatants," the class of persons subject to military commissions under current law. Under the provision in the conference report, membership in al Qaeda at the time an offense occurred would be sufficient to meet the definition, even if the person did not engage in or support hostilities against the United States. Confessions allegedly elicited through cruel, inhuman, or degrading treatment, would be inadmissible even if they were made prior to the enactment of the Detainee Treatment Act of 2005 (42 U.S.C. § 2000dd), which bars the use of such confessions only if they were made after its enactment. The conference report also bars the admission of any other statement of the accused unless the military judge finds it reliable and voluntarily given. The requirement that the statement be voluntary would be waived if it were taken in a combat circumstances. In the case of hearsay evidence, the party offering the evidence would have the burden of demonstrating that it is reliable, whereas under current law, the opponent has the burden of proving that it is unreliable. The conference report includes a requirement that the judge consider wither the declarant's will was overborne. The prosecutors' obligation to disclose exculpatory information would include mitigating evidence, and the obligation would extend to all information that is known or reasonably should be known to any government officials who participated in the investigation and prosecution of the case. The conference report provides for additional counsel for those charged with capital crimes, and recommends that the defense be fully resourced, particularly in capital cases. The conference report retained the Court of Military Commission Review, created by the 2006 Military Commissions Act to review any judgment rendered by a military commission. The Senate bill would have assigned that role to the Court of Appeals for the Armed Forces. The conference report contains a detailed provision governing the use of classified information, establishing procedures for military commissions that are similar to the procedures used in federal courts and courts-martial. The conference report on H.R. 2647 retained, with modifications, a provision of the Senate bill that would prohibit the use of contract employees to conduct interrogations of individuals detained during hostilities (Section 1038). Unlike the Senate version of the bill, in which the prohibition was absolute, the conference report would allow the Secretary of Defense to waive the ban, with the proviso that he notify Congress within five days of issuing such a waiver. The conference report would prohibit the President (thru December 31, 2010) from releasing in the United States, its territories or possessions any non-U.S. citizen detainee held at the Guantanamo Bay Naval Station. It also would prohibit, for the same time period, transfer of any Guantanamo detainee to those areas until 45 days after the President has submitted to the congressional defense committees a plan for the disposition of such person, including an assessment of the risks entailed by the proposed action and a plan for mitigating those risks (with an estimate of the associated costs), and the location or locations to which the detainee would be transferred. The House version of the bill included a prohibition that was similar except that it was open-ended (i.e., did not lapse on December 31, 2010) and it would have required 120 days' prior notice to Congress. The conference report also incorporated several provisions of the House-passed version of the bill (some of them with modifications) that deal with the treatment of detainees. These provisions would: Prohibit of reading Miranda rights to any foreign belligerent, privileged or unprivileged, captured outside the United States, unless a court rules otherwise; and require a report on how the reading to detainees of their "Miranda rights" may affect military operations in Afghanistan, including any effects on intelligence collection through interrogations (Section 1040); Require DOD to videotape or otherwise electronically record strategic intelligence interrogations of persons in its custody, under its effective control, or under detention at a DOD theater-level detention facility, with the proviso that the Secretary of Defense could waive the requirement and notify Congress (Section 1080); Require that the International Committee of the Red Cross (ICRC) be notified whenever a detainee comes into U.S. custody or under U.S. control at the detention facility at Bagram Air Base in Afghanistan. The ICRC would have access to such detainees "as soon as practicable" after submitting a request to visit a detainee. The House version of the bill had required notification of the ICRC within 24 hours of the detainee's coming into U.S. custody (Section 1039). The conference report included, with modifications, provisions of the Senate-passed bill relating to so-called hate crimes. The Senate provisions, in turn, largely mirrored the provisions of H.R. 1913 , passed by the House April 29, 2009. Current law defines hate crime as any crime against either person or property in which the offender intentionally selects the victim because of the victim's actual or perceived race, color, religion, national origin, ethnicity, gender, disability, or sexual orientation. Hate crimes are not separate and distinct offenses. Rather, hate crimes are traditional crimes, during which the offender is motivated by one or more biases that are considered to be particularly reprehensible and damaging to society as a whole. Federal jurisdiction over hate crime, however, is limited to certain civil rights offenses, which are considered to be "hate crimes" when it is determined that the offender was motivated by a bias against race, color, religion, national origin, and, in limited instances, disability. During Senate debate on the defense authorization bill, it adopted by voice vote an amendment—similar to H.R. 1913 —that would broaden federal jurisdiction over hate crimes by authorizing the Attorney General to provide assistance (technical, forensic, prosecutorial, or other), when requested by a state, local, or tribal official, for crimes that (1) would constitute a violent crime under federal law or a felony under state or tribal law, and (2) are motivated by the victim's actual or perceived race, color, religion, national origin, gender, sexual orientation, gender identity, or disability. The Senate also adopted, by a vote of 78-13, an amendment to the hate crimes amendment that would prohibit the implementation of any provision of the amendment in a manner that would violate or burden the exercise of an individual or group's First Amendment rights to free speech and association provided the actions in question were not intended to plan or incite violence against another individual. Although supporters of the amendment argued that greater federal involvement would ensure that hate crimes are systematically addressed, some opponents contended that additional federal penalties for hate crimes would be redundant and largely symbolic, as penalties for those crimes already exist under state law. The Senate rejected by a vote of 29-62 an alternative amendment that would have required a report on state-level hate crimes investigations, prosecutions, and sentencing. The conference report on H.R. 2647 dropped a Senate provision authorizing the death penalty for certain hate crimes, but retained a Senate provision prohibiting assault and battery against a person on account of their military service or status as a member of the U.S. Armed Forces. The conference report also added to the Senate-passed language provisions that would (1) define the term "state" to include the District of Columbia, Puerto Rico, and any other territory or possession of the United States, (2) establish a seven-year statute of limitations for hate crimes that did not result in death, and (3) require the U.S. Sentencing Commission to produce a report on mandatory minimum sentencing provisions under federal law. Current statute (Section 2905 of the Defense Base Closure and Realignment Act of 1990) requires the Secretary of Defense to seek fair market value prior to conveying real property (land or permanent structures) declared surplus during the current round of military base closures to local authorities. Section 2705 of the conference report eliminated this requirement on condition that the authority to which the property is transferred adhere to certain restrictions in its redevelopment. The bill also allows the Secretary to accept, as consideration for the property's value, a portion of the third-party sale or lease revenues collected by the property's redevelopment authority, payment in kind (in the form of goods and services), other real property or property improvements, or other considerations the Secretary considers to be appropriate. Sections 2831 through 2837 contain provisions related to military force realignment on Guam, which includes the movement of forces forward from domestic bases and the redeployment of Marine units from their garrisons in the Japanese Prefecture of Okinawa to new locations in the Territory. The bill appoints the Deputy Secretary of Defense as leader of the interagency Guam Executive Council. It also labels any corporation, agency, etc., able to build military family housing or provide utilities to military installations on Guam as "special purpose entities" (SPE) and requires the Secretary of Defense to report on how he intends to employ SPEs in support of the redeployment. The bill requires the use of DOD's "unified facilities criteria" (UFC) as the minimum construction standard for all projects funded by contributions made by the Government of Japan for the relocation. Local wage rates would apply to construction workers employed on relocation projects, and the bill stipulates a number of measures that would emphasize the recruitment of the US construction workers before H2B visa waivers could be issued to foreign laborers. The bill also creates an Interagency Coordination Group for Guam Realignment, chaired by the DOD Inspector General (IG) that includes the IGs of other federal agencies. The Group would report annually to the congressional defense committees on realignment activities. Following are among the other issues on which the Senate took action during debate on the FY2010 defense authorization bill. None of them were dealt with in the conference report on H.R. 2647 . The Senate rejected an amendment that would allow citizens who have obtained permits from their home states to carry concealed firearms to carry concealed firearms in any other state that issues such permits. The amendment garnered 58 "aye" votes and 39 "nays"; however, it was debated under an agreement stipulating that the amendment would be agreed to only if it obtained 60 or more "yeas." By voice vote, the Senate adopted an amendment expressing the sense of the Senate that the follow-on agreement to the expiring Strategic Arms Reduction Treaty (START) should not include limitations on ballistic missile defense, military capabilities in space or advanced conventional weapons. The amendment also requires a presidential report on plans to improve the safety and reliability of U.S. nuclear weapons and to modernize the Energy Department's nuclear weapons complex. The version of the amendment that was adopted supplanted an earlier version which would have barred the use of funds to implement a START follow-on agreement unless (1) the treaty placed no limits on missile defenses, space capabilities or advanced conventional weapons and (2) the Administration's FY2011 budget provides sufficient funding for the Energy Department's nuclear complex to maintain the reliability and safety of remaining U.S. nuclear forces and to modernize the weapons complex. The Senate rejected by a vote of 43-54 an amendment expressing the sense of the Senate that North Korea should be officially designated as a state sponsor of terrorism. North Korea had been so-designated by the State Department, but that designation was rescinded in October 2008. Subsequently, the Senate adopted, by a vote of 66-31, an amendment requiring a review of North Korea's conduct to determine whether it should be re-listed as a state sponsor of terrorism. In lieu of a conference report on the FY2010 defense appropriations bill (H.R. 3326), House and Senate negotiators agreed on a compromise final version of the bill that was drafted as an amendment to the Senate-passed version. The House passed the compromise version December 16 by a vote of 395 to 34. The Senate passed it on December 19 by a vote of 88-10 and the President signed the bill later on December 19 (P.L. 111-118). As enacted, the bill supports proposals by the Obama Administration to terminate some major weapons programs designed for traditional combat—such as the Air Force's F-22 fighter. It funds several other programs the Administration also wanted to cancel, including development of an alternate engine for the F-35 Joint Strike Fighter, continued production of the C-17 cargo plane and continued development of the VH-71 presidential helicopter. The enacted version of H.R. 3326 does not reflect any additional funding requirements associated with President Obama's decision, announced December 1, to increase by 30,000 the number of U.S. troops deployed in Afghanistan. The bill does include funds to pay for operations in Afghanistan and Iraq that already were underway, prior to the December 1 announcement that additional forces would be deployed. For additional information, see " War Costs and Issues ," above. The enacted version of H.R. 2236 included provisions temporarily extending—in most cases through February 28, 2010—current policies or expiring provisions of law relating to ten non-DOD federal programs or activities. For additional information, see " Temporary Extensions of Non-Defense Programs ," above. The version of the FY2010 defense appropriations bill which the House passed July 30 by a vote of 400-30 included funds to continue development of an alternate engine for the F-35 Joint Strike Fighter ($560 million), continue production of the C-17 cargo plane ($674 million), and spend an additional $400 million on the VH-71 executive helicopter program. The Administration opposed all of these actions, two of which—the alternate engine and the VH-71—drew threats that the President might veto a bill that funded them. The House-passed bill also would have added to the budget request nine F/A-18E/F fighters ($495 million), one Littoral Combat Ship ($540 million) plus $240 million to fully fund the three LCS ships requested, and a third high-speed transport ship ($180 million) in addition to the two requested (one apiece for the Army and Navy). As reported by the House Appropriations Committee, H.R. 3326 also would have added to the budget request funds to continue production of the F-22 fighter, which the Obama Administration—like the preceding Bush Administration—had decided to terminate. President Obama also had said, in unusually explicit terms, that he would veto any defense bill that provided funding for continued F-22 production. Before the House passed the bill, it adopted by a vote of 269-165 an amendment deleting the additional F-22 procurement funds. In its report, the House committee noted that the Administration had not submitted to Congress the annual Selected Acquisition Reports (SARs), which provide cost and schedule data on major equipment purchases. Noting that the Government Accountability Office (GAO) relied on data from these reports to perform its annual assessment of major weapons programs, the committee directed the Secretary of Defense to provide "SAR-like" data—including future budget projections—to GAO in time for that agency to present Congress with its annual program review in March 2010. Like the House-passed version of H.R. 3326 , the version of the FY2010 defense appropriations bill passed by the Senate on October 6 (which the Senate Appropriations Committee had reported September 10; S.Rept. 111-74 ), concurred with most of the Obama Administration's proposals to terminate or reduce funding for several high-profile weapons programs including production of the VH-71 White House helicopter and F-22 fighter. However, the Senate's version of the bill also concurred in the Administration's decision to terminate development of an alternate engine for the F-35 fighter, whereas the House version of the bill added funding to continue that effort. Like the House-passed bill, the Senate version also would have added funds to buy 18 F/A-18E/F Navy fighters, instead of the nine planes requested by the Administration. The Senate version would have funded these aircraft ($512.3 million) in the section of the bill that funds war costs. It also would have sustained the production line for the C-17 cargo plane, which is slated to shut down, by adding to the budget request funds for 10 C-17s ($2.50 billion). The House bill would have added funds for three C-17s. Funding levels appropriated by the House and Senate versions of H.R. 3326 and by the compromise version of the bill are summarized in Table 8 , below. Funding levels authorized and appropriated for selected programs are summarized in the Appendix . Following are highlights of H.R. 3326. The House and Senate versions of the bill generally supported the Administration's decisions to slow or terminate some technologically advanced anti-missile systems while increasing the procurement of the Navy's ship-borne Aegis and the Army's ground-based THAAD systems, both of which are designed to cope with near-term missile threats. The enacted version of the bill adds a total of $77.6 million to the amounts requested for Aegis, including: $57.6 million (in addition to $168.7 million requested) to purchase SM-3 interceptor missiles used by the Aegis system; $20 million (in addition to $257.4 million requested) for development of improved variants of the SM-3; and The final bill did not include $41 million added by the Senate bill for the radar component of the land-based THAAD system. In OMB's September 25 Statement of Administration Policy (SAP) regarding the Senate bill, the Administration opposed the additional funding for the THAAD radar, saying it was premature. Like the House version of H.R. 3326, the enacted version added to the budget request $80 million to adapt to other missile defense programs technologies that were fostered by the program to develop a Kinetic Energy Interceptor (KEI)—a very fast missile intended to intercept enemy missiles early in their flight. Defense Secretary Gates had recommended cancelling the program on cost and technical grounds. The House had rejected by a vote of 124-307 an amendment that would have dropped the KEI funding from its version of the bill. The Statement of Administration Policy (SAP) on H.R. 3326 issued by the Office of Management and Budget (OMB) on July 29, the Administration strongly objected to a provision of the House bill that would have rescinded $114.7 million that had been appropriated in FY2009 for work on a European missile defense site and $40.2 million that had been appropriated for the projected Space Tracking and Surveillance System (STSS), which is intended to be a network of missile tracking satellites. These were among rescissions of prior appropriations included in the House version of the bill with a total value of $1.39 billion, which reduced the budgetary impact of the bill by that amount. The enacted version of the bill did not include the European site or STSS among the programs from which it rescinds a total of $1.24 billion in prior-year appropriations. On September 17, 2009, President Obama cancelled the plan to deploy a missile defense system in Poland and the Czech Republic, designed to intercept long-range missiles launched from Iran at U.S. territory. The system would have used a two-stage version of the three-stage "ground-based interceptor" (GBI), 30 of which currently are deployed in Alaska and California. In place of that system, the Administration announced plans to acquire a network of mobile radars and interceptor missiles, including the SM-3 intended to defend Europe against Iranian missiles of short and medium range. The President said U.S. intelligence agencies had concluded that Iran's effort to develop long-range ballistic missiles was taking longer than had been assumed while it was moving more quickly than had been forecast to develop missiles that could fly far enough to hit Europe, but not far enough to hit U.S. territory. Although the Administration cancelled the plan to deploy in Europe a two-stage version of the GBI, it planned to continue developing that weapon. The Senate Appropriations Committee added to the appropriations bill $50 million to sustain a production capacity for those weapons. By voice vote, the Senate adopted an amendment by Senator Joseph I. Lieberman that would require DOD to spend on development of the two-stage GBI at least $50 million (and would give DOD discretion to spend as much as $151 million) of the funds appropriated for missile defense in Europe by H.R.3326 and by the FY2009 DOD appropriations bill. In the "joint explanatory statement" by House and Senate negotiators who drafted the compromise final version of the bill, the Missile Defense Agency is "encouraged" to spend at least $50 million in FY2010 funds to continue the two-stage GBI program. In addition, the statement directs DOD to send the congressional defense committees a plan for continuing development of that weapon and an explanation of how MDA will use development of the two-stage interceptor to modernize the ground-based system currently deployed in Alaska and California. In their explanatory statement, House and Senate negotiators who drafted the compromise bill also directed the Secretary of the Navy to report to Congress on the benefits of using the hull form of a class of ships already being procured as the basis for several classes of ships currently slated for funding in future budgets. Both the House and Senate versions of the bill basically approved the $1.07 billion requested for a third destroyer of the DDG-1000-class, which is the last ship of this type the Navy plans to acquire. The House bill would have trimmed the request by $11 million while the Senate bill would have shifted into the DDG-1000 funding line $320.6 million the budget request includes in a separate line to cover costs associated with building this class of ships that are not allocated to any one vessel. The compromise version incorporated the actions of both chambers, appropriating $1.38 billion for the ship. The Senate bill would have added to the request $1.74 billion for a second DDG-51 destroyer, in addition to providing the $1.91 billion requested for one ship of this class, which the House bill funded. The compromise bill added to the request $250 million for long lead-time components to be used in two DDG-51s to be funded in FY2011. The House version of the bill would have cut $40 million from the $150.0 million requested for development of a new class of cruisers, designated CG(X), which is intended to replace existing Ticonderoga-class cruisers equipped with the Aegis anti-aircraft and anti-missile defense system.. The Senate version of the bill would have cut $64 million from the request. The enacted version of the bill cut $104 million, providing a total of $46 million for the program. The House and Senate Appropriations Committees agreed that the three Littoral Combat Ships included in the Administration's original FY2010 budget request were not fully funded by the accompanying $1.38 billion budget request. But, whereas the House bill would have added to the request $240 million to fully fund the three ships requested plus an additional $540 million for a fourth LCS, the Senate committee cut $300 million from the request in the Senate bill and directed the Navy to buy only two of the ships. On September 16, 2009, the Navy announced a restructuring of the LCS program, cancelling its plan to build several ships to each of two competing designs before selecting one of the two for further production. Under the Navy's new plan, it would choose between the two designs during FY2010 and would procure two LCS ships in FY2010 (instead of the three included in the original FY2010 budget request). The enacted version of H.R. 3326 bill would provide $1.1 billion for procurement of two LCS ships and $424.5 million in R&D funding to continue developing the design. The R&D funding includes $60 million the bill adds to the budget request to develop, for whichever of the two designs the Navy selects, a technical data package that would allow a second contractor to compete for future contracts. The final bill did not include $180 million the House bill would have added to the budget request to fund a third Joint High Speed Vessel, in addition to the one requested in the Navy budget ($178.0 million) and another in the Army budget ($183.7 million). These are small ships based on the design of high-speed ferries intended to haul cargo and combat units over distances of up to several hundred miles. As enacted, the bill incorporates $170 million , added by the Senate bill to the budget request, for long lead-time components to be used in a helicopter carrier (LHA) for which the Navy plans to request most of the funding in FY2011. Unlike the Senate bill, the compromise version would provide the $1.1 billion requested for two T-AKE class supply ships. The House bill would have cut one ship ($400 million). Most of the Administration's proposals to terminate certain major aircraft programs were incorporated into both the House and Senate versions of H.R. 3326. However, both versions of the bill also added to the budget, over the Administration's objections, funds or production of the C-17 cargo jets and for development of both a alternate engine for the F-35 Joint Strike Fighter and the VH-71 White House helicopter. As reported by the House Appropriations Committee, H.R. 3326 had included $368.8 million for long lead-time components that would permit the funding of 12 more F-22 fighters in FY2011. However the House adopted by a vote of 269-165 an amendment by Defense Appropriations Subcommittee Chairman John P. Murtha to reallocate that money, in light of President Obama's insistence that he would veto a bill that included funds to continue F-22 production. Subsequently, the House reaffirmed that position, rejecting by a vote of 169-261 a procedural motion that was, in effect, an amendment to restore the F-22 procurement funds. The House bill also includes a provision barring the use of funds to approve or license the sale of F-22s to any other country, a provision that has been included in the defense appropriations bill for every year since FY1998. The Senate version included no funds to continue F-22 production. But, while retaining the ban on approving any foreign sale of the plane, it would explicitly allow DOD to "conduct or participate in studies, research design and other activities," to develop an "export" version of the plane that was modified to protect classified information (Section 8056). That provision was retained in the final bill. The House version of H.R. 3326 bill included $560 million to continue development of an alternate engine for the F-35 Joint Strike Fighter. The House Appropriations Committee largely offset the cost of the alternate engine project by cutting from the budget two of the 30 F-35s requested ($300 million) and $232 million requested for one-time costs associated with the program because, the committee said, the program had not yet expended more than $200 million appropriated in prior years for these costs. In a Statement of Administration Policy (SAP) issued before the House passed H.R. 3326 , the Office of Management and Budget said the Administration "strongly objects" to any action that would delay the F-35 program, as administration officials have insisted the alternative engine project would do, and that the President's advisers would recommend that he veto the defense bill, if it includes funding for the alternate engine. The Senate version of the bill included no funds for the alternate engine. However, the compromise version added to the budget request $465 million to continue the program without making any of the offsetting reductions the House version had made to the funding request for the Joint Strike Fighter. Both the House and Senate versions of the bill added funds for nine F/A-18E/F Navy fighters in addition to the $1.0 billion requested for nine planes of this type. The House version would have added $495 million for the additional planes plus $108 million for long lead-time components that would allow the Navy to sign a five-year contact for 150 additional F/A-18E/Fs beginning in FY2011. The Senate bill would have added $512.3 million for nine additional F/A-18E/Fs to the section of the bill that funds war costs. The final bill would add $495 million for the additional nine planes to the base budget request and no additional funds for long lead-time components. The rationale for funding the additional F/A-18E/Fs, as stated by both the House and Senate Appropriations Committees, is that the planes are needed to mitigate a shortfall in the Navy's force of carrier-based fighters that otherwise would occur for three reasons: repeated combat deployments are wearing out the F/A-18s currently in service earlier than had been projected; plans to extend the life of the planes currently in service are more problematic than had been assumed; and production of F-35 Joint Strike Fighters intended to replace the older F/A-18s has been delayed. The compromise version, like the House and Senate bills, provide the requested $1.61 billion for 22 radar-jammer versions of the F/A-18E/F, which are designated E/F-18Gs. In its report on the bill, the Senate Appropriations Committee noted that the Navy and Air Force are exploring the possibility of acquiring so-called "light attack" planes, which could be any of several types of off-the-shelf aircraft—some of them armed versions of training planes—that are less expensive than front-line fighters and which are designed for combat against relatively lightly armed insurgent forces. The Senate Committee directed the services to treat this project as a "new start" acquisition program, going through established procedures to fund the effort and to solicit proposals from contractors. House and Senate negotiators did not address this issue in their joint statement on the compromise version of the bill. The enacted version of H.R. 3326 would add to the budget request $2.5 billion for 10 C-17 wide-body, intercontinental cargo planes. The House-passed bill would have added $674.1 million for three C-17s, whereas the Senate bill would have added $2.50 billion for 10 of the planes. During Senate consideration of the bill, it killed, by a vote of 34-64, an amendment by Senator McCain that would have eliminated funding for the 10 C-17 cargo planes the Appropriations Committee had added to its version of H.R. 3326. The amendment would have reallocated the added funds ($2.5 billion) to operations and maintenance (O&M) accounts in the bill. The amendment would have violated the Senate's budget rules by increasing budget outlays resulting from the bill during FY2010, thus exceeding a cap on outlays established pursuant to the congressional budget resolution. The reason the amendment would have increased FY2010 outlays is that funds appropriated for O&M accounts are spent more quickly than funds appropriated for aircraft procurement accounts. The vote that killed Senator McCain's amendment came on a motion to exempt the C-17 amendment from those budget rules. After that motion—which would have required 60 votes for adoption—was rejected, the McCain amendment was ruled out of order. On October 6, the Senate rejected by a vote of 30-68 a second McCain amendment that would simply have dropped from the bill the $1.5 billion added to the budget to buy C-17s. In the Statements of Administration Policy (SAPs) released by the Office of Management and Budget (OMB) concerning both the House and Senate versions of the defense bill, OMB said the Administration "strongly objected" to funding additional C-17s, but did not specifically say that the bill might be vetoed if it were not brought into line with the Administration's request. President Obama had made such an explicit veto threat to back up his objection to congressional initiatives to fund production of additional F-22s. The Senate version of the bill would have cut $30 million from the $439.6 million requested to develop a new aerial refueling tanker on grounds that the project had been delayed. After a competition in 2008-09, the Air Force had selected the team of Northrop Grumman and Europe-based EADS as the winner of a competition to build the new plane. However, GAO nullified that decision, upholding a protest by Boeing—the other competitor—who argued that the service had not adhered to the announced criteria for selecting the winner. The enacted version of the bill would provide $291.7 million for the tanker program. The budget requested $294.8 million for five long-range executive transport planes , including: $66.4 million for one C-37 (based on the commercial Gulfstream V executive jet); and $228.4 million for four C-40s (based on the commercial Boeing 737 airliner). The House bill would have added to that request $132.8 million for two additional C-37s and $200.0 million for two additional C-40s. The compromise version, like the Senate bill, would provide $294.8 million, as requested, for one C-37 and four C-40s. Pursuant to the Administration's decision to cancel development of a new fleet of presidential helicopters, designated VH-71s, the budget request included $85.2 million to wind down the program. The Senate bill would have cut $55 million from that request, while the House bill would have added $400 million to the budget request to continue testing and outfitting five VH-71s already built. Those five aircraft had been planned to be part of a fleet of 27 helicopters, most of which were to have been much more capable than the first five. The House Appropriations Committee said that the added funding would allow DOD to harvest useful aircraft from the $3.2 billion already spent on the program. In its SAP on the House bill, OMB said the Administration "strongly objects" to this funding and that, if it were included in the final version of the bill, the President's advisers would recommend a veto. The compromise version of the bill would cut from the request $55 million, following the Senate's lead. It also would add $100 million to extract from the program technologies that could be used in the resumed effort to develop a new transport helicopter for senior officials. Both House and Senate versions of H.R. 3326 accepted the Administration's decision to cancel the CSAR-X program, which was intended to develop a new search and rescue helicopter to replace the HH-60Ms currently used for that mission. The House bill would have cut $80 million from the $90 million requested for CSAR-X development costs and added $140 million to buy five HH-60Ms to replace aircraft lost in combat since 2001 plus an additional $100.2 million to upgrade older HH-60G rescue helicopters. The Senate bill included none of the $90.0 million in the budget request for CSAR-X. Acting at the request of the Air Force, the committee said in its report, the bill allocated $90 million, instead, to buy two new HH-60Ms ($75.0 million) and to begin development of a replacement for the HH-60M ($15.0 million). The enacted version of the bill tracked the Senate bill's action on CSAR-X. The House and Senate versions of the bill basically supported the Administration's decision to substantially restructure the Army's Future Combat Systems (FCS) program, starting over the effort to develop a new family of ground combat vehicles. The House version of H.R.3326 would have provided $2.67 billion of the $2.88 billion requested for FCS, eliminating $211 million requested for termination costs the committee said could be covered by unspent funds previously appropriated for now-cancelled elements of the program. The Senate bill would have cut $368 million from the amounts requested for FCS programs. The compromise version would provide $2.55 billion for FCS, a reduction of $332 million. The House version of the bill would have cut $50 million from the $293 million requested to continue development of the Marine Corps's Expeditionary Fighting Vehicle (EFV), a troop carrier intended to carry a squad of Marines from ship to shore at nearly 30 mph and then function as an armored troop carrier on land. Citing delays and cost increases in the program, the House committee said it had "serious reservations" as to whether the EFV development program would succeed. The compromise version of the bill, like the Senate bill, would fund the request. Following are selected other provisions that initially were added to the Senate version of H.R. 3326. By a vote of 91-7, the Senate adopted October 6 an amendment by Senators Christopher S. Bond and Patrick J. Leahy that would bar DOD from carrying out a plan to retire 249 older combat jets, most of which are assigned to Air Force Reserve and Air National Guard units. The prohibition would be lifted when DOD submits to the Senate and House Armed Services committees a report detailing how the Air Force will fill the gaps left by the retirement of those planes and what missions it will assign to the bases and personnel associated with the aircraft. The compromise version of the bill did not include the Bond-Leahy amendment; however, in the joint explanatory statement issued by House and Senate negotiators who drafted the bill, the Secretary of the Air Force was directed to spend no funds on the proposed changes until several reports associated with the issue are submitted to Congress. The compromise version of H.R. 3326 retain a provision of the Senate bill that would prohibit the payment of funds appropriated by the bill to any contractor that requires its employees, as a condition of employment, to accept the result of binding arbitration in case of any claim arising from sexual assault or harassment. The Senate approved the provision, offered as a floor amendment by Senator Al Franken, by a vote of 68-30.
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For the Department of Defense (DOD) in FY2010, the Administration requested a total of $663.8 billion in discretionary budget authority. This includes $533.8 billion for the so-called "base budget"—all DOD activities other than combat operations—and $130.0 billion for "overseas contingency operations," including operations in Iraq and Afghanistan. The Administration also requested $75.9 billion in supplemental DOD appropriations for FY2009 to cover war costs. The Administration's DOD request, made public May 7, 2009, incorporated Defense Secretary Robert Gates's April 6 recommendations to curtail funding for several major weapons programs focused on conventional warfare. The FY2010 national defense authorization bills drafted by the House and Senate Armed Services Committees generally supported this shift in policy, which the Obama Administration's budget request reflected. However, both committees added to their respective bills authorization to continue production of the Air Force's F-22 fighter and to continue development of an alternative engine for the F-35 Joint Strike Fighter. The Obama Administration warned that a bill that continued either program would be vetoed. On June 25, the House passed by a vote of 389-22 its version of the FY2010 National Defense Authorization Act, H.R. 2647, which would authorize a total of $534.0 billion for the DOD base budget and $129.3 billion for war costs. The bill also would authorize $16.5 billion for defense-related nuclear activities of the Department of Energy, which was $83.3 million more than requested. On July 2, the Senate Armed Services Committee reported its version of the authorization bill, S. 1390, which would authorize $534.6 billion for the DOD base budget, $129.3 billion for war costs, and $16.4 billion for the Energy Department. The Senate passed the bill on July 23 by a vote of 87-7 after adopting several amendments, including two that would, in effect, end production of the F-22 and terminate the F-35 alternate engine programs, as the Administration had requested. The conference report on the authorization bill authorizes a total of $680.2 billion for military activities of DOD and defense-related activities of other federal agencies, which is $14.9 million more than the Obama Administration requested. The conference report, which terminates the F-22 but continues the alternate engine program, was adopted by the House on October 8 by a vote of 281-146. The Senate adopted the conference report October 22 by a vote of 68-29 and President Obama signed the bill (P.L. 111-84) on October 28. The House passed its version of the FY2010 defense appropriations bill (H.R. 3326) on July 30, by a vote of 400-30. The bill would appropriate $497.6 billion for the DOD base budget (covering all accounts except military construction) and $128.2 billion for FY2010 war costs. The Senate Appropriations Committee reported September 10 an amended version of H.R. 3326 which would appropriate $497.6 billion for the DOD base budget and $128.2 billion for war costs. The Senate passed the bill October 6 by a vote of 93-7. In lieu of a conference report on the FY2010 defense appropriations bill, House and Senate negotiators agreed on an amendment to the Senate-passed version of H.R. 3326 that would appropriate $497.7 billion for the DOD base budget and $128.2 billion for war costs. The House passed that compromise version of the bill December 16 (395-34); the Senate passed it December 19 (88-10). The President signed the bill December 19 (P.L. 111-118).
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Section 504 of the Rehabilitation Act of 1973 prohibits discrimination against people with disabilities in programs or activities receiving federal financial assistance or under any program or activity conducted by an executive agency or the U.S. Postal Service. The core requirement of Section 504 is articulated in subsection (a), which states: No otherwise qualified individual with a disability in the United States, as defined in section 705(20), shall, solely by reason of her or his disability, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service.... The purpose of the Rehabilitation Act is to ensure that individuals with disabilities can be independent and fully participate in society. The act seeks to empower individuals with disabilities by maximizing "employment, economic self-sufficiency, independence, and inclusion and integration into society, through ... the guarantee of equal opportunity." However, tension may arise between giving full effect to these statutory objectives and ensuring that Section 504 compliance remains practicable for federal agencies and grantees. To prove a violation of Section 504 of the Rehabilitation Act, a plaintiff must show that (1) the program or activity is carried out by a federal executive agency or with federal funds; (2) the plaintiff is disabled within the meaning of the Rehabilitation Act; (3) he is otherwise qualified; and (4) he was excluded from, denied the benefit of, or subject to discrimination under the program or activity. A defendant in a Section 504 suit may assert as an affirmative defense to liability that accommodating the plaintiff's disability would constitute an "undue burden." In 1985, the U.S. Supreme Court held in Alexander v. Choate that a federal agency or grantee who denies an otherwise qualified plaintiff "meaningful access" to the program or benefit it provides has excluded the plaintiff from the program, denied the plaintiff its benefits, and/or discriminated against the plaintiff within the meaning of Section 504. Moreover, the Court stated that to afford meaningful access to people with disabilities, a federal agency or grantee might be required to make "reasonable accommodations." Although Choate was the first case to construe the nondiscrimination prong of Section 504 as requiring meaningful access, the Court ruled against the plaintiffs in Choate . The plaintiffs argued that Tennessee's decision to reduce the number of days of inpatient care paid for by Medicaid denied Medicaid recipients with disabilities meaningful access to Medicaid and hospital services because they spent, on average, more days receiving inpatient care than their nondisabled peers. The Court found that despite Tennessee's change in policy, Tennessee continued to provide people with and without disabilities "identical" access to Medicaid covered inpatient care. Accordingly, while Choate remains the source of the meaningful access standard, the case illustrates that practices or policies with a disparate impact on people with disabilities do not, ipso facto , violate Section 504. The Court in Choate also noted that Section 504 does not require federal agencies and grantees to provide people with disabilities meaningful access to their programs and activities at the expense of their programs' integrity. The Court quoted its holding in Southeastern Community College v. Davis , which established that Section 504 does not require a federal grantee "to make 'fundamental' or 'substantial' modifications to accommodate the handicapped, [but] it may be required to make 'reasonable' ones." As a reflection of this jurisprudence, Department of Treasury regulations state that the department is not required to take actions to comply with Section 504 when doing so would result in a fundamental alteration of a program or in undue financial and administrative burdens. A 1995 National Research Council study concluded that more than 3.7 million Americans experience low vision and, as a result, have difficulty identifying U.S. banknotes due to their virtually uniform size, color, and general design. This difficulty, the study found, prevented visually impaired individuals from fully participating in society because they cannot "conveniently and confidentially exchange currency in everyday transactions," such as those required to use public transportation or make purchases. Relying in part on the findings of that study, the American Council of the Blind and two individuals with visual impairments (collectively "the Council") sued the Secretary of the Treasury of the United States, Henry Paulson, in U.S. District Court for the District of Columbia in 2002. The Council alleged that the Department of Treasury violated Section 504 of the Rehabilitation Act by issuing banknotes that were not readily identifiable for people with visual disabilities. It sought declaratory and injunctive relief to prohibit the Department of Treasury from continuing to manufacture notes greater than $1 in their present format and to require the Treasury Department to create and implement a corrective action plan. The department acknowledged that the physical design of U.S. dollars made it difficult for blind and visually impaired individuals to independently identify denominations. However, it also contended that these individuals were not denied the benefit of meaningful access to U.S. currency and, even if they were, requiring the Treasury to make modifications would unduly burden the department. These were the only two issues contested. Both the plaintiffs and the Department of Treasury moved for summary judgment. The U.S. district court concluded that (1) the Council met its burden to show that the visually impaired are denied meaningful access to U.S. paper currency; and (2) the Department of Treasury had failed to meet its burden to demonstrate that no effective accommodation could be implemented without imposing an undue burden on the department. Accordingly, the district court granted the Council's motion for summary judgment in part and denied Treasury's motion. However, the court did not order the Treasury Department to follow a particular plan or design change to achieve compliance with the Rehabilitation Act. Instead, the court ordered a status conference with both parties for the purpose of discussing the appropriate remedy. Before a final remedy was ordered, the Department of Treasury appealed the ruling to the United States Court of Appeals for the District of Columbia. The Council opposed the petition for interlocutory appeal, arguing that the Treasury Department's contentions regarding the burden of accommodating the plaintiffs were purely hypothetical in the absence of a determined remedy. However, the D.C. Court of Appeals accepted the appeal, reasoning that reviewing the case before injunctive relief was issued would prevent both the court system and the Department of Treasury from expending resources unnecessarily. For the reasons discussed below, the D.C. Circuit Court affirmed the district court's grant of summary judgment and remanded the case for the district court to address the Council's request for injunctive relief. The D.C. Circuit first considered whether the lower court was correct to hold that the Department of Treasury discriminated against people with visual impairments in violation of Section 504 of the Rehabilitation Act. Because the Treasury Department conceded three of the four elements of Section 504 liability, the D.C. Circuit focused on the fourth prong—that is, whether visually impaired individuals are denied meaningful access to U.S. paper currency. Choate established that Section 504 of the Rehabilitation Act requires federal agencies and grantees to provide "an otherwise qualified handicapped individual ... with meaningful access to the benefit that the grantee offers." When meaningful access is denied, a federally funded program might be required to make "reasonable accommodations," but there is no denial of meaningful access when people both with and without disabilities have "identical and effective" access to the benefit or services provided. Since Choate , courts have determined whether a federal agency or grantee provides an otherwise qualified individual with meaningful access to the benefit or program at issue on a case-by-case basis. On appeal to the D.C. Circuit, the Treasury Department argued that people with visual impairments are denied meaningful access to the benefits of U.S. currency only if they are unable in all circumstances to accurately identify paper money without assistance. The court disagreed, stating that this construction of Choate 's meaningful access test lacked a "legal foundation." The court cited precedent in which plaintiffs with disabilities were denied meaningful access to government programs because they were forced to take extreme measures, such as crawling, to access government services. These cases, the D.C. Circuit wrote, suggest that the plaintiffs are denied meaningful access to U.S. currency if their access to U.S. banknotes is impeded. The court also rejected the Treasury Department's assertion that individuals with visual impairments have meaningful access to U.S. banknotes. The department advanced two theories in support of this argument. First, it claimed that in the absence of evidence that visually impaired individuals are "frequently defrauded," the court should presume that they have meaningful access to U.S. paper currency. However, the court dismissed this contention as "astounding" on its face. The department's second theory was that people with visual impairments have meaningful access to cash transactions because they can use certain techniques and technology to identify U.S. banknotes. For example, the Treasury Department claimed that people with visual impairments could identify dollar denominations effectively by asking sighted persons for assistance during transactions, using portable electronic readers to identify bills, keeping differing denominations folded in distinct ways, and/or using methods of cashless payments (i.e., credit and/or debit cards). The court disagreed. Dependence on third parties, it wrote, "is anathema to the stated purpose of the Rehabilitation Act and places the visually impaired at a distinct disadvantage ... they are compelled to rely on the honesty and carefulness of sighted individuals." Similarly, the court reasoned that conditioning access to paper currency on a person's ability to spend substantial sums of money on technological devices amounted to a denial of meaningful access. For support, the court cited a Second Circuit decision rejecting a defendant's argument that, in the absence of American Sign Language interpreters, deaf parents had meaningful access to school activities because they could pay for their own interpreters. Finally, the court wrote that credit cards do not provide the plaintiffs with meaningful access to paper currency because they are not universally accepted substitutes for cash. Even if credit cards became universally accepted, the court found that they would not provide visually impaired individuals with access to transactions in which they, perhaps as store employees, received cash from another person. The court concluded that the plaintiffs did not enjoy meaningful access to U.S. currency. Having determined that the Department of Treasury violated the nondiscrimination provision of the Rehabilitation Act, the D.C. Circuit turned to the one issue remaining: whether Treasury's noncompliance was justified because effectively accommodating the plaintiffs' disabilities would impose an undue burden on the department. Compliance with Section 504 is deemed unduly burdensome if, given the defendant's resources, the costs associated with compliance outweigh its benefits. The Treasury Department argued that, by granting the plaintiffs' motion for summary judgment, the district court had categorically validated the Council's proposed accommodations without assessing whether any one of those accommodations would impose an undue burden on the department. It contended that the court should have analyzed each of the accommodations that was recommended and found, at the least, that the most expensive of those accommodations constituted an undue burden. However, the D.C. Circuit described this assertion as a misstatement of the law: "liability under Section 504," the court wrote, "requires only that the least burdensome accommodation not be unduly burdensome." The D.C. Circuit also found that the Department of Treasury had invited the lower court's categorical approach by failing to present evidence rebutting the reasonableness of each of the accommodations that the Council proposed. The department had opted to present evidence in the lower court that suggested that implementing any accommodation would impose an undue burden on Treasury. The district court found this evidence deficient for a variety of reasons, and the department did not challenge that finding on appeal. The Department of Treasury did not appeal the D.C. Circuit's decision in American Council of the Blind . On remand, the district court granted the Council's request for injunctive relief. Pursuant to the terms of the district court's October 3, 2008, injunction order, Treasury is required to complete changes to each denomination no later than the date when the Secretary next approves a redesign for that denomination. On May 20, 2010, the Bureau of Engraving and Printing (BEP) within the Department of Treasury published a notice of proposed action identifying the accommodations that it is considering in the wake of American Council of the Blind . BEP stated that it will (1) develop and deploy a raised tactile feature as part of the next currency redesign; (2) continue its practice of adding large, high-contrast numerals and different and distinct color schemes to each denomination; and (3) implement a "Supplemental Currency Reader Program" to provide electronic currency readers to people with visual impairments. Comments on BEP's proposals were due no later than August 18, 2010. The American Council of the Blind submitted comments expressing overall satisfaction with BEP's plan, particularly with its proposal to incorporate raised tactile features into U.S. currency. However, the Council had concerns with the substance of—and eligibility requirements for—the currency reader distribution program. The Council contended that interim measures, such as the proposed reader program, have a history of becoming permanent substitutes for the originally envisioned program, and, should this happen with the reader program, the Treasury would fail to make U.S. currency meaningfully accessible to visually impaired individuals. The Council listed several reasons why distributing currency readers will not make currency denominations readily distinguishable to people with visual impairments. For one, currency readers must be operated with both hands, which, the Council wrote, prevents users from being able to keep their wallet safely in their hands while denominating. In addition, bills must be fed into the devices one at a time, which can place users in the uncomfortable situation of having to publicly reveal how much money is on their person while also holding up the line behind them. A third concern is that if a person's currency reader is damaged, lost, stolen, or experiencing a technological glitch, the user has no means of identifying currency denominations. In light of these concerns, the Council urged BEP to provide specific details about the timelines for implementing the accessible features on the currency itself and establish performance specifications for devices that are distributed through the currency reader program. The Council also strongly opposed BEP's suggested eligibility requirements for the currency reader program. BEP proposed to distribute readers to people who provide documentation verifying that they need a reader to accurately identify the denomination of U.S. banknotes. This verification must be provided by a "competent authority," namely a registered nurse, licensed practical nurse, or doctor of medicine, osteopathy, or optometry. The Council asserted that this proposed definition of "competent authority" is too limiting. It urged BEP to use the definition of "competent authority" that the Library of Congress uses to determine who is qualified to benefit from its program for loaning Library materials to the blind. If BEP adopts the Library of Congress's definition of competent authority, applicants for currency readers could obtain verification from a broader range of sources, including, inter alia , therapists, social workers, case workers, and rehabilitation teachers.
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In May 2008, the United States Court of Appeals for the District of Columbia issued a decision in The American Council of the Blind v. Paulson. The D.C. Court of Appeals affirmed the lower court's holding that the U.S. Department of the Treasury violated Section 504 of the Rehabilitation Act of 1973 by issuing paper currency in denominations that people with visual impairments cannot readily identify. Specifically, the court ruled that the current design of U.S. banknotes denies people with visual impairments meaningful access to the benefits of using U.S. currency. Furthermore, the Treasury Department was not exempted from liability on the grounds that accommodating the plaintiffs' disabilities would impose an undue burden. The court found that Treasury failed to substantiate its claims about the financial cost of achieving Section 504 compliance and the poor durability of certain proposed remedial tactile features. The Department of Treasury did not appeal the circuit court's decision. The case was remanded for consideration of an appropriate remedy, and, on October 3, 2008, the district court issued an injunction order. The injunction order required the Department of Treasury to make changes to accommodate people with visual impairments by the time the next currency redesign is approved. On May 20, 2010, the Bureau of Engraving and Printing (BEP) within the Department of Treasury published a notice of proposed action in the Federal Register. The notice identifies changes that BEP proposes to make to U.S. currency to accommodate people who are visually impaired. These changes are (1) developing and deploying a raised tactile feature as part of the next currency redesign; (2) adding large, high-contrast numerals and different and distinct color schemes to each denomination; and (3) implementing a "Supplemental Currency Reader Program" to provide electronic currency readers to people with visual impairments. In comments submitted to BEP, the American Council of the Blind expressed concern over the institution of the Supplemental Currency Reader Program. The Council urged BEP, inter alia, to provide specific details about the timelines for implementing the accessible features on the currency itself and establish performance specifications for readers that are distributed through the program. The Council also strongly opposed BEP's proposed eligibility requirements for the reader program, contending that they unnecessarily restricted the types of professionals who could verify a person's eligibility for a currency reader. Under the proposed regulation, only certain nurses and doctors would be authorized to verify a person's eligibility for a currency reader. The Council would like a variety of other professionals to be authorized as well, including social workers and professional staff at hospitals and other institutions.
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This report provides brief answers to frequently asked questions about selected campaign finance provisions in the Consolidated and Further Continuing Appropriations Act, 2015 ( H.R. 83 ; P.L. 113-235 ). The House passed the measure (219 - 206) on December 11, 2014. The Senate did so (56-40) on December 13, 2014. The President signed the bill into law on December 16. Although other provisions address topics such as contractor disclosure, increased limits for contributions to national party committees have been the subject of most debate. Those increases, particularly for individual contributions, are the subject of this brief overview. The relevant language in P.L. 113-235 increased contribution limits to national political party committees. Most prominently, these party committees include the Democratic National Committee (DNC), Democratic Congressional Campaign Committee (DCCC), Democratic Senatorial Campaign Committee (DSCC), Republican National Committee (RNC), National Republican Congressional Committee (NRCC), and the National Republican Senatorial Committee (NRSC). These committees may also establish new accounts, each with separate contribution limits, to support party conventions, facilities, and recounts or other legal matters. In practice, it appears that an individual's contributions to a national party could increase from at least $97,200 annually to at least $777,600. For a two-year election cycle, an individual could give twice that amount, or more than $1.5 million. Under inflation adjustments announced in February 2015, it appears that an individual may contribute at least $801,600 to a national party committee in 2015. Although this report emphasizes increases in individual contribution limits, political action committees (PACs) may also make larger contributions to parties. For multicandidate PACs—the most common type of PAC—contributions to a national party appear to have increased from $45,000 to at least $360,000 annually. Unlike limits for individual contributions, those for PACs are not adjusted for inflation. Ultimately, the impact of the proposed language will depend on a combination of agency implementation and political practice. The Federal Election Commission (FEC) is responsible for administering the increased limits. The agency's rulemaking, advisory opinions, or enforcement activities could further clarify how the provisions will affect donors and elections. On December 17, 2014, the FEC briefly stated that it was "assessing" the language and would issue guidance "as soon as practicable." Similarly, donor and party decisions will determine how or whether fundraising practices change. In particular, it is unclear how many donors have the ability or desire to make the larger contributions now permitted. As of this writing, how the FEC intends to interpret the contribution limits and how the parties intend to alter fundraising practices, if at all, remains to be seen. The report has been prepared in response to evolving questions concerning ongoing legislative debate. Some implications remain unclear at this time, and the analysis below could change with additional information. This report will be updated as additional information becomes available. Before P.L. 113-235 was enacted, the Federal Election Campaign Act (FECA) permitted an individual to contribute $32,400 annually to national party committees (reflecting 2014 limits, subsequently increased for inflation, as discussed below). P.L. 113-235 increased the limits as discussed below. These limits apply separately to the six political committees around which the two major parties are organized. For both parties, these include a headquarters committee (e.g., the Democratic National Committee), a House campaign committee (e.g., the National Republican Congressional Committee), and a Senate campaign committee (e.g., the National Republican Senatorial Committee). Previously, an individual could contribute no more than $97,200 annually to a typically organized national party. In addition, an October 2014 FEC advisory opinion (AO) determined that, following the recent repeal of public funding for presidential nominating conventions, separate contribution limits apply to convention funds. Therefore, it appears that a "maxed out" donor could have contributed $129,600 to a national party when counting all three traditional committees plus a convention committee. Division N, Section 101 of P.L. 113-235 increased limits for individuals making contributions to national party committees. These provisions, which are effective "on or after" the enactment date, permitted parties to establish new, segregated accounts and accept additional funds to support party conventions, facilities, and recounts or other legal matters. Specifically, the language permitted the national parties to establish up to three additional accounts for each purpose. Overall, it appears that maximum individual contributions increased from $97,200 (or $129,600 if following the FEC AO noted above) for a typical party with three major committees to $777,600. During a two-year election cycle, it appears that an individual could, therefore, contribute up to $1,555,200 to a national party's typical committees. These limits were annual amounts for 2014—when the law was enacted. The original versions of this report showed those amounts in Table 1 below. The current version of the table reflects inflation adjustments announced in February 2015. As the table shows, the 2015 base limit for individual contributions increased to $33,400 (from $32,400 in 2014). Although this report emphasizes proposed changes to the individual contribution limits, the language also increases limits for political action committees (PACs) as shown in Table 2 and Table 3 below. Although there are differences between the increased limits for multicandidate PACs and non-multicandidate PACs, it is unclear how consequential they might be in practice. Given the higher limits for non-multicandidate PACs, it appears that there could be an advantage to a PAC not achieving multicandidate status, although such PACs are rare and it is perhaps unlikely that a committee could practically prevent itself from achieving multicandidate status. In practice, therefore, it appears that the increased limits in Table 3 will be more consequential than those in Table 2 . FECA does not permit inflation adjustments for multicandidate PAC contributions ( Table 3 ). Six committees appear to be most relevant. The two major parties each have three main national political committees that perform similar functions and are organized similarly. On the Democratic side, these include the DNC, DCCC, and DSCC. Republican counterpart committees include the RNC, NRCC, and NRSC. The new law appears to be relevant for all national party committees, including third parties. The provisions do not appear to affect other fundraising or spending provisions in elections per se. It is possible that with additional freedom to make comparatively large contributions to political parties, some donors who would have previously given money to super PACs or other "outside" groups would instead redirect those funds to parties. It is also possible that increased party-funding limits will provide another outlet for donors but not necessarily redirect existing funds. As of this writing, the FEC has not yet announced regulations or formal guidance surrounding how it plans to interpret the new limits—including how the "base" contribution amounts might interact with the limits for the three new accounts, if at all. Similarly, the parties have yet to make widespread use of the new limits. Those supporting the increased limits have reportedly suggested that the proposed contributions would be more transparent than those given to groups such as politically active tax-exempt organizations (e.g., 501(c)(4) social welfare groups), and would provide parties with more funds to compete in an environment increasingly dominated by nonparty groups. Opponents counter that the proposed changes have not been subject to substantial consideration and would represent a return to the "soft money" era that existed before Congress enacted the Bipartisan Campaign Reform Act (BCRA), when parties could accept unlimited contributions for generic "party-building" activities. The precise implications of the proposed new limits remain to be seen.
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This report provides brief answers to frequently asked questions about increased campaign contribution limits in the Consolidated and Further Continuing Appropriations Act, 2015 (H.R. 83; P.L. 113-235), enacted and signed into law in December 2014. The relevant language increases certain contribution limits to national political party committees. This language changes the amounts the two major parties may solicit and collect. Most notably, three units within each of the national Democratic and Republican parties could be affected. These include a headquarters committee (e.g., the Democratic National Committee), a House campaign committee (e.g., the National Republican Congressional Committee), and a Senate campaign committee (e.g., the National Republican Senatorial Committee). The language permits all six of these national party committees to establish additional accounts, with higher contribution limits than previously permitted. In practice, it appears that maximum individual contributions to a national party have increased from at least $97,200 (or $129,600 if following a recent Federal Election Commission (FEC) advisory opinion) annually to at least $777,600. Inflation adjustments announced in February 2015 bring the individual total to at least $801,600 for 2015. Other national parties, such as third parties, would also be eligible for larger contributions. Although this report emphasizes individual contribution limits, political action committees (PACs) may also increase their party contributions under the bill, to a total of $360,000 for multicandidate PACs—the most common form of PAC. This updated report is based on information available as of this writing. The FEC has not yet issued regulations or definitive guidance about how the limits will be interpreted. Similarly, political parties have yet to adopt widespread fundraising practices under the new limits. This report will be updated as additional information becomes available.
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In September 2008, TransCanada Corp., a Canadian company, applied to the U.S. Department of State (State Department) for a permit to cross the U.S.-Canada international border with the Keystone XL pipeline project. As originally proposed, the pipeline would carry crude oil produced from the oil sands region of Alberta, Canada, to U.S. Gulf Coast refineries. In most instances, decisions about the siting of oil pipelines, even interstate oil pipelines like the proposed Keystone XL pipeline, are made by state governments if the state governments choose to exercise a pipeline siting authority. The federal government generally does not regulate the siting of oil pipelines, although it does oversee oil pipeline safety and pricing issues. However, the construction, connection, operation, and maintenance of a pipeline that connects the United States with a foreign country requires the permission of the State Department, conveyed through a presidential permit. Accordingly, the proposed Keystone XL pipeline required a permit. Executive Order 13337 delegates to the Secretary of State the President's authority to issue such a permit upon a determination that the project is in the national interest. The proposed project, and the environmental review of the approval pursuant to the National Environmental Policy Act (NEPA), garnered significant interest in media and political circles. There was significant debate both at the national level and at the state level, particularly in Nebraska, where many expressed concern that the pipeline would run through environmentally sensitive areas in the state. On December 23, 2011, Congress passed and the President signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Title V of the act addressed the Keystone XL presidential permitting process. Under that provision, the President was required to grant the Keystone XL pipeline permit within 60 days of the law's enactment, unless the President determined that the pipeline was not in the national interest. If the President did not make a national interest determination and took no action to grant the permit, then the law provided that the permit would be "in effect by operation of law." Title V of the act appears to be the first legislative foray into the permitting of the border crossing facilities as contemplated in Executive Orders 11423 and 13337. As required by Title V of the act, on January 18, 2012, the State Department recommended that "the presidential permit for the proposed Keystone XL pipeline be denied and, that at this time, the TransCanada Keystone XL Pipeline be determined not to serve the national interest." The State Department asserted that its recommendation "was predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest." The State Department press release also indicated that the 60-day time period provided for the in the act "is insufficient" for a determination as to whether the pipeline is in the national interest. The State Department said that "subsequent permit applications" and "applications for similar projects" were not precluded by the denial of this particular permit application. The same day, the President stated his determination that the Keystone XL pipeline project "would not serve the national interest." He made this determination, as required by Title V of the act, in a memorandum to the Secretary of State. On May 4, 2012, the State Department received a new application from TransCanada for a reconfigured Keystone XL pipeline that would run from the Canadian border and connect to an existing pipeline located in Steele City, NE. This new application identified proposed new routes through Nebraska. Also, on September 5, 2012, TransCanada submitted this preferred alternate route to the Nebraska Department of Environmental Quality. The governor of Nebraska approved this new route through the state on January 22, 2013. While this process played out at the federal and state administrative level, Congress continued to show legislative interest in the pipeline. In addition to Title V of the Temporary Payroll Tax Cut Continuation Act of 2011, several other pieces of legislation were introduced in the 112 th Congress to compel expedited review of the Keystone XL application. Another legislative proposal, the North American Energy Access Act ( H.R. 3548 ), would have transferred permitting authority over the Keystone XL pipeline project from the State Department to FERC, and would require the commission to issue a permit for the project within 30 days of enactment. This legislative interest has not abated in the 113 th Congress, as multiple bills have been introduced that would effectively supersede the State Department's permitting authority and grant a presidential permit for TransCanada to construct and operate the border-crossing facility of the Keystone XL pipeline, including H.R. 334 , H.R. 3 , and S. 582 . Meanwhile, on March 1, 2013, the State Department issued a Draft Supplemental Environmental Impact Statement (draft SEIS) as required by NEPA, evaluating the environmental impacts of the revised proposal. The issuance of this document is followed by a 45-day comment period. After the comment period ends, the State Department may issue the Final EIS, and subsequently a decision on whether to issue the presidential permit. This recent legislative activity intended to direct action on the two Keystone XL presidential permit applications appears to represent the first congressional efforts to amend the established executive branch procedure for the permitting of cross-border pipeline facilities, and there is some question as to whether this raises constitutional issues related to the jurisdiction of the two branches over such facilities. Additionally, as states considered taking action with respect to the pipeline, questions arose regarding whether state siting of a federally approved pipeline is preempted by federal law. Another question was whether a state's dictating the route of the pipeline was a violation of the dormant Commerce Clause of the Constitution, which prohibits one state from acting to protect its own interests to the detriment of other states. Finally, the adequacy of government review of the proposed pipeline under NEPA, the routing of the pipeline, and the emissions caused by the oil production was a cause of some concern and controversy. This report reviews those legal issues, observing generally that legislation altering the pipeline border crossing approval process appears likely to be a legitimate exercise of Congress's constitutional authority to regulate foreign commerce and that state oversight of pipeline siting decisions does not appear to violate existing federal law or the Constitution. The report also suggests that the State Department's implementation of its authority to issue presidential permits appears to allow for judicial review of its NEPA determinations. A companion report from CRS focusing on policy issues associated with the proposal, CRS Report R41668, Keystone XL Pipeline Project: Key Issues , by [author name scrubbed] et al., is also available. The Constitution does not expressly accord the President any authority to regulate foreign commerce. However, the President's recognized authority in the area of foreign affairs permits him to take action in matters of foreign commerce such as border crossing facilities, as discussed below. There has been some judicial recognition of the President's ability to exercise authority over matters implicating foreign commerce, even in the absence of an express delegation of authority by Congress, but the Supreme Court has not definitively opined on the circumstances in which any such authority may be exercised. The executive branch exercises permitting authority over the construction and operation of "pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products" and other products pursuant to a series of executive orders. This authority has been vested in the U.S. State Department since the promulgation of Executive Order 11423 in 1968. Executive Order 13337 amended this authority and the procedures associated with the review, but did not substantially alter the exercise of authority or the delegation to the Secretary of State in Executive Order 11423. Executive Order 11423 provided that, except with respect to cross-border permits for electric energy facilities, natural gas facilities, and submarine facilities, The Secretary of State is hereby designated and empowered to receive all applications for permits for the construction, connection, operation, or maintenance, at the borders of the United States, of: (i) pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products, coal, minerals, or other products to or from a foreign country; (ii) facilities for the exportation or importation of water or sewage to or from a foreign country; (iii) monorails, aerial cable cars, aerial tramways and similar facilities for the transportation of persons or things, or both, to or from a foreign country; and (iv) bridges, to the extent that congressional authorization is not required. Executive Order 13337 designates and empowers the Secretary of State to "receive all applications for Presidential permits, as referred to in Executive Order 11423, as amended, for the construction, connection, operation, or maintenance, at the borders of the United States, of facilities for the exportation or importation of petroleum, petroleum products, coal, or other fuels to or from a foreign country." Executive Order 13337 further provides that after consideration of the application and comments received thereon: "[I]f the Secretary of State finds that issuance of a permit to the applicant would serve the national interest, the Secretary shall prepare a permit, in such form and with such terms and conditions as the national interest may in the Secretary's judgment require, and shall notify the officials required to be consulted ... that a permit be issued." Thus, the Secretary of State is directed by the President to authorize all border crossing facilities that the Secretary has determined would "serve the national interest." However, the source of the executive branch's permitting authority is not explicitly stated within the executive orders. Powers exercised by the executive branch are authorized by legislation or are inherent presidential powers based in the Constitution. Executive Order 11423 does not reference any statute or constitutional provision as the source of its authority, although it does state that "the proper conduct of foreign relations of the United States requires that executive permission be obtained for the construction and maintenance" of border crossing facilities. Executive Order 13337 refers only to the "Constitution and the Laws of the United States of America, including Section 301 of title 3, United States Code." However, 3 U.S.C. Section 301 simply provides that the President is empowered to delegate authority to the head of any department or agency of the executive branch. Federal courts have addressed the legitimacy of this permitting authority. In Sisseton-Wahpeton Oyate v. U.S. Department of State , the plaintiff Tribes asked the court to suspend or revoke a presidential permit issued under Executive Order 13337 for the TransCanada Keystone Pipeline. The plaintiffs claimed that the issuance of the national interest determination and the border crossing permit for the project violated NEPA and the Administrative Procedure Act (APA). The U.S. District Court for the District of South Dakota determined that even if the plaintiffs' injury could be redressed, "the President would be free to disregard the court's judgment," as the case concerned the President's "inherent constitutional authority to conduct foreign policy," as opposed to statutory authority granted to the President by Congress. The court further found that even if the Tribes had standing, the issuance of the presidential permit was a presidential action, not an agency action subject to judicial review under APA. The court stated that the authority to regulate the cross-border pipeline lies with either Congress or the President. The court found that "Congress has failed to create a federal regulatory scheme for the construction of oil pipelines, and has delegated this authority to the states. Therefore, the President has the sole authority to allow oil pipeline border crossings under his inherent constitutional authority to conduct foreign affairs." In Sierra Club v. Clinton , the plaintiff Sierra Club challenged the Secretary of State's 2009 decision to issue a permit authorizing a pipeline from Alberta, Canada, to Superior, Wisconsin. The plaintiff claimed that issuance of the permit was unconstitutional because the President had no authority to issue the permits referenced in Executive Order 13337. The defendant responded that the authority to issue permits for these border-crossing facilities "does not derive from a delegation of congressional authority ... but rather from the President's constitutional authority over foreign affairs and his authority as Commander in Chief." The U.S. District Court for the District of Minnesota agreed, noting that the defendant's assertion regarding the source of the President's authority has been "well recognized" in a series of Attorney General opinions, as well as a 2009 judicial opinion. The court also noted that these permits had been issued many times before and that "Congress has not attempted to exercise any exclusive authority over the permitting process. Congress's inaction suggests that Congress has accepted the authority of the President to issue cross-border permits." Based on the historical recognition of the President's authority to issue those permits and Congress's implied approval through inaction, the court found the permit requirement for border facilities constitutional. As these cases show, courts that have analyzed the President's exercise of permitting authority as articulated in Executive Order 13337 have held that it is a legitimate exercise of the President's constitutional authority, and therefore does not require legislative authorization. Article I, Section 8 of the Constitution authorizes Congress to "regulate Commerce with foreign Nations." Whereas any independent presidential authority in matters affecting foreign commerce derives from the President's more general foreign affairs authority, Congress's power over foreign commerce is plainly enumerated by the Constitution, suggesting that its authority in this field is preeminent. In a review of the origins of the Constitution's Foreign Commerce Clause, the former Special Counsel of the Department of Justice's Office of Legal Counsel emphasized the placement of the foreign commerce power with Congress, stating that the power to regulate foreign commerce at the national level was to be vested in Congress. … The debate at the Philadelphia Convention over whether a bare majority or a supermajority of each House was required to enact foreign commerce regulations demonstrates that the Framers intended such regulation to be made by a legislative body, rather than an executive or judicial one. Each of the three branches of the federal government has opined on the nature of the executive and legislative powers related to matters related to foreign affairs and foreign commerce, in many cases addressing border crossing facilities specifically. Until recently, Presidents have indicated that executive permission for cables, pipelines, and other border crossing facilities may be granted or refused only to the extent that Congress has not acted to institute terms and conditions on such facilities. For example, in 1869, President Grant resisted the landing of a transatlantic cable from France for which the French government had granted a monopoly. President Grant recounted his unwillingness to act "[i]n the absence of legislation by Congress," but stated that he dropped his resistance to the cable once the monopolistic condition was removed. Letters indicate that he understood that Congress could impose "limitations and conditions" upon the laying of cables within U.S. waters. He then proposed legislation to Congress with conditions "for the protection of the public" from monopolies with the right to operate cable telegrams. He also indicated that "unless Congress otherwise direct[ed]," he would not oppose the landing of any other cable that complied with the conditions he had outlined and presented to Congress. As another example, in 1897, President McKinley declined to act on request for an application from a French company to the State Department, requesting permission to land a supplementary cable under the "same terms and conditions as those which were imposed by the President in 1879 when the original cable was landed." The State Department's letter to the French Ambassador stated that the President did "not regard himself as clothed, in the absence of legislative enactment, with the requisite authority to take any action upon the application." President McKinley's position stemmed from the congressional introduction of a bill to grant the President "express authority to authorize the landing of submarine cable … subject to conditions therein specified," which "failed to become law." A series of Attorney General opinions dating back to the 19 th century also suggest that the executive branch has taken an expansive view of Congress's authority in the area of cross-border commercial activity. These Attorney General opinions conditioned the President's authority to prohibit or permit cross-border cables, telegraphs, and electrical power on the absence of congressional action. The Department of Justice has cited these Attorney General opinions as "indicat[ing] that the President or his delegates for over a century have exercised the inherent executive authority to issue such permits without action by Congress." These opinions assert that the President may permit or prohibit the landing of a foreign cable, subject to legislation by Congress; recognize that cross-border cables are "instrument[s] of commerce"; and indicate that the President's power to act in the absence of legislation on point derives from his "power to prohibit [the landing of a foreign cable] should he deem it an encroachment on our rights or prejudicial to our interests." The first of these Attorney General opinions, dating to 1898, formed the basis for future Attorney General opinions on submarine cables, wireless telegraphy, and gas pipelines. The Solicitor General, acting as the Attorney General, addressed the Secretary of State's questions as to "the power of the President, in the absence of legislative enactment, to control the landing of foreign telegraphic cables." The acting Attorney General reviewed presidential actions and related communications regarding the landing of submarine cables dating back to the landing of the first foreign cable from Cuba to Florida in 1867. The first cable to the United States landed "under the supposed authority" of a 1866 congressional act granting a monopoly to one company, but reserving to Congress "the power to alter and determine the rates." However, Congress had not always enacted legislation imposing terms and conditions on subsequent cables that came to the shores of the United States. Presidents in the latter half of the 19 th century granted permission for the landing of several cables, while indicating that the executive branch's permission in such matters was "subject to future action by Congress." In this 1898 opinion, the Attorney General stated that the President was charged with the "preservation of our territorial integrity and the protection of our foreign interests." The Attorney General found that the President's ability to act was not limited to enforcing particular congressional acts, but that he was under oath to "preserve, protect, and defend the Constitution." The opinion relied on the President's position as "head of the diplomatic service" and Commander-in-Chief to find that the President could impose conditions upon foreign cables, in absence of congressional legislation, and either prevent or permit the landing of such cables "on conditions which will protect the interests of this Government and its citizens." Subsequent Attorney General opinions reached a similar conclusion. For example, 19 th century legislation directed that the United States not direct any "franchises, or concessions of any kind whatever" in Cuba while the United States occupied the island. In an 1899 opinion, the Attorney General indicated that the executive branch had regulated the matter of cables, "revocable either at the will of the President or by subsequent legislation by Congress." The general in charge of U.S. forces in Cuba had forbidden "grants and concessions of franchises" in Cuba, unless the Secretary of War approved. Although the Attorney General did not "concede that Congress, by legislative act, has the power to restrain or control the proper exercise of the powers of the Commander in Chief of the Army and Navy of the United States, occupying, … a foreign territory," the Attorney General found that the expressed congressional will conformed to the executive branch's previous policies and was "entitled to the respect of the Executive Departments, and ought to be followed." The Attorney General thus advised the Secretary of War "that it would be inexpedient … to grant permission to the applicant in this case to land its cable upon the soil of Cuba." Similarly, a 1913 Attorney General opinion interpreting a 1910 treaty between the United States and Great Britain concerning the diversion of water from the Niagara River for power purposes, as well as a statute on a similar subject, suggests that both the President and Congress have authority to regulate such international commercial transactions. The opinion found that it was the President's "duty to interfere with any diversion within the State of New York of the waters of the Niagara River … for power purposes, exceeding a daily maximum" established in the treaty. The Attorney General said that the treaty's stipulation that "the United States may authorize and permit" the diversion of waters up to a daily maximum "clearly places the subject, in the absence of legislation by Congress to the contrary, under [the President's] supervision." The opinion also responded to the President's question as to whether he had "any authority to control the importation into [the United States] from Canada of electric current generated by water power from the Niagara River." The Attorney General opined that, due to the lapse of a statute regarding electricity transmission from Canada, the President was "free to control the matter under [his] plenary power to prevent any physical connection (not authorized by Congress) between any foreign country and the United States." The opinion recognized the executive branch's power as being "subject, of course, to affirmative control by Congress" to prohibit or permit the importation of electrical power into the United States from Canada. The Attorney General also concluded that "in the absence of legislation by Congress," the President could subject the importation of Canadian electrical power "to such conditions as to [him] may seem good." Finally, it should be noted that Executive Order 11423, discussed earlier in this report, delegated authority to the Secretary of State to receive all applications for permits for cross border facilities including pipelines, cable cars, bridges, and similar facilities only "to the extent that congressional authorization is not required." However, Executive Order 13337 omitted the qualification "to the extent that congressional authorization is not required," when amending the section in Executive Order 11423 that empowered the Secretary to receive all such applications. A history of legislation related to border crossing facilities further suggests that congressional action related to permitting of pipeline border crossings is a legitimate exercise of Congress's authority to regulate foreign commerce. Examples of congressional legislation "regarding certain types of border crossing facilities," include the Submarine Cable Landing Licensing Act of 1921 and the International Bridge Act of 1972. Additionally, Congress has passed several statutes relating specifically to petroleum or pipelines, and some of these require the President to make particular findings, such as that certain exports are in the national interest: the Export Administration Act of 1979, the Mineral Leasing Act of 1920, the Naval Petroleum Reserve Production Act of 1976, the Outer Continental Shelf Lands Act Amendments of 1978, the Energy Policy and Conservation Act, and the Comprehensive Anti-Apartheid Act of 1986. The Supreme Court's pronouncements on the foreign commerce clause recognize the expansive scope of this enumerated congressional power. The Court has said that this power is "exclusive and plenary." In the seminal 1824 Commerce Clause case Gibbons v. Ogden , the Supreme Court said the words of the Commerce Clause "comprehend every species of commercial intercourse between the United States and foreign nations. No sort of trade can be carried on between this country and any other, to which this power does not extend." As of 2006, the Supreme Court had "never struck down an act of Congress as exceeding its powers to regulate foreign commerce." In addition, although there is no precedent that directly addresses Congress's power to legislate pipeline border crossings, language found in multiple judicial opinions further suggests that the executive authority to regulate such facilities may be amended by legislation. As noted above in Sierra Club v. Clinton, the plaintiff challenged the Secretary of State's 2009 decision to issue a permit authorizing a pipeline from Canada to Wisconsin. The reviewing federal district court found that the authority to issue permits for these border-crossing facilities "does not derive from a delegation of congressional authority ... but rather from the President's constitutional authority over foreign affairs and his authority as Commander in Chief." In reaching its conclusion, the court noted that "despite the fact that cross-border permits for pipelines have been issued by Presidents in the past, Congress has not attempted to exercise any exclusive authority over the permitting process. Congress's inaction suggests that Congress has accepted the authority of the President to issue cross-border permits." This seems to suggest a recognition by the court that the cross-border permitting process is not the exclusive province of the executive branch and that Congress may legislate in this area if it is so inclined. Similarly, in Sisseton-Wahpeton Oyate v. U.S. Department of State , the reviewing federal district court engaged in a discussion of the nature of the authority being exercised by the President in granting cross-border permits. The court noted that In this case, the proposed pipeline crosses international borders. Under the federal Constitution, then, the authority to regulate such a project vests in either the legislative or executive branch of government . Congress has failed to create a federal regulatory scheme for the construction of oil pipelines, and has delegated this authority to the states. Therefore, the President has the sole authority to allow oil pipeline border crossings under his inherent constitutional authority to conduct foreign affairs. As with the Attorney General opinions discussed above, the court's language suggests that Congress possesses the constitutional authority to legislate border crossing facilities, which suggests that Congress also can legislate to amend the role of the executive branch with respect to such facilities. As the discussion above demonstrates, all three branches of the federal government have historically taken an expansive view of the nature of Congress's authority to regulate foreign commerce, even in the absence of existing legislation in the area. Although the Temporary Payroll Tax Cut Continuation Act of 2011 appears to be the first legislation enacted on the subject of cross border pipeline permitting, the absence of previous legislation related to the permitting of cross border facilities does not mean that Congress lacks the constitutional authority to take action on these matters. The executive branch also possesses some ability to act in the area of border crossing permitting, derived from the power to conduct foreign affairs under Article II of the Constitution. The executive's ability to act in this area, however, is informed by the previous lack of federal legislation in this area. The absence of legislation up to this point may have "enable[d], if not invite[d], measures on independent presidential responsibility" in which the President has acted in the "absence of either a congressional grant or denial of authority." However, if Congress chose to assert its authority in the area of border crossing facilities, this would likely be considered within its constitutionally enumerated authority to regulate foreign commerce. Congress may consider legislation to overturn the domestic effect of legal action denying a permit for a border crossing facility for the Keystone XL pipeline. It could also potentially establish criteria for the issuance of any cross border permits, and potentially require the issuance of permits to entities which fulfill such criteria. As noted earlier, the federal government's role in siting the Keystone XL pipeline is limited to the border crossing facility, although its environmental review considered impacts of the entire project pursuant to NEPA. However, some state and local government officials voiced concern regarding the pipeline's proposed route through areas perceived to present safety or environmental issues. At least one state, Nebraska, took action in November 2011, adopting two laws that (1) carve out a role for the state in siting "major oil pipelines" that run through the state, and (2) directing collaboration with the State Department on a supplemental environmental statement for the proposed pipeline. Debate over the legislation in Nebraska gave rise to two constitutional concerns that some feel may limit the extent to which states may legislate and regulate interstate oil pipelines generally, and the proposed Keystone XL pipeline in particular. First, some have expressed concern that a state action may place too great of a burden on interstate commerce, in violation of a doctrine known as the dormant Commerce Clause. Second, some have wondered whether state legislation or regulation of interstate pipelines is preempted by federal legislation related to interstate pipeline safety. The Constitution provides that Congress shall have the power to regulate commerce with foreign nations and among the various states. This power has been cited as the constitutional basis for a significant portion of the laws passed by Congress over the last 50 years, and it currently represents one of the broadest bases for the exercise of congressional authority. Although the Constitution does not explicitly provide that this federal power displaces the power of states to regulate interstate commerce, the courts have long found that such restrictions are an inherent part of the federal authority. State interference with trade was widespread before the ratification of the Constitution and a source of much dispute, so one goal of granting Congress the power to regulate interstate commerce was to limit such practices. It was not clear at first to what extent states retained authority over such commerce. However, the doctrine of a dormant Commerce Clause was soon recognized by the courts as a limit on state legislation, even in the absence of congressional regulation. Dormant is used to describe this right because it is not an express provision in the Constitution. Although the meaning and application of the dormant Commerce Clause has varied over time, the modern standard, as applied to state regulatory actions, contains two basic inquiries. First is the question of whether a state regulation discriminates against other states on its face or in effect, showing an intent to benefit in-state economic interests at the expense of out-of-state interests. If that is the case, then no further analysis is required, and the law will generally be struck down. Second, if a law is non-discriminatory, but still has some impact on interstate commerce, the court will evaluate the law using a balancing test to find whether there is a legitimate public purpose. State public health, environment, and safety concerns are generally considered by the courts to represent a legitimate public purpose. As a preliminary matter, it should be noted that land use regulation, such as zoning, has traditionally been considered primarily a state concern. Also, there are many instances of states taking an important role in regulating the siting of energy facilities and associated rights-of-way. This includes state statutes governing the siting of oil pipelines within their borders. In addition, siting electricity transmission lines has also historically been the exclusive province of states regardless of the nature of the facilities and the degree to which the interstate electricity grid depends upon those facilities. States retain primary authority to make siting decisions even in areas considered particularly important to the interstate electricity grid. Other federal legislation has recognized the state's role in making siting decisions with respect to other tools of interstate commerce like wireless telecommunications facilities and interstate highways. Of course, federal legislation may reduce the primacy of state authority. For instance, federal law provides that siting decisions for interstate natural gas pipelines are made by FERC pursuant to Section 7 of the Natural Gas Act. Further, interstate natural gas pipelines still must obey state and local laws, including zoning ordinances, unless preempted by federal law. Thus, there seems to be little question that both historical practice and modern regulatory schemes recognize a significant role for state regulatory actions regarding siting energy facilities and associated rights-of-way. In order to make a dormant Commerce Clause analysis, the court must have a fully developed record to allow "a sensitive, case-by-case analysis of purposes and effects." Without knowing what final action states may take, it is difficult to speculate which, if any, potential actions might present dormant Commerce Clause concerns. It is possible, however, to outline the factors a court might consider in reviewing a dormant Commerce Clause challenge to state action related to the pipeline. The first question that a court would consider in a dormant Commerce Clause challenge would be whether a particular state regulation or siting decision was discriminatory. So long as the regulatory scheme provided a uniform standard for reviewing siting decisions for energy transmission it seems unlikely it would be found unconstitutional due to discrimination. In order to be found discriminatory, it would need to be shown that the intent or effect of the legislation was to benefit in-state economic interests at the expense of out-of-state interests. For instance, protectionist legislation which favored in-state companies regarding right-of-way acquisition might run afoul of this requirement. However, to the extent that the law applies equally to both in-state and out-of-state pipeline companies, it is not clear that there would be a basis for an argument that such a law was discriminatory. If a law, statute, or siting decision was found not to be discriminatory, then a court would move to a Pike analysis, in which an excessive burden on interstate commerce must be shown. One court described the Pike analysis as putting the burden on the challenging party to show that a statute encumbers interstate commerce in a way that "is clearly excessive in relation to the putative local benefits." Although lower courts have varied in their application of this test, it does appear that states are given significant deference by courts to establish environmental, public health, and safety standards. Some have posited that a court might apply a heightened level of scrutiny to any state action regarding the Keystone XL pipeline on the grounds that the action would regulate "foreign commerce." The Supreme Court has held that state action which burdens foreign commerce should be subjected to a "more rigorous and searching scrutiny." However, this heightened level of scrutiny has generally been applied to those areas where the state action directly affects foreign trade or foreign entities, not where it burdens commerce generally. Accordingly, it is unlikely that any state action related to the siting of the Keystone XL pipeline within its borders would be seen as a direct regulation of foreign trade. Rather, the action would most likely be seen as dictating the terms and conditions of the domestic transit of an imported good after it has been imported. Next, putative local benefits would be identified and weighed. It does not appear to be difficult to establish before a court that an oil pipeline siting statute would serve local interests. As discussed above, courts have considered safety and economic concerns in evaluating similar legislation, and a court might also consider environmental, aesthetic, or any number of other non-protectionist concerns. The relative weight of the local benefits would depend not only on the benefits identified by a court, but also on what implementing regulations look like and how a regulatory scheme is applied in a particular case. Once a court had established what legitimate state interest was being served, it would then evaluate the level of burden on interstate commerce that was imposed by the state regulatory activity. In general, it appears unlikely that the passage of an oil siting statute similar to laws in other states would by itself create an "undue burden on interstate commerce" that would dictate reversal of the law. Statutes that require state permission prior to construction and operation and conformity with siting and regulatory requirements as set forth by a state agency during the review process are not uncommon and appear to be challenged only rarely. A state action related to the siting of an oil pipeline could be found to impose a significant burden on commerce. For example, if the statute requires the owner/operator of a proposed pipeline to obtain a permit before siting a pipeline in the state, but the regulatory agency tasked with enforcing the statute refused to permit a proposed pipeline across the state regardless of location, that refusal arguably may constitute an undue burden on interstate commerce. However, even that decision might not be a per se violation of the dormant Commerce Clause, as a court might choose to evaluate the burden imposed by the re-routing of the pipeline through other states, or the burden imposed by using an alternative means of transport of the oil. Assuming that a state statute or regulatory scheme would not preclude the passage of the Keystone XL pipeline through the state, it may still impose some administrative burden, and, in addition, might delay project construction or make the project more expensive. The burden on commerce is measured by the level of burden, delay, and expense. A court would consider what costs could be associated with this delay, and how this would affect the overall viability of the project. As noted, however, the fact that there are costs associated with regulatory burdens does not appear to have led to significant challenges to oil pipeline siting statutes in the past. One argument that could be made is that new state requirements for oil pipelines in the Keystone XL pipeline planning process where none previously existed could add significantly to the cost or viability of the pipeline. Establishing the economic effect of a delay would depend on factors that could not be easily established until legislation was passed and siting decisions were made. For instance, what changes to the Keystone XL planning process would be required because of a change in siting to the original proposal? What costs associated with the pipeline have already been expended, and would the value of those expenditures be diminished by failure to begin construction by a certain date? What financial commitments might expire, and what would be the costs of new ones? How might delay otherwise raise costs, and would the economic viability of the project be threatened? What other economic or business considerations would be involved? One could argue further that a court would need to consider how changed regulations might affect the burden on commerce. Thus, to the extent that the Keystone XL Pipeline planning process had accounted for certain regulatory hurdles, the state action might not significantly add to those regulatory burdens. However, new regulations could mean additional processing. To the extent that a court found that delays, even if costly, were a necessary component of the state effectuating legitimate state interests in public health and safety, then a court would be likely to find that the state's action was not an unconstitutional burden on interstate commerce. Before turning to whether and how a state statute might be preempted, it is useful to review the history and content of federal pipeline safety legislation. The initial federal legislation governing fossil fuel pipeline safety was the Natural Gas Pipeline Safety Act of 1968. This pipeline safety legislation was amended in 1979 to include liquid fuels, and has been since been amended on a number of occasions, including by the Pipeline Safety Improvement Act of 2002. Thus, what is often referred to as the "Pipeline Safety Act" is actually several statutes enacted over the last 50 years and codified at 49 U.S.C. Section 60101 et seq . However, for the sake of convenience this memorandum will refer to the collection of federal legislation codified at 49 U.S.C. Chapters 601-605 as the "Pipeline Safety Act." In addition to the arguments that state action regulating interstate pipelines might run afoul of the dormant Commerce Clause, several parties have also voiced concerns as to whether certain state actions related to oil pipelines could be preempted by the federal Pipeline Safety Act. Under the Supremacy Clause, statutes and treaties as well as the constitution itself supersede state laws that "interfere with, or are contrary to" their dictates. In such cases, the federal law is said to "preempt" the state law. In evaluating Supremacy Clause challenges to state statutes or other state actions, courts will generally consider three ways that a state action might be preempted. First, when acting within its constitutional limits, Congress may expressly preempt state law. Second, federal law may preempt state law if the two conflict. This type of conflict occurs either when "compliance with both federal and state regulations is a physical impossibility" or if the state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." And third, "Congressional intent to preempt state law in a particular area may be inferred where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress 'left no room' for supplementary state regulation." The preemption argument in the case of Keystone XL is based on a concern that potential state action affecting pipeline siting might be preempted by federal pipeline safety statutes, despite state intent to protect public safety and the environment. Turning first to express preemption, the Pipeline Safety Act contains the following language: A State authority that has submitted a current certification under section 60105(a) of this title may adopt additional or more stringent safety standards for intrastate pipeline facilities and intrastate pipeline transportation only if those standards are compatible with the minimum standards proscribed under this chapter. A state authority may not adopt or continue in force safety standards for interstate pipeline facilities or interstate pipeline transportation. In order to determine what state action is expressly preempted, it must first be determined what is meant by "safety standards for interstate pipeline facilities or interstate pipeline transportation." It is difficult to draw specific parameters as to what sort of state action would constitute a "safety standard for interstate pipelines facilities or interstate pipeline transportation" and therefore would be an area in which any state action would be expressly preempted by the Pipeline Safety Act. There are at least five sources for guidance on the parameters of the Pipeline Safety Act's express preemption: related statutory provisions, the "plain meaning" of the statutory language, the "industry usage" of the language, the federal agency's exercise of the statutory authority granted to it, and interpretations of the language by the federal courts. The Pipeline Safety Act offers an express statement of federal preemption, but also includes a limitation on the federal exercise of authority pursuant to the act: "[t]his chapter does not authorize the Secretary of Transportation to prescribe the location or routing of a pipeline facility." This suggests that so long as the state action can be deemed only to "prescribe the location or routing of a pipeline facility," there would likely be no federal preemption. The difficulty for proposed state actions affecting interstate pipelines arises where decisions related to location and routing may impact matters related to safety. This analysis should provide guidance to the state in determining what action can be taken without crossing the line from a legitimate state action affecting location/routing to a state adoption of "safety standards" that would be preempted by the Pipeline Safety Act. Before moving forward with this analysis of what action may avoid being deemed preempted, it is important to note that the Pipeline Safety Act's preemption provision prohibits states from adopting safety standards for both "interstate pipeline facilities" and for "interstate pipeline transportation." It is not clear what sort of state action might be preempted by a prohibition on safety standards for "pipeline facilities" and "pipeline transportation," but it is important that a state be aware of the existence of this prohibition and note that a court would likely seek to address this language in any preemption challenge based on 49 U.S.C. Section 60104(c). The primary rule of statutory interpretation is that, in the absence of a statutory definition (as is the case here), words in statutes are to be given their "plain meaning," and the plain meaning of "safety standards" is generally understood to be explicit rules regarding levels of safety that must be attained. It is unclear whether the plain meaning or ordinary usage of the phrase "safety standards" would extend beyond pipeline performance standards to action taken by a state with respect to the siting of pipelines—an authority that is expressly not preempted by the Pipeline Safety Act—that is done for the express purpose of protecting public safety. If, however, the state action related to siting were made for reasons not related to safety, a "plain meaning" reading of the statute would still suggest that there would be no preemption. A second rule of statutory interpretation is that some words or phrases may be ascribed the meaning given to them in the field addressed by the statute. The industry's perception of what concepts are (and are not) considered aspects of pipeline "safety" is therefore instructive here. One such example are the "safety and government-cited standards" for "pipeline operations" published by the American Petroleum Institute (API). Of those standards and recommendations, only "managing system integrity" seems to relate to the pipeline's location, and, on initial review, those standards seem to be concerned only with different standards and practices that may apply in certain "high consequence" areas, rather than planning or routing concerns. The API also has "safety and fire prevention" standards which seem to contemplate emergency prevention and response rather than external safety issues. These industry-sourced standards may suggest that the industry considers "safety standards" to include only standards that impact pipeline operations, such as avoiding leaks, preparedness and early warning systems, integrity testing, and related concepts, rather than standards to be contemplated during the planning/routing process. Another helpful tool in interpreting the meaning of the phrase "safety standards for interstate pipeline facilities or interstate pipeline transportation" is the extent to which the federal regulatory agency tasked with implementing those standards has asserted its authority. The Pipeline and Hazardous Materials Safety Administration (PHMSA) is a division of the U.S. Department of Transportation tasked with, among other things, the promulgation and enforcement of regulations issued pursuant to the terms of the Pipeline Safety Act. These regulations can be found at 49 C.F.R. Parts 190-195. The regulations are helpful in interpreting the Pipeline Safety Act because they offer insight into the PHMSA's perception of its authority under the act. Multiple substantive matters are addressed in PHMSA's pipeline safety regulations, which are issued pursuant to its authority under the Pipeline Safety Act. These requirements all appear to relate to the physical properties of the pipeline and associated facilities; the qualifications of the personnel employed in the construction, operation, and maintenance of the pipelines; or emergency response requirements. The regulations seem to recognize the different safety and environmental hazards presented by the siting of pipelines in different locations. For example, the regulations appear to establish varying standards for pipelines in rural areas, "unusually sensitive areas," and other geographical distinctions. It appears that these distinctions are made in order to establish different physical, emergency response, and other requirements rather than to dictate a policy of siting pipelines away from these areas. State actors that infringe on this assertion of federal jurisdiction could be preempted by federal statute. Thus, it appears that the PHMSA seems to view the extent of its authority over "safety standards for interstate pipeline facilities or interstate pipeline transportation" to extend to subjects such as the physical makeup up the pipeline, monitoring requirements, personnel qualifications, emergency response requirements, and related topics. If this is the extent of the reach of the Pipeline Safety Act's jurisdiction with respect to oil pipelines, state action would avoid preemption so long as it does not affect these aspects of oil pipeline operation. Finally, jurisprudence in the federal courts can assist in understanding the parameters of the federal authority to adopt "safety standards for interstate pipeline facilities or interstate pipeline transportation" and the express limitation on the states to adopt such standards. Although there is no case law evaluating a challenge to a state statute or regulatory action governing the location of an interstate pipeline, these cases help to draw the line between a permissible state activity governing pipeline activities and an impermissible foray into interstate pipeline safety standards expressly preempted by the Pipeline Safety Act. In Texas Midstream Gas Services v. City of Grand Prairie , a natural gas pipeline operator sought to enjoin the Grand Prairie City Council from enacting and enforcing a city ordinance known as "Section 10," requiring a special permit from the city in order to build a natural gas compressor station, and mandating that compressor stations comply with certain setback requirements, security requirements, and aesthetic and noise level requirements. Parties were also required to pave means of vehicular access to the facilities in order to obtain a permit. In this instance, the pipeline operator had announced its intentions to build and operate the facility prior to the enactment of Section 10 by the Grand Prairie City Council. The pipeline operator claimed, among other things, that Section 10 was preempted by the Pipeline Safety Act. After a federal district court held that only that portion of Section 10 requiring a security fence was preempted by the Pipeline Safety Act and rejected the request for injunction regarding enforcement of the remainder of Section 10, the pipeline operator appealed to the U.S. Court of Appeals for the Fifth Circuit. That court affirmed the lower court's decision and rejected the request for an injunction, thus allowing the city to enforce Section 10 with the exception of the security fence requirement. With respect to the setback requirement, the court noted that The question is whether the setback requirement is a "safety standard." It is not. Along with the other provisions of Section 10, the setback requirement primarily ensures that bulky, unsightly, noisy compressor stations do not mar neighborhood aesthetics. City Council records reveal that Grand Prairie's primary motivation in adopting Section 10 was to preserve neighborhood visual cohesion, avoiding eyesores or diminished property values. The pipeline company claimed that, regardless of the purpose of the enactment, Section 10 had the effect of regulating fire safety, and thus was preempted by the Pipeline Safety Act. The court rejected this argument, finding that "[a] local rule may incidentally affect safety, so long as the affect is not 'direct and substantial.'" The court also addressed the scope of the PSHMA regulations as discussed above. In response to an assertion by the pipeline that Section 10 was preempted because the PHMSA regulations "address the location of compressor stations," the court clarified that "the PSA itself only preempts safety standards," and that the regulation cited by the pipeline "touches on compressor station location only as a means of effectuating this legislative directive. A regulation promulgated by an administrative agency cannot expand the unambiguously expressed preemptive scope set by Congress." This decision helps illustrate the type of state or local actions related to pipeline facilities that the courts have held to be preempted by the Pipeline Safety Act's assertion of exclusive federal jurisdiction over "safety standards" for interstate pipeline facilities so long as the state or local action does not have "safety standards" for the pipeline as its primary intent. Another U.S. Court of Appeals decision, Kinley v. Iowa Utilities Board , illustrates the sort of state or local action that the courts have found would be preempted by the Pipeline Safety Act. In Kinley , the owner/operator of an interstate petroleum product pipeline challenged an Iowa state statute that established a "comprehensive state program supervising the intrastate and interstate transportation of solid, liquid or gaseous substances ... in order to protect the safety and welfare of the public." The state statute, referred to as "Chapter 479," required that such facilities be permitted by the state. The pipeline owner/operator challenged the state's assertion of jurisdiction over the operations of its interstate pipeline as preempted by the Pipeline Safety Act. After the district court agreed with the owner that the state's assertion of jurisdiction over interstate pipelines under Chapter 479 was preempted, the state appealed to the Eighth Circuit Court of Appeals. On appeal, the state acknowledged that certain aspects of Chapter 479 that explicitly dealt with safety were preempted by the Pipeline Safety Act. However, the state argued that there were certain "non-safety" provisions of Chapter 479, specifically hearing, permit, and inspection provisions, as well as financial responsibility requirements, designed to protect the state's farmland and topsoil from damage due to the construction, operation, and maintenance of the pipelines and to guarantee payment of property and environmental damages, that were not preempted. The court disagreed, finding that the hearing, permit, and inspection provisions of Chapter 479 are "so related to the federal safety regulations that they are preempted" by the Pipeline Safety Act, and further holding that "environmental and damage remedies provisions are not severable from the preempted hearing, permit and inspection provisions and thus are preempted as well." The court thus affirmed the lower court's opinion and disallowed the application of Chapter 479 to the interstate pipeline. The example of Kinley is instructive to states seeking to regulate interstate pipelines. A state that is contemplating such action might analyze Iowa's Chapter 479 to avoid creating law that would, like Iowa's Chapter 479, be preempted by the Pipeline Safety Act. It should, however, be noted that with respect to the "environmental and damage remedies" provisions, the court found that these provisions were preempted by the Pipeline Safety Act not by virtue of their content but rather because they could not be severed from other aspects of Chapter 479. As the court noted in Kinley , the question of severability is not a constitutional question but instead is a matter of state law. Many states have statutes and regulations that govern interstate pipelines subject to the Pipeline Safety Act that appear not to have been deemed preempted by the Pipeline Safety Act. Although the lack of a successful preemption challenge does not conclusively demonstrate that the state statute would survive such a challenge, a state might nevertheless find that such statutes and regulations provide guidance in avoiding preemption. If the state action is not expressly preempted, it may be preempted by what is commonly known as "conflict preemption." There appear to be two arguments that action regarding the siting of the proposed Keystone XL pipeline would be preempted by conflict with federal law and would therefore be unconstitutional. The first is that a siting statute would conflict with the president's authority to permit cross-border pipelines. It is difficult to comprehend how a state statute that addresses the location of a facility within its borders would "conflict" with an exercise of executive branch authority to authorize cross-border pipelines. There would likely be no operational conflict, as compliance with both the federal requirement and a state permitting/siting requirement is not only physically possible but has been achieved by numerous other international pipeline projects that have obtained presidential permits and also satisfied permitting and siting requirements of other states. It is also not clear whether and how a state permitting/siting requirement would "stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Although the State Department considered the environmental impacts of the entire Keystone XL project when conducting its NEPA review, the State Department's actual permitting authority extends only to that portion of the facility that crosses the U.S.-Canada border. According to its own terms, the purpose of the exercise of executive authority found in Executive Order 13337 is to expedite reviews of permits as necessary to accelerate the completion of energy production and transmission projects, and to provide a systematic method for evaluating and permitting the construction and maintenance of certain border crossings for land transportation ... that do not require the construction and maintenance of facilities connecting the United States with a foreign country, while maintaining safety, public health, and environmental protections. Viewed in isolation, some of this language could be interpreted to suggest a generic federal "purpose and objective" of accelerating completion of energy production and transmission projects, in which case state legislation which might impede the completion of such projects could be considered to be in conflict with the stated federal purpose. However, this appears likely to be too narrow a view of the objective of Executive Order 13337, which appears intended to expedite the processing of presidential permit applications. It therefore seems unlikely that a court would construe state action impacting the siting of an oil pipeline within the state's borders as "an obstacle to the accomplishment and execution of the full purposes and objectives" of the federal government as expressed in Executive Order 13337. A second potential claim of "conflict preemption" would be an assertion that state action conflicts with the Pipeline Safety Act. It is impossible to draw a conclusion without knowing the nature of the state's action. Additionally, it is difficult to articulate an argument that a state statute related to oil pipeline siting would present either an "operational conflict" with the Pipeline Safety Act or would be deemed "an obstacle to the accomplishment and execution of the full purposes and objectives" of the Pipeline Safety Act, which are stated as "to provide adequate protection against risks to life and property posted by pipeline transportation and pipeline facilities by improving the regulatory and enforcement authority of the Secretary of Transportation." So long as state action did not interfere with the accomplishment and execution of these objectives by the federal government and did not make it impossible for an entity to comply with its actions, the Pipeline Safety Act, and any regulations issued pursuant to the act, a court would likely not find that the state's action was invalidated by "conflict preemption" with the Pipeline Safety Act. The third and final potential preemption of state action is what is commonly known as "field preemption"; that is, where it is inferred from congressional action that Congress intended to remove a state's regulatory authority over an entire subject. However, the Supreme Court has held that When Congress has considered the issue of pre-emption and has included in the enacted legislation a provision explicitly addressing that issue, and when that provision provides a "reliable indicium of congressional intent with respect to state authority," "there is no need to infer congressional intent to pre-empt state laws from the substantive provisions" of the legislation. Because Congress explicitly addressed the issue of preemption in the Pipeline Safety Act at 49 U.S.C. Section 60104, there is no need to explore the notion of "field preemption" with respect to that legislation. The State Department reviews environmental impacts prior to making the national interest determination. However, the legal necessity of the State Department's review under NEPA for projects under Executive Order 13337 is uncertain. Compliance with NEPA in this instance could mean a project once immune from judicial oversight is subject to court review. As discussed above, Executive Order 13337 delegates the President's authority to the State Department to issue permits for certain energy projects that cross international borders. Executive Order 13337 requires that the State Department seek the views of certain agency heads, including the Secretary of the Interior and the Administrator of the Environmental Protection Agency, prior to issuing the determination. While the introductory language of the order indicates one purpose of the process is to maintain "environmental protections," the order does not explicitly require consideration of environmental impacts. It states only that the permit be in the national interest. Executive Order 13337 is a modification of Executive Order No. 11423, which predates NEPA, and thus, does not reference a NEPA review to inform the national interest determination. The Keystone XL project has had a series of environmental reviews under NEPA initiated by the January 28, 2009, State Department announcement that it would prepare an EIS: With respect to the application submitted by Keystone, the Department of State has concluded that the issuance of the Presidential permit would constitute a major Federal action that may have a significant impact upon the environment within the meaning of the National Environmental Policy Act (NEPA) of 1969. For this reason, Department of State intends to prepare an EIS to address reasonably foreseeable impacts from the proposed action and alternatives. A draft EIS was issued in April 2010. A supplemental draft EIS was issued in April 2011, and a final EIS in September 2011. Following the decision to reroute the Nebraska portion of the pipeline, a draft SEIS was issued in March 2013. The State Department's decision to prepare an EIS was consistent with its regulations. Under 22 C.F.R. §161.7(c), the State Department will prepare an environmental review for certain projects, including issuing permits for construction of international pipelines as provided under Executive Order 11423. Pursuant to its regulations, the State Department evaluates the environmental impacts under NEPA prior to making a national interest determination for a permit. For example, it prepared an environmental assessment for an oil pipeline that crossed from Alberta, Canada, to Superior, Wisconsin. It also prepared an EIS for the earlier Keystone oil pipeline from Canada. Courts have considered whether any environmental review prepared by the State Department for projects seeking a permit under Executive Order 13337 is subject to judicial review. Only trial-level courts have heard the issue, and the decisions in those courts have been split. The U.S. District Court for the District of Columbia held that there was no judicial review of Executive Order 13337 actions. A year later, the U.S. District Court for the District of Minnesota, which was not bound by that precedent, held that a State Department NEPA review prepared for a permit under Executive Order 13337 was a final agency action subject to review by a court. In order to sue the federal government, the government must waive sovereign immunity. For federal agency actions, that waiver is typically provided by the Administrative Procedure Act (APA): "Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." Courts have consistently held that an EIS is a final agency action subject to review under the APA. However, under accepted precedent, no NEPA review is required for actions by a President because NEPA applies to "agencies of the Federal government," and not to presidential actions. Thus, although it seems no NEPA review was required under Executive Order 13337, the State Department's NEPA review may be an agency action that is judicially reviewable. By conducting a NEPA review, the State Department may have opened that evaluation to court scrutiny. District courts disagree over whether an EIS would be an agency action under these circumstances. The U.S. District Court for D.C. held that it is not, relying on the fact that the Executive Order is a delegation by the President of a constitutional authority. The court in that case focused on the issuance of the permit and not on the EIS, itself. Since the delegation did not change the underlying authority for the action, just who issues the permit, according to the D.C. district court, any activity by the State Department pursuant to that Executive Order is a presidential action, and not an agency action. The U.S. District Court for the District of Minnesota disagreed with the reasoning of the D.C. district court and found that an EIS by the State Department for a cross-border pipeline permit was reviewable. The court noted the State Department's Federal Register notice in which it stated that the pipeline permit was a "major federal action." The court noted that although the permit pertained to a pipeline crossing an international border, that did not excuse the State Department from analyzing the environmental impacts of the entire route. More important, the court held that the fact that the permit for the international crossing was a presidential action did not "convert the State Department's preparation of the FEIS into a presidential action." To some extent, the two courts are arguing about two different things: the issuance of the permit, and the issuance of the EIS. However, only the Minnesota district court separates the two actions, noting that the issuance of the permit was not before the court, and allowing judicial review of the EIS. Further, evidence appears to support the notion that an EIS is an agency action separate from the State Department's issuance of a presidential permit under Executive Order 13337. First, the State Department, under APA notice and comment rulemaking, created a rule stating it would prepare an EA for pipelines under that Executive Order. If the State Department failed to complete a NEPA review while that rule was still in effect, it could be liable under the APA for acting contrary to its own regulations. Second, there is no directive in the Executive Order to perform any type of environmental review. A permit could be issued without any NEPA review, but occurs because of a State Department regulation requiring an EA, consistent with NEPA. Thus the NEPA review could be characterized as a congressional delegation of authority by statute (NEPA) rather than a presidential delegation of authority via Executive Order 13337. Additionally, the State Department's description of its process indicates that the national interest determination is separate from the NEPA review, lending further support to the argument that there are two actions: "Following the release of the Final EIS, a review period begins to determine if the proposed project is in the national interest. This broader evaluation of the application extends beyond environmental impact, taking into account economic, energy security, foreign policy, and other relevant issues." In reaching its conclusion that issuing a permit under Executive Order 13337 is judicially untouchable, the D.C. district court reviewed Supreme Court precedent and noted that no decision is directly on point. The Supreme Court has considered presidential actions only in the context of those authorized by statute. In those cases, Franklin v. Massachusetts and Dalton v. Specter , the Court reviewed challenges to the sufficiency of agency or commission reports submitted to the President before he acted. The decisions of the President in each case were held to be insulated from judicial review because, regardless of the documents' content, the Court held the President had ultimate discretion. The reports submitted to the President as part of each underlying statutory directive did not change the nature of the authority: regardless of the content of the reports, the decision was still made by the President. In the case of Franklin , the statute did not require the President to use the data in the report. In Dalton , the Court held that despite the statute's requirement limiting the President to approving or rejecting the list in its entirety, the ultimate authority was still presidential: no action was final until the President submitted his certificate of approval to Congress. Distinctions between the Supreme Court cases and an EIS for Executive Order 13337 may be made. In those court cases, the documents given to the President were required by an underlying statute and deemed part of the delegated authority. In cases under Executive Order 13337, there is no presidential directive suggesting or requiring an environmental review. The EIS was a discretionary action of the agency based on a statutory requirement that agencies act "to the fullest extent possible" to review agency actions. To make that distinction more clear, if a Secretary submitted a "view" under Executive Order 13337 Section 1(b)(2) stating it was not in the national interest to issue the permit, but the State Department issued the permit anyway, under Supreme Court precedent neither the "view" nor the permit issuance appears to be reviewable. Under the holdings in Franklin and Dalton , that "view" would not be final and the permit issuance would be part of the delegated presidential authority because the "view" was advisory and part of the delegated presidential authority. In contrast, if the EIS finding was in error, well-established case law would allow challenge of the EIS as "arbitrary and capricious" under the APA. While that might not change the State Department's determination of the project's being in the national interest, it would make the EIS a final agency action reviewable under accepted legal precedent. Second, the reports in Franklin and Dalton were found not to be final actions because the presidential decision still had to be made. Whereas, courts have held repeatedly that a completed EIS is a final action. In fact, in Franklin , the Court noted the ways that the census report was not an APA agency action: it was "not promulgated to the public in the Federal Register, no official administrative record is generated, and its effect on reapportionment is felt only after the President makes the necessary calculations and reports the results to Congress." In contrast, each of those factors occurs for an Executive Order 13337 NEPA review: it was promulgated to the public, there is an administrative record, and under Supreme Court precedent, injury under NEPA occurs when the agency fails to comply with the law. Because the State Department prepared a supplemental EIS to address EPA's concerns with the draft EIS, the State Department appears to concede that its EIS was different from the documents at issue in Franklin and Dalton . The Franklin Court said that until the President acted there was "no determinate agency action to challenge, since the President, not the Secretary, takes the final action that affects the States." In the case of Keystone XL, while issuing a permit is a final action taken under presidential authority, the EIS may also be a final action, which is taken under separate statutory authority. The D.C. court's holding did not recognize that distinction. Instead, the D.C. court found that the permit was a presidential action not subject to judicial review. Minnesota found that the EIS was a final agency action subject to judicial review.
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In 2008, TransCanada Corp. applied for a presidential permit from the State Department to construct and operate an oil pipeline across the U.S.-Canada border in a project known as Keystone XL. The Keystone XL pipeline would transport oil produced from oil sands in Alberta, Canada, to Gulf Coast refineries. The permit application was subjected to review by the State Department pursuant to executive branch authority over cross-border pipeline facilities as articulated in Executive Order 13337, and subsequently denied by the State Department. Pursuant to the requirements of legislation passed in the 112th Congress which directed a decision on the application within a particular time frame, on January 18, 2012, the State Department recommended that "the presidential permit for the proposed Keystone XL pipeline be denied and, that at this time, the TransCanada Keystone XL Pipeline be determined not to serve the national interest." The same day, the President stated his determination that the Keystone XL pipeline project "would not serve the national interest." Following this initial denial, TransCanada Corp. reapplied to the State Department for the presidential permit needed for the border-crossing Keystone XL pipeline proposal on May 4, 2012. On March 1, 2013, the agency released a draft Supplemental Environmental Impact Statement (draft SEIS) on the new presidential permit application, as required by the National Environmental Policy Act (NEPA). A final decision from the State Department and the Administration on whether to grant the presidential permit is expected after expiration of the comment period for the draft SEIS in late April 2013. Legislative activity in the 112th Congress and sustained interest in the 113th Congress with respect to the permitting of the Keystone XL pipeline and similar border-crossing facilities, a subject previously handled exclusively by the executive branch, has triggered inquiries as to whether this raises constitutional issues related to the jurisdiction of the two branches over such facilities. Additionally, as states contemplated taking action with respect to the pipeline siting, some questioned whether state siting of a pipeline is preempted by federal law. Others argued that states dictating the route of the pipeline violates the dormant Commerce Clause of the Constitution which, among other things, prohibits one state from acting to protect its own interests to the detriment of other states. This report reviews these legal issues raised during the ongoing debate over the Keystone XL project. First, it suggests that legislation related to cross-border facility permitting is unlikely to raise significant constitutional questions, despite the fact that such permits have traditionally been handled by the executive branch alone pursuant to its constitutional "foreign affairs" authority. Next, it observes generally that state oversight of pipeline siting decisions does not appear to violate existing federal law or the Constitution. Finally, the report suggests that State Department's implementation of the existing authority to issue presidential permits appears to allow for judicial review of its National Environmental Policy Act determinations. A companion report from CRS focusing on policy issues associated with the proposal, CRS Report R41668, Keystone XL Pipeline Project: Key Issues, by [author name scrubbed] et al., is also available.
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Legislative interest in the patent system has been evidenced by substantial discussion of omnibus reform bills. Some of the reforms considered in the 110 th Congress, but ultimately not enacted, would have impacted the United States Patent and Trademark Office (USPTO). Among these proposals are the adoption of patent opposition proceedings, changes to the rules governing the publication of pending patent applications, and third party submission of information to the USPTO that may be pertinent to the decisions whether to allow a patent to issue or not. Alongside these congressional proposals, the USPTO itself has engaged in a substantial rulemaking effort in recent years. This process culminated in new rules that would make several significant changes to the patent acquisition process. First, the rules would limit the number of "claims" that can be filed in a particular patent application, unless the applicant supplies the USPTO with an "Examination Support Document" in furtherance of that application. Second, the rules would limit the number of "continued applications" that could be filed, absent a petition and showing by the patent applicant of the need for such applications. In addition, the USPTO has proposed reforms that would impose additional applicant disclosure obligations with respect to "Information Disclosure Statements" filed in support of a particular patent application. The USPTO rules concerning claims and continued applications are controversial. Some patent professionals are concerned that the rules would make the process of patent acquisition more costly, impede the ability of innovators to protect their inventions adequately, and ultimately harm innovation. Some have also opined that the rules are inconsistent with the provisions of the governing patent legislation, the Patent Act of 1952. On the other hand, other observers believe that current claiming and continued application practices are subject to abuses that can potentially place undue burdens upon the USPTO during its examination tasks, be harmful to competitive industry, and at times work against the public interest. These observers favor reforms that would limit what they see as applicant abuses of the current system. Criticisms of the USPTO rules have led to legal challenges before the U.S. District Court for the Eastern District of Virginia. The result was the April 1, 2008 decision in Tafas v. Dudas . There, the U.S. District Court for the Eastern District of Virginia concluded that the USPTO claims and continued application rules were substantive in nature. Because Congress has not granted general substantive rulemaking power to the USPTO, the District Court declared that the rules were void and therefore unenforceable. The USPTO has appealed this judgment. At the time of the publication of this report, this outcome of this appeal is not yet available. Congressional response to the claims and continuing application rules has thus far been limited. In the 110 th Congress, H.R. 1908 would have expressly provided the USPTO with regulatory authority to specify the circumstances under which a patent applicant may file a continuing application. That bill passed the House on September 7, 2007, as the "Patent Reform Act of 2007." No other legislation in the 110 th Congress—including S. 1145 , the Senate legislation also titled the "Patent Reform Act of 2007"—addressed the new USPTO rules. This report reviews the USPTO rules that would restrict claims and continuing applications. It begins by offering a summary of the patent system and the role of patents in innovation policy. The context, details, and legal challenges to the new USPTO rules are then explained. The report then offers both the policy justifications for the new rules, as well as concerns that patent professionals and other observers have expressed over their effectiveness and impact. The report closes by identifying congressional issues and options. The U.S. Constitution provides Congress with the power "To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries.... " In accordance with the Patent Act of 1952 (the "Patent Act"), an inventor may seek the grant of a patent by preparing and submitting an application to the USPTO. USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent. In determining whether to approve a patent application, a USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must disclose the "best mode," or preferred way, that the applicant knows to practice the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must meet four primary requirements. First, the invention must fall within at least one category of patentable subject matter. According to the Patent Act, an invention which is a "process, machine, manufacture, or composition of matter" is eligible for patenting. Second, the invention must be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit. Third, the invention must be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. Finally, an invention is not patentable if "the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." This requirement of "nonobviousness" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art. If the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Patent rights do not enforce themselves. Patent proprietors who wish to compel others to respect their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. Patent ownership is perceived to encourage innovation, which in turn leads to industry advancement and economic growth. One characteristic of the new knowledge that results from innovation is that it is a "public good." Public goods are non-rivalrous and non-excludable, for use of the good by one individual does not limit the amount of the good available for consumption by others, and no one can be prevented from using that good. The lack of excludability in particular is believed to result in an environment where too few inventions would be made. Absent a patent system, "free riders" could easily duplicate and exploit the inventions of others. Further, because they incurred no cost to develop and perfect the technology involved, copyists could undersell the original inventor. Aware that they would be unable to capitalize upon their inventions, individuals might be discouraged from innovating in the first instance. The patent system corrects this market failure problem by providing innovators with an exclusive interest in their inventions, thereby allowing them to capture their marketplace value. The patent system purportedly serves other goals as well. The patent law encourages the disclosure of new products and processes, for each issued patent must include a description sufficient to enable skilled artisans to practice the patented invention. At the close of the patent's twenty-year term, others may employ the claimed invention without regard to the expired patent. In this manner the patent system ultimately contributes to the growth of the public domain. Even during their term, issued patents may encourage others to "invent around" the patentee's proprietary interest. A patentee may point the way to new products, markets, economies of production and even entire industries. Others can build upon the disclosure of a patent instrument to produce their own technologies that fall outside the exclusive rights associated with the patent. The regime of patents has also been identified as a facilitator of markets. Absent patent rights, an inventor may have scant tangible assets to sell or license. In addition, an inventor might otherwise be unable to police the conduct of a contracting party. Any technology or know-how that has been disclosed to a prospective licensee might be appropriated without compensation to the inventor. The availability of patent protection decreases the ability of contracting parties to engage in opportunistic behavior. By lowering such transaction costs, the patent system may make transactions concerning information goods more feasible. Through these mechanisms, the patent system can act in a more socially desirable way than its chief legal alternative, trade secret protection. Trade secrecy guards against the improper appropriation of valuable, commercially useful and secret information. In contrast to patenting, trade secret protection does not result in the disclosure of publicly available information. That is because an enterprise must take reasonable measures to keep secret the information for which trade secret protection is sought. Taking the steps necessary to maintain secrecy, such as implementing physical security measures, also imposes costs that may ultimately be unproductive for society. The patent system has long been subject to criticism, however. Some observers have asserted that the patent system is unnecessary due to market forces that already suffice to create an optimal level of innovation. The desire to obtain a lead time advantage over competitors, as well as the recognition that passive firms may lose out to their more innovative rivals, may provide sufficient inducement to invent without the need for further incentives. Other commentators believe that the patent system encourages industry concentration and presents a barrier to entry in some markets. Because the relationship between the rate of innovation and the availability of patent rights is not well-understood, we lack rigorous analytical methods for studying the impact of the patent system upon the economy as a whole. As a result, current economic and policy tools do not allow us to calibrate the patent system precisely in order to produce an optimal level of investment in innovation. Thus, each of these arguments for and against the patent system remain open to challenge by those who are unpersuaded by their internal logic. The Patent Act allows inventors to file "continued applications." Stated generally, a continued application is one that has been "re-filed" at the USPTO, commonly following the rejection of some or all of its claims. Continued patent applications allow inventors to extend the period of examination at the USPTO in order to negotiate further with a patent examiner, amend claims, submit new claims, and gain additional time to prepare evidence to be submitted to the USPTO in support of their applications, among other potential benefits. Under current patent practice, several different types of continued applications exist. A "continuation" application discloses the same subject matter as the original application. A "continuation-in-part" application, or CIP, adds some additional subject matter to the original application. Finally, a "request for continued application," or RCE, allows applicants to request additional examination of an application without the need to file a continuation application. A simple example illustrates continuation practice. Suppose that an inventor files a patent application on January 1, 2000. After the USPTO examiner subsequently issues a "final rejection" of that application, the inventor files a continuation application on February 1, 2004. The continuation application includes the same disclosure as the 2000 application. By filing it, the inventor may continue to assert to the USPTO that a patent should issue on that invention. If the USPTO approves the continuation application, it will issue as a patent that expires on January 1, 2020—twenty years from the date of filing of the original or "parent" application. Section 120 of the Patent Act imposes several technical requirements that must be met with respect to continuation applications. First, the continuation application must be filed prior to the patenting, abandonment, or termination of proceedings of its predecessor application. Second, the predecessor and continuation application must have at least one inventor in common. Third, the continuation application must expressly identify the predecessor application. Finally, to be entitled to the benefit of the predecessor application, claims within the continuation application must be fully supported by the technical disclosure found within the predecessor application. Claims that reference "new matter" found in the continued application, but not in the predecessor application, are entitled only to the actual filing date of the continued application. As noted earlier, such an application is termed a "continuation-in-part," or CIP. It should be appreciated that an applicant may file a continuation application even though the "parent" application has resulted in an issued patent itself. Even in circumstances where the USPTO examiner has allowed all of the claims of a patent application to issue, the inventor may nonetheless file a continuation application. He may do so in order to obtain broader claims, to obtain claims that more closely track his competitor's products, or for any other reason. Continued applications are widely used in modern patent practice. In 2006, about 29.4% of the applications filed at the USPTO were continued applications, as compared to approximately 18.9% in 1990 and approximately 11.4% in 1980. Furthermore, the relevant provisions of the Patent Act place no numerical limits upon the number of continued applications that may be filed. Many existing U.S. patents have relied upon a chain of four, five, or even greater number of continuations, CIPs, and RCEs. As part of its rules announcement of August 21, 2007, the USPTO imposed some limitations upon the number of continued applications that could be filed absent a petition by the applicant. In particular, the USPTO rules stipulate that applicants may file only two continuations or CIPs, plus one RCE, with respect to an original application as a matter of right. In order to file additional continued applications, the applicant must submit a petition showing an amendment, argument, or evidence that could not have been previously submitted. The USPTO issued the rules on August 21, 2007, and followed them with an additional "clarification" memorandum on October 10, 2007. The rules were to apply to applications filed after November 1, 2007. In addition, the rules were to apply to applications that had been filed at the USPTO prior to November 1, 2007, provided that they had not yet been reviewed by the USPTO. The USPTO rationalized its rule in part on the basis of administrative efficiency. As explained by the USPTO: The volume of continued examination filings ... is having a crippling effect on the Office's ability to examine "new" (i.e., non-continuing) applications.... The cumulative effect of these continued examination filings is too often to divert patent examining resources from the examination of new applications disclosing new technology and innovations, to the examination of applications that are a repetition of prior applications that have already been examined and have either issued or become abandoned. The USPTO has also explained that the public interest lies in knowledge of the scope of patent claims. According to the USPTO, the filing of a sequence of continued applications leaves the public "with an uncertainty as to what the set of patents resulting from the initial application will cover." Academics have also criticized continued application practice. Mark Lemley and Kimberly Moore, then members of the Berkeley and George Mason law school faculties respectively, stated that continued application practice has introduced a number of deleterious consequences into the patent law: First, at a minimum, continuation practice introduces substantial delay and uncertainty into the lives of a patentee's competitors, who cannot know whether a patent application is pending in most circumstances. Second, the structure of the PTO suggests that continuations may well succeed in "wearing down" the examiner, so that the applicant obtains a broad patent not because he deserves one, but because the examiner has neither incentive nor will to hold out any longer. Third, continuation practice can be—and has been—used strategically to gain advantages over competitors by waiting to see what product the competitor will make, and then drafting patent claims specifically designed to cover that product. Finally, some patentees have used continuation practice to delay the issuance of their patent precisely in order to surprise a mature industry, a process known as "submarine patenting." On the other hand, critics of the USPTO rules explain that continuation practice has a number of beneficial attributes. First, some observers believe that continued application practice allows inventors to pursue a cautious, deliberate strategy before the USPTO, allowing them to obtain robust patent rights. This tactic may be appropriate in view of recent judicial opinions that have emphasized the doctrine of "prosecution history estoppel." Broadly stated, this principle allows courts to consider negotiations between the applicant and the examiner when determining the scope of rights associated with a particular patent. In view of these judicial developments, some patent practitioners believe that it is unwise to make certain concessions to the examiner during the course of prosecution. The ability to file a continued application supports this strategy by allowing additional opportunities for discourse between the applicant and examiner. Second, critics of the USPTO rules state that continued applications allow innovative firms to procure patent claims that relate to the products that they will ultimately market. For example, a pharmaceutical and biotechnology firm may file a patent application incorporating claims directed towards a broad category of compounds. At the time of the initial filing, however, that firm may not have conducted the extensive testing and research that is often needed to identify the particular member of that category that will be brought to market. Under current law, once that particular compound has been identified, the firm may file a continuation application specifically claiming it. Should administrative rulemaking impose limitations upon continuing applications, some observers believe that pharmaceutical and biotechnology firms in particular may potentially be unable to obtain claims that both cover their marketed products and be able to withstand validity challenges on a reliable basis. This tendency could potentially diminish the effectiveness of patent protection within industries where the patent system is widely acknowledged as crucial to innovation. Third, critics of the USPTO rules have asserted that some examiners at times do not understand the invention presented to them in particular applications. The use of continued applications is, in their view, necessary to obtain a competent examination. In addition, some observers believe that certain examiners have encouraged the filing of continued applications in order to inflate statistics pertaining to their workplace productivity. In addition to addressing continued applications, the USPTO Rules also announced changes to claiming practice. As noted previously, the Patent Act requires each patent to include "one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention." The claims set forth the proprietary rights that the patent owner asserts for itself. In particular, the words of a patent's claims are compared to the physical features of an accused product to determine whether infringement has occurred. As well, the teachings of earlier publications, patents, and other relevant "prior art" is compared to a patent's claims in order to decide whether the patented invention has been anticipated or would have been obvious. Claims may be drafted in either "independent" or "dependent" format. A dependent claim references an earlier claim, but then provides additional limitations upon the scope of that claim. Claims 1 and 2 of U.S. Patent No. 4,161,079, which relate to traps for mice and other pests, provides an example of independent and dependent claims: 1. A trap for rodents or like pests comprising: an enclosure for the pest to enter; means for ensnaring the pest in the enclosure; a charge of separately covered bait material mounted to the enclosure; means for uncovering said covered bait material within the enclosure, said means for uncovering being operable externally of said enclosure; whereby covered bait material may be stored for a long period of time and yet easily released when desired. 2. The invention of claim 1 wherein: said enclosure includes a window through which a user may look to see if a mouse or like pest is entrapped therein. The use of dependent claims is largely a drafting convenience for patent applicants. In the mouse trap example, rather than reciting each of the features of claim 1 once more, claim 2 merely references them but also incorporates an additional limitation. In practice, most patents contain multiple claims. Each claim is ordinarily viewed as presenting a separate statement of the patented invention. It is possible that the patent proprietor's competitor may infringe some of the patent's claims, but not others, depending upon the precise wording of the claim. Similarly, a court may declare that some of the patent's claims are invalid, but uphold other claims, in view of novelty, nonobviousness, or other legal requirements to obtain a patent. For the most part, then, each claim in a patent affords the patent owner separate proprietary rights that must be judged on its individual merits. Determinations as to the precise number of claims that a particular patent contains falls largely within the discretion of the individual who drafted the patent. As Paul Janicke, a member of the University of Houston law faculty, has explained: No limit is placed on the number of claims that can be included in an application. Most good patent attorneys write many of them of varying scope, in case the broadest turn out to be invalid because they cover some unknown piece of prior art, and in case the narrowest fail to provide commercially effective scope because they are easily designed around. Each claim is judged for validity and infringement as though it were a sort of mini-patent unto itself. To win an infringement case, the patentee need only establish infringement of one claim that the defendant is unable to invalidate. Such a system encourages the most diverse possible claiming. It is a good system for protecting inventions. The USPTO fee schedule provides some financial incentives to limit the number of claims in a particular patent. The basic filing fee for patent applications is currently $310. For each independent claim in excess of three, the USPTO imposes a surcharge of $210. In addition, for each claim in excess of 20, whether dependent or independent, the USPTO imposes a surcharge of $50. As a result, incorporating large numbers of claims within a patent may lead to a substantial increase in the official fees associated with its acquisition. Empirical studies have arrived at varying results on the average number of claims per patent, depending on the sampling technique employed and the time frame under consideration. Patent lawyer Peter L. Giunta reported an average of 3.09 independent claims and 18.15 total claims per patent issued in 2003. John Allison and Mark Lemley, members of the faculties of the University of Texas and Stanford University respectively, sampled 1,000 patents issued between 1976 and 1978, and another 1,000 patents issued between 1996 and 1998. Allison and Lemley reported an average of 9.94 claims per patent for the 1970's patents, and 14.87 claims per patent for the 1990's patents. Both the Giunta and Allison-Lemley studies agreed that the average number of claims per patent has increased over time. It should be appreciated, however, that some patents incorporate considerably more claims than average. For example, in the well-known patent litigation involving the BlackBerry® mobile communications device, the patent proprietor asserted charges of infringement based upon five patents. The first of these patents to issue incorporated 89 claims; the remaining four included 276, 223, 341, and 665 claims respectively. As a general matter, one empirical study has concluded that patents of greater value to their owners tend to have a larger number of claims than average. Following issuance of notice and a period of public commentary, the USPTO promulgated rules that would impose an obligation upon inventors who file patent applications that have more than five independent claims, or more than 25 total claims (dependent or independent). That obligation consists of the duty to prepare and file an Examination Support Document, or ESD. The ESD contains information about the claimed inventions that may assist the USPTO in conducting its examination tasks. In order to prepare the ESD, the applicant must conduct a search of databases of patents and the scientific literature. The applicant must then provide a detailed explanation of why the submitted claims are patentable over the prior art discovered during the search, as well as provide additional information pertinent to the patentability determination. The USPTO is concerned that applicants might attempt to file multiple applications directed toward the same or similar inventions in order to avoid the obligation to submit an ESD. The USPTO rules therefore require applicants to disclose all applications that are commonly owned and have at least one inventor in common. If the examiner determines that the applications have "substantially overlapping disclosures," the examiner may presume that the claims are not "patentably distinct" and will apply the 5/25 claim limitation to the total number of claims in the relevant applications. The USPTO further "cautioned" applicants from attempting to avoid this rule by filing separate applications outside the two-month window. On the other hand, the USPTO has recognized that applicants may permissibly file continued applications in order to obtain additional claims without the filing of an ESD. As the new continuation rules allow applicants to file two continuation applications and one RCE without special justification, applicants may potentially obtain 15 independent claims, and 75 total claims without the filing of an ESD. As with the rules with respect to continued applications, the claiming practice rules were to apply to applications filed after November 1, 2007. In addition, the rules were to apply to applications that had been filed at the USPTO prior to November 1, 2007, provided that they had not yet been reviewed by the USPTO. The USPTO justified these restrictions upon claiming practice on a number of grounds. One rationale was that these reforms would lead to a "better focused and effective examination process" that would allow examiners to concentrate upon a smaller number of claims, or in the alternative be assisted by an ESD. According to the USPTO, the result would be a reduction in "the large and growing backlog of unexamined applications," while "the quality of issued patents" would be maintained or possibly improved. The USPTO also expressed concerns that, absent rule changes, the public would face difficulty in analyzing numerous claims in issued patents that were directed towards "patentably indistinct inventions." Patents are often complex, technical instruments that may prove difficult to parse. It is not uncommon for jurists who frequently adjudicate disputes concerning patents to disagree on their appropriate construction. The transaction costs and uncertainty surrounding determinations of patent scope may be further exaggerated if the patent includes a large number of claims. These circumstances may not favor the ability of others to innovate themselves, and also to compete in the marketplace. Although the USPTO rules place no absolute restrictions upon the number of claims that may be incorporated within a particular application, they were subject to negative commentary by many patent professionals. In particular, some observers viewed the filing of an ESD as a costly, time-consuming, and potentially risky endeavor. Patent attorneys John Pegram and Ronald Lundquist opined that preparing an ESD may require more technical and legal effort than drafting its associated patent application. Submitting an ESD might therefore significantly increase the costs of procuring patent rights in the United States. In addition, some observers believe that ESDs will commonly incorporate statements and disclosures that might potentially be viewed as admissions. An ESD might therefore limit the scope of protection and enforceability of any patent that resulted from its application. Other observers believed that the claim rules would negatively impact patent rights without meaningfully serving the goals identified by the USPTO. As explained by patent attorneys John R. Harris and Daniel E. Sineway: For the USPTO to claim that an ESD will "improve examination quality" seems disingenuous—the improvement in quality will likely result not from any greater scrutiny or effort by the patent examiner, but from patent applicants providing the examiner with the ammunition to reject the application. The ESD will give examiners the information and reasoning needed to deny a patent, and/or force the applicant to fill the file history with information that helps infringers avoid liability in later litigation. As a result, patent attorney Kevin Noonan opined that "an applicant should avoid filing an ESD under any circumstances." If inventors widely subscribe to this view, then they will be practically limited in the number of claims that they can obtain from the USPTO. This effect may limit the extent of patent protection an inventor may effectively procure, particularly in view of a number of judicial opinions that have stressed that inventors possess the ability to draft claims using words of their own choosing. Courts have further observed that a patent's claims are intended to provide notice to third parties of its owner's proprietary rights. If the claims do not match the accused infringer's product or process literally, then courts may be reluctant to employ equitable principles such as the "doctrine of equivalents" to reach a finding of infringement. As the Federal Circuit explained, "as between the patentee who had a clear opportunity to negotiate broader claims but did not do so, and the public at large, it is the patentee who must bear the cost of its failure to seek protection for [a] forseeable alteration of its claimed [invention]." Some observers believe that the combination of judicial stress upon precise claim drafting and administrative limitations upon claims will make the patent system less attractive, thereby decreasing investment in R&D, diminishing innovation, and encouraging use of trade secret law. Criticisms over the propriety of the claims and continued application rules led to litigation against the USPTO in federal court. Legal challenges to the rules resulted in the April 1, 2008 decision in Tafas v. Dudas . There, the U.S. District Court for the Eastern District of Virginia concluded that the USPTO claims and continued application rules were substantive in nature. Because Congress has not granted general substantive rulemaking power to the USPTO, the District Court declared that the rules were void and therefore unenforceable. The Tafas v. Dudas ruling arose from lawsuits filed by two separate plaintiffs: (1) individual inventor Triantafyllos Tafas, and (2) the multinational pharmaceutical enterprise organized as Smithkline Beecham Corp. and Glaxo Group Limited. The plaintiffs requested a permanent injunction that would prevent the USPTO from implementing the claims and continued application rules. Although a number of arguments were before the District Court, Judge Cacheris confined his ruling to the issue of whether the USPTO claims and continued application rules were substantive or not. He concluded that the rules were indeed substantive because they would "affect[] individual rights and obligations." In particular, Judge Cacheris observed that the Patent Act placed no strict limitations upon the number of claims or continuing applications that an inventor could pursue. Because the rules would deprive inventors of these rights, they were substantive in nature and thus beyond the ability of the USPTO to enact. In keeping with its opinion, the District Court issued an order permanently enjoining the USPTO from implementing its claims and continued application rules. The USPTO has appealed this judgment to the Federal Circuit, where the appeal remains pending at the time of the publication of this report. Although patent professionals have focused attention upon the claims and continued application rules, the USPTO has proposed additional reforms as well. One of these reforms relates to the so-called Information Disclosure Statement, or IDS. An IDS is a document submitted to the USPTO that discloses all journal articles, patents, and other "prior art" of which a patent applicant is aware. The USPTO has expressed concerns that applicants too frequently include numerous "irrelevant or marginally relevant" prior art reference that not only fail to bring the most relevant material to the attention of examiners, but also require them to sort through dozens or hundreds of documents that are not pertinent to the question of patentability. As a result, the USPTO has proposed rules that would impose additional applicant responsibilities with respect to IDS filings. In particular, the USPTO proposes that if more than 20 documents are disclosed in an IDS, the applicant must provide an explanation of each cited document. That explanation consists of "an identification of a portion of a document that caused it to be cited, and an explanation of how the specific feature, showing, or teaching of the document correlates with language in one or more claims." If an IDS contains fewer than 20 documents, the applicant would be required to provide an explanation only for documents not published in English, or for English-language documents over 25 pages in length. Critics of the proposed IDS rules assert that "their practical effect will be to dramatically increase the cost of obtaining patent protection" and "make it much more difficult for inventors and innovators to protect their legitimate intellectual property rights . . .." At present time, the USPTO has not taken final action with respect to the proposed IDS rules. Should Congress conclude that the current situation with respect to the USPTO rulemaking is satisfactory, then no action need be taken. If Congress wishes to intervene, however, a number of options present themselves. In the 110 th Congress, H.R. 1908 would have expressly provided the USPTO with regulatory authority to specify the circumstances under which a patent applicant may file a continued application. That bill passed the House on September 7, 2007, as the "Patent Reform Act of 2007," and was referred to the Senate. No other legislation that was before the 110 th Congress—including S. 1145 , the Senate legislation also titled the "Patent Reform Act of 2007"—addresses the subject matter of the claims or continuation rules. One possibility would be to provide the USPTO with substantive rulemaking authority. In the 110 th Congress, an earlier verison of H.R. 1908 would have granted the USPTO Director the authority to "promulgate such rules, regulations, and orders that the Director determines appropriate to carry out the provisions of this title or any other law applicable to the United States Patent and Trademark Office." This provision was ultimately removed from the bill in favor of a more narrow grant of authority with respect to continued applications. More specific legislative amendments provide another option. Amendments to the relevant provisions of the Patent Act could confirm that no limitations should be imposed upon the number of claims or continuations that applicants may file. They could also address IDS filing requirements or other aspects of USPTO procedures. Alternatively, amended statutory provisions could impose such limitations, or grant the USPTO the authority to do so. Patent administration has becoming increasingly difficult as the USPTO faces both a rising number of filings and more technologically complex applications. On the other hand, many patent professionals have viewed both judicial and legislative developments as emphasizing well-crafted applications. Limitations upon claims and continued application practice have been widely viewed as constraining the ability of patent professionals to achieve this goal. Establishing the appropriate balance of rights and responsibilities between applicants and the USPTO forms an important consideration in maintaining a fair and efficient patent system.
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Congressional interest in the patent system has been evidenced by discussion of substantial reform bills in previous sessions. Alongside these congressional proposals, the United States Patent and Trademark Office (USPTO) has engaged in a significant rulemaking effort in recent years. This process culminated in new rules that would make several significant changes to the patent acquisition process. First, the rules would limit the number of "continued applications" that could be filed, absent a petition and showing by the patent applicant of the need for such applications. Stated generally, a continued application is one that has been re-filed at the USPTO, commonly following an examiner's rejection. The USPTO has justified this limitation on the basis that the increasing number of continued examination filings is hampering its ability to review new applications. Second, the rules would limit the number of "claims" that can be filed in a particular patent application, unless the applicant supplies the USPTO with an "Examination Support Document" in furtherance of that application. The USPTO asserts that these rules would lead to a more effective examination process. Critics of the new rules contend that they will negatively impact the ability of innovators to obtain effective proprietary rights. Legal challenges to the rules resulted in the April 1, 2008 decision in Tafas v. Dudas. There, the U.S. District Court for the Eastern District of Virginia concluded that the USPTO claims and continued application rules were substantive in nature. Because Congress has not granted general substantive rulemaking power to the USPTO, the District Court declared that the rules were void and therefore unenforceable. The USPTO has appealed that judgment. At the time of the publication of this report, this outcome of this appeal is not yet available. In addition, the USPTO has proposed reforms that would impose additional applicant disclosure obligations with respect to "Information Disclosure Statements" filed in support of a particular patent application. The USPTO has not yet taken action concerning this rule. Should Congress conclude that the current situation with respect to claims and continued application practice at the USPTO is satisfactory, then no action need be taken. If Congress wishes to intervene, however, a number of options present themselves. Congress could expressly provide the USPTO with regulatory authority to specify the circumstances under which a patent applicant may file a continued application. Other possibilities include providing the USPTO with substantive rulemaking authority and more specific reforms directed to the relevant substantive provisions of the Patent Act.
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On July 13, 2000, after nearly five years of bargaining, the U.S. and Vietnam announced theyhad signed a bilateral trade agreement (BTA). (1) OnJune 8, 2001, President Bush submitted theagreement, which requires congressional approval, to Congress. Following President Bush'stransmission, joint resolutions ( H.J.Res. 51 and S.J.Res. 16 ) wereintroduced in both chambers, and referred to the House Ways and Means Committee and the SenateFinance Committee. On September 6, 2001, the House approved the agreement by voice vote. TheSenate passed the agreement, by a vote of 88-12, on October 3, 2001 (Roll Call 291). On October16, 2001, President Bush signed the agreement into law ( P.L. 107-52 ). Vietnam's NationalAssembly ratified the BTA on November 28, 2001, by a vote of 278-85, and Vietnamese PresidentTran Duc Luong signed the agreement into law on December 7. It entered into force on December10, 2001 when the two countries formally exchanged notices of acceptance. The BTA is a major step toward fully normalizing U.S.-Vietnam commercial relations, as it restores reciprocal most-favored-nation (MFN, also known as normal trade relations [NTR])treatment between the two countries, and commits Vietnam to undertake a wide range ofmarket-oriented economic reforms. (2) Extending MFNtreatment to Vietnam will significantly reduceU.S. tariffs on most imports from Vietnam. Following the victory of communist North Vietnam over U.S.-backed South Vietnam in 1975,the United States ended virtually all economic interchange with unified Vietnam. The commercialrestrictions included not only those that previously had been imposed only on North Vietnam (seethe following section), but also a halt to bilateral humanitarian aid, opposition to financial aid frominternational financial institutions (such as the World Bank), a ban on U.S. travel to Vietnam, andan embargo on bilateral trade. Washington and Hanoi gradually began to normalize relations in the early 1990s, followingimprovements on the issues of Vietnam's activities in Cambodia and American prisoners of war(POWs) and missing-in-action (MIA) personnel in Vietnam. (4) In 1994, President Clinton orderedthe lifting of the trade embargo against Vietnam. The following year, the two countries establishedambassadorial-level diplomatic relations. In 1998, President Clinton granted Vietnam its first waiverfrom the requirements of the so-called Jackson-Vanik amendment (contained in the Trade Actof1974, Title IV, section 402), which prohibit the President from normalizing commercial relationswith selected socialist and formerly socialist countries if they do not meet certain requirementsregarding freedom of emigration. Presidential waivers were also granted to Vietnam in 1999, 2000,2001, and 2002. Congress may reject the annual waiver by passing a joint disapproval resolution. Each time waivers have been granted to Vietnam, the House has defeated disapproval resolutions. (See Figure 1 ), most recently on July 23, 2002, by a vote of 338-91 (roll call #329). As explainedbelow, after the BTA went into effect in December 2001, the Jackson-Vanik waiver grantedVietnam MFN status and allowed the U.S. Overseas Private Investment Corporation (OPIC) and theU.S. Export-Import Bank to support U.S. businesses exporting to and/or operating in Vietnam. Restoration of Temporary MFN Status to Vietnam. The U.S. denied MFN treatment to communist-controlled areas ofVietnam in August of 1951. At that time, under Section 5 of the Trade Agreements Extension Actof 1951, MFN tariff rates were suspended for all countries of the Sino-Soviet bloc. (5) Whencommunist North Vietnamese forces unified the country in 1975, MFN status was suspended for theentire country. In 1974, the U.S. issued strict conditions for restoring MFN status to those non-market economies (NMEs) subject to Section 5 suspension (in practice, the new conditions applied to allcountries of the former Sino-Soviet bloc). Under Title IV of the Trade Act of 1974, MFN treatmentmay be restored to NME countries after two requirements have been met: a) The President issues a determination that the country is not in violation of the freedom-of-emigration requirements of the Jackson-Vanik amendment. (6) To date, Vietnamhas not been found to be in full compliance with Jackson-Vanik requirements.Alternatively, subject to certain conditions, the President may waive full compliance withthese requirements, as Presidents Clinton and Bush have done since 1998. Jackson-Vanikwaivers must be renewed annually, and Congress may reject them by passing a jointdisapproval resolution. b) The completion of a bilateral trade agreement that contains certain required provisions, including a reciprocal MFN clause. (7) Such anagreement requires approval by the Congress(and by the Vietnamese National Assembly). The approval of the BTA allows thePresident to extend temporary MFN tariff treatment to Vietnam. The MFN treatment istemporary because it is contingent upon Vietnam meeting the requirements described inthe previous paragraphs - i.e. either obtaining a Presidential determination or aPresidential waiver, both of which are subject to annual congressional review anddisapproval. (8) Congressional Procedures for Considering a U.S.-Vietnam BTA. (9) To go into effect, Title IV bilateraltrade agreements must be approved bya joint resolution of Congress. Once the President transmits the agreement to Congress, a jointresolution must be introduced in both Houses. The resolutions are subject to special expeditedprocedures, under which amendments are not permitted in either chamber. Additionally, there are deadlines of 45 session-days for committee consideration (by the House Ways and Means and the Senate Finance Committees), and 15 session-days for floor debate in bothchambers. Because the approval resolutions are revenue measures, the Senate must vote on aHouse-passed resolution, and Congress would have a maximum of 90 session-days to act on theresolution: 45 days for consideration by the House Ways and Means Committee; followed by 15 daysfor floor debate in the House; followed by 15 days for consideration of the House-passed resolutionin the Senate Finance Committee; followed by 15 days for floor debate in the Senate. As with most trade agreements with non-market economies, the U.S.-Vietnam BTA will remain in effect for a 3-year period and will be extended automatically unless renounced by either party. Additionally, each extension will require a presidential determination that Vietnam is satisfactorilyextending reciprocal MFN treatment to U.S. exports. After the BTA: Extending Permanent MFN Treatment to Vietnam. Following the BTA, the next step toward normalizing U.S.-Vietnamcommercial ties is restoring permanent MFN status (also known as permanent NTR or PNTR status)to Vietnam. This process that will require Congress to terminate the application of the relevant TitleIV provisions to Vietnam, as has been done for several countries, including China, Albania, andGeorgia. Vietnam and the World Trade Organization (WTO). Vietnam applied to join the WTO in 1995. Many observers believe thatVietnam is a number of years away from meeting the requirements for WTO membership. In March2001, Vietnam's Trade Minister expressed his government's goal of acceding to the WTO by 2004. Countries seeking to enter the WTO must negotiate bilateral agreements with current WTOmembers. Provisions of such agreements are then consolidated into the acceding country's protocolof accession and, because of the WTO's mandatory MFN requirement, apply to all WTO members. In other words, any concessions obtained by one country in a bilateral accession agreement wouldbe enjoyed by all WTO members. Typically, the bilateral accession negotiations focus on tariffconcessions and other market access issues that will govern bilateral trade relations after theapplicant becomes a member. Thus, at some point in the future, Vietnam and the U.S. are likely toengage in another set of negotiations about the changes Vietnam must make to its trade regimebefore the U.S. will support Vietnam's application for WTO membership. Upon completion of thisagreement, it is likely that the U.S. president will ask Congress to extend permanent MFN treatmentto Vietnam, much as President Clinton did after completing WTO accession negotiations with Chinain November 1999. (10) Table 1. Vietnam's Path to Commercial Normalization with the United States U.S. Interests in a Bilateral BTA. U.S.-Vietnamtrade and investment flows are extremely low. Although Vietnam is the world's 13th most populouscountry, with nearly 80 million people, for the past several years annual U.S. exports have hoveredin the $200-$400 million range (see Table 2 below), a figure roughly equivalent to three days' worthof exports to Japan, and roughly one-fifth the amount the U.S. exported to South Vietnam in 1970. (12) Major U.S. exports to Vietnam include aircraft, fertilizer, telecommunications equipment, andgeneral machinery. Cumulative foreign direct investment (FDI) by U.S. companies in Vietnam isalso low, valued at about $1 billion, making the United States the ninth-largest source of investmentin Vietnam. To boost U.S. exports and investment, U.S. negotiators demanded that Vietnam provide more comprehensive and detailed concessions in the areas of services, investment, and market access thanhad been obtained in previous bilateral trade pacts with other Jackson-Vanik countries. As discussedin the following section, it appears the U.S. successfully obtained most of these negotiatingobjectives. Following the signing of the agreement, Clinton Administration officials and business representatives were careful not to argue that the BTA will significantly boost U.S. exports andinvestment to Vietnam in the short term. Rather, they stressed that U.S. exporters and investors willbenefit most in the medium to long-term, as Vietnam continues market-oriented reforms, becomesmore developed and integrated into the global economy, and as Vietnam phases in more and moreof the BTA's requirements. Moreover, exports to and investment in Vietnam are expected toincrease as Hanoi and other members of the Association of Southeast Asian Nations (ASEAN) - a10-country, 500-million person market - follow through on commitments to reduce trade barriersby 2006. Ultimately, U.S. trade and investment opportunities in the future will depend on a) Hanoi'simplementation of the BTA; b) Vietnam's progress on moving toward a more market-orientedeconomy; and c) Vietnam's rate of economic growth. Table 2. U.S.-Vietnam Trade, 1994-2002 (millions of dollars) Source: U.S. International Trade Commission. Data are for merchandise trade on a customsbasis. In the short- to medium-term, the BTA will require Vietnam to improve the climate for foreign investors. U.S. businesses in Vietnam will receive legal protections that are unavailable today. Moresectors will be open to U.S. multinationals. Additionally, the BTA will help make the Vietnamesebusiness environment more predictable and transparent. Currently, a frequent complaint fromforeign executives in Vietnam is the lengthy delay in obtaining investment licenses from thegovernment. To make matters more difficult, foreign investors often are not aware of all theregulatory requirements for obtaining licenses, leading to complaints of arbitrary treatment by localand central government authorities. Many of the agreement's proponents also contended that the bilateral trade pact will nudge Vietnam toward a more democratic society by committing the government to enact market-orientedreforms, weakening the government's tight political controls, solidifying the rule of law, integratingVietnamese enterprises more fully into the global economy, and economically empoweringindividuals. BTA proponents also pointed out that the agreement will help to bring Vietnam closerto compliance with WTO rules, facilitating Hanoi's eventual WTO accession. Once Vietnam joinsthe WTO, its trade policies will be subject to even greater international scrutiny and disciplines. Strategically, BTA backers argued that the U.S.-Vietnam BTA, together with BTAs recentlycompleted with Cambodia and Laos, will promote regional stability by smoothing the integration ofIndochina into the regional and global community. (13) Arguments Against the BTA. The agreement's critics argued that Vietnam's government is likely to fall short on implementing the agreementand/or is likely to erect new, hidden barriers to imports and foreign investment, while low-costVietnamese exports - particularly textiles - to the U.S. will increase. Some U.S. trade unionscriticized the pact's lack of provisions on minimum labor standards and environmental protection. Vowing to fight the agreement in Congress, AFL-CIO President John Sweeney in July 2000 arguedthat "it [the BTA] is missing what we've been championing - core labor standards, human rights andenvironmental protection." Textile manufacturers and other groups said they would lobby Congressand the Administration for changes to safeguard their industries from low-priced Vietnameseimports. (14) Many observers, including laborgroups, also opposed the pact on human rights grounds,arguing that human rights considerations should take priority over trade ties and/or that Hanoi'sruling elite would capture most of the gains from increased globalization. Indeed, on the same daythe House approved the BTA, it also passed the Vietnam Human Rights Act, ( H.R. 2833 , by a vote of 410 - 1), which would ban increases (over FY2001 levels) in non-humanitarianaid to the Vietnamese government if the President does not certify that Vietnam is making"substantial progress" in human rights. The act allows the President to waive the cap on aidincreases. In its most recent annual review of Vietnam's human rights situation, the U.S. StateDepartment reported that Hanoi continues "to repress basic political and some religious freedomsand to commit numerous abuses," notably "not tolerating most types of public dissent." (15) Vietnam's Interests in a BTA. After recording impressive growth for much of the 1990s following Hanoi's launch of the doi moi (economicrenovation) reforms, Vietnam's economy has slowed since the 1997-99 Asian financial crisis, whichoriginated in nearby Thailand. Annual economic growth declined from a peak of 9.5% in 1995 to4.8% in 1999 and 6% in 2000. Foreign direct investment - a major stimulus for the country's growth- dwindled from over $8 billion in 1996 to $600 million in 1999, the lowest level since 1992. (16) It is likely that the deterioration in Vietnam's economic fortunes played a major role in jump-starting the BTA talks with the U.S. in the spring of 1999, as a significant portion of Vietnam'sleadership came to see increased U.S. investment and MFN access to the U.S. market as major waysfor Vietnam to reverse its declining growth rates. As of December 2000, the United States was onlythe ninth largest source of foreign investment in Vietnam and absorbed less than 5% of Vietnam'sexports. The bilateral trade agreement presumably will increase these levels considerably byconferring to Vietnamese exporters the same tariff rates that are applied to other MFN-recipientcountries. The World Bank has estimated that Vietnam's exports to the U.S. will rise to $1.3 billion- more than 60% over 2000 levels - in the first year of MFN status, as U.S. tariff rates onVietnamese exports would fall from their non-MFN average of 40% to less than 3%. (17) Obtaining MFN status is likely to dramatically transform the product mix of Vietnam's exports to the U.S. Since the trade embargo was lifted in 1994, most of Vietnam's exports to the U.S. havebeen in items that either receive duty-free treatment (zero tariffs) or that have identical tariffs forMFN and non-MFN countries. In the short term, the BTA is likely to increase Vietnam's exportsof labor-intensive manufacturing with large differences between the MFN and non-MFN tariff rates. Judging by Vietnam's leading exports to the European Union and Japan (see Figure 2 below),exports of the following items are likely to increase substantially: garments, leather products,footwear, household plastic products and processed foods. (18) Vietnam's Clothing Exports. In particular, Vietnam's clothing exports are expected to increase dramatically. Vietnam currently exports fewapparel products to the U.S. - less than $40 million in 1999 - because of the higher, non-MFN, tariffrates it faces. In contrast, Vietnamese garment exports to Japan and the 15 countries of the EuropeanUnion in 1999 totaled more than $500 million and $640 million, respectively (see Figure 2 ). Basedon the experience of Cambodia, which was granted MFN status by the United States in 1996, theWorld Bank estimates Vietnamese apparel exports will increase nearly tenfold - to $384 million -in the first year after receiving MFN status. (19) The BTA agreement contains no provisions on Vietnamese textile exports to the U.S., but the safeguard provision would allow the U.S. to impose quotas on textile imports in the event of a surgeof imports. In private, U.S. and Vietnamese officials have said they expect to begin negotiating abilateral textile agreement, which presumably would set quotas for Vietnamese textile exports, soonafter a Congressional vote on the BTA. Some Members of Congress have called for the BushAdministration to publicly commit to negotiating a textile agreement, and have pressed for acommitment that such an agreement would include provisions that would link the size of Vietnam'squotas to progress in its labor rights. (20) Passing a trade agreement would also bring Vietnam one step closer to receiving U.S. trade benefits under the generalized system of preferences (GSP), which allows many imports fromless-developed countries to enter the U.S. market duty-free. (21) Furthermore, Vietnamese officials seethe bilateral trade agreement as an important stepping stone to joining the WTO, providing themwith non-discriminatory access to all WTO members. Not only do they regard the BTA as necessaryto obtaining U.S. support for Vietnam's application for WTO membership, but they also see theprocesses of negotiating and implementing the agreement as useful for raising Vietnam's legal,regulatory, and economic systems to the WTO's standards. Source: The trade agreement consists of four parts: market access, trade in services, intellectual propertyrights, and investment. Vietnam has agreed to take the following steps to open its markets: guarantee most-favored-nation (MFN) treatment to U.S. goods; treat imports the same as domestically produced products (also known as"national treatment"); eliminate quotas on all imports over a period of 3 to 7 years; make its government procurement process more transparent; allow for the first time all Vietnamese enterprises to trade all products; allow for the first time U.S. companies and U.S.-invested companies to importand export most products (to be phased in 3-6 years). (Presently, foreign companies have to rely onlicensed Vietnamese importers, most of which are state-owned enterprises.) ensure that state enterprises comply with WTO rules; adhere to WTO rules in applying customs, import licensing, technicalstandards, and sanitary and phytosanitary measures Tariff Concessions. The U.S.-Vietnam BTA is unique in that, in contrast to previously negotiated Title IV bilateral trade agreements between theU.S. and Jackson-Vanik countries, it includes specific commitments by Vietnam to reduce tariffs onapproximately 250 products, about four-fifths of which are agricultural goods. Typically, the cutsrange from 33% to 50% and are to be phased in over a three-year period. Vietnam's tariffs are notconsidered to be extremely high for a developing country (the U.S. Foreign Commercial Serviceestimates that Vietnam's average tariff line is 15%-20%). Also in the area of market access, the agreement includes a safeguard provision that will alloweither side to raise tariffs temporarily if it encounters a surge of imports. Vietnam has pledged to phase in the World Trade Organization Agreement on Trade-Related Intellectual Property Rights (TRIPs) over 18 months. The bilateral TRIPs agreement goes above andbeyond the WTO's TRIPs agreement by including Vietnamese commitments to protect satellitesignals within 30 months. In the area of services, Vietnam has committed to uphold WTO rules such as MFN, national treatment, and disciplines on domestic regulation. Additionally, Vietnam has agreed to allow U.S.companies and individuals to invest in markets in a wide range of service sectors, includingaccounting, advertising, banking, computer, distribution, education, insurance, legal andtelecommunications. Most sector-specific commitments are phased in over three to five years. Vietnam's commitments in three of the largest U.S. service sectors - banking, insurance, andtelecommunications - are highlighted below. Banking Services. Vietnam agreed to the following liberalization measures: For the first nine years after the agreement goes into effect, U.S.banks may form joint ventures with Vietnamese partners, with U.S. equity between 30% and 49%. After nine years, 100% subsidiaries are permitted. Insurance. Under the BTA, for "mandatory" insurance sectors (such as automobile and construction-related insurance), after three years Vietnamwill allow U.S. companies to form joint ventures, with no limit on the U.S. equity share. After sixyears, 100% subsidiaries are permitted. For life insurance and other "non-mandatory" insurancesectors, after three years joint ventures are permitted, with a limit of 50% U.S. equity. After fiveyears, 100% subsidiaries are allowed. Telecommunications. Under the BTA, for higher-end telecommunications services (such as Internet, e-mail, and voice mail services), Vietnamwill permit joint ventures after two years, with a 50% cap on U.S. equity participation. Internetservices have a three-year phase in period. For basic telecommunications services (such as facsimile,cellular mobile, and satellite services), joint ventures are permitted after four years, with U.S.companies limited to a 49% stake. For local, long distance, and international voice telephoneservices, joint ventures are permitted after six years, with a 49% cap on U.S. ownership. Vietnamagreed that it will consider increasing the U.S. equity limits when the agreement is reviewed in threeyears. Regarding investment , the U.S.-Vietnam trade agreement includes guarantees of MFN treatment, national treatment, transparency, and protection against expropriation. Additionally,Vietnam pledged to implement the following changes in its investment regime: Investment screening: Currently, foreign businesses must obtain government approval to invest in Vietnam. Under the BTA, investment screening will be phased out for mostsectors within two, six, or nine years, depending on the sector involved. Profit repatriation: Presently, Vietnamese enterprises have greater freedom than foreign multinationals to convert their Vietnam-earned profits into hard currency. The StateBank of Vietnam must approve the conversion of currency on behalf of foreign businesses, and theBank does not give permission to convert currency to foreign-invested companies. (23) Under the BTA,foreign multinationals will receive the same rights for profit repatriation as Vietnamese firms;however, Vietnam's currency is still not fully convertible. Capital contribution floors: Currently, the U.S. stake in a joint venture must be at least 30%. This requirement will be eliminated in three years. Personnel requirements for joint ventures: Presently, Vietnam requires that certain board members of joint ventures be Vietnamese and requires that certain types of decisionsbe made by consensus (thereby granting veto power to the Vietnamese board members). Under theBTA, within three years Vietnam will allow U.S. multinationals to select top executives withoutregard to nationality. Trade-related investment measures (TRIMs): Vietnam has agreed to eliminate within five years all TRIMs that are inconsistent with the WTO, such as local content requirements. Vietnam has agreed to adopt a fully transparent commercial regime by allowing comment on draft laws and regulations by ensuring that advance public notice is given for all such laws andregulations; by publishing these documents; and by allowing U.S. citizens and corporations the rightto appeal rulings. It is an open question whether the Vietnamese government has the will or the wherewithal to implement the pervasive reforms required by the U.S.-Vietnam bilateral trade agreement. Implementing the agreement will require cooperation at the local government level, where centralcontrol often is weak and corruption is rampant. An unprecedented level of cooperation amonggovernmental ministries will also be required. Powerful vested interests - particularly thestate-owned enterprises and the Vietnamese People's Army - undoubtedly will put pressure on localand central government officials to erect new barriers to foreign competition. Most of Vietnam's concessions in the BTA are due to be phased in within three to five years. However, a number of reforms took effect upon the BTA's entry into force in December 2001. These include according national treatment (i.e. not discriminating between foreign and domesticenterprises) business activities, allowing all enterprises to import and export, eliminating mostnon-tariff barriers, streamlining the process for foreign investors to obtain licenses and approval, andpublicizing laws, regulations and administrative procedures pertaining to any matter covered by theTrade Agreement. Thus far, according to one group monitoring the situation, Hanoi appears to havetaken steps to implement nearly all of these initial commitments. (24) In May 2002, senior officialsfrom Washington and Hanoi launched a Joint Committee on Development of Economic and TradeRelations, a consultative body called for in the BTA. In July 1999 the U.S. and Vietnam announced an "agreement in principle" on a BTA, but for nearly a year Vietnam delayed finalizing the deal because of intense divisions among the VietnameseCommunist Party (VCP) leadership (see the following section for an analysis of the reasons forVietnam's hesitation). The Clinton Administration did not release the full terms of the July 1999agreement in principle. According to one negotiator, the only significant differences between thefinal BTA and the 1999 agreement lie in the area of trade in services (Chapter III and Annex G),specifically in the area of telecommunications. (25) Telecommunications. In general, the 1999 agreement in principle would have allowed U.S. companies the right to obtain a majority (51%)stake in certain Vietnamese telecommunications sectors after a certain number of years (oftenreferred to as the "phase-in" period). Following the November 1999 U.S.-China agreement onChina's WTO accession - which granted U.S. companies the right to a 49% maximum stake inChinese telecommunications enterprises - the Vietnamese negotiators demanded that they receivesimilar equity caps. The U.S. agreed to this concession, but in exchange received significantlyshorter phase-in periods. Vietnam also agreed to consider increasing the U.S. equity limits when theagreement is reviewed in three years. Two telecommunications sectors, wireless and basic voice services, illustrate the differences between the 1999 and 2000 documents. In wireless telecommunications, under the 1999 agreementVietnam would have allowed U.S. companies the right to set up joint ventures after three years, witha 51% maximum stake for U.S. companies. Under the 2000 BTA, Vietnam is to grant U.S.companies the right to set up wireless joint ventures after two years (three years for internetservices), with a 50% cap on U.S. equity participation. In the area of basic voice telecommunication services (local, long distance and international phone service), press reports indicate that the 1999 agreement would have phased-in a right to investafter 11 years, with a 51% maximum stake for U.S. companies. Under the 2000 BTA, Vietnam isto allow U.S. companies to set up joint ventures after six years, with a 49% cap on U.S. ownership. Insurance. According to press reports, under the 1999 agreement Vietnam would have permitted U.S. companies to invest in its insurance sector intwo to six years. The phase-in period varied by insurance sector. Details are unavailable on foreignequity caps. (26) Under the July 2000 BTA, Vietnamis to grant U.S. companies the right to set up50-50 joint ventures in its insurance sector after three years, and wholly owned (100% stake)ventures after five years. Market Access. The final BTA includes commitments by Vietnam to reduce tariffs on approximately 250 products, about four-fifths of whichare agricultural goods. 1999 press reports implied that the agreement in principle contained 330tariff items scheduled for tariff reduction. A U.S. official involved in negotiating the agreement,however, has argued that this number is incorrect, stating that the tariff changes in Annex E of thefinal BTA are essentially the same as those agreed upon in 1999. In negotiating bilateral trade deals with Jackson-Vanik countries, U.S. negotiators generally have tried to break new ground with each successive agreement. As one indication of that policy,the 1979 agreement China was less than 10 pages, while the far more comprehensive U.S.-VietnamBTA is more than ten times that length. The Vietnam-U.S. BTA goes beyond past agreements inits more detailed commitments in the areas of services and investment. Furthermore, Vietnam'stariff concessions represent a new development. Previous Jackson-Vanik BTAs contained few orno market access commitments because in those negotiations the U.S. proposed to carry out tariffdiscussions at a future date, not as part of the final BTA itself. (27) Though the U.S. and Vietnam reached an agreement in principle on the BTA in July 1999, fornearly a year Vietnam delayed signing the deal. What were the reasons for Vietnam's hesitancy? Consensus-Based Decision-Making. Vietnam's official reason for the delay was that it needed time to vet the agreement among decision-makers inVietnam. Vietnam's consensus-style of decision-making and the weakness of the country's currentleadership probably extended this vetting process: The BTA is the most extensive agreementVietnam has ever negotiated, and the assent of virtually all officials involved in implementing thedeal was required before Hanoi would take such a radical step. Furthermore, the weakness of thecountry's current top leaders - VCP General Secretary Le Kha Phieu, Prime Minister Phan VanKhai, and President Tran Duc Luong - made it difficult for them to forge a consensus on such acontroversial issue. (28) Questions from Vietnamese Conservatives. Ever since the Vietnamese Communist Party's (VCP) 8th Party Congress in 1996, disagreements betweenreformers and conservatives in Vietnam's 19-member Politburo - the country's supreme ruling body- have paralyzed economic decision-making. As the bilateral trade agreement with the U.S. requiresVietnam to jump-start its reforms and deepen its integration into the global economy, it is notsurprising that the Politburo also has been divided over whether to finalize the deal. The conservatives fear that economic reform will undermine the "socialist foundations" of the country's economic and political systems, and thereby erode the VCP's legitimacy and monopolyon power. They also fear that Vietnam's sovereignty will be eroded by increasing Vietnam'seconomic dependence on the West and by increasing Vietnam's vulnerability to regional economicdownturns such as the 1997-99 Asian financial crisis. Among their specific concerns, conservativesworry that shifting to a more market-oriented economy will force the Politburo to curtail subsidiesto the country's state-owned enterprises, the backbone of the socialist economic system. Manyconservatives are understandably worried that further rationalization will raise unemployment rates,which already exceed 10%, according to some estimates. Social and political pressures on the Partyhave already been heightened in recent years by peasant uprisings and widespread accusations ofgovernment corruption. High level U.S. pressure on Vietnam for its human rights record, appliedduring Secretary of State Madeleine Albright's September 1999 trip to Vietnam, is said to havefurther rankled conservative forces opposed to the trade agreement. In January 2000, a group of reform-minded leaders were transferred to key economic and political posts. These moves, combined with the BTA signing, the unveiling of a new EnterpriseLaw, the passage of new amendments to the Foreign Investment Law, and the opening of Vietnam'sfirst stock market on July 20, 2000, may be signs that Hanoi's policy logjam is breaking up in thereformers' favor. Opposition from Vested Interests. Parochial interests also may have played a role in Vietnam's deliberations. According to many sources,Vietnam's military leaders have been among the staunchest opponents of the BTA. Many argue thatthe military - known as the People's Army of Vietnam - is worried that the trade deal will threatenits vast commercial interests. According to one estimate, the business enterprises of the People'sArmy of Vietnam generated over $600 million in revenue in 1998, a figure equivalent to nearly 60%of the entire military budget. (29) Evidence of themilitary's influence can be seen in Vietnam'sbargaining position on telecommunications liberalization during the BTA negotiations. Hanoidemanded an eleven-year phase-in period for FDI liberalization in cable communications, a sectorin which the People's Army has invested heavily since 1995. In contrast, Vietnam's negotiatorswere willing to accept a four-year phase in for cellular communications, an area in which theMinistry of Defense has few investments. (30) Yet another hypothesis is that Hanoi was concerned that a trade deal with the United States would antagonize China. Beijing and Hanoi recently have strengthened their ties, and conservativeelements in Hanoi may be wary of upsetting Beijing by appearing too closely aligned with the U.S. In particular, the Vietnamese leadership may have wished to avoid jeopardizing negotiations withChina over a land-border treaty, negotiations that were not concluded until December 1999. Thereare also reports that Chinese leaders warned the Vietnamese not to conclude the BTA before Beijinghad finalized its own WTO accession negotiations with the U.S., talks that were concluded inNovember 1999. However, some analysts and Administration officials reject this reasoning as astalling tactic by the Vietnamese, who are said to often use the Chinese as an excuse for delayingforeign policy moves about which they are uncertain. As one observer has pointed out, Chineseopposition did not prevent Vietnam from joining the Association of Southeast Asian Nations(ASEAN) in 1995. (31) Most observers agree that, apart from the issue of unsubstantiated Chinese pressure, the China factor played a positive role in spurring the Vietnamese to move forward, due to Hanoi's fears ofincreased economic competition with Beijing following China's accession to the WTO.
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On July 13, 2000, U.S. and Vietnamese negotiators signed a sweeping bilateral trade agreement (BTA). Following affirmative votes in Congress and the Vietnamese National Assembly, the BTAentered in into force on December 10, 2001, when the two countries formally exchanged lettersimplementing the agreement. Under the deal, the U.S. will extend temporary most-favored nation(MFN, also known as normal trade relations [NTR] status) status to Vietnam, a step that willsignificantly reduce U.S. tariffs on most imports from Vietnam. The World Bank has estimated thatVietnam's exports to the U.S. will rise to $1.3 billion - 60% higher than 2000 levels - in the firstyear of MFN status, as U.S. tariff rates on Vietnamese exports will fall from their non-MFN averageof 40% to less than 3%. In particular, Vietnamese garment exports are expected to record a tenfoldincrease in the first year after receiving MFN treatment. In return, Hanoi agreed to undertake a wide range of market-liberalization measures, including extending MFN treatment to U.S. exports, reducing tariffs on goods, easing barriers to U.S. services(such as banking and telecommunications), committing to protect certain intellectual property rights,and providing additional inducements and protections for inward foreign direct investment. Vietnamis the world's 13th most populous country, with 78 million inhabitants, roughly equal to thepopulation of Germany. The U.S. and Vietnam reached an agreement in principle in July 1999, butfor nearly a year Vietnam delayed finalizing the deal because of intense divisions among theVietnamese Communist Party (VCP) leadership. Under the requirements of Title IV of the Trade Act of 1974 - Section 402 of which is commonly referred to as the "Jackson-Vanik amendment" - signing a bilateral trade agreement isa necessary step for the U.S. to restore MFN treatment to certain socialist countries, includingVietnam. Congressional approval of the BTA will allow the President to extend MFN treatment toVietnam. Such MFN status will be conditional because - as with all Title IV BTAs - it will requireannual Presidential extensions, which Congress could disapprove. This report outlines the terms of the BTA, identifies U.S. and Vietnamese motivations for entering into the deal, analyzes the reasons for Vietnam's delay in signing the agreement, andexplains Congress' role in the process of restoring normal trade relations treatment to Vietnam. This report will be updated periodically. Further information on U.S.-Vietnam relations is available inCRS Issue Brief IB98033, Vietnam-U.S. Relations . Further information on the legislative and legalprocedures for handling the BTA is available in CRS Report RS20717 , Vietnam Trade Agreement:Approval and Implementing Procedure .
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According to the National Oceanic and Atmospheric Administration (NOAA), seafood inspectors have detected fraud in at least 40% of all products submitted to them voluntarily. Media attention to seafood fraud has increased and a variety of schemes to defraud other seafood businesses, retail stores, restaurants, and the public have been reported. These incidents have raised public concern with the identity, value, and safety of seafood. Incidents of seafood fraud have included the following: serving lower-priced seafood as higher-priced items; marketing mislabeled seafood products; transshipping products to avoid antidumping and countervailing duties; and overtreating products and labeling seafood packages with inaccurate counts or weights. Most seafood fraud is based on supplying something different from and inferior to the product that the consumer expects. When consumers purchase a product of lower quality or become aware of seafood substitution, their perception of seafood quality may decrease. In addition, these occurrences may lower consumers' demand for seafood products, and result in economic losses to law-abiding seafood businesses. Seafood fraud also is related to food safety when fish that contain toxins are mislabeled or when fish high in mercury are substituted for another species. On a broader scale, seafood fraud has been linked to international concerns with illegal, unreported, and unregulated (IUU) fishing. It has been reported that a significant portion of seafood traded in international markets, including seafood imported into the United States, is harvested by IUU fishing activity. On June 17, 2014, President Obama released a presidential memorandum entitled—"Comprehensive Framework to Combat Illegal, Unreported, and Unregulated Fishing and Seafood Fraud." The memorandum calls on executive departments and agencies to use existing authorities to combat IUU fishing and seafood fraud. On March 15, 2015, the task force released its final recommendations, which included both international and domestic measures. However, some segments of the seafood industry have questioned whether IUU fishing and seafood fraud should be addressed as part of the same initiative. They contend that although sometimes related, IUU fishing and seafood fraud are different issues and should be addressed as such. During the last several Congresses, legislation was introduced to address seafood fraud. In the 113 th Congress, two nearly identical bills ( H.R. 1012 and S. 520 ) were designed to strengthen seafood safety and fraud prevention by adopting several different measures. The bills would have required the Secretary of Commerce and the Secretary of Health and Human Services to execute a memorandum of understanding (MOU) to improve agency cooperation on seafood safety and seafood fraud. To improve compliance with existing laws, both bills would have incorporated penalties under provisions of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. §§1801 et seq.) for violations related to seafood fraud. They also would have required a report to Congress every two years to assess the problem and evaluate progress made to improve seafood safety and prevent seafood fraud. In addition, the bills would have enhanced seafood traceability by requiring the following tracking information for seafood imported into the United States or offered for sale in interstate commerce: fishing area in which the fish was caught; acceptable market name and scientific name; method of harvest; date of the catch; and weight or number of the individual fish or lot. No action was taken on either of these bills during the 113 th Congress. In the 112 th Congress, S. 50 proposed directing the Departments of Commerce and of Health and Human Services, the Federal Trade Commission, and other federal agencies to combat seafood fraud; the Senate Committee on Commerce, Science, and Transportation reported this bill ( S.Rept. 112-131 ) on January 26, 2012, but no further action was taken. H.R. 6200 sought to address seafood fraud by requiring labels to identify species and origin for both domestic and imported fish and by requiring a plan to coordinate the Food and Drug Administration (FDA) and National Marine Fisheries Service (NMFS) seafood inspections. No further action was taken on H.R. 6200 during the 112 th Congress. Some have questioned whether FDA has sufficient resources to carry out its responsibilities to enforce laws related to seafood fraud. Some believe that FDA requires additional funding to systematically monitor for economic fraud and mislabeling, determine the scope and scale of these types of problems, and develop new programs to address these concerns. They also insist that FDA needs new authorities to facilitate seafood traceability and improve compliance. It remains an open question whether FDA can address seafood fraud using existing authorities and resources or whether new legislation and funding increases will be necessary. In the 114 th Congress, two food safety bills ( H.R. 609 and S. 287 ) and two bills that focus on seafood ( S. 190 and H.R. 3282 ) have been introduced. H.R. 609 and S. 287 are similar comprehensive food safety bills that would modify the federal food safety system. S. 190 would seek to improve seafood safety by requiring equivalent standards in exporting countries, increasing inspections of exporting facilities, and inspecting and testing at least 20% of seafood imports. H.R. 3282 would seek to improve seafood safety and prevent seafood fraud by requiring coordination of inspection activities through the National Sea Grant Program, developing a list of exporters that violate U.S. seafood safety laws, and including seafood fraud detection and prevention during seafood safety inspections. H.R. 3282 also would add new seafood traceability requirements. To date, no action has been taken on any of these bills. Seafood fraud-related issues that may receive further attention during the 114 th Congress include whether federal agencies are collaborating effectively; greater authority is needed to improve traceability of seafood through the supply chain; penalties for seafood fraud offenses are a deterrent; and resources for federal agency detection and enforcement are sufficient. The primary federal law that addresses mislabeling and safety of food is the Federal Food, Drug, and Cosmetic Act of 1938 (FFDCA; 21 U.S.C. §§301 et seq.). FFDCA requires that foods be safe, wholesome, and accurately labeled. It gives FDA authority over most food regulation (except for most meats and poultry) and includes a series of definitions elaborating on the concepts of adulteration and misbranding; control over all labeling of foods traveling in interstate commerce; detailed regulation of issues concerned with safety and wholesomeness of foods; and enforcement remedies available to the agency, when needed. FFDCA prohibits introducing adulterated or misbranded food into commerce, adulterating or misbranding food that is in commerce, and the receipt and delivery of adulterated or misbranded food in commerce. An article is deemed misbranded if, among other things, its labeling is false or misleading or it is offered for sale under the name of another food. A food is deemed adulterated "if any substance has been substituted wholly or in part." Under FFDCA, species substitution violates FDA's prohibition against adulteration. For example, the marketing of a less valuable fish as one of higher value is substitution and can result in a finding of adulteration. The Fair Packaging and Labeling Act (FPLA; 15 U.S.C. §§1451 et seq.) requires that consumers of packaged commodities be provided with accurate information as to their contents. FPLA requires each package label to identify the commodity; the name of its manufacturer, packer, or distributor; and the net quantity of contents, in terms of weight or mass, measure, or numerical count. Congress passed FPLA to "enable consumers to obtain accurate information as to the quantity of the contents and to facilitate value comparisons." Under FPLA, it is unlawful for persons engaged in labeling or packaging of consumer commodities "to distribute or to cause to be distributed in commerce any such commodity if such commodity is contained in a package, or if there is affixed to that commodity a label, which does not conform to the provisions" of the act. Food products falling within the scope of FFDCA that are introduced into interstate commerce in violation of FPLA and its regulations are deemed to be misbranded within the meaning of FFDCA. FDA has issued regulations that outline general principles for common or usual names of food. The common or usual name must accurately identify or describe, in as simple and direct terms as possible, the basic nature of the food or its characterizing properties or ingredients. The name shall be uniform among all identical or similar products and may not be confusingly similar to the name of any other food that is not reasonably encompassed within the same name. Each class or subclass of food shall be given its own common or usual name that states, in clear terms, what it is in a way that distinguishes it from different foods. A common or usual name of a food may be established by common usage or by regulation. For example, FDA promulgated a regulation establishing that Pacific whiting or North Pacific whiting is the common or usual name of the food fish Merluccius productus . Most common or usual names, however, are established through common usage. FDA is the primary agency responsible for ensuring that food sold in interstate commerce is safe and properly labeled. The agency's jurisdiction includes seafood, and the agency operates a regulatory program for nearly all fish and fishery products. FDA's program includes research, inspection, compliance, enforcement, and development of regulations and outreach. Responsibility for a food product's safety, wholesomeness, identity, and economic integrity rests with the processor or importer, which must comply with the FDA's regulations promulgated under FFDCA and FPLA. FDA has the authority to take both administrative and judicial enforcement actions. FDA administrative actions may include inspections, warning letters, recalls, suspension of registration, and administrative detention. For example, agency personnel may detain or temporarily hold food being imported into the United States while it determines if the product is misbranded or adulterated. Judicial actions require some involvement by the courts and may include seizures of violative products, injunctions, criminal prosecutions, and civil penalties. For example, FDA has the authority to take legal actions against sellers of misbranded and adulterated seafood by recommending criminal prosecution or injunction of responsible firms and individuals. Customs and Border Protection (CBP) enforces regulations at ports of entry including labeling requirements under FFDCA and the Tariff Act of 1930 (19 U.S.C. §§1202 et seq.). The Tariff Act requires all imported articles to be marked with the country of origin for the ultimate purchaser, the last person who will receive the article in the form in which it was imported. However, if the article will undergo substantial transformation, then the processor is considered the ultimate purchaser. CBP is responsible for assessing and collecting the final customs duties on imports. CBP reviews seafood import documentation to detect whether firms are transshipping products to avoid paying import or customs duties. Transshipping seafood is illegal whenever it circumvents trade laws and other applicable trade restrictions. The applicable law and regulation may vary, depending upon trade agreements existing between the United States and specific countries as well as the status of any antidumping and countervailing duties currently in force for particular products imported from designated nations. The National Oceanic and Atmospheric Administration (NOAA) operates a voluntary fee-for-service seafood inspection program under the authority of the Agricultural Marketing Act of 1946 (7 U.S.C. §§1621 et seq.). The program focuses on product quality and offers services to assure compliance with all applicable food regulations. Specific program services include sanitation inspection, system and process audits, product inspection and grading, product lot inspection, laboratory analysis, training, and export certification. Products are evaluated with regard to their general condition and wholesomeness and may be sampled for chemical and microbiological contamination, decomposition, and species identification. Vessels, processing facilities, and retail establishments may receive services for all edible product forms, such as whole fish and products that have undergone varying degrees of processing as well as fish meal products used for animal feeds. NOAA, FDA, and CBP also enforce provisions of the Lacey Act (16 U.S.C. §3372(d)). Under the Lacy Act, it is illegal to falsely label fish sold in interstate or foreign commerce. NOAA's Office of Law Enforcement sometimes uses this authority to undertake seafood fraud investigations. For example, a NOAA enforcement case involved the purchasing and reselling of farm-raised catfish and Lake Victoria perch as higher-valued grouper, sole, or snapper. With passage of the 2002 farm bill ( P.L. 107-171 ; the Farm Security and Rural Investment Act of 2002), country-of-origin labeling (COOL) became mandatory for wild and farm-raised seafood products. The Agriculture Marketing Service (AMS) of the U.S. Department of Agriculture (USDA) is responsible for administration and enforcement of COOL. In October 2004, AMS promulgated an interim final rule requiring certain retailers and their suppliers to notify customers of the country of origin of wild and farm-raised fish and shellfish. COOL does not apply to seafood imports that are processed food items. AMS published final rules to fully implement the country-of-origin requirements on January 15, 2009. USDA has entered into agreements with states having existing enforcement infrastructure to assist in compliance reviews for fish and shellfish. The 2008 farm bill ( P.L. 110-246 ; the Food, Conservation and Energy Act of 2008) moved responsibility for catfish inspection to USDA by designating catfish as an amenable species . As an amenable species, catfish and catfish products are subject to continuous inspection by USDA's Food Safety and Inspection Service (FSIS). Previously, FDA had primary responsibility for the safety of all domestic and imported seafood, including catfish, under FFDCA. The 2008 farm bill also required that the Secretary define the species of catfish that would be inspected by USDA. The definition could be either narrow, such as the family Ictaluridae (North American catfishes), or broad, including all catfish in the order Siluriformes (36 families including North American and Asian catfishes). The broad definition would affect catfish imports because the non-Ictaluridae (Siluriformes from Asia) would be subject to FSIS inspection requirements. The proposed rule provided background related to the catfish inspection but deferred the definition of catfish to the final rule. The final rule was not finalized before debate began on the 2014 farm bill. The 2014 farm bill ( P.L. 113-79 ; the Agricultural Act of 2014) defined catfish as all fish in the order Siluriformes and required USDA to finalize regulations for food safety inspections of catfish no later than 60 days after enactment of the law. As of August 15, 2015, the catfish rule had not been published in the Federal Register . The 2014 farm bill also required USDA and FDA to execute an MOU to improve interagency cooperation on food safety and fraud prevention. The MOU was finalized in April 2014. In addition to federal requirements, states regulate the labeling and branding of seafood under state versions of FFDCA. For example, in Alaska "no person may label or offer for sale any food fish product designated as halibut, with or without additional descriptive words, unless the food fish product is Hippoglossus or Hippoglossus stenolepsis ." In California, an individual who sells any commodity in less quantity than what is represented is guilty of a misdemeanor offense. Often federal and state agencies coordinate efforts to enforce seafood safety and fraud standards. For example, state agencies, the shellfish industry, FDA, NOAA, and the Environmental Protection Agency work cooperatively under the National Shellfish Sanitation Program (NSSP). NSSP promotes the sanitary control of shellfish produced and sold for human consumption. Foreign governments also participate in NSSP through international agreements with FDA. NSSP provides program guidelines, state growing area classification, and dealer certification programs. One of the main objectives of NSSP is to ensure shellfish are not harvested from polluted waters. This standard is especially important for species of shellfish such as clams and oysters that are often consumed raw. Substituting an inexpensive species for one of higher value can be relatively easy. The differences in the taste and texture of different fish species' flesh may be subtle, and therefore it is frequently difficult to identify a species in fillet form, especially after it is prepared for consumption. It is difficult to generalize on the occurrence of misidentified species because the practice varies significantly by species, product form, and region. Further, the success of those who perpetrate seafood fraud depends on not being caught and maintaining the deception as long as possible. Most independent reports indicate that the level of fraud can be significant. For example, a Consumer Reports study of seafood sampled from New York, New Jersey, and Connecticut found that 20% to 25% of seafood products were mislabeled. The Los Angeles County Department of Public Health conducted a cooperative survey of seafood substitution made by businesses selling seafood. The survey found that of 103 retail food facilities (66 restaurants and 37 food markets), 74% had seafood label misbranding or false and/or misleading advertisement on menus, menu boards, or display cards. Instances of mislabeling also include imported farmed salmon being falsely identified as wild Alaska salmon, frozen seafood being marketed as fresh product, and confusion over seafood being marketed as organic. In response to these reports, FDA began collecting samples from the wholesale distribution chain, prior to the point of final sale, and a limited amount of samples from the point of import. When compared to the FDA's Seafood List, a guide to acceptable market and common names for imported seafood and seafood sold in interstate commerce, 15% of the samples were found to be incorrectly labeled. Fraud can be perpetrated in a variety of ways and at different market levels. Problems can arise from substitution at the restaurant level, misrepresentation by the restaurant supplier, or product misidentification anywhere in the harvesting and processing system. It is often difficult to determine who may have been at fault, especially if there is collusion. Intentional fraud, rather than human error, is more likely to have occurred when cheaper species are consistently mislabeled as more valuable species, rather than the other way around. One study, based on an analysis of mitochondrial DNA sequences, revealed that 77% of the fish sold in the U.S. marketplace as red snapper, Lutjanus campechanus , belonged to other species of the Lutjanidae family. In these cases, identification of other snapper species as red snapper is illegal. In another case, a seafood wholesaler in Alabama was convicted of selling Asian catfish and Lake Victoria perch as groupers, and farm-raised shrimp as wild-caught shrimp. Because large quantities of seafood are imported for U.S. consumption, some portion of the mislabeling problem undoubtedly originates with foreign suppliers. To address this concern FDA has issued an import alert on species substitution to provide guidance to agency field personnel about the manufacturers and/or products at issue. Asian catfish (basa and tra) may illustrate the magnitude of the problem. Although import volumes exceed 50 million pounds annually for these species, they sometimes are identified incorrectly in the domestic marketplace. For example, in 2012, a California seafood corporation was fined $1 million for selling Asian catfish as grouper. Although species substitution may be intentional for certain species and products because of their differing values, it also occurs unintentionally because the identities of species are easily mistaken. Table 1 provides a list of some common illegally substituted species. Common names such as red snapper are sometimes used for a variety of different species both unintentionally and intentionally. The two main provisions that cover the naming of fish are Section 403 of FFDCA, which addresses misbranded food, and Title 21, Section 102.5, of the Code of Federal Regulations , which sets forth general principles for common or usual names for non-standardized food. FDA recognizes the acceptable market name as the appropriate label for seafood products in interstate commerce. The acceptable market name "is a name that FDA recognizes as a suitable statement of identity in labeling a species" and fairly represents the identity to consumers. The use of vernacular names is discouraged because a species may have different vernacular names in different regions and because different species may be called by the same vernacular name. A common or usual name is the "prevalent and meaningful name by which consumers ordinarily identify the food." Often the common name and acceptable market name are the same. For example, sablefish, Anoplopoma fimbri , has the same market and common name. If they are not misleading, FDA generally regards common names as appropriate seafood names. The term seafood includes an exceptionally large number and variety of species. In 1988, FDA and NOAA developed its Seafood List. In addition to serving as a guide to acceptable market and common names, the list can be used as a standard reference to reduce confusion among consumers and provides an authoritative source for processors, retailers, and other vendors. FDA's guidance documents are recommendations, and thus the Seafood List does not establish legally enforceable requirements. In 1993, FDA published an updated and expanded Seafood List to include invertebrate species (mollusks and crustaceans) as well as finfish. The list is updated every six months and includes the following display for each species: type (vertebrate, invertebrate, crustacean); acceptable market name (e.g., grouper); common name (e.g., red grouper); and scientific name (e.g., Epinephelus morio ) The list includes 1,827 seafood species and species groups, 1,737 common names, and 555 market names for seafood items. Often the acceptable market name is more general than the more specific common name. For example, there are 47 different species listed with the market name of grouper, all of which have different common names. In this case, one market name may be used for a number of different grouper species. Use of either the acceptable market name or the common name assures seafood venders that their labeling of seafood will comply with FDA regulations. For some species, compliance policy guides (CPGs) are issued by FDA to provide acceptable labels for a product or species. For example, less desirable and valuable fish such as West Coast rockfishes and other snapper and grouper species have been labeled as red snapper. A CPG has been issued that identifies red snapper as the species Lutjanus campechanus , and the sale of other fish by this name constitutes misbranding in violation of the FFDCA. Sometimes a regulation may become necessary when guidelines either are not adhered to consistently or do not resolve differences that distinguish certain foods. For example, a regulation establishes common or usual names for certain kinds of crabmeat. Each name is associated with specific species of crab. Recent state efforts in California illustrated the difficulties related to using common and market names. In August 2014, the California legislature passed S.B. 1138 to address the problem of seafood fraud. The bill would have required the labeling of all fish and shellfish by their common name and of whether a species is wild-caught or farm-raised. Seafood industry representatives opposed the bill. They claimed it would have generated confusion and been difficult to enforce because of the large number of common names for seafood. Governor Jerry Brown supported the intent of the measure but vetoed the bill. The governor stated that species-specific labeling of seafood would not be achieved easily and that the legislation would have created uncertainties and complexities that would have been difficult to resolve. Consumers or businesses in the seafood supply chain receive less product for their money than advertised and anticipated when seafood businesses employ inaccurate (low) counts or net weights ( short-weighting ) and overtreatment. These practices also constitute mislabeling offenses under FFDCA. Some businesses resort to these practices because the chances of being caught may be low and it makes their products appear relatively inexpensive and increases profits, at least in the short run. The FDA standard for breaded shrimp requires that such a product contain at least 50% shrimp. Overbreading may cause consumers to pay shrimp prices for excess bread crumbs. Frozen fillets, shrimp, crab legs, and other products normally are protected from dehydration (freezer burn) with the application of a light glaze of ice. Excessive amounts of glaze (over-glazing) that are not accounted for can be used deliberately to increase the apparent weight, and therefore the apparent value, of the delivered product. On February 20, 2009, FDA reissued its 1991 guidance, warning the seafood industry that the net weight of frozen seafood may not include the weight of glazing and that violations of this kind may be criminally prosecuted as felonies. Recent comments submitted to the presidential task force on combating IUU fishing and seafood fraud by the Southern Shrimp Alliance stated that greater efforts are needed to stop short-weighting of seafood products. The seafood industry uses sodium tripolyphosphate (STPP) to retain moisture in products so as to prevent freezer burn. When properly used, STPP can be a legitimate means for aiding processing and maintaining product quality. However, STPP can be misused to retain excess moisture in seafood products. For example, Atlantic sea scallops or shrimp may absorb excessive water after prolonged soaking in an STPP-water solution. Such excess water misrepresents the product's total weight and value when seafood prices are charged for the extra water. In addition to paying for excess water, shrimp can be bumped to a higher weight class (lower count per pound), which can increase the price per pound. Seafood treated with STPP or other water-retaining chemicals must be accurately labeled to identify this treatment. However, FDA rescinded moisture-percentage requirements in 2004 and now only requires that additives be listed on labels. NOAA's seafood inspection handbook assumes that scallops with a moisture content of greater than 83% have been treated and should be properly labeled as such. No moisture guidelines or standards exist for shrimp. Some critics suggest that the use of all water-retention chemicals (primarily phosphates) should be prohibited in fish and shellfish. Fish fillets can be treated with carbon monoxide (CO) to give fish flesh a fresher-appearing reddish tint. The growing use of CO (also referred to as tasteless smoke or TS) as a pigment fixative has alarmed some consumer advocates who say it deceives shoppers who depend on color to help them avoid spoiled fish. Seafood industry representatives assert that TS/CO is a legitimate preservative, and FDA has responded that it has no questions at this time regarding an industry determination that TS/CO is a substance generally recognized as safe (GRAS). However, FDA has not made its own determination as to whether TS/CO is GRAS. A seafood safety concern occurs when the flesh of certain species, such as tuna, develops toxic levels of histamine through time and/or temperature abuse. Some assert that CO treatment may mask visual cues indicating that such flesh is decomposed and toxic. Consumer advocates have urged FDA to conduct a formal evaluation of this treatment's impact on consumer safety. FDA considers tuna to be misbranded if it is treated with TS/CO but not labeled to indicate that it contains a preservative and thus purports to be unprocessed, fresh, or fresh-frozen tuna. Some aquaculture operations use color additives such as canthaxanthin or astaxanthin in feed to impart a more orange color to fish flesh of salmon or trout. If not for these color additives, the flesh of the farmed varieties of these fish would be a possibly less appealing, paler color. Under specified conditions, use of these additives in feed for salmonid fish is legal as long as fish are properly labeled to identify that this treatment has been used. Transshipment occurs when foreign producers ship goods through a second country en route to the United States. Although transshipment is generally legal and commonly used in the ordinary course of business, it is illegal if done for the purpose of circumventing duties and other applicable trade restrictions. For example, shrimp from China reportedly have been shipped to the United States by way of Cambodia and Malaysia to avoid paying antidumping duties levied by the United States on shrimp imported from China. In other cases, seafood such as Asian catfish has been mislabeled as sole specifically to avoid paying antidumping duties. Mislabeling the country of origin is another example of fraud. Without labeling, consumers rarely would be able to distinguish a product's country of origin. For example, some businesses may falsely claim their seafood product is domestic when it is actually imported from another country. Particularly for seafood, some difficult questions are related to the meaning of the term country of origin . For example, is a product's origin best represented by where the seafood was caught, the flag of the harvesting vessel, where the harvest was first landed, where the product was first processed, or where it was last or secondarily processed? Some consumers and businesses have become more interested in tracing seafood throughout the supply chain so the source of and liability for any mislabeling can be more easily identified. During the last several decades, international seafood trade and movement of seafood throughout the United States have increased. Most seafood is no longer obtained from local sources; more than 90% of seafood consumed in the United States is imported. This shift has led to greater industry and consumer interest in tracing seafood throughout the supply chain from fishing vessel or aquaculture operation to the final consumer. The Bioterrorism Act of 2002 ( P.L. 107-188 ) requires producers, distributers, importers, transporters, and packers to maintain records of the sources and recipients of its products, or one step forward and one step back in the supply chain. The law also requires businesses to make these records available to FDA when there is a reasonable belief that adulterated food presents a threat of serious adverse health consequences or death to humans or animals. Seafood traceability can be used to identify, locate, and withdraw harmful products from stores and restaurants. Traceability of products also can identify where fraud occurs in the supply chain or detect seafood products obtained from IUU activities. Consumers are becoming more concerned with product quality, identity, and sustainability. Currently, most seafood businesses do not provide information such as where, how, and when a specific seafood item was caught. Some fisheries are certified as sustainable by nongovernmental organizations and labeled as such to convey this information to consumers. For certified products, traceability through the supply chain is required to confirm the origin and identity of seafood products. Some segments of the fishing industry believe that adopting systems to trace products from "capture to plate" can improve profits. Tracking requires tagging fish at the time of capture and recording related information such as vessel, date, species, weight, and location of capture at the time of unloading. This information is linked to products as barcodes or tags as they move through the supply chain. Because fish are a perishable commodity, the ability to quickly identify products and their location can improve efficiency and decrease waste. Traceability also can improve customer service by providing the capacity to quickly identify and correct problems when they occur. Whether similar information should be required for all seafood items and markets remains an open question. Broad adoption of seafood tracing systems would require universal standards and information from across businesses in the supply chain. Although more information could decrease costs associated with seafood fraud and potentially improve efficiency, these gains would need to be weighed against potential costs of developing and maintaining the traceability system. There are no estimates of total economic losses associated with seafood fraud, but costs to consumers and legitimate seafood business likely are substantial. When seafood products are short-weighted, the losses to the buyer or consumer are in proportion to the difference between the labeled and actual weights. In 2012, U.S. consumers spent $82.6 billion for seafood products, which includes $55.2 billion in expenditures at food service establishments and $26.8 billion in retail sales for home consumption. When paying for excess water or breadcrumbs, consumers may sustain direct losses in proportion to the excess filler used to increase the weight of the product. The National Institute of Standards and Technology speculated that if only 2% of the weight of all seafood is short-weighted, the annual loss to consumers could be as high as $1.6 billion. Consumers may incur losses when purchasing a lower-valued substitute for the price of a higher-valued product. They also may gain less utility from consuming a product of lower quality even when they are unaware of whether substitution has taken place. Consumers may find inferior substitutes to be less desirable and factor this experience into future food purchases. It is not clear whether the amount of fraud and deception in seafood sales and marketing is increasing, but media and nongovernmental organization attention to this issue has raised its profile with the public. These reports may deter consumers from purchasing seafood because of suspicions that they may not be getting the product they expect. Both consumer experiences and reports of seafood fraud may change consumer tastes and preferences for seafood products and decrease demand for seafood. For example, a study of Floridians found that 62% of respondents were familiar with media reports of restaurants substituting lower-valued species for grouper. Among respondents who were aware of the reports and order grouper at restaurants, 39% said they were less likely to purchase grouper at restaurants, 21% said they were less likely to purchase grouper for home consumption, 13% said they were less likely to order other types of fish at restaurants, and 9% said they were less likely to purchase other fish for home consumption. Study participants were willing to pay $0.83 to $3.18 more for grouper entrees in restaurants if these products were supplied with an integrity label. The seafood industry also is likely to sustain losses because of the lower consumer perception of its products and a related decrease in demand. A decrease in demand would result in lower prices and losses in revenue to law-abiding businesses. These businesses also compete with those selling fraudulent products for lower prices. Lower-priced substitutes, albeit fraudulent, can put downward pressure on prices for legitimate, high-quality products. In 1986, the Southeastern Fisheries Association introduced a Seafood Product Quality Code program—one of the first efforts by a fisheries trade association to inform wholesale and retail seafood buyers. The code, a voluntary educational and promotional concept developed by the seafood industry, cataloged the industry's recommended measures for product quality of specific seafood products. Each product, such as raw headless shrimp, is listed with a description of its characteristics, such as production method, product types, product forms, quality attributes, packaging, and labeling. The availability of this information was intended to increase quality and safety awareness and to improve communication between buyers and sellers. In October 2006, concerns that seafood fraud had eroded consumer confidence in seafood led the National Fisheries Institute (NFI) to announce an initiative to promote economic integrity within the seafood industry. NFI officially launched its Better Seafood Bureau in July 2007. Implementation of this initiative identified three primary concerns: transshipment of products to avoid antidumping and countervailing duties; mislabeling of products or species substitution; and mislabeling of weights or counts of products. NFI is pursuing its initiative by obtaining commitments from the CEOs of NFI member companies to comply with industry principles of economic integrity and to report suppliers committing economic fraud. As part of its economic integrity initiative, NFI reported that, in the year ending in August 2008, it sent more than 80 letters to FDA documenting specific examples of fraudulent weights. However, NFI has not been an advocate for new seafood fraud laws. NFI has maintained that "FDA needs to fulfill its mandate to fight seafood fraud" and "enforce laws that are already on the books." It contends that calling for new laws suggests some advocacy groups do not understand the issue. NFI adds that its "members have been aggressive in rooting out bad actors and pushing regulators to enforce laws designed to stop this type of activity." In 2013, NFI and the National Restaurant Association signed an MOU to join forces in the fight against seafood fraud. On June 17, 2014, President Obama released a presidential memorandum entitled "Comprehensive Framework to Combat Illegal, Unreported, and Unregulated Fishing and Seafood Fraud." The memorandum called on executive departments and agencies to use existing authorities to combat IUU fishing and seafood fraud. The memorandum also established a task force composed of senior-level federal agency representatives to develop recommendations for a comprehensive framework that targets IUU fishing and seafood fraud. On March 15, 2015, the task force released its final recommendations, which included both international and domestic measures. The task force's 15 recommendations are organized according to the following categories: International : Work with international governments, regional fisheries management organizations, and others to combat IUU fishing and seafood fraud at the international level. Enforcement : Strengthen enforcement tools to combat IUU fishing. Partnership : Create and expand partnerships with U.S. state and local governments, industry, and nongovernmental organizations to identify and eliminate seafood fraud and IUU seafood in U.S. commerce. Traceability : Create a risk-based traceability program to track seafood from harvest to entry into U.S. commerce to prevent entry of illegal product into the supply chain and better inform retailers and consumers. The National Ocean Council has been changed with establishing an IUU Fishing and Seafood Fraud Committee to coordinate implementation of the task force's recommendations. IUU fishing occurs throughout the world, and a significant portion of seafood entering the United States reportedly is obtained from IUU fishing activities. Although IUU fishing may be a significant problem, some have questioned whether IUU fishing and seafood fraud should be addressed as part of the same initiative. Those who harvest seafood illegally may attempt to avoid detection by concealing its origin or mislabeling seafood, but seafood fraud can occur whether seafood products are harvested legally or illegally. Some have recommended that IUU fishing needs to be addressed at the source, before the product enters the market system. In contrast, seafood fraud may occur at different points in the supply chain and needs to be addressed accordingly. Furthermore, some explain that the terms seafood fraud and IUU are being used very broadly and question whether they need to be redefined or categorized to address specific types of illegal activity. In February 2009, the Government Accountability Office (GAO) released a report on seafood fraud that focused on the federal government's role in addressing this problem. GAO concluded that federal agencies have not taken advantage of opportunities to share information that could benefit individual agency efforts to detect and prevent seafood fraud, and have not identified similar and sometimes overlapping activities that could be better coordinated to use limited resources more efficiently. The reported concluded that the lack of collaboration among Customs and Border Protection, National Marine Fisheries Service (NOAA), and FDA has resulted in overlapping actions and inefficient use of resources. According to GAO, FDA has considered detection of seafood fraud-related violations to be a low priority and has devoted minimal resources to this activity. At the time of GAO's study in 2009, FDA program guidance to field staff stated that "no resources have been allocated for seafood fraud-related work, and resource expenditures in this area should be kept to a minimum." FDA officials stated that, "the agency does not have the staff or resources to address economic fraud in addition to their food safety responsibilities." Since GAO released its report in 2009, FDA has dedicated resources to improving DNA testing for seafood fraud, collecting data related to the occurrence of seafood fraud, and launching an online training module related to seafood fraud. GAO also questioned whether seafood safety requirements of FDA's Hazard Analysis Critical Control Point (HACCP) regulations should include seafood fraud. Under HACCP, domestic processors are required to prepare site- and product-specific plans that analyze potential safety hazards, identify where possible hazards occur during processing, monitor hazard control points, and determine how hazards will be controlled. Importers of seafood produced in other countries also must take steps to verify that the products obtained from foreign processors are in compliance with HACCP rules. When HACCP regulations were developed in 1995, FDA also proposed guidelines for using an HACCP-based approach to control economic fraud under FFDCA. However, measures related to economic fraud were not included in the HACCP regulations that FDA adopted for seafood safety. FDA explained that the food system would need to mature before the agency should address matters other than food safety. GAO recommended FDA propose changes to its HACCP regulations to include requirements for identifying and mitigating economic fraud risks. On October 9, 2009, NOAA and FDA concluded an MOU to improve cooperation and information sharing in the inspection of seafood products and establishments. The arrangement attempts to address the GAO recommendations by strengthening the agencies' partnership and outlines procedures to work together both at headquarters and in the field. The MOU recognizes that FDA may take NOAA inspections into account when establishing inspection priorities. The MOU represents a broad outline of the parties' intent to collaborate in areas of mutual interest, but it did not create binding and enforceable obligations for either agency.
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Fraudulent seafood sales and marketing—the act of defrauding buyers of seafood for economic gain—has been widely reported and has gained greater public attention in recent years. The extent of seafood fraud is difficult to determine because of its clandestine nature; fraud depends on not being detected, which often depends on not attracting attention or causing immediate harm to customers. Seafood fraud can include a variety of illegal activities, such as transshipping products to avoid antidumping and countervailing duties; mislabeling products or substituting one species for another; overtreating products with water-retaining chemicals; and short-weighting products. Although not illegal, some treatments, such as carbon monoxide/tasteless smoke, are being questioned for their potential to deceive consumers. The primary federal law that addresses seafood safety and fraud is the Federal Food, Drug, and Cosmetic Act of 1938 (FFDCA; 21 U.S.C. §§301 et seq.). FFDCA prohibits the misbranding or adulteration of food products, including seafood products that have been mislabeled, substituted, or overtreated. FFDCA provides the Food and Drug Administration (FDA) of the Department of Health and Human Services with the primary responsibility for ensuring that domestic and imported foods, including seafood, are safe, wholesome, sanitary, and properly labeled. Observers have questioned whether greater coordination among federal agencies is needed, whether agency enforcement efforts targeting seafood fraud are sufficient, whether greater authorities are needed to trace seafood from its source to consumers, and whether the penalties for committing seafood fraud are adequate. Some consumer and environmental groups have called on federal agencies to aggressively enforce existing laws and on Congress to pass legislation that targets seafood fraud. Some in the seafood industry have supported industry initiatives to stop seafood fraud, but in most cases they have not advocated for new federal authorities. On June 17, 2014, President Obama released a presidential memorandum entitled "Comprehensive Framework to Combat Illegal, Unreported, and Unregulated Fishing and Seafood Fraud." The memorandum calls on executive departments and agencies to combat illegal, unreported, and unregulated (IUU) fishing and seafood fraud by strengthening coordination and using existing authorities. The President also established a task force composed of senior-level federal agency representatives to develop recommendations for a comprehensive framework that targets IUU fishing and seafood fraud. On March 15, 2015, the task force released its final recommendations, which included both international and domestic measures. Some segments of the seafood industry have questioned whether IUU fishing and seafood fraud should be addressed as part of the same initiative. They contend that although sometimes related, IUU fishing and seafood fraud are different issues and should be considered separately. In the 114th Congress, two bills related to seafood (S. 190 and H.R. 3282) have been introduced. S. 190 would seek to improve seafood safety by requiring equivalent standards in exporting countries, increasing inspections of exporting facilities, and inspecting and testing at least 20% of seafood imports. H.R. 3282 would focus on both seafood safety and seafood fraud by requiring coordination of inspection activities through the National Sea Grant Program, maintaining a list of exporters that violate U.S. seafood safety laws, and including seafood fraud detection and prevention during seafood safety inspections. H.R. 3282 also would add new seafood traceability requirements. To date, no action has been taken on either bill.
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On November 27, 2002, Congress created a commission charged with investigating theSeptember 11, 2001, terrorist attacks on the United States. The National Commission on TerroristAttacks Upon the United States, also known as the 9/11 Commission, was to make a full and complete accounting of thecircumstances surrounding the attacks, and the extent of the United States' preparedness for, andimmediate response to, the attacks; andâ¦investigate and report to the President and Congress on itsfindings, conclusions, and recommendations for corrective measures that can be taken to prevent actsof terrorism. (3) The panel's July 22 report was the culmination of a series of hearings and investigations by the paneland its staff into the terrorist attacks. The report included a wide-ranging series of proposals tochange intelligence agencies of the executive branch and some committee structures within thelegislative branch. The 9/11 Commission's recommendations on the appointment process are designed to makeit quicker and more predictable for a relatively small group of nominees. The proposal is relativelysparse on details, and implementing it would require the Senate to flesh out the plan substantially;however, it is clear that the recommended changes in the Senate's confirmation process wouldprovide a certain up-or-down vote by the full chamber on all National Security Team nomineeswithin a definitive time frame (30 days) after a nomination is made at the start of an administration. On October 6, the Senate passed, by a vote of 96-2, legislation ( S. 2845 ),introduced by Senate Governmental Affairs Committee Chair Susan Collins and Ranking MemberJoseph I. Lieberman, that would implement many of the 9/11 Commission's recommendations. Asintroduced, the bill did not address the 9/11 Commission's proposal to institute a time-frame forSenate consideration of national security nominees at the start of a new presidential administration. During consideration of the measure, Senators adopted by voice vote an amendment that added"sense of the Senate" language to the bill. It states that the "Senate committees to which thesenominations are referred should, to the fullest extent possible, complete their consideration of thesenominations, and, if such nominations are reported by the committees, the full Senate should voteto confirm or reject these nominations within 30 days of their submission." This is, essentially, anaffirmation of the current confirmation process. The House-passed version of the bill contains a different approach. The bill (an amendmentto S. 2845 , formerly H.R. 10 , which passed by a vote of 282-134) wouldrequire that the Office of Personnel Management create a list of all national security positions whichrequire Senate confirmation. The House provision would not change the current system for the top level of nationalsecurity appointees, such as the Secretary of Defense, who are Level I employees on the ExecutiveSchedule. The President would chose his nominee and submit their name to the Senate for its adviceand consent. The nominee would not be confirmed in the position without Senate action. For Executive Schedule Level II employees, such as the Deputy Attorney General, andExecutive Level III employees, such as an under secretary of State, however, the House provisionwould require that the Senate act within 30 days of receiving a nomination, or the nomination wouldgo into effect without action by the Senate. Finally, for Level IV and Level V national securityemployees who currently require Senate confirmation, the House provision would remove thatrequirement and make them appointed at the discretion of the President. The House-passed bill does not contain any details about how the Senate would implementthe change for Level II and Level III employees, concerning the 30-day deadline, but it is reasonableto assume that the analysis of the 9/11 Commission's recommended 30-day deadline would beapplicable (see section "Implementation of the 9/11 Commission's Recommendation"). On November 20, House and Senate conferees on the 9/11 legislation reported out acompromise measure. It includes the Senate-passed "sense of the Senate" provision on presidentialnominations, not the House-passed language. Last-minute objections prevented either chamber fromvoting on the compromise measure at that time, but Congress returned in early December to considerthe bill. (4) The Housepassed the bill by a vote of 336-75 on December 7, 2004, and the Senate followed suit the next day,passing the bill by a vote of 89-2. President George W. Bush signed the bill into law on December17, 2004 ( P.L. 108-458 ). The National Security Team, as defined by the 9/11 Commission, would include roughly 31positions from the Defense Department, the Homeland Security Department, the Justice Department,the State Department, and the Central Intelligence Agency. The group extends from the heads of thedepartments down through and including the Under Secretary positions. (5) In testimony before the Senate Governmental Affairs Committee on July 30, CommissionChair Thomas Kean told Members that the Senate should "treat these nominations unlike othernominations in that they recognize the speed with which we need those people in place." (6) The report of the 9/11Commission also pointed out that the time for transition between the Clinton Administration and theBush Administration was shortened. "The dispute over the election and the 36-day delay cut in halfthe normal transition period. Given that a presidential election in the United States brings wholesalechange in personnel, this loss of time hampered the new administration in identifying, recruiting,clearing and obtaining Senate confirmation of key appointees." (7) The commission's recommendations built on the work of a series of commissions andscholars who have investigated the appointment process generally over the last 20 years. Virtuallyall of the studies reached a similar conclusion: that it takes too long to get presidential nominationsthrough the appointment process. The Presidential Appointment Initiative, for example, a projectof the Brookings Institution, found in 2001 that "there is ample evidence that the process for bothnominating and confirming talented citizens to presidential service is failing at its most basictasks." (8) That followeda similar study in 1996 called the 20th Century Task Force on the Presidential Appointment Process,which called for prohibiting Senators from delaying consideration of nominee by using extendeddebate, called a filibuster. (9) "That the nomination and confirmation process is broken is a truism now widely acceptedby both Republicans and Democrats," wrote congressional scholars Norman Ornstein and ThomasDonilon in 2001. "The lag in getting people into office seriously impedes good governance. A newpresident's first year -- clearly the most important year for accomplishments and the most vulnerableto mistakes -- is now routinely impaired by the lack of supporting staff. For executive agencies,leaderless periods mean decisions not made, initiatives not launched, and accountability notupheld." (10) One of the complaints about the nominations process from scholars and commissions hasbeen that nominations can get bogged down in the Senate confirmation process, sometimes fallingvictim to parliamentary devices that can prevent a final vote on the nomination from taking place. An analysis of data on how the Clinton Administration and the current Bush Administration wereable to fill those offices considered to make up the National Security Team at the beginning of theiradministrations shows that Senate delay does not tend to be a major problem for this subset ofnominees. The Senate did not reject any of the National Security Team nominations in eitheradministration. (11) The amount of time it took nominations to work their way through the Senate varied widelyin this small sample, from one day for secretaries of state and defense in both administrations, to 128days for the Defense Department's Under Secretary for Policy in the Clinton Administration. Forboth administrations, the Secretary of Defense and the Secretary of State were confirmed onInauguration Day. As Table 1 shows, of the 31 positions in the Bush Administration that would be included inthe new deadline, 22 were confirmed ahead of the 30-day schedule, four were holdovers from theClinton Administration (and did not require reconfirmation) and five nominations took longer than30 days to win Senate confirmation. The median elapsed days from submission of the nominationuntil Senate confirmation was 21 days. As Table 1 also shows, for all National Security Team nominees, the process of nominationby the President took longer than the process of confirmation by the Senate. In some instances, thedelay between the start of the vacancy to the choice of a presidential nomination was two to threetimes longer than the time from nomination to confirmation. Of the five nominations that exceeded 30 days for Senate confirmation in the BushAdministration, all were confirmed within 73 days -- four of the five were confirmed in less than 60days. In all five instances, the delay between the start of the vacancy and the choice of nominee waslonger than the time between the nomination and confirmation of the nominee. As Table 2 shows, the four holdovers from the Clinton Administration had a longerconfirmation time during their original consideration by the Senate. The mean time for thosenominations was 75 days. As Table 3 shows, the Clinton Administration's National Security Team members were alsoconfirmed largely ahead of the 30-day deadline. For the 23 positions covered by the definition, (12) seven were considered bythe Senate for more than 30 days. One was a holdover from the previous administration (and didnot require reconfirmation), one of those was confirmed at 36 days, another at 44 days, the next after47 days and another at 51 days. The remaining two nominees had lengthy confirmations -- one was122 days and the final one was 128 days. Table 3 also shows, however, that, as with the Bush Administration, the delays by theClinton Administration in making its appointments were generally longer than the Senateconfirmation process. Typically, the time to presidential nomination was significantly longer thanthe Senate confirmation, sometimes several times as long. As this information shows, the 9/11 Commission's proposal for an accelerated Senateconfirmation process would not have affected 35 of the 49 National Security Team nominations thatwere in office before the 30-day deadline. A review of the data on the speed with which newadministrations have been able to get their National Security Team members in place suggests thisis an issue in a minority of cases. The recommendation of the 9/11 Commission would deal with only a small subset of thepresidential nominations considered by the Senate. With respect to the offices included in theNational Security Team, however, it would place substantial new conditions on how the Senatecarries out its role in confirming presidential nominees. While the Constitution includes the Senatein the confirmation process, it does not spell out how the chamber should fulfill its role of providingadvice and consent to a nomination. The extent of legislative and executive control of the processhas in many respects remained undetermined. In response to this Constitutional indeterminancy, some have asserted that the Senate shouldhave a co-equal role with the President in the process. The Senate's responsibility for confirming presidentialnominees, although fixed firmly in the Constitution, remains unsettled in its application. The Senatewas not meant to be a passive participant. Delegates to the Philadelphia convention believed thatthe Senate would be knowledgeable about nominees and capable of voting wisely. Yet, for the mostpart, it has acted cautiously, uncertain of the scope of its own constitutional power. The source ofthis uncertainty is not the Constitution. Nowhere in that document, or in its history, is there anobligation on the part of the Senate to approve a nomination. On the contrary, the burden should beon the President to select and submit a nominee with acceptable credentials. (13) Others have said the Senate should play a lesser role, allowing the President greater leewayin his choices for office than is currently the case. Law professor John C. Eastman told the SenateRules Committee on June 5, 2003, that ... the appointment power is located in Article II of theConstitution, which defines the powers of the President, not in Article I, which defines the powersof the legislature. As the Supreme Court itself has noted, by vesting appointment power in ArticleII, the framers of our Constitution intended to place primary responsibility for appointments in thePresident. The "advice and consent" role for the Senate, then, was to be narrowly construed. (14) The practice of the Senate, however, has not systematically reflected either of theseperspectives. Historically, much of the regular order of business on the nomination and confirmationof presidential appointments has been regulated not by strict, formal rules, but rather by informalcustoms that can change (and have changed) over the years, as the relative balance of power betweenthe President and the Senate ebbs and flows. It is these traditions which form the process, accordingto appointments expert Michael J. Gerhardt. These informal arrangements -- those not clearlyrequired or clearly prohibited by the Constitution -- have come to define the dynamic in the federalappointments process. The informal arrangements through which the system operates -- includingsenatorial courtesy; logrolling; individual holds, "blue slips"; consultation between presidents,members of Congress, and other interested parties, including judges; interest group lobbying;strategic leaking by administrations, senators and interest groups; manipulation of the press; themedia's effort to influence the news; and nominees' campaigning -- are the sum and substance of thefederal appointments process. Studying these arrangements provide even greater illumination thanstudying Supreme Court decisions or the Constitution itself of how the different branches of thefederal government interact on matters of mutual concern. (15) Under these informal customs, individual Senators have, historically, been deeply involvedin the nomination and confirmation process. The procedures and traditions that have developed havetended to protect the autonomy of individual Senators to choose how to fulfill the advice and consentrole, rather than to dictate the process for all Senators. (16) It is this combination -- unwritten Senate traditions and the protection of each Senator's rights-- that has led critics of the process to call for changes similar to those proposed by the 9/11Commission. "[T]he Senate's confirmation process is entirely consistent with all of its other norms,traditions and rules. Concern for the rights and prerogatives of individual senators gives rise tonumerous opportunities for obstruction and delay," argued political scientists Nolan McCarty andRose Razaghian. (17) With respect to nominations to the National Security Team, the recommendations made bythe 9/11 Commission would require some major changes in the way the Senate typically conductsits business. In exchange for a relatively quick and predictable process, Senators as a group and asindividuals would relinquish some of their current rights under the Senate's rules and practices. Under current practice, once the President has chosen an individual for a position, thenomination is submitted to the Senate, and referred to the committee with jurisdiction over theagency or office which the nominee would fill. The committee may or may not act on thenomination. If the committee approves the nomination, it goes before the full Senate, which mayor may not take up the nomination on the floor. If the Senate does proceed to consider thenomination, it may or may not proceed to a final vote. A final vote of the full Senate is required fora nomination to be confirmed. The President gives to the confirmed nominee a commission withthe seal of the United States, and the individual is sworn into office. (18) Nominations are part of the executive business of the Senate (the other component beingratification of treaties). These are matters that come directly from the President and require theSenate's approval to implement. The Senate treats these items as separate from its legislativebusiness: they are placed on a different calendar (the Executive Calendar ), and the Senate must bein executive session to consider them. The official record of Senate action on treaties andnominations is known as the Executive Journal , while the record of Senate action on legislation andother matters is called the Senate Journal . In practice, the chair of the committee of jurisdiction generally has the discretion whether tomove the nominee through his or her committee or not. The action can take the form of a hearingat which the nominee testifies or a markup of the committee to formally approve the nomination andsend it on to the full chamber, or both. If the committee reports a nomination, the majority leadermay ask unanimous consent, or move, that the Senate enter executive session to take it up. He is not required to take either action. (In principle, any Senator may move to take up a nomination, but inpractice the Senate treats this action as the prerogative of the majority leader.) If the Senate agreesto take up the nomination, it may proceed to a final vote, but again, it is not required to do so. While a nomination is pending before the Senate, any Senator or group of Senators may actto delay or defeat the nomination by extended debate, called a filibuster. The Senate custom of"holds," which can allow a Senator or group of Senators to delay consideration of a measure ormatter, has also been used to prevent full Senate consideration of nominations. While the vast majority of presidential nominees receive Senate action, not all do. Senaterules do not require that a nominee receive consideration. "There is nothing inherent in theappointments process that forces action, as there is, for example in the budget process. If theCongress fails to act on the budget, the unpleasant prospect of a government shutdown looms. Thisusually inspires action, even if it is not always completed by the first day of the new fiscal year. Anappointment carries no similar sense of urgency," noted political scientist G. Calvin Mackenzie. (19) In the case of nominees, by contrast, if the Senate does act, there is no established time framefor that action. "The mere fact that the President submits a name for consideration does not obligatethe Senate to act promptly," wrote separation-of-powers scholar Fisher. (20) The 9/11 Commission's proposal, and most likely the House-passed provision to S. 2845 , would presumably require that Senate committee chairs schedule confirmationhearings on the proposed members of the National Security Team. If hearings were not held on thenominee in a timely fashion or the nomination not reported out after a certain number of days, thenomination would presumably be discharged, either automatically or through a motion to discharge. As a result of this change, a nomination could come before the full Senate for consideration withouthaving had a hearing in the committee of jurisdiction. While some argue that too many nominationsare subject to Senate confirmation hearings, it is unlikely that Senators would want to skip such astep in the case of the Secretary of State or Secretary of Defense. This change would constitute a major change in the established prerogative of committeechairs. The power of committee chairs to control the agenda of their panels is longstanding. Severaltimes in recent years, committee chairs have refused to grant a nominee a hearing, and effectivelyprevented the Senate from being able to act on the nomination. (21) The Senate can dischargea committee from consideration of a nomination, and frequently does so by unanimous consent whenthe nominations concerned are non-controversial. When there is opposition, however, the processto discharge the committee from further consideration of the nomination is difficult and subject tofilibuster, and has been used rarely. Responding to concerns that committee chairs were too powerful in their ability to blockconsideration of legislation, the 1970 Legislative Reorganization Act created a new Senate rule toallow a majority of a committee to call a meeting without the approval of the chair. (22) It is rarely used, perhapsbecause of the inherent political consequences of challenging a committee chair's authority, becausethe chair retains control over the agenda for any new meeting scheduled, or because the threat issufficient to bring about action by the chair. Implementing the 9/11 Commission's proposal would require guaranteeing action on anominee at the committee level. It would accordingly weaken the power of the chair to use his orher position to block a nomination. The deadline proposed by the 9/11 Commission and the House also would seem to excludethe possibility of Senators placing holds on these nominees to postpone their consideration for anylength of time. It would mean that votes on these specific nominations would have to be protectedagainst being delayed by a filibuster. Senators have several times refused to allow the Senate to reach a final vote on a nomination,thus permitting a filibuster, or extended debate, to kill that nomination. (23) In other instances, aSenator or a group of Senators has placed a "hold" on a nomination, which can also effectively killthe nominee's chance for confirmation. The system of "holds" is not a formal part of the Senaterules; rather, it is a practice honored by the Senate leadership. If a Senator or a group of Senatorstell their leader they want to place a hold on a nomination (or a piece of legislation), the leader maydecide to honor that request and not schedule the nomination for floor consideration. The leader alsomay decide to honor the hold for a specific period of time or not at all. The power of the hold liesin its implicit threat -- that if the item is scheduled for floor consideration, the concerned Senator andhis or her allies might wage a filibuster and try to prevent a final up or down vote on the matter. (24) Holds and filibusters are essentially two versions of the negative power of the Senate and itsMembers -- the ability to stop something from happening, whether it be passage of piece oflegislation, ratification of a treaty or confirmation of a nomination. The 9/11 Commission'srecommendation, which calls for a guaranteed up or down vote on all nominees in the NationalSecurity Team, would require altering these traditions. In order to ensure that nominees receive afinal vote, it would be necessary to preclude the possibility of a successful filibuster. If thenomination had to be acted upon within 30 days, the hold would lose its power as well -- under thoserules, a delay of a day, even a week, is unlikely to be detrimental to a nominee's ultimateconfirmation. Many critics argue that Senators should not be able to use these powers to block action onnominations, that it distorts the confirmation process and prevents the full chamber from workingits will. "Holds, mentioned nowhere in Senate rules, are antidemocratic and probablyunconstitutional (although not likely subject to judicial review since the courts tend to be deferentialto political questions)â¦Yet the hold subjects nominations to a single senator's veto," argue Ornsteinand Donilon. (25) Political scientist Christopher J. Deering wrote that the practice of holds has been destructiveto the confirmation process. "[M]embers of the Senate of both parties have placed holds onparticular individuals. In some cases, the nominee is the target, in other cases merely a pawn, butin either case the use of the nominees as, in effect, hostages has undermined the integrity of thesystem.⦠[T]he use of such holds is a serious abuse of the current system." (26) As political scientist Barbara Sinclair has noted, however, holds are not meaningful unlessthey are backed up by the threat of filibuster. Therefore, it is the Senate's tradition of unlimiteddebate on most subjects, including nominations, that is at the heart of this dispute. Sinclair observed: As long as members are willing to back their holds withactual extended debate, the leaders are faced with an impossible situation when floor time is short. Assuming that the bill is not "must" legislation, calling it up is likely to consume scarce timeunproductively, time for which the leaders have multiple and clamorous requests. (27) Supporters of the Senate's tradition of unlimited debate argue that it is a necessary componentof the chamber's procedures. "Advocates of restrictions on debate rest their case on the cliches ofdemocracy, and transform government by a majority from an imperfect device into an eternalprinciple," wrote Senate historian Lindsay Rogers. "Yet curiously enough, freedom of debate,although sanctioning minority control by avoirdupois rather than by argument, has proved to be avaluable safeguard against executive inefficiency and corruption," he concludes. (28) Senator J.W. Fulbright, in 1957, during Senate debate on a proposal to change its rules tomake it easier to invoke cloture and end debate, defended extended debate this way: The great distinction between the Senate andthe other body of Congress is the power of the Senate to examine and to subject approval ofmeasures to delay, in order that the people themselves may be able to understand controversialissues. I hope Senators will not take seriously the argument that democracy is in some wayequivalent to majority rule, because there is nothing whatsoever to such an argument. There isnothing in our Constitution which in any respect implies, directly or indirectly, that majority ruleshould be the rule of the Senate. (29) Others have argued that the full Senate must be able to act on presidential nominees and notallow one or several Senators to block a confirmation vote. Political scientist Brannon P. Denningput it this way: The notion of "advice and consent" is mutable. It hasevolved from an alleged "rubberstamp" into a right to inquire into the jurisprudential commitmentsof Supreme Court nominees, to a right to disapprove nominees because a particular senator believesthat they are not "ambassadorial quality." Tools for facilitating "consensus" -- said to be the raisond'etre of most Senate rules and procedures -- have, in short order, been fashioned into weapons ofminority rule.⦠[C]ustoms like the "hold" and the prerogative of committee chairs have, lately, beenexercised not for the benefit of the Senate as an institution, or even for the benefit of a particularparty, but for the benefit of individual senators. (30) Rules implementing the requirements outlined above would have the main features of anexpedited procedure. Expedited procedures are tools used by the House and Senate that can overridethe normal parliamentary procedure to ensure relatively quick action on a particular measure ormatter. Examples of expedited procedures, also known as "fast track" provisions, include theDefense Base Closure and Realignment Act of 1990 and the Trade Act of 1974, the process by whichCongress considers most trade agreements. (31) Given its call for a deadline-mandated, up or down vote on each nominee in the NationalSecurity Team, the most likely way to implement the 9/11 Commission's recommendation or theHouse-passed provision of S. 2845 would be for the Senate to create a new expeditedprocedure that would apply to this specific set of nominations. Expedited procedures have notpreviously been used in the Senate to consider executive business, so enactment of the 9/11Commission's recommendations would be precedent-setting. That would not necessarily, however,be a barrier to using expedited procedures for executive business. Necessary Elements. An expedited procedurereflecting the 9/11 Commission's recommendation and the House provision would need to includea time limit for action by the committees on nominations referred to them. This provision mightrequire that the committee hold a hearing on the nomination and report it to the full chamber by aset time after receiving it, such as 20 days. (32) An effective expedited procedure would need to include anenforcement mechanism at this stage, so that if the committee did not act, either the nominationwould automatically be discharged from committee and placed on the Executive Calendar , makingit available for consideration by the full chamber, or a motion to do so would be in order. An effective expedited procedure also would need to provide some controls regarding Senatefloor action. Currently, under Senate precedents, a Member may move to go into executive sessionto take up a particular nomination without that motion being subject to debate, and thus a filibuster. The nomination itself, however, is subject to debate and, therefore, to filibuster. The expeditedprocedure would need to foreclose the possibility of filibustering a nomination, probably by placinga limit on the total amount of time the Senate could spend debating the nomination of a member ofthe National Security Team. How much debate time would be required could be a tricky question to decide. The Senatespent no floor time debating the two nominations for Under Secretary of State for Public Diplomacyand Public Affairs it has approved during the Bush Administration. That position is included in the9/11 Commission's definition of the National Security Team. The Senate might, however, want tobe sure it includes sufficient debate time to consider other members of the National Security Team,such as Secretary of Defense, Secretary of State or Attorney General. In general, the Senate does not tend to include in its expedited procedures a provisionautomatically calling a measure to the floor. (33) Usually, the expedited procedure would make it in order for themajority leader or another Member to bring the matter up. If desired, the expedited provision forNational Security Team nominations could include such a provision, requiring that within severaldays after the end of committee consideration, the Senate take it up. This provision would need tospecify when, in the Senate's normal course of daily operations, the nomination would come up. Because this procedure would be designed to apply to nominations, it also would need to providefor a motion that the Senate go into executive session or that the Senate be considered to have goneinto executive session at a specified time. Finally, to implement the 9/11 Commission's recommendation fully, the expedited procedurewould need to require an up or down vote at the end of the debate for each nominee included in theNational Security Team. In spite of all the requirements of an expedited procedure, it is possible that the Senate as abody might refuse to act on a particular nomination. The majority leader might simply decline tocall it up. It is not apparent how any form of procedure could provide effective recourse in thissituation. Expedited procedures in existing statutes often provide that if Congress does not act ona presidential proposal within a specified time, the proposal goes into effect. Permitting anomination to be treated as confirmed without affirmative action by the Senate, however, would notlikely be acceptable to the Senate, and the validity of such an outcome might well be questioned onconstitutional grounds. The Senate could institute procedures to implement the 9/11 Commission's proposal or theHouse provision in several ways: by enacting an expedited procedures law, by amending the Senate'sstanding rules or its standing orders, through adoption of a unanimous consent agreement, or bypassage of a constitutional amendment. Expedited Procedures Statute. Language to createan expedited procedure for the National Security Team could be included in a larger bill toimplement other elements of the 9/11 Commission' recommendations, such as the creation of aDirector of National Intelligence. If the expedited procedures legislation were subject to a filibuster,60 votes would be required to invoke cloture. (34) Legislation including an expedited procedure, however, couldbe enacted into law only through the constitutional lawmaking process, requiring action by the Houseof Representatives and the President as well as by the Senate. This method of implementation raisesthe question whether the Senate would be willing to involve the House and the President in makingchanges to the confirmation process, a matter which is bound up in with its own rules and specialconstitutional prerogatives. Amending Senate Rules. Similar changes alsocould be implemented by amending the Senate rules. This approach would have the advantage tothe Senate of not having to go through the House or be signed by the President; rather, the changeswould take effect as soon as the Senate adopted them. The difficulty with this approach is that, ifthe changes to the rules were opposed by a filibuster, it would take a two-thirds vote of those present,as many as 67 Senators, to invoke cloture and cut off debate, which is a very high threshold to meet. Constitutional Amendment. The Senate alsocould try to amend the Constitution to redefine the confirmation process along the lines of the 9/11Commission's recommendations. This approach might be considered less promising becauseconstitutional amendments must be passed by two-thirds of those voting, or as many as 67 votes. In addition, once in place, such a change would be extraordinarily difficult to reverse or modify. Unanimous Consent. The Senate also could tryto amend its rules to conform to the 9/11 Commission's recommendations by a unanimous consentagreement. For this approach to succeed, all Senators would have to agree on a plan to implementthe new confirmation procedure -- one objection would prevent the agreement from going into effect. Unanimous consent agreements have been used to structure debate on specific nominations. Thisagreement, however, would be binding into future Congresses, unless it specified otherwise or wasmodified by another unanimous consent agreement. Standing Order. Finally, the Senate could try toamend its rules through adoption of a Standing Order, which would take the form of a simpleresolution. Such a Standing Order would have effects like those of a rule, but the resolution wouldrequire 60 votes for cloture if it was filibustered, not two-thirds of Senators voting. Such a standingorder resolution was used for the creation of the Permanent Select Committee on Intelligence (S.Res.400, 94th Congress). One impact of the ability of a Senator to filibuster a nominee has been that negotiations overother matters, both with the executive branch and among fellow Senators, have been broadened toinclude all matter of Senate business, a concept known as linkage. For example, a Senator'sobjections to a particular nominee might be disposed of by permitting that Senator to offer anamendment to a bill that is soon to be considered on the Senate floor. Taking nominations out ofthis equation could shift the balance of power between the executive and legislative branches. "The appointments process is deeply contentious, and as legislative policymaking has grownmore difficult in recent decades, the process has increasingly become a venue for pitched battles overthe shape of public policy," wrote appointments expert Mackenzie. He continued: More and more, the contentiousness in the appointmentsprocess is driven not by questions of the fitness of nominees but by policy disagreements. Senatorsvote against nominees, and nominations fail, because the appointments process has become a policybattleground⦠This is not a new phenomenon, this use of the appointments process to wage policybattles. In fact, it has always been a characteristic of the appointments process. (35) Mackenzie noted that President Andrew Johnson fought with the Senate over several of his nomineesto head the national bank and of Roger Taney to be Secretary of the Treasury. What is different now,he said, is the extent to which those connections are made. Political scientists Nolan McCarty and Rose Razaghian studied more than 100 years ofSenate action on nominations. They said: "The thrust of our theory is that the supermajoritarianismof the Senate in general and the confirmation process in particular gives partisan and ideologicalminorities a strategic opportunity to have an impact on public policy by delaying nominations thatwould pass on a simple majority vote." (36) For some, the ability to engage in extended debate on (and effectively block) measures ormatters is what empowers the Senate to deal on equal footing with the President in their fights overboth nominations and legislation. Political scientist Rogers argued that "For the fact of the matteris, as I hope to show, that, as the much vaunted separation of powers now exists, unrestricted debatein the Senate is the only check upon presidential and party autocracy. The devices that the framersof the Constitution so meticulously set up would be ineffective without the safeguard of senatorialminority action." (37) Some also believe that the Senate's opportunity to play a vigorous role in the nomination andconfirmation process is essential to the public's trust in the process. "Nonetheless, the process ofvetting and voting on the president's candidates for high position is an essential balance wheel in ourcomplicated form of government. It lends legitimacy to the whole structure, and it is worth theoccasional loss of a good person," wrote former judge, and former Member of Congress, AbnerMikva. (38) Hecontinued: Neither branch always chooses good people, as historyshows, and frequently the best people don't get appointed. Learned Hand never made it to theSupreme Court. Nonetheless, political involvement, including confirmation by the very politicalSenate, offers a reality check on who gets the power to make very important judicial decisions forlife. The case is a little less compelling for appointments to the executive branch, but it still can bemade. Most of the federal work force come into their positions and are protected in them, by a civilservice system based on meritocracy. For those relatively few policy makers whose appointmentsrequire Senate confirmation, an extra "look see" is justified. (39) Others believe that the delaying strategies being employed by some in the Senate detract fromthat legitimacy. (40) And some contend that it is not right to use nominations as bargaining chips in legislativenegotiations. "The Senate's constitutional and institutional role of advice and consent is beingsupplanted by informal, extra-constitutional customs that allow individual senators to effectivelyveto the President's nominees -- even if only to gain leverage with the executive branch on anunrelated matter," wrote Denning. (41) Any change to the confirmation process of the kind proposed by the 9/11 Commission wouldalmost certainly also influence the balance of power between the executive and the legislativebranches. The ability to block a final vote on a nomination has become a critical element in theSenate's power relationship with the President, both for its action, or inaction, on the nominationitself and, frequently, for a Senator or group of Senators to gain leverage in negotiations on othermatters. A vote deadline, for example, could still lead to a defeat, so requiring a vote could lead tomore presidential defeats or to pressure to go along with the President so as to not hand him a defeat. Political scientist Burdett Loomis observed that trying to change the Senate's rules may notbe an effective plan. "Is there any indication that the Senate might smooth the way for futurenominees? Given the profound changes in the chamber over the past twenty-five years -- the greaterlatitude allowed individual members and the intense partisanship that dominates muchdecision-making -- it seems unlikely that reformers would profit much from attempting to reshapeSenate procedures." (42) Instead, he argued, "Striving to "govern together" by bridging the separate institutions may bevaluable than seeking to change an institution that has proved highly resistant to structuralreforms." (43) If the history of the confirmation process is more about practices than rules, perhaps it wouldbe useful to consider informal changes in the dynamics that undergird the process. Instead of settingup timetables for action, this approach would build upon a view that the problem is not procedural,but political. Political scientist Christopher J. Deering wrote that politics has always been a part of theprocess. "The relationship between the executive and legislative branches has been and remainsessentially political. That should not change. The Senate's role in the review of executive personnelis but one example of that political relationship. The Senate's role in the confirmation process wasdesigned not to eliminate politics but to make possible the use of politics as a safeguard. From theoutset the political motivations of the two branches were to be a protection against tyranny." (44) "The one enduring characteristic of the process is that it is as deeply and intensely politicalnow as it has always been," (45) agreed Mackenzie. The process is political, he asserted, becauseits results can have a major impact on policy-making, and therefore, politics. Conflict occurs in the appointment process for a verysimple reason. Appointments matter. Were that not the case, presidential administrations would nothave several dozen White House aides devoting full time to appointment decisions; Senatecommittees would not hold hundreds of hours of confirmation hearings; interest groups, agencies,political parties and members of the House would not spend their time and resources trying to shapeappointments decisions. Yet they do all these things, and they do them because they think it makesa difference who gets appointed to serve in particular federal offices. (46) As a result, when the process has worked, it frequently was because the two branches ofgovernment found a way to make it work. "The appointment power operates in a framework ofstudied ambiguity, its limits established for the most part not by court decisions but by imaginativeaccommodations between the executive and legislative branches," wrote separation-of-powersscholar Fisher. (47) The 9/11 Commission's proposal provides an occasion for the Senate to evaluate the largerquestion of its confirmation process and its role in the presidential appointment process. Adoptionof the recommendation, for example, could open the door to consideration of ever more nominationsthrough expedited procedures. What would a new process mean for other presidential nominations,particularly those to the judiciary? For several years, the Senate has been debating the proper role of the President and Senatorsin the nomination and confirmation of the nation's federal judges. During the ClintonAdministration, critics charged that the Judiciary Committee was not acting on all the nominationsit needed to. During the Bush Administration, the controversy has been over the use of the filibusterto block a final vote on a judicial nominee. (48) Before the 9/11 Commission released its recommendations, Senator Arlen Specter hadintroduced a resolution that would establish a "protocol" for the confirmation of federal judges. Hisplan ( S.Res. 327 ) would establish timetables for action at both the committee andSenate floor stages, and it would effectively prohibit filibusters of judicial nominations. PresidentGeorge W. Bush on October 30, 2002, proposed a similar plan for the Senate's confirmationprocess. (49) S.Res. 138 , introduced by Senate Majority Leader Bill Frist on June 26, 2003, would set up a diminishing threshold for invoking cloture on presidential nominations that aresubject to Senate approval. The threshold necessary for invoking cloture would drop each time theSenate voted on a cloture motion on a particular nominee until it reached 51 Senators, a majority ofthe chamber. Given the interest already expressed, some Senators might want to expand the 9/11Commission's recommendations to include a broader number of presidential nominees. The 30-daytimetable would likely have to be adjusted to allow the Senate to complete its work on a largernumber of nominations. On the one hand, this action could put in place a definitive system for the consideration ofpresidential nominees -- it could bring order and predictability to the entire process. On the otherhand, it might rush the process for some nominees and make it more difficult for Senators to defeata nomination they oppose. Existing Rules. Instead of, or in addition to,instituting new procedures to expedite action, the Senate might exercise more control over threatenedfilibusters against nominations by enforcing more stringently its existing rules. Under currentprocedures, debate on nominations and treaties is in some respects easier to limit than on legislativematters. First, the motion to proceed to consider a nomination may be offered in a non-debatableform, whereas the motion to proceed to consider legislation is usually debatable. Second, the "TwoSpeech Rule" of the Senate limits each Senator to two speeches per day on any given question. Withrespect to legislative matters, this rule is not a viable deterrent to extended debate, for each newamendment is viewed as a new question on which each Senator may speak two more times. Onun-amendable matters, such as nominations, the Two Speech Rule could more effectively be usedas a procedure to limit debate indirectly. Under current interpretations, however, the two-speech rule has proved to be an ineffectivedeterrent against extended debates on nominations because it has been interpreted to apply to thecalendar day. On each new calendar day every Senator is able once again to make two speeches onthe pending nominee. As a result, since the late 1980's, the Senate has rarely sought to enforce thisrule. A reinterpretation of the rule in its application to nominations could make it more effective. Given such an interpretation, it would be easier for Senate leaders to overcome filibustersagainst a nominee by forcing opposing Senators to speak at length. In modern practice, mostfilibusters feature delay by means other than debate (quorum calls or agreements to turn to otheritems of business). In effect, the threat of a filibuster is treated as though the Senate is beingprevented, through extended debate, from reaching a final conclusion on the measure or matter athand. Keeping the Senate in continuous executive business session for consideration of anomination could make it more difficult for Senators to sustain a true filibuster, and, perhaps, reducethe incidence of filibuster threats. Expiring Nominations. Another approach mightbe to place a time limit on a presidential nomination. While such a requirement might seemcounterintuitive, it would prevent an endless delay in filling the position in question. If the Senatedid not act on a nomination after a defined period of time, say 60 days, it would automatically bereturned to the President. While the President would have the ability to renominate the individualin question, if he so chose, he could also take the opportunity to reconsider his choice without thepolitically sensitive problem of asking a nominee to step aside. Table 1. Initial Appointments by President George W. Bush to Top Positions at the Departments of Defense,Homeland Security, Justice, and State, andthe Central Intelligence Agency Source: This table was created by [author name scrubbed], Analyst in American National Government, CRS, Aug. 18, 2004. a. The Homeland Security Act of 2002 ( P.L. 107-296 ), which created the Department of Homeland Security, was signed into law on 11/ 25/02. Theposition of Under Secretary of Defense for Intelligence was created by P.L. 107-314 , sec. 901(a), enacted 12/02/02. b. Vacancy information for Mueller's predecessor, Louis J. Freeh, is from the FBI's history page, available at http://www.fbi.gov/libref/directors/freeh.htm . c. Although the first day the new President submitted nominations to the Senate was Inauguration Day, Senate committees held hearings on some topnominations before that time and the Senate was therefore ready to confirm them on the same day they were nominated. d. This position was created by P.L. 107-314 , sec. 901(a), enacted 12/02/02. e. On Jan. 27, 2003, President Bush announced his intention to designate England, Hutchinson, Hale, and one other individual as acting officials in theirintended positions. (U.S. President (George W. Bush), "Digest of Other White House Announcements," Weekly Compilation of PresidentialDocuments , vol. 39, Jan. 27, 2003, p. 145.) These actions were taken under Section 1511(c)(1) of the act. (Information received from Departmentof Homeland Security, Office of the Deputy Secretary, via telephone conversation, Jan. 28, 2003.) England, Hutchinson, and Hale were laterconfirmed as shown. f. According to DHS sources, Brown was appointed under Section 1511(c)(2) of the act, which provides that reconfirmation by the Senate is not requiredby the law for "any officer whose agency is transferred to the Department pursuant to this act and whose duties following such transfer are germaneto those performed before such transfer." (Information received from Department of Homeland Security, Office of Legislative Affairs, viatelephone conversation, Mar. 12, 2003.) He was previously nominated to be deputy director of the Federal Emergency Management Agency(FEMA) on 03/21/02 and confirmed on 08/01/02. g. Technically Beers was nominated twice. She was first nominated on 06/29/01and this nomination was returned to the President on 08/03/01at thebeginning of a 31-day Senate recess under the provisions of Senate Rule XXXI, Paragraph 6 of the Standing Rules of the Senate. She wasnominated again on 09/04/01. The 31 days of the Senate recess are not included in the calculations, in this row, of days elapsed. Table 2. Appointment Information for Four William J. Clinton Appointees Who Continued in Office Under PresidentGeorge W. Bush Source: This table was created by [author name scrubbed], Analyst in American National Government, CRS, Aug. 18, 2004. a. Information on the departure date for Larson's predecessor, Stuart Eizenstat, is from Office of Personnel Management (OPM) records. The departuredate for Tenet's predecessor, John M. Deutch, is noted in R. Jeffrey Smith, "Having Lifted the CIA's Veil, Deutch Sums Up: I Told You So," TheWashington Post , Dec. 26, 1996, p. A25. John Gordon, who preceded McLaughlin, reportedly took a new position as of 06/27/00, but his precisedate of departure from the CIA could not be determined (Associated Press Online, "Clinton Names New No. 2 at CIA, June 29, 2000). Dempseywas the first person to hold the position of Deputy Director of Central Intelligence for Community Management, which was created by P.L.104-293 , sec. 805, enacted 10/11/96. b. The Senate adjourned on 07/27/00 and reconvened on 09/05/00. The 39 days of that recess are not included in the calculations, in this row, of dayselapsed. c. The Senate adjourned on 11/13/97 at the end of the 1st session of the 105th Congress and reconvened on 01/27/98. The 74 days between the 1st and2nd sessions of the 105th Congress are not included in the calculations, in this row, of days elapsed. Table 3. Initial Appointments by President William J. Clinton to Top Positions at the Departments of Defense,Justice,and State, and the Central Intelligence Agency Source: This table was created by the author with extensive assistance from [author name scrubbed], Analyst in American National Government, CRS. a. Although the first day the new President submitted nominations to the Senate was Inauguration Day, Senate committees held hearings on some topnominations before that time and the Senate was therefore ready to confirm them on the same day they were nominated. b. The Senate adjourned on 08/7/93 and reconvened on 09/07/93. The 30 days of that recess are not included in the calculations, in this row, of dayselapsed. c. This position was created by P.L. 103-160 , sec. 903, enacted 11/30/93. d. Freeh's predecessor, William S. Sessions, was fired by President Clinton on July 19, 1993. Ana Puga, "Clinton fires FBI's Sessions, expected to nameN.Y. judge," The Boston Globe , July 20, 1993, p. 1. e. Wirth was confirmed into the position of counselor at the Department of State. After a reorganization, the name of the position became under secretaryof State for global affairs. John M. Goshko, "State Department Reorganizes Ranks; As Many as 40 Deputy Assistant Secretary Job WillDisappear," The Washington Post , Feb. 6, 1993, p. A8. f. This position was created by P.L. 105-277 , sec. 1313, enacted 10/21/98. g. Studeman was a holdover from the previous Bush Administration. Studeman's predecessor, Richard J. Kerr, resigned on Jan. 14, 1992. ElaineSciolino, "No. 2 C.I.A. Official Quits Post," The New York Times , Jan. 14, 1992. h. This position was created by P.L. 104-293 , sec. 805, enacted on 10/11/96. The Senate adjourned on 11/13/97 at the end of the 1st session of the 105thCongress and reconvened on 01/27/98. The 74 days between the 1st and 2nd sessions of the 105th Congress are not included in the calculations,in this row, of days elapsed.
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On July 22, 2004, the National Commission on Terrorist Attacks Upon the United States,known as the 9/11 Commission, issued its final report, detailing the events up to and including theSeptember 11, 2001 terrorist attacks upon the United States. The report contained 41recommendations on ways to prevent future catastrophic assaults, including a series of proposalsdesigned to improve the presidential appointments process as it relates to the top national securityofficials at the beginning of a new administration. On October 6, the Senate passed legislation( S. 2845 ) to implement many of the changes recommended by the 9/11 Commission. The House on October 8 passed its version of the legislation ( H.R. 10 ). The Presidentsigned the final version of the bill on December 17, 2004 ( P.L. 108-458 ). Two other measuresdealing with the 9/11 Commission's recommendations ( S. 2774 and H.R. 5040 ) were introduced in early September. The 9/11 Commission recommended that the Senate adopt rules requiring hearings and votesto confirm or reject national security nominees within 30 days of their submission at the start of eachnew presidential administration. Implicit in the proposal is the assumption that there is a problemwith the process for nominating and confirming presidential appointees. Analysis of Senateconsideration of the initial nominations by Presidents William J. Clinton and George W. Bush to theposts covered by the recommendation shows that the commission's proposed timetable was not metin 14 of the 49 cases, suggesting this is an issue in a minority of cases. The Constitution gives the Senate a role in the presidential appointments process, but theparameters of that role have never been clearly defined. The current process is regulated by amixture of formal rules and informal customs, as well as by political interactions between thePresident and Senators. Implementing the commission's proposal would presumably requireinstituting procedures that guarantee committee consideration of each nomination, at least at ahearing, and a final vote on each by the full Senate. Changes of this kind would involve newrestrictions on both the power of committee chairs to control the agenda of their committees and therights of Senators to delay or block nominations through holds and extended debate. These changeswould likely also alter the relationship between the legislative and executive branches, weakeningthe negotiating posture of the Senate in relation to the President, particularly if they were to beextended to additional nominations. Procedures adequate to implement the commission's recommendation would resemble anexpedited procedure, such as those used in resolutions of approval and disapproval of executiveactions. Procedural changes of this kind could be achieved by amending the Standing Rules of theSenate, changing the Standing Orders of the Senate, passing a Constitutional Amendment enactingan expedited procedures statute, or reaching a unanimous consent agreement. This report will be updated as events warrant.
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U.S. agricultural exports have long been a bright spot in the U.S. balance of trade, with exports exceeding imports in every year since 1960, although in recent years the value of farm exports have experienced a downturn from the record level recorded in FY2014. The U.S. Department of Agriculture (USDA) forecasts U.S. agricultural exports in FY2017 will reach $134 billion. If realized, this total would represent a moderate rebound from FY2016, when exports sank to $129.7 billion, which was $10 billion below the FY2015 total and more than $20 billion below the peak of $152.3 billion in FY2014. The decline in the value of farm exports in recent years has reflected mainly lower market prices for bulk commodities. U.S. agricultural imports are forecast to total $113.5 billion in FY2017, essentially unchanged from $113.1 billion in FY2016, resulting in an agricultural trade surplus of $19.5 billion. This would compare favorably with a surplus of $13.9 billion in FY2016 but would still be well below the high of $43.1 billion in FY2014. Agricultural exports are important both to farmers and to the U.S. economy. From 2013 to 2015—the most recent calendar years for which figures are available—the value of U.S. agricultural exports accounted for 10% and 11% of total U.S. exports and 5% of total U.S. imports, according to USDA. As for the contribution of U.S. agricultural exports to the overall economy, USDA's Economic Research Service estimates that in 2014 each dollar of agricultural exports stimulated an additional $1.27 in business activity. Moreover, that same year, agricultural exports generated an estimated 1,132,000 full-time civilian jobs, including 808,000 jobs outside the farm sector. With the productivity of U.S. agriculture growing faster than domestic demand, farmers and agriculturally-oriented firms rely heavily on export markets to sustain prices and revenue. Within the agricultural sector itself, the importance of exports looms especially large, accounting for around 20% of total farm production by value. Export markets are a major outlet for many farm commodities, in some cases absorbing over one-half of U.S. output, including for wheat, cotton, and some specialty crops. Within the overall mix of agricultural exports, soybeans, corn, other feed crops, and wheat continue to rank at or near the top of the list of farm exports by value. But overall it is the high value product (HVPs) category—which includes such products as live animals, meat, dairy products, fruits and vegetables, nuts, fats, hides, feeds, sugar products, grain products, and processed fruits and vegetables—that comprises the largest share of exports in value terms. In FY2015, the HVP share of the value of U.S. agricultural exports represented 67% of the total. All states export agricultural commodities, but a minority of states account for a majority of farm export sales. In calendar year 2015, the 10 leading agricultural exporting states based on value—California, Iowa, Illinois, Nebraska, Minnesota, Texas, Indiana, Kansas, North Dakota, and Washington—accounted for 57% of the total value of U.S. agricultural exports that year. Status: Congress reauthorized major agricultural export promotion programs in February 2014 through FY2018 with the passage of the 2014 farm bill ( P.L. 113-79 ). For more information see CRS Report R43696, Agricultural Exports and 2014 Farm Bill Programs: Background and Current Issues . In September 2016, the Office of the U.S. Trade Representative (USTR) launched two dispute settlement cases against China at the World Trade Organization (WTO) over Chinese policies that USTR alleges are inconsistent with its WTO obligations and have distorted international trade in wheat, rice, and corn. In September 2016, USTR challenged China's domestic support measures for these crops, asserting that the level of government support appears to have been well in excess of China's WTO commitments. The U.S. subsequently filed a separate enforcement action in December 2016 over the same three commodities, alleging that China's management of the tariff-rate quotas (TRQs) for these crops has improperly restricted access to the Chinese market by up to $3.5 billion. Under a TRQ, a lower tariff is levied on import quantities within the quota amount, while a higher rate is imposed on quantities in excess of the quota. In the initial action involving China's domestic support measures, USTR contends that the level of support that China has provided for rice, wheat, and corn has exceeded—by nearly $100 million from 2012 through 2015—the level to which the country committed when it joined the WTO of 8.5% of the value of its annual domestic agricultural production. USTR also asserts that China's support levels for domestic production have been above world market prices since 2012, thereby creating an incentive for Chinese farmers to increase production of these crops, which in turn has displaced imports from the United States and elsewhere. Concerning the TRQs, USTR asserted that China's administration of them is not transparent, predictable, or fair, citing impermissible restrictions on importation, unclear procedures, and lack of meaningful information on how the TRQs are managed. As a consequence, USTR points out that the TRQs for these crops during the most recent five years (2011-2015) have consistently gone unfilled even though global prices have favored importation. The TRQs, which USTR values at about $7 billion based on Chinese import prices in 2015, are global in nature, making them available to numerous exporters. Status: Following the U.S. trade enforcement action over China's domestic price support levels at the WTO in September, bilateral consultations were undertaken, but no resolution was agreed upon. Thus, in December, USTR requested that WTO establish a dispute settlement panel to examine China's domestic support levels for these crops, a request that was fulfilled in January 2017. Following its WTO challenge of China's administration of TRQs, U.S. officials requested bilateral consultations to seek a mutually agreeable solution before potentially moving to the next level of dispute resolution. If the talks prove to be unproductive, the United States could request that a WTO dispute settlement panel be appointed to examine China's TRQ administration. If the WTO would determine that China's price supports or its administration of its TRQs for wheat, rice, and corn (or both) are WTO inconsistent, then China would be obligated to take corrective measures. If China did not, the United States could seek authorization from the WTO to impose trade sanctions against China. The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) that was negotiated by the Obama Administration and signed by the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The agreement had not yet entered into force when President Trump signed an executive order withdrawing the United States from TPP on January 23, 2017. The fate of TPP is uncertain as other countries may seek to ratify a very similar deal without the United States. Concerning agricultural products, the agreement sought to liberalize trade through lower tariffs, expanded TRQs, and agreements over rules and procedures for reducing non-tariff barriers. Export markets are the destination for about 20% of U.S. agricultural production, providing material support for U.S. farm prices and income. As such, the importance of improving access to overseas markets is readily apparent and is expected to factor more importantly in the years ahead, because the growth of food demand abroad is expected to far outpace increases in domestic demand. TPP countries represent a major component of U.S. farm and food trade, providing markets for 42% of U.S. farm exports between 2011 and 2015, while also supplying 47% of U.S. agricultural imports. Among the TPP countries, Japan and Vietnam—with a combined population of around 220 million people—were expected to offer the greatest potential for expanding U.S. farm exports under TPP, because the United States does not already have free trade agreements (FTAs) with either country. Also, Japan and Vietnam impose significantly higher average most-favored-nation (MFN) tariffs on imports of agricultural products—at 12.9% and 16.3%, respectively—in 2015 compared with the U.S. average of 5.2%. Thus, tariff reductions under TPP would be expected to improve the competitiveness U.S. farm and food exports compared with domestic suppliers and non-TPP export competitors. As negotiated, TPP would have materially increased the overseas markets to which U.S. farm and food products would have preferential access. In its report of May 2016, the U.S. International Trade Commission (ITC) concluded that TPP would provide significant benefits for U.S. agriculture. ITC projected that by 2032 U.S. agricultural exports would be higher by $7.2 billion, or 2.6%, under TPP than without the agreement, reflecting lower tariffs and expanded tariff-rate quotas, while U.S. farm imports would total $2.7 billion higher, or 1.5%. Most of the increase in U.S. exports would have been concentrated in Japan (up $3.6 billion) and Vietnam (up $3.3 billion). Beyond market access changes, TPP included new rules and procedures for addressing non-tariff barriers that impede trade, including sanitary and phytosanitary (SPS) measures that address food safety, plant pests and animal diseases. For more information, see CRS Report R44337, TPP: American Agriculture and the Trans-Pacific Partnership (TPP) Agreement ; and CRS In Focus IF10412, TPP: Taking the Measure of the Agreement for U.S. Agriculture . Status: A broad cross-section of agricultural groups and food and agribusiness interests have expressed support for implementing TPP, citing increased market access for U.S. farm and food products under the agreement and potential for expanded exports. But support for TPP within agriculture, while broad-based, was not universal. A number of groups representing agriculture and food industry interests opposed the agreement, reflecting concerns about competition from imports, the lack of a strong enforcement mechanism against currency manipulation, and the potential offshoring of jobs in the food processing sector. Congress had not considered implementing legislation that would have been needed to bring TPP into force when President Trump ordered the withdrawal of U.S. participation from the agreement. For more, see CRS In Focus IF10000, TPP: An Overview . Agricultural issues have been an active topic of debate in the ongoing trade negotiations between the United States and the European Union (EU) to establish a free trade area as part of T-TIP. Some of the principal objectives of U.S. agricultural interests include expanding market access for U.S. agricultural exports, addressing regulatory concerns regarding certain SPS and related non-tariff trade measures, and addressing concerns about EU products characterized by "geographical indications" (GIs). Complicating the U.S.-EU negotiations regarding agricultural issues are major underlying regulatory and administrative differences between the United States and the EU in how each addresses issues of food safety and public health, as well as intellectual property rights for some types of agricultural products. In addition, the T-TIP negotiations on agricultural products need to be viewed in the context of a series of long-standing, high-profile transatlantic trade disputes between the United States and the EU across a range of trade issues. In 2015, U.S. exports of agricultural products to the EU totaled $12 billion, while EU exports of agricultural products to the United States totaled $20 billion, resulting in a substantial trade deficit of nearly $8 billion for the United States. The WTO reports that the simple average MFN tariff applied to agricultural product imports in the United States was 5.1% in 2014, compared to an average of 12.2% for the EU. Including all products imported under an applied tariff and TRQ, USDA reports that the calculated average rate across all U.S. agricultural imports is roughly 12% overall, well below the EU's average of 30%. Restrictive TRQs on agricultural products are also a concern for U.S. exporters. A USDA study reports that removing tariffs and TRQs could increase U.S. agricultural exports to the EU by an estimated $5.5 billion (compared to a 2011 base year). EU exports to the United States are estimated to rise by $0.8 billion. These totals cover all current 28 EU member states. High tariff barriers are further exacerbated by additional non-tariff barriers that may limit U.S. agricultural exports. Addressing non-tariff barriers is another major goal of the U.S. agricultural sectors in the negotiation covering certain SPS concerns. These include delays in reviews of biotech products (limiting U.S. exports of grain and oilseed products), prohibitions on growth hormones in beef production and certain antimicrobial and pathogen reduction treatments (limiting U.S. meat and poultry exports), and burdensome and complex certification requirements (limiting U.S. exports of processed foods, animal products, and dairy products). As such, T-TIP negotiations on agricultural products are conditioned by a number of these long-standing, high-profile transatlantic trade disputes between the United States and EU. Other EU regulations of concern to U.S. exporters include lack of a science-based focus in establishing SPS measures, difficulty meeting food safety standards and obtaining product certification, lack of cohesive labeling requirements, and stringent testing requirements that are often applied inconsistently across EU member nations. USDA reports that removing select non-tariff barriers affecting meats, field crops, and fruits and vegetables could raise U.S. exports to the EU by an additional $4.1 billion over gains estimated from removing tariffs and TRQs (compared to a 2011 base year) across all current 28 EU member states. Major differences exist in how the United States and the EU apply SPS and technical barriers to trade and how each regulates food safety and related public health protection. For more information on SPS issues, see CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade . Other U.S. agricultural concerns in the negotiation involve the EU's use of GIs—certain protected product names for foods, wine, and spirits that many U.S. food producers consider to be generic names. Further complicating negotiations regarding GIs are underlying regulatory and administrative differences between the United States and the EU in how each addresses GIs within their respective borders. For more information, see " Geographical Indications (GIs) ." For more detailed information on the role of agriculture in the T-TIP negotiations, see CRS Report R44564, Agriculture and the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations ; and CRS In Focus IF10240, Agriculture Issues in U.S.-EU Trade Negotiations . For additional information on the T-TIP negotiations, see CRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations . For other background information on some of the previous trade disputes between the United States and EU, see CRS Report R40449, The U.S.-EU Beef Hormone Dispute ; and CRS Report R40199, U.S.-EU Poultry Dispute on the Use of Pathogen Reduction Treatments (PRTs) . Status: T-TIP negotiations began in July 2013 with the goal of concluding a "comprehensive and high standard" FTA within two years. That outcome remains uncertain, in part reflecting the complexity of the issues involved and the politically sensitive nature of a number of them. In addition, in June 2016, the United Kingdom (UK) voted to exit the EU (referred to as "Brexit"), and it remains to be seen what impact this will have on the T-TIP negotiation, since the UK accounts for a sizeable share (about 15%) of U.S. agricultural exports to the EU each year, and the exclusion of the UK from the EU could significantly reduce potential U.S. trade gains under a negotiated agreement. The United States exports 10-20% of its meat and poultry production to numerous markets around the world. At times, foreign countries impose export bans, often based on questionable grounds, on U.S. product when there is a discovery or outbreak of certain animal diseases. Specifically, bans have been imposed on U.S. beef exports because of the discovery of bovine spongiform encephalopathy (BSE or mad cow disease) in 2003. The outbreak of highly pathogenic avian influenza (HPAI) that ran from December 2014 through May 2015 in U.S. turkey and egg-producing flocks resulted in export bans on poultry products by more than 30 countries. Broiler meat exports were banned even though the HPAI outbreaks were not in areas close to commercial broiler production areas. The World Organization for Animal Health (known as OIE) has established trade protocols that member states should follow when there are disease outbreaks in countries that export meat and poultry products. According to OIE, in most cases total export bans are not recommended or needed when there is a BSE or HPAI discovery or outbreak in exporting countries. The OIE determined that the United States is a "negligible risk" status for BSE, meaning that the U.S. surveillance and safeguard systems are strong. For HPAI, USDA, in collaboration with states, has implemented increased flock biosecurity and has a system in place to rapidly contain and eradicate an outbreak of HPAI. Over the years, some foreign markets have imposed total bans on U.S. beef exports because of BSE. Some major markets for the U.S. beef industry have imposed specific conditions on beef exports. For example, Japan and South Korea—two major importers of U.S beef—require that U.S. exports be produced from cattle less than 30 months of age. China continues to ban all U.S. beef exports. During the HPAI outbreak, some foreign markets imposed total bans on poultry exports, while other markets imposed export bans only from the regions affected by the outbreak (the recommended OIE protocol for avian influenza). As the United States demonstrated that the outbreak was contained and eliminated, most of these bans were lifted. However, China, a major market for U.S. broiler meat, continues to ban U.S. poultry exports. Status: The U.S government has been working for years to reopen China's beef market. In September 2016, China's Ministry of Agriculture announced that it would lift the ban on U.S. beef. The United States and China have been engaged in negotiations to establish the protocol that would allow exports to resume. To date there has been no announcement of such a protocol. On avian influenza, USDA and the USTR will be working with trading partners to encourage them to follow international guidelines when responding to outbreaks. The United States and the EU have engaged in a long-standing and acrimonious trade dispute over the EU's ban on hormone-treated meat. The EU adopted restrictions in the early 1980s on livestock production limiting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals and meat from animals that have been administered the hormones. In response, the United States suspended trade concessions with the EU in 1999 by imposing retaliatory tariffs of 100% ad valorem on selected food products from EU countries. Despite an ongoing series of WTO dispute settlement proceedings and decisions, the United States and the EU continue to disagree on a range of legal and procedural issues, as well as the scientific evidence and consensus affirming the safety of hormone-treated beef. Many in the United States perceive the EU's action and the use of SPS measures and non-tariff barriers as disguised protectionism, intended to unjustifiably restrict and discriminate against product exports from certain countries. In January 2009, USTR announced its intent to make changes to the list of EU products subject to increased tariffs under the dispute, including changes to the EU countries and products affected and additional tariffs on some products. The EU claimed that this action constituted an "escalation" of the dispute. In May 2009, following a series of negotiations, the United States and the EU signed a memorandum of understanding (MOU) that phased-in certain changes over the next several years. As part of this MOU, the EU granted market access to U.S. exports of beef raised without the use of growth promotants, and the United States suspended its retaliatory tariffs for imported EU products under the dispute. For more information, see CRS Report R40449, The U.S.-EU Beef Hormone Dispute . Status: In December 2016, USTR took steps to reinstate retaliatory tariffs on the list of EU products under the dispute. Some attribute these actions to the perceived failure to conclude T-TIP negotiations between the United States and the EU and to continued concerns about U.S. beef access to the EU market. Starting in August 2012, the EU increased the TRQ for "high-quality" (non-hormone-treated) beef to 45,000 metric tons. However, according to USTR and the U.S. beef industry, most of this duty-free quota has been filled by countries other than the United States, including Australia, Uruguay, and Argentina. According to U.S. officials, the "EU has been unwilling to consider an allocation that would reserve a significant part of the TRQ for the United States." USTR has scheduled a public hearing for early 2017. This issue has also been raised in ongoing trade negotiations between the United States and EU to establish a free trade area as part of T-TIP. Some Members of Congress expect the T-TIP negotiations to resolve long-standing trade disputes regarding SPS rules between the two trading blocs and enhance disciplines to address SPS issues and other non-tariff barriers. Many U.S. farm organizations are unhappy that the provisional agreement continues to allow the EU to maintain its restrictions on U.S. beef imports in a manner that many believe to be inconsistent with WTO rules and with a scientific consensus supporting the safety to consumers of eating hormone-treated meat. To this date, the EU continues to ban imports of hormone-treated meat and restricts most meat exports to the EU to a limited quantity of beef imports that are certified as produced without the use of hormones, beta agonists, and other growth promotants. In December 2014, the U.S. Department of Commerce (DOC) signed agreements with the government of Mexico and Mexican sugar producers and exporters that fundamentally changed the ground rules over trade in sugar between the two countries. These "suspension agreements" prevented the imposition of countervailing duty and antidumping duties on U.S. imports of Mexican sugar as a consequence of U.S. government determinations that Mexican sugar was being subsidized by the government of Mexico and was being sold into the U.S. market at less than fair value. The suspension agreements limit Mexico's sugar exports to the United States to the residual of U.S. needs for domestic human use in a given marketing year minus U.S. production and imports from TRQ countries. The agreements establish minimum reference prices for Mexican sugar that are well above U.S. sugar program loan levels. Another provision limits the share of Mexican sugar that can enter the United States as refined sugar. This new regime ushered in by the suspension agreements represents a major course adjustment in U.S.-Mexico sugar trade. From 2008 until the suspension agreements were signed in December 2014, Mexican sugar had occupied a unique position in the U.S. market in that under the North American Free Trade Agreement (NAFTA), Mexico was accorded unlimited, duty-free access to the U.S. market. Mexico continues to be the largest foreign supplier of sugar to the U.S. market, providing between 11% and 18% of the total of U.S. production plus imports from marketing years 2013/2014 to 2015/2016. Since the suspension agreements took effect, a number of stakeholders in the U.S. sugar market have soured on them, asserting that they have not worked as intended and do not meet the legal standard of eliminating entirely the injury caused by the subsidization and dumping of Mexican sugar. One widely held criticism is that cane refiners that depend on imports of raw cane from Mexico have received an inadequate share of sugar from Mexico, which exacts a heavy toll on the business operations of these refiners. Another criticism is that Mexican exporters are not always adhering to terms in the agreements on refined versus raw sugar exports nor to the minimum reference prices agreed upon. For more information see CRS In Focus IF10517, U.S. Stakeholders Critical of U.S.-Mexico Sugar Agreements . Status: The suspension agreements have no termination date, but signatories may terminate them at any time. U.S. stakeholders in the sugar market generally agree that the terms of bilateral trade in Mexican sugar need to be changed, but they have mixed views on what actions should be taken. In November 2016, the American Sugar Coalition—representing sugar cane and sugar beet producers and sugar processors, refiners, and workers—called on the DOC to withdraw from the agreements, an action that would cause substantial AD and CVD duties to be imposed on Mexican sugar. Imperial Sugar Company, a U.S. cane refiner, has also advocated for withdrawal. But the Sweetener Users Association, which represents sugar-using businesses, has recommended renegotiating the agreements to address their shortcomings, warning that terminating them would virtually eliminate Mexican sugar from the U.S. market. In November 2016, the DOC issued results of a preliminary administrative review. In it, the DOC concluded that there may be some substance to allegations that the agreements are not meeting the legal standard provided in the statute for removing injury and that certain transactions may not have adhered to the terms in the agreements. But the DOC also added that it needed to gather more information. The agency expects to issue the final results of its review in early April 2017 unless the signatories agree on revised terms for the agreements before then. Canada's supply management system for its dairy sector—a regime that supports milk prices at high levels relative to world market prices though quotas on domestic production together with high tariff levels and TRQs that restrict imports of dairy products—has long been a source of concern for the U.S. dairy industry. In addition, U.S. dairy interests are concerned about an ingredient pricing strategy the Canadian dairy industry is pursuing. U.S. interests assert that it is intended to further discourage imports of certain U.S. milk product exports to Canada, including ultra-filtered milk, while also facilitating exports of Canadian skim milk products beyond their allowable WTO commitments. Ultra-filtered milk is a high-protein liquid product that results from separating and concentrating certain milk components (such as protein and fat) for use in the production of dairy products, such as cheese, yogurt, and ice cream. U.S. ultra-filtered milk found a market among Canadian cheese makers after Canada revised its compositional standards for cheese in 2008, which significantly reduced the use of several milk products that U.S. processors had been supplying to Canadian food manufacturers, including milk protein concentrates and dried protein products. In 2016, in order to make Canadian dairy ingredients competitive with imported products, the province of Ontario adopted a special pricing program (Class 6) that allows for the sale of various domestic dairy ingredients at world market prices rather than the typically higher prices that would prevail under Canada's supply management system. The price farmers receive for milk is adjusted to reflect the Class 6 ingredient prices. U.S. dairy interests contend that the program favors Canadian milk products at the expense of imports, including U.S. milk product exports such as ultra-filtered milk. U.S. dairy interests are concerned that a broadly similar approach to pricing ingredients that was introduced across Canada last year (and is currently in place on a temporary basis) could be further expanded and implemented longer term if the Canadian Dairy Commission and provincial marketing boards approve a proposed National Ingredients Strategy. According to the U.S. Census Bureau, Canada ranked as the largest U.S. export market for ultra-filtered milk in 2015 with sales of $149 million. U.S. exports of ultra-filtered milk enter Canada duty-free, and U.S. dairy producers, processors, and exporters view Ontario's Class 6 ingredients pricing initiative—and the prospect for a similar Canada-wide program—as an attempt to displace these U.S. exports with domestically sourced dairy ingredients. The U.S. dairy industry also contends that this strategy allows Canadian products to be sold below the cost of production, placing similar U.S. products at a disadvantage in Canada, as well as in other export markets where U.S. exporters compete with similar Canadian products. In sum, the U.S. industry asserts that Canadian policies amount to violations of their commitments under NAFTA and the WTO. An additional concern for the U.S. dairy industry is that Canadian dairy farmers and some Canadian officials refer to U.S. exports of diafiltered milk as being a product that is distinct from ultra-filtered milk. The U.S. industry asserts that diafiltration is merely one step in the ultra-filtration process that does not create a fundamentally different product. The significance is that Canada's compositional standards for cheese do not prescribe limits on the content of milk or ultra-filtered milk, whereas limitations do apply to the content of other dairy products that can be used to make cheese. Canada's Dairy Product Regulations and Food and Drug Product Regulations do not currently define diafiltration. Status: In a letter of September 12, 2016, to government trade officials, major U.S. dairy market stakeholders—together with their counterparts in several dairy-exporting competitor countries—contended that the Canadian dairy industry's ingredients pricing program that has been agreed to in principle violates its commitments under NAFTA, the WTO, and the EU-Canada Comprehensive Economic and Trade Agreement as well as the spirit of TPP. U.S. government officials have expressed concern about the adoption of this scheme to their Canadian counterparts. In January 2017, President Trump issued an order withdrawing the United States from TPP. (See " Trans-Pacific Partnership (TPP) "). As a signatory member of the WTO, the United States has committed to abide by WTO rules and disciplines, including those that govern domestic farm policy. The WTO's general rules concerning subsidy disciplines, trade behavior, and market access concessions apply to all members. The enacted 2014 farm bill (Agricultural Act of 2014; P.L. 113-79 ) could result in potential compliance issues for U.S. farm policy with the rules and spending limits for domestic support programs that the United States agreed to as part of the WTO's Uruguay Round Agreement on Agriculture. In general, the act's new farm safety net shifts support away from classification under the WTO's green and amber boxes and toward the blue and amber boxes, indicating a potentially more market-distorting U.S. farm policy regime. Such spillovers, if measurably harmful to foreign export competitors or producers, could lead to challenges under the WTO's dispute settlement process (see " U.S.-Brazil WTO Cotton Dispute Settlement " at the end of this report). For more details, see CRS Report R43817, 2014 Farm Bill Provisions and WTO Compliance . The two most prominent revenue support programs established by the 2014 farm bill are the Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs. Producer participation varies by crop and region under these two programs. Most corn (93%) and soybean (97%) base acres signed up for ARC, while nearly all rice (99%) and peanut (100%) base acres are signed up for PLC. Wheat base was split 58% for ARC and 42% for PLC. Payments under these two programs are delayed substantially because the payment formula for both programs requires complete data from a crop's market year. For example, payments under ARC and PLC for the 2014 crop year are not announced until October 2015, which pushes the actual outlays into the 2016 fiscal year. As a result, ARC and PLC payment data is available only for the 2014 and 2015 crops, but already it has accumulated to over $13 billion for the first two years of these programs. While this sum is substantial, it is uncertain how it may be viewed by foreign competitors that have used the WTO dispute settlement mechanism in the past to address their grievances with U.S. domestic support policies. Because ARC and PLC payments are made to a portion (85%) of historical base acres irrespective of actual plantings, the programs are partially decoupled from producer behavior. However, program calculations do require current market prices to determine if a payment has been triggered, thus partially coupling them to market conditions. The partial decoupling of both ARC and PLC is in deference to WTO rules. Furthermore, ARC's use of a moving average formula based on historic prices and yields is also in response to a WTO panel stipulation to consider market conditions in setting program support levels, while PLC—with a statutorily fixed reference price—fails on this later point. An additional WTO consideration is that projected outlays under the new 2014 farm bill's shallow-loss and counter-cyclical price support programs may make it difficult for the United States to agree to future reductions in allowable caps on domestic support expenditures and related de minimis exclusions, as envisioned in ongoing WTO multilateral trade negotiations. Status: Most studies suggest that, for U.S. program spending to exceed the $19.1 billion cumulative spending limit, a combination of worst-case events would have to occur. Perhaps more relevant to U.S. agricultural trade is the concern that, because the United States plays such a prominent role in most international markets for agricultural products, any distortion resulting from U.S. policy would be both visible and vulnerable to challenge under WTO rules. Currently, 33 countries are eligible to export meat and poultry to the United States. Before the United States imports meat or poultry, USDA's Animal and Plant Health Inspection Service (APHIS) conducts risk assessments of any foreign animal diseases that could pose a threat to U.S. animal health through the import of meat or poultry. Also, USDA's Food Safety and Inspection Service (FSIS) must determine if a foreign meat or poultry inspection system provides an "equivalent" level of sanitation and protection of public health as the U.S. system. Foreign governments provide documents that show how inspection systems are regulated, and FSIS conducts onsite audits of foreign facilities. FSIS regularly conducts equivalency verification and periodic audits of countries already approved to export meat and poultry to the United States. In August 2013, USDA's Food Safety and Inspection Service (FSIS) confirmed that China's poultry processing system was equivalent to the U.S. poultry inspection system. This determination allows China to export processed (cooked) poultry meat that is sourced from raw poultry from the United States, Canada, or Chile (the two countries approved to send raw poultry to the United States). In March 2016, FSIS recommended that the process of verifying equivalency for China's poultry slaughter system move forward. These actions were the culmination of a process that began in 2005, when China requested that USDA evaluate its poultry inspection system. Congress halted the process in FY2006, when appropriations provisions prohibited FSIS from expending funds to evaluate China's poultry inspection system. The process resumed in FY2010 on the condition that FSIS provide Congress regular reports on the equivalency process. The possibility that the United States could import poultry meat from China has alarmed some food safety advocates and Members of Congress because of concerns about relatively lax food safety enforcement in China for both domestically consumed products and exports. Testimony presented during a Congressional-Executive Commission on China hearing highlighted China's weak track record on food safety. Also, the discovery that a Chinese meat processor was supplied expired meat products to McDonald's, KFC, and other foreign food establishments in China only heightened concern about China's ability to supply safe meat. Status: In response to concern about China's food safety, Section 730 of the FY2016 appropriations act ( P.L. 114-113 ) prohibits USDA from using any funds to purchase Chinese processed poultry products for feeding programs, including the school lunch and school breakfast programs. In November 2014, China notified FSIS of four processing plants that were eligible to ship product to the United States. There have been no imports to date of processed chicken from China since equivalency was granted. China would be eligible to export Chinese poultry after FSIS completes the rulemaking and comment process and grants equivalency to China's poultry slaughter system. Currently, poultry imports would still be restricted to cooked/processed products because of APHIS restrictions due to the presence of animal diseases in China that could threaten U.S. animal health. In December 2013, USDA's Animal and Plant Health Inspection Service (APHIS) proposed a rule that would allow fresh beef imports from 13 regions in Brazil. In August 2014, APHIS also proposed a rule to allow fresh beef imports from Patagonia and northern Argentina. In July 2015, APHIS released final rules to allow the import of fresh beef from these regions of Brazil and Argentina. USDA's risk assessments determined that, under certain circumstances, fresh beef could be safely imported from Brazil and Argentina without threatening the foot-and-mouth disease (FMD)-free status of the United States. Some livestock industry stakeholders, such as the National Cattlemen's Beef Association and the National Farmers Union, have expressed opposition to allowing fresh beef from Brazil and Argentina because neither country is considered to be free of FMD. FMD was eradicated in the United States in 1929, and any introduction of the disease back into the United States could be economically devastating for the livestock industry. The Department of Homeland Security has estimated that the cost of an FMD outbreak in the United States could exceed $50 billion. In May 2015, FSIS found that Brazil's beef inspection system would provide an equivalent level of food safety as the U.S. system. In August 2016, USDA announced that Brazil was approved to ship fresh beef to the United States, and the first shipments of fresh beef entered the United States the next month. FSIS has not verified beef inspection equivalency for Argentina. Status : Beef imports from Brazil enter the United States under a 64,805 metric ton TRQ that is reserved for countries without a specified quota allotment. The United States imported about 300 metric tons of fresh beef from Brazil from September to November 2016. FSIS conducted an audit of beef facilities in Argentina at the end of 2016 and is working with Argentine authorities on verifying equivalency there. Once Argentina is approved to ship, it holds a 20,000 metric ton quota allotment. The U.S. embargo on trade and financial transactions with Cuba dates from 1962. The sanctions on Cuba were partially eased in 2000 with regard to U.S. exports of agricultural products with the enactment of the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 ). The law allows for one-year export licenses for selling agricultural commodities to Cuba but without the availability of U.S. government assistance, foreign assistance, export assistance, credits, or credit guarantees to finance the trade. The law also denies exporters access to U.S. private commercial financing or credit. All agricultural product transactions must be conducted on a cash-in-advance basis or with financing from third countries. Since prohibition on sales of U.S. agricultural goods was lifted, Cuba has purchased over $5 billion in agricultural products from 2001 through 2015. In recent years, though, U.S. agricultural exports to Cuba have been declining. Shipments of U.S. farm products to Cuba amounted to $149 million in calendar year 2015, down from $285 million in 2014 and $348 million in 2013. During this three-year period, U.S. farm exports to Cuba amounted to 0.25% of total U.S. farm exports. U.S. farm sales to Cuba have included a variety of farm products, but recently the great majority of this trade has been concentrated among a few product categories. From 2013 to 2015, broiler meat made up 47% of U.S. exports to Cuba in value terms, with soybean meal at 25% of the total, corn at 12%, and soybeans at 10%. In 2016, ITC, in a report evaluating the effect of U.S. restrictions on agricultural trade with Cuba, noted that Cuba imports 70%-80% of its food needs, which amount to some $2 billion per year. Given the price competitiveness and logistical advantages of key U.S. agricultural products compared with export competitors, ITC indicated that U.S. agricultural exports could expand significantly—to about $800 million within five years—if the remaining U.S. restrictions on trade with Cuba were removed. The report identified corn, wheat, rice, and dairy products (particularly milk powder) as the commodities that could see the greatest dollar increase in exports over the near term. The same report observed that U.S. agricultural suppliers view prohibitions on providing credit on food and agricultural product sales and U.S. restrictions on travel to Cuba as key obstacles to increasing U.S. farm exports to the island nation. As for agricultural products that Cuba might export to the United States in a post-embargo environment, USDA in 2015 asserted that with time and investment Cuba would likely develop comparative advantages in the production and export of certain citrus and tropical fruit, vegetables, tropical plants, and cut flowers. Some agricultural interests in Florida have expressed concern about the prospect of potentially subsidized competition from Cuba and the possibility of exposing U.S. agriculture to invasive pests and diseases. Although the United States is major sugar importer and Cuba continues to export sugar, Cuba's sugar production and exports have diminished sharply in recent decades. Also, the United States tightly manages sugar imports, so any post-embargo access for Cuba to export sugar to the U.S. market would have to be negotiated. Status: In December 2014, President Obama announced a major shift in U.S. policy toward Cuba aimed at moving away from a sanctions-based policy toward a policy of engagement. The President acknowledged that he does not have the authority to lift the embargo because it is codified into legislation (Section 102(h) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, P.L. 104-114 . The LIBERTAD Act ties the lifting of the embargo to conditions in Cuba (including that a democratically elected government is in place). Removing the overall economic embargo would require amending or repealing that law as well as other statutes—such as the Cuban Democracy Act of 1992 (Title XVII of P.L. 102-484 ) and the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 )—that have provisions impeding normal economic relations with Cuba. Several bills were introduced in the 114 th Congress that would have lifted the embargo altogether, while others focused more narrowly on removing restrictions pertaining to U.S. agricultural sales, including removing the prohibition on private financing of such exports by U.S. entities and even lifting the ban on access to certain U.S. government export promotion programs. These bills were not adopted. For more on U.S. agricultural trade with Cuba and legislative initiatives aimed at expanding that trade, see CRS Report R44119, U.S. Agricultural Trade with Cuba: Current Limitations and Future Prospects . For information on U.S. policy toward Cuba, see CRS Report R43926, Cuba: Issues and Actions in the 114th Congress . Geographical indications (GIs) are geographical names that act to protect the quality and reputation of a distinctive product originating in a certain region. The term is most often applied to wines, spirits, and agricultural products. Some food producers benefit from the use of GIs by giving certain foods recognition for their distinctiveness, differentiating them from other foods in the marketplace. In this manner, GIs can be commercially valuable. GIs may also be eligible for relief from acts of infringement or unfair competition. The use of GIs may also protect consumers from deceptive or misleading labels. Examples of GIs include Parmesan cheese and Parma ham from the Parma region of Italy, Tuscan olive oil, Roquefort cheese, Champagne from the region of the same name in France, Irish whiskey, Darjeeling tea, Ceylon tea, Florida oranges, Idaho potatoes, Vidalia onions, Washington State apples, and Napa Valley wines. GIs—along with other types of intellectual property such as patents, copyrights, trademarks, and trade secrets—are an example of intellectual property rights (IPR). The use of GIs has become a contentious international trade issue, particularly for U.S. wine, cheese, and sausage makers. In general, some consider GIs to be protected intellectual property, while others consider them to be generic or semi-generic terms. For example, in the United States, "feta" is considered the generic name for a type of cheese; however, it is protected as a GI in Europe. As such, feta cheese produced in the United States may not be exported for sale in the EU, since only feta produced in countries or regions currently holding GI registrations may be sold commercially. GIs are included among other IPR issues in the current U.S. trade agenda. GIs have been an active area of debate between the United States and EU in the T-TIP negotiation. Laws and regulations governing GIs differ markedly between the United States and EU, which further complicates this issue. Within a potential T-TIP agreement, GIs may likely be included as part of either a chapter on IPR or a chapter on agriculture. The EU's March 2016 draft of a chapter on agriculture includes its proposal regarding GIs. Complicating this issue further are GI protections afforded to registered products in third country markets. This has become a concern for U.S. agricultural exporters following a series of recently concluded trade agreements between the EU and Canada, South Korea, South Africa, and other countries that in many cases are also major trading partners of the United States. As of May 2016, more than 4,500 product names are registered and protected in the EU for foods, wine, and spirits originating in both EU member states and other countries. The proposed TPP also addresses GIs in various ways, including allowing TPP countries to comment on and oppose prospective recognition of GIs in other agreements and by obliging TPP members to provide a process for canceling GI protection. For more information, see CRS Report R44556, Geographical Indications in the Transatlantic Trade and Investment Partnership (T-TIP) Negotiations ; CRS In Focus IF10188, Geographical Indications (GIs) in U.S. Agricultural Trade ; CRS Report R43658, The U.S. Wine Industry and Selected Trade Issues with the European Union ; and CRS Report R44337, TPP: American Agriculture and the Trans-Pacific Partnership (TPP) Agreement . Status: The EU's use and promotion of its GIs, establishing protected product names for many foods and wines the U.S. consider to be generic names, has been actively debated in the ongoing T-TIP negotiations. As discussed in "U.S.-EU Transatlantic Trade and Investment Partnership (T-TIP)", the outcome of the negotiation remains uncertain, in part reflecting the complexity and the political sensitivity of many of the issues being negotiated. USDA officials have indicated that the United States would likely not agree to EU demands to reserve certain food names for EU producers and have expressed concerns that the EU's system of protections for GIs "doesn't fit well into our trademark system." The EU's GI program also remains a contentious issue for many in the U.S. Congress, particularly among Members with significant dairy sectors. Some have long expressed their concerns about EU protections for GIs, which they claim are being misused to create market and trade barriers. For more information, see CRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations ; CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff Barriers to Agricultural Trade ; CRS Report R40449, The U.S.-EU Beef Hormone Dispute ; and CRS Report R40199, U.S.-EU Poultry Dispute on the Use of Pathogen Reduction Treatments (PRTs) . Agricultural biotechnology refers primarily to the use of recombinant DNA techniques to genetically modify or bioengineer plants and animals so that they have certain desired characteristics. Most crops developed through recombinant DNA technology have been engineered to be tolerant of various herbicides or to be pest resistant by having a pesticide genetically engineered into the plant organism. U.S. soybean, cotton, and corn farmers have rapidly adopted genetically engineered (GE) varieties of these crops since commercialization began in 1996. The United States is the leading country in planting GE crops, accounting for more than 40% of acres growing GE crops worldwide. GE varieties now dominate soybean, cotton, and corn production in the United States. Elsewhere in the world, however, the adoption and cultivation of GE crops by both producers and consumers has been more mixed. In the EU, for example, GE crops play a much more limited role. In the EU, GE crop production accounts for only about 1% of EU crop acreage, all in a single variety of pest-resistant GE corn. This GE corn is cultivated mostly in Spain, with Portugal, the Czech Republic, Slovakia, and Romania having much smaller GE acreage. Several EU countries have completely banned the cultivation of GE crops in their territories or have specific rules on the trade of GE seeds. While EU officials have been cautious in permitting GE products to be cultivated in the EU, EU-approved varieties of GE commodities can be imported. To date, very few GE varieties have been authorized (approved) by EU authorities for commercial cultivation. All GE-derived food and feed must be labeled as such. The EU's regulatory framework regarding biotechnology is generally regarded as one of the most stringent, and more onerous, systems worldwide. Many U.S. producers assert that EU labeling and traceability regulations and the lack of timelines and transparency in the EU process for admitting GE crops and that products approved in the U.S. have effectively limited certain U.S. agricultural exports to the EU. This could become a more contentious issue in the context of the T-TIP negotiations. Also, in January 2015, the European Parliament voted to allow each member country to ban or approve GE crops in their respective territories. This action will likely further complicate T-TIP negotiations on biotechnology policy. While the EU as a policymaking entity generally supports GE production, public opinion remains strongly opposed to GE food and crops in most EU member states. This opposition in the EU has also been an important factor in the acceptance of GE crops in lesser developed countries (LDC). Nine of the 14 LDCs to have approved commercial planting of GE crops are in Latin America. Most African countries have largely followed the EU in restricting or banning the cultivation of GE crops. South Africa, Egypt, Burkina Faso, and Sudan are the only African countries where GE crops are grown commercially. The Philippines is the only Asian country to have approved a GE crop for cultivation other than cotton. India, China, and Pakistan are also major producers of GE cotton. U.S.-China negotiations on agricultural biotechnology have also seen little progress on approving GE crops. China's biotechnology approval process has been a priority of the Obama Administration. In September 2016, China agreed to improve its agricultural biotechnology approval process. That commitment did not include specific details of what China would actually do to improve the process. Both China and the United States reaffirmed the importance of implementing transparent and predictable approval processes for agricultural biotechnology products. However, at the U.S.-China Joint Commission on Commerce and Trade meetings in November 2016, the United States again failed to secure commitments from China to improve its approval process for GE crops. In addition to variance in approval processes by different countries, trade negotiations concerning agricultural biotechnology also involve labeling issues for GE products and the virtual impossibility of keeping GE material and non-GE material completely segregated in commodity supply chains. Status: From the United States perspective, an objective for both the T-TIP negotiations and the TPP agreement has been to establish a common framework for GE approvals, the development of labeling practices consistent with the U.S. Food and Drug Administration (FDA) guidelines, and the implementation of policies concerning GE presence that are consistent with the Codex Alimentarius Commission Annex on Food Safety Assessment in Situations of Low-Level Presence of Recombinant-DNA Plant Material in Food . At this time, positions appear to be hardening between the United States and the EU relative to agricultural biotechnology. Any progress toward narrowing the differences between the U.S. and the EU will likely revolve around harmonizing the U.S. and the EU regulatory regimes. To date, little movement toward a common position has been seen. Similar steps to implementing the GE approval process in China have also seen little positive movement. In January 2009, the United States escalated a long-running dispute with the EU over its refusal to accept imports of U.S. poultry treated with certain pathogen reduction treatments (PRTs). PRTs are antimicrobial rinses that have been approved for use by the USDA in poultry production to reduce the amount of microbes on meat. Meat and poultry products processed with PRTs are judged safe by the United States and also by European food safety authorities. Nevertheless, the EU prohibits the use of PRTs and the importation of poultry treated with these substances. The EU generally opposes such chemical interventions and asserts that its own poultry producers follow much stricter production and processing rules that are more effective in reducing microbiological contamination than simply washing products at the end of the process. This dispute dates to 1997, when the EU first banned the use of PRTs on poultry. This effectively shut out virtually all imports from the United States. Such treatments are routinely used in U.S. chicken and turkey plants. The United States views the EU ban as a trade barrier that is not based on scientific evidence showing that such treatments are harmful. EU interests believe that stronger sanitary practices during production and processing are more appropriate for pathogen control than what they view as U.S. overreliance on PRTs. The United States requested WTO consultations with the EU on the matter, a prerequisite first step toward the establishment of a formal WTO dispute settlement panel. A WTO panel was established in November 2009, but this case has not moved forward. For more information, see CRS Report R40199, U.S.-EU Poultry Dispute on the Use of Pathogen Reduction Treatments (PRTs) . Status: To date, the United States and EU have not been able to reach agreement on a number of issues related to veterinary equivalency, and the EU continues to maintain measures that prohibit the use of any substance other than water to remove contamination from animal products unless the substance has been approved by the European Commission. Applications by USDA to the EU's health agencies requesting approval to use certain poultry treatments have not been approved by the European Commission. The United States is seeking approval of four PRTs: peroxyacetic acid, chlorine dioxide, acidified sodium chlorite, and trisodium. This issue has also been raised in ongoing trade negotiations between the United States and EU to establish a free trade area as part of T-TIP. The U.S. poultry industry has indicated that it is unlikely to support a T-TIP agreement that does not provide for better access to the EU for U.S poultry products. Ractopamine, an animal drug that increases animal weight gain and meat yield, is approved by the FDA for use in U.S. cattle, hog, and turkey production. It is approved for use in countries such as Canada, Japan, Mexico, and South Korea, but many other countries ban the use of ractopamine in meat production. In 2012, the Codex Alimentarius—the international food standards organization that sets guidelines to protect public health and ensure fair practices in the food trade—set maximum residue levels for ractopamine in beef and pork. However, several of the largest markets for U.S. meat exports have restricted imports of meat produced with ractopamine, despite the residue standards established by Codex. The USTR highlighted in the 2016 National Trade Estimate Report and the 2016 USTR Report to Congress on China's WTO Compliance several major markets (including the EU, Taiwan, Thailand, and China) that restrict U.S. meat exports produced with ractopamine. According to FSIS, U.S. meat exports—particularly pork—may be shipped to markets with ractopamine restrictions if the exported product is raised without ractopamine and is certified through USDA's Never Fed Beta Agonists Program. U.S. exports to markets that have ractopamine restrictions face increased certification and testing costs, potentially dampening market opportunities. Status : USDA and the USTR continue to engage with trading partners on ractopamine issues. The origin of the Trade Adjustment Assistance for Farmers program can be traced back to a Department of Labor report in 2000 recommending that a separate program be enacted to assist agricultural producers and workers affected adversely by imports. Observers stated that farmers and ranchers typically did not qualify for the existing Trade Adjustment Assistance (TAA) for trade-affected workers program because they were self-employed; that farmers were less likely to want to be retrained for a new occupation; and that those producers most likely to be affected by import surges were those producing a commodity that receives little or no price protection under traditional farm support programs. Accordingly, the Trade Act of 2002 established a new Trade Adjustment Assistance for Farmers (TAAF) program. The U.S. Department of Agriculture's (USDA's) Foreign Agricultural Service (FAS) is the lead administrative agency for the TAAF program, with responsibility for certifying eligible commodities and producer groups. USDA's Farm Service Agency (FSA) has responsibility for processing and approving individual applications for assistance under TAAF, and for disbursing cash payments to eligible producers. A third USDA agency, the National Institute for Food and Agriculture (NIFA), provides training and technical assistance to producers who are approved for TAAF benefits. Under TAAF, support is available in the form of enhanced technical assistance and seed money to enable a producer to formulate and implement a business adjustment plan. Producers of raw and natural agricultural commodities (crops, livestock, farm-raised aquatic products, and wild-caught seafood that competes with aquaculture products) and of "any class of goods within an agricultural commodity" must follow a two-part process to receive benefits. To be certified, a group of commodity producers must first show that imports were a significant cause for at least a 15% decline in one of three factors: the price of the commodity in question, the quantity of the commodity produced, or the production value of the commodity. Once a producer group is certified, an individual producer within that group must meet three requirements to be approved for program benefits. The benefits include technical assistance with a training component and financial assistance. From 2009 to 2011, USDA certified 10 of 30 petitions filed by producers of five commodity groups—shrimp, catfish, asparagus, lobster, and wild blueberries. USDA approved TAAF benefits for about 4,500 individual producers in FY2010, and for about 5,700 producers in FY2011. A 2013 audit by the USDA's Office of Inspector General (OIG) identified several shortcomings in administering the program, including determining eligibility and providing effective oversight. Status: Under P.L. 114-27 , TAAF is authorized to receive $90 million annually for FY2015 through FY2021, subject to annual appropriations. Congress has not appropriated funding since the first quarter of FY2011 (i.e., October through December 2010), and as a result, the program has been inactive. TAAF was last funded under Section 1887 of P.L. 111-5 (the American Recovery and Reinvestment Act of 2009, approved February 17, 2009), which authorized and appropriated $90 million in each of FY2009 and FY2010, and $22.5 million for the first quarter of FY2011. For more information see CRS Report R40206, Trade Adjustment Assistance for Farmers . The Generalized System of Preferences (GSP) provides duty-free tariff treatment for certain products from designated developing countries. Agricultural imports under GSP totaled $2.6 billion in 2015, nearly 15% of the value of all U.S. GSP imports. Leading agricultural imports (based on value) include processed foods and food processing inputs, beverages and drinking waters, processed and fresh fruits and vegetables, sugar and sugar confectionery, olive oil, fresh fruits, and miscellaneous food preparations and inputs for further processing. The majority of these imports are from Thailand, Brazil, India, Indonesia, and Turkey, which combined account for roughly two-thirds of total agricultural GSP imports. GSP was most recently extended until December 31, 2017 (Title II of P.L. 114-27 ). Over the past decade, GSP renewal has been somewhat controversial. Some in Congress have continued to call for changes to the program, including tightening its requirements on imports under certain circumstances. The most recent extension designated new product categories as eligible for GSP status, including some cotton products (for least-developed beneficiaries only) and other non-agricultural products. In addition, certain countries have been suspended from GSP. In October 2014, Russia's GSP status was officially terminated. Previously, in March 2012, Argentina's benefits under the program were suspended. In September 2015, President Obama announced, among other things, that Seychelles, Uruguay, and Venezuela had become "high income" countries and would no longer be eligible to receive GSP benefits, effective January 1, 2017. Opinion within the U.S. agriculture industry is mixed, reflecting both support for and opposition to the current program. For more information, see CRS Report RS22541, Generalized System of Preferences: Agricultural Imports . For additional background on GSP, see CRS Report RL33663, Generalized System of Preferences: Overview and Issues for Congress . Status: Authorization for GSP expires on December 31, 2017. Renewal of the program may become a legislative issue in the 115 th Congress. In the past few years, Congress has extended GSP through a series of short-term extensions. Congressional leaders also have continued to express an interest in broadly evaluating the effectiveness of all U.S. trade preference programs, including GSP, so broader reform of these programs is a possibility. World Trade Organization (WTO) multilateral trade negotiations have been ongoing since November 2001. The negotiations—referred to as the Doha Development Agenda (DDA) or simply the Doha Round—encompass four broad areas of trade reform: agriculture, non-agriculture market access (NAMA), rules, and services. An important goal of the Doha Round negotiations is to liberalize trade in goods, including agricultural products. The agriculture negotiations have focused on three broad areas—domestic agricultural support programs, market access, and export competition—often referred to as the three pillars of the WTO's Agreement on Agriculture. Agriculture negotiations in the Doha Round have attempted to maintain a balance across the three pillars by simultaneously achieving concessions from exporters and importers alike in the form of tighter spending limits on trade-distorting domestic support; elimination of export subsidies and new disciplines on other forms of export competition; and expansion of market access by lowering tariffs, increasing quota commitments, and limiting the use of import safeguards and other trade barriers. From the U.S. perspective, a successful Doha Round would substantially increase access for U.S. agricultural products in foreign markets in exchange for significantly lowering allowable spending limits for certain types of U.S. domestic support and ending export subsidies. Proponents assert that a successful WTO Doha Round of multilateral trade negotiations offers the prospect of enormous market efficiencies and trade gains. The largest potential area of gain for the United States is in expanded market access to foreign consumers. However, U.S. trade officials, Members of Congress, and commodity groups have expressed concern that the current WTO Doha Round draft agreement on agricultural trade liberalization includes too many exceptions for foreign importers to ensure an adequate balance between potential market access gains for U.S. agricultural products and U.S. domestic support reduction concessions. For additional detail, see CRS Report RS22927, WTO Doha Round: Implications for U.S. Agriculture . Status: By 2009, outstanding differences in the Doha Round had been reduced to a short list of contentious issues, including designating additional products as "sensitive," coupled with establishing new tariff quotas; designating developing country products as "special," and thus exempt from tariff reductions; and allowing developing countries to raise tariffs temporarily to deal with import surges or price declines. However, these differences proved sufficient to deadlock the negotiations. The Doha Round of multilateral trade negotiations has been at an impasse since 2009 and presently shows no signs of restarting, despite an interim agreement reached at the December 2013 Bali Ministerial. At the World Trade Organization's (WTO's) Ninth Ministerial Conference in Bali, Indonesia, December 3-7, 2013, ministers adopted the so-called Bali Package. The package has measures dealing with four principal categories: Trade Facilitation, Agriculture (with five sub-issues described below), and Development and Least-Developed Country (LDC) Issues. From the United States' viewpoint, the major policy initiative is the Trade Facilitation Agreement (TFA), which aims to improve the efficiency of international trade by harmonizing and streamlining customs procedures such as duplicative documentation requirements, customs processing delays, and nontransparent or unequally enforced importation rules and requirements. Implementation of the Bali Package is expected to facilitate U.S. and international agricultural trade—slowly at first but more substantially longer term. With respect to agricultural interests, the Bali Agreement addressed five issues: (1) export competition — reconfirms a commitment to eliminate all export subsidies as part of the ongoing Doha Round, and asks for greater transparency and restraint in their use prior to their final elimination; (2) tariff rate quota (TRQ) administration — addresses persistently under-filled quotas; (3) temporary peace clause (established through 2017) — provides relief from challenge under the WTO dispute settlement process for a developing country's above-market purchases of commodities for food-security stockholding programs (described in more detail below), while working to find a permanent solution; (4) proposed list of green - box-eligible LDC-focused general services — adds new criteria of particular interest to developing countries to existing exemptions; and (5) cotton — regrets lack of progress in addressing LDC-related cotton issues, reiterates commitment to progress in negotiations on cotton, commits to meet twice yearly to study related issues, and reaffirms the importance of cotton to LDCs. At the time, analysts predicted that a successful Bali Package—boosted primarily by substantial efficiencies in trade facilitation—could increase global gross domestic product by $1 trillion . However, many hope that its ultimate benefit will be a rejuvenation of the Doha Round. For more details, see CRS Report R43592, Agriculture in the WTO Bali Ministerial Agreement . Status: Implementation of the Bali Agreement and the five agriculture sub-issues are not expected to present any significant difficulties for the United States. The 2014 farm bill eliminated the last U.S. export subsidy program—the Dairy Export Incentive Program (DEIP), while the green box changes and proposed cotton negotiations are extensions of the status quo. In contrast, in the long run both the streamlined trade facilitation and the TRQ administration initiative are expected to result in lower marketing costs and positive market access gains for U.S. agricultural exports. However, developments in regards to the food-security stockholding programs (see " U.S.-India Agricultural Trade Issues " below) merit special attention and monitoring to avoid potential disruptions to commercial trade activity. A key unresolved negotiating issue from the Doha Round is the specifics of a proposed SSM—a controversial safeguard mechanism that could be used by developing countries to temporarily protect producers of special products when imports surge. Disagreement over the size of surge in import volume needed to trigger a Special Safeguard Mechanism (SSM), as well as the size of the temporary SSM tariff, is a primary factor behind the current impasse of the Doha Round. Two key opponents in the SSM debate were India (joined by China) and the United States (joined by the European Union and most of the Cairns Group of countries). The SSM issue remains largely unresolved, and the Doha Round remains deadlocked and moribund. A similar fate was narrowly avoided by the Bali Agreement when India proposed delaying the July 31 deadline for approval of the Trade Facilitation Agreement (TFA) protocol until a permanent solution was reached on the issue of food stockholding programs. India wanted a permanent solution to exempt such programs—in which governments buy domestic commodities at above-market prices to distribute to poor populations—from counting toward WTO subsidy limits. Several WTO members, including the United States, preferred a temporary agreement followed by discussions regarding safeguards to prevent food stocks from leaking into commercial markets before a permanent agreement could be reached. The impasse was resolved in November 2014, when the United States and India reached an understanding on food stockholding that would permit the WTO to move forward with full implementation of the Bali Agreement. Disagreement between the United States and India within WTO multilateral trade negotiations are at least partially responsible for the current stalemate in the Doha Round of negotiations and nearly sidelined the recently completed Bali Agreement. Progress in bilateral negotiations between India and the United States over a food-security stockholding program were the key to breaking a deadlock in the Bali Agreement and could play a similar role for the currently stymied Doha Round negotiations as regards disagreement over a SSM. Status: U.S. and Indian trade negotiators managed to find agreement on the food stockholding issue within the context of the Bali Agreement, suggesting that a parallel pattern could perhaps be adopted to address lingering trade issues such as the SSM within the Doha Round of negotiations. While the Doha Round involves several other major trade partners, each with their own set of special interests, it is undeniable that, were the United States and India to find agreement on the SSM issue, such agreement could provide special impetus to find agreement on the remaining unresolved Doha Round issues. In March 2009, USDA implemented a final rule to implement country-of-origin labeling (COOL) to provide consumers information on the origin of fresh fruits and vegetables, fish, shellfish, peanuts, pecans, macadamia nuts, ginseng, and ground and muscle cuts of beef, pork, lamb, chicken, and goat. The rules were required by the 2002 farm bill ( P.L. 107-171 ) as amended by the 2008 farm bill ( P.L. 110-246 ). In 2009, Canada and Mexico challenged U.S. COOL in the WTO, arguing that COOL had a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market, thus violating WTO trade commitments. In 2011, the WTO found that COOL treated imported livestock less favorably than U.S. livestock and did not meet its objective to provide complete information to consumers on the origin of meat products. The United States appealed the WTO ruling, but the Appellate Body upheld the findings. USDA issued a revised COOL rule in May 2013, which required that production steps—born, raised, and slaughtered, by origin country—be included on meat labels, but in 2014 the WTO found that the revised COOL regulations still violated its WTO obligations by discriminating against imported livestock. In December 2015, the WTO authorized Canada and Mexico to retaliate against $1 billion worth of products imported from the United States. Status : In December 2015, Congress repealed the COOL requirements for beef and pork and ground beef and pork in Section 759 of the enacted Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). USDA then issued a final rule that removed beef and pork from COOL regulations, thus settling the trade dispute, but Canada and Mexico retain their rights granted by the WTO to retaliate if the United States should implement laws or regulations that violate the WTO findings on U.S. COOL for beef and pork. For further details on the case, see CRS Report RS22955, Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling . The so-called "Brazil-U.S. cotton case" was a long-running WTO dispute settlement case initiated in 2002 by Brazil—a major cotton export competitor—against specific provisions of the U.S. cotton program. Brazil charged that U.S. cotton programs were depressing international cotton prices and thus artificially and unfairly reducing the quantity and value of Brazil's cotton exports, causing economic harm to Brazil's domestic cotton sector. On October 1, 2014, Brazil and the United States reached an agreement to resolve the long-running cotton dispute when they signed a memorandum of understanding (MOU) that spelled out the terms of the agreement. Under the MOU, Brazil relinquished its rights to countermeasures against U.S. trade or any further proceedings in the dispute; the United States agreed to new rules governing fees and tenor for the GSM-102 export credit guarantee program; Brazil agreed to a temporary Peace Clause with respect to any new WTO actions against U.S. cotton support programs while the 2014 farm bill is in force or against any agricultural export credit guarantees under the GSM-102 program as long as the program is operated consistent with the agreed terms of the MOU; the United States would make a one-time final payment of $300 million to the Brazil Cotton Institute (BCI) with explicit use-of-fund conditions; and both counties agreed to routine semi-annual reporting under the MOU. The successful resolution of the WTO cotton dispute (largely in Brazil's favor) avoided a trade war between two of the world's major agricultural trading nations, the United States and Brazil, while resulting in substantial and substantive changes in U.S. domestic support programs for upland cotton and the U.S. export credit guarantee program. The resolution to the cotton case could have an important bearing on how domestic support programs are treated in future WTO trade negotiations or in future dispute settlement cases. In addition to the implications for domestic support policy, the heightened attention surrounding the WTO Brazil-U.S. cotton case has set precedent by singling out cotton for special treatment within ongoing WTO trade negotiations. Finally, Brazil's successful challenge of certain aspects of the U.S. cotton program under the rules of the WTO's dispute settlement process could serve as a role model for future domestic support-related trade disputes against U.S. farm programs. For more details, see CRS Report R43336, The WTO Brazil-U.S. Cotton Case . Status: The inability of the WTO to move forward with the Doha Round of multilateral trade negotiations suggests that the WTO may not rapidly achieve the global trade goals of its members. As a result, the WTO's dispute settlement mechanism—which remains a primary forum for allowing members to resolve trade grievances—could likely serve as the primary mechanism for effecting future change in domestic support policies. However, there are reasons why challenges may rarely be filed—disputes are economically and diplomatically costly, and a lost challenge can help to legitimize the disputed program.
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Trade, particularly exports, is critical to the vitality of American agriculture. On average, foreign markets absorb about one-fifth of U.S. agricultural production, thus contributing significantly to the health of the farm economy. The positive economic effects of trade in farm products are felt well beyond the farm gate. Farm product exports make up about 10% of total U.S. exports and contribute positively to the U.S. balance of trade. The economic benefits of agricultural exports also extend across rural communities, while overseas farm sales help to buoy a wide array of industries linked to agriculture, including transportation, processing, and farm input suppliers. Moreover, most of the future growth in food demand is expected to occur in developing countries. Congress has traditionally displayed a keen interest in agricultural trade issues given their importance to farmers and ranchers and to the overall economy. The plethora of agriculture-related policy questions and trade issues in play as the 115th Congress convenes suggests that trade policy in general, as well as specific farm trade issues, may continue to draw congressional oversight and input. One ongoing concern has centered on the trade-distorting domestic policies abroad, including in China, which ranked as the second largest market for U.S. farm exports in FY2016. In late 2016 the Office of the U.S. Trade Representative (USTR) launched two trade enforcement actions against China at the World Trade Organization (WTO) over its administration of tariff rate quotas for imports of wheat, rice, and corn and over its domestic support measures for these crops. On the multilateral front, President Trump has ordered the withdrawal of the United States from the Trans-Pacific Partnership (TPP) regional free trade agreement (FTA), which the United States and 11 other Pacific-facing nations signed but which Congress has not ratified. As negotiated, TPP would have significantly improved access for U.S. farm exports. USTR continues to negotiate with the European Union (EU) over a regional FTA—the Transatlantic Trade and Investment Partnership (T-TIP)—involving a number of thorny agricultural issues that have proved to be impediments to trade, including differences over geographic indications (GI) and discontinuity in regulating the application of biotechnology to agricultural production, as well as access for these products to commercial markets. The United Kingdom vote to exit the EU has added to the already uncertain prospects for T-TIP. At the global level, further liberalization of agricultural trade is an objective of the Doha Round of multilateral trade negotiations under the WTO, but those talks have been at an impasse for several years. Of concern to the developing world, the Generalized System of Preferences (GSP)—which provides duty-free tariff treatment for certain products from developing countries and benefits from $2.6 billion in U.S. agricultural imports in 2015—will expire at the end of 2017 unless Congress extends it. Beyond trade agreements, numerous other trade issues of importance to U.S. agriculture may be of interest to Congress. For one, suspension agreements that limit Mexico's sugar exports to the United States have come under increasing criticism from U.S. stakeholders and may have implications for the U.S. sugar program. In Cuba, U.S. farm and food interests see potential to meaningfully expand exports, but a prohibition on private U.S. financing is viewed as a major obstacle to this end. U.S. dairy interests object to a Canadian dairy ingredient pricing strategy that it believes is aimed at displacing U.S. ingredient exports. U.S. exports of beef, pork, and chicken continue to face bans and trade restrictions over disease outbreaks that are inconsistent with international trade protocols. Examples include China's ongoing bans on imports of U.S. beef and poultry and restrictions imposed by several foreign markets on U.S. ractopamine-fed pork. As the 115th Congress convenes, the United States has settled two long-running WTO challenges to its policies: one to its cotton program and another to its country-of-origin labeling (COOL) law.
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Experts believe that terrorist use of chemical agents is an event with low probability, but potentially high consequences. While terrorist groups may or may not have an increased interest in chemical agent acquisition and use, the domestic vulnerability of the United States to chemical attack remains an issue. Both the United States and Russia have signed and ratified the Chemical Weapons Convention (CWC), and are reducing, and eventually eliminating, their chemical weapon stockpiles. The possibility that terrorist groups might obtain insecure chemical weapons led to increased scrutiny of declared Libyan chemical weapon stockpiles following the fall of the Qadhafi regime. Experts have expressed similar concerns regarding the security of Syrian chemical weapons, reportedly including stocks of nerve (sarin, VX) and blister (mustard gas) agents, and their potential use. For analysis of chemical weapons possession and use in Syria, see CRS Report R42848, Syria's Chemical Weapons: Issues for Congress , coordinated by [author name scrubbed]. Policy approaches to reducing chemical agent vulnerability have generally treated them as a group, rather than addressing specific agents. Additionally, military and civilian chemical agent detection has developed with little coordination, so that civilian toxic industrial chemical kits and military chemical weapons detectors have varying sensitivities and detection capabilities. Treatments for chemical exposure vary on a chemical by chemical basis. Because comparatively few individuals have been exposed to modern chemical weapons, health care providers have limited practical experience in treatment of chemical casualties, especially among civilians. While national efforts to reduce vulnerability to terrorist chemical agent use continue, it is not clear whether these efforts address the risks from those specific agents that pose the greatest danger. This report describes the different types of chemical weapons and toxic industrial chemicals, their availability, treatment, and detection. Chemical agents are, for the purpose of this report, chemicals posing exceptional lethality and danger to humans. Some chemical agents are toxic industrial chemicals used for commercial purposes, while others are chemicals developed predominantly as weapons. Different chemical weapons cause different symptoms in and injuries to their victims. Because of this range of potential effects, identifying the chemical agent is a key step to determining the most effective treatment. Also, chemical weapons may produce their effects by multiple different exposure routes, for example by skin contact or by inhalation. As a consequence, depending on the encountered chemical, those affected must employ different protective equipment and approaches; for example, a gas mask alone does not provide sufficient protection against chemicals that can damage through skin contact. Military planners generally categorize chemical agents into at least four classes: nerve, blister, choking, and blood agents. This method organizes chemical agents by their biological effects. Modern militaries have generally focused on nerve and blister agents as weapons. Several choking and blood agents are chemicals widely used in industrial processes. Chemicals categorized as nerve agents disrupt normal functioning of the nervous system. Nerve agents do not occur naturally. Rather, they are manmade compounds that require manufacture and isolation for high purity and toxicity. Most nerve agents belong to a group of chemicals called organophosphates. Organophosphates have a wide range of toxicity. Some insecticides contain organophosphates, though these are significantly less toxic compounds than those developed as chemical weapons. Nerve agents are mainly liquids. The first nerve agent, tabun or GA, was made in Germany in the 1930s. Following this discovery, a series of nerve agents similar to tabun were developed. This series, known as the G-series, includes the weapons sarin (GB) and soman (GD). In the late 1940s, another series of nerve agents, the V-series, was invented in England. This series includes the chemical weapon VX. Historically, multiple countries, including the United States and the Soviet Union, manufactured and maintained stockpiles of nerve agents. As signatories to the Chemical Weapons Convention (CWC), both the United States and Russia are reducing, and eventually eliminating, their nerve agent stockpiles. Military and terrorist use of nerve agents has been rare. Public intelligence assessments issued by the United Kingdom and the United States on August 29 and August 30, 2013, respectively, stated that the Syrian government used a nerve agent on August 21, 2013, against opposition forces outside of Damascus, Syria. During the 1980-1988 Iran-Iraq war, Iraq used nerve agents against Iranian troops and later against members of its Kurdish population in northern Iraq. In 1995, the Japanese apocalyptic cult Aum Shinrikyo used sarin on the Tokyo subway and reportedly carried out an attack in the city of Matsumoto as well. National chemical weapons programs have produced nerve agents for decades. A terrorist group might overcome technological barriers to synthesize these agents by using commercially available equipment, though the extreme toxicity of these compounds would pose appreciable danger to the manufacturer. Nerve agent production requires the use of toxic chemicals during synthesis and specialized equipment to contain the nerve agents produced. Of the nerve agents, VX is the most difficult to manufacture. An alternative to the direct manufacture of nerve agents is to manufacture certain chemicals that, when mixed, react to form the desired nerve agent. These chemical combinations are called binary chemical weapons. Binary chemical weapons have certain advantages and disadvantages when compared with the actual nerve agent. The chemicals comprising a binary chemical weapon are much less toxic than the actual nerve agent and thus are less dangerous to manufacture, transport, and handle. The nerve agent obtained through the use of a binary chemical weapon may be less pure or effective than directly manufactured nerve agent, since the conditions under which the nerve agent is manufactured are less controlled. Nerve agents are extremely dangerous and can enter the body through the lungs or by skin contact. For the G-series nerve agents, such as sarin, the inhalation toxicity is significantly greater than the dermal toxicity. Of the nerve agents, VX is the most deadly and tabun is the least deadly, though all are exceedingly toxic. Nerve agents interfere with the nervous system, causing overstimulation of muscles. Victims may suffer nausea and weakness and possibly convulsions and spasms. At higher concentration, loss of muscle control, nervous system irregularities, and death may occur. The action of nerve agents can be irreversible if victims are not quickly treated. Treatment for nerve agent exposure relies on two drugs, atropine and pralidoxime chloride, as antidotes. Atropine prevents muscle spasm and allows the body time to clear the nerve agent. Pralidoxime chloride limits the effects of nerve agents by reversing the agent's action. U.S. troops during the Persian Gulf War received both of these drugs in the form of an antidote kit. Anticonvulsants, such as Diazepam (Valium), may reduce convulsions and seizures brought on by exposure to nerve agents. The treatment window for nerve agent exposure is agent-dependent. Some agents quickly and irreversibly act within the body, while others require a much longer time. The most effective treatment occurs before or immediately after exposure to the nerve agents has taken place. For example, treatment of soman must begin within minutes to be effective, while tabun treatment can occur up to several hours after exposure. Prophylactic use of some compounds, such as pyridostigmine bromide, may allow effective treatments for some nerve agents to occur with longer delay. Chemicals categorized as blister agents, also known as vesicants, cause painful blistering of the skin. Such blistering is not generally lethal. Militarily, blister agents produce casualties and reduce the combat effectiveness of opposing troops by requiring them to wear bulky protective equipment. The most common blister agents are called mustard agents, due to their odor. Mustard agents are oily liquids that range in color from very pale yellow to dark brown, depending on the type and purity, and have a faint odor of mustard, onion, or garlic. These liquids evaporate quickly, and their vapors are also injurious. Blister agents are not naturally occurring compounds. Mustard agents, for example, were first developed in the late 1800s. During World War I, both sides in the conflict used these weapons against their enemies. Mustard-type blister agents produced the greatest number of chemical casualties during World War I, though fewer than 5% of these casualties died. Countries have stockpiled blister agents in their chemical weapon inventories. Mustard agent was also used by both sides in the Iran-Iraq war. As a signatory to the CWC, the United States is in the process of destroying its stockpile of blister agents. Production of blister agents is less complicated than that of nerve agents. Similar to manufacture of nerve agents, it requires the use of toxic chemicals and specialized equipment to contain the agent produced. The most common blister agents have many different methods for their production published in the open literature. Blister agents can enter the body by inhalation or contact with the skin or eyes. Some agents can penetrate through normal clothing material, causing burns even in cloth-covered areas. While blister agents react quickly upon skin contact, their symptoms may be delayed. In the case of mustard agent, damage occurs within one to two minutes of exposure, but symptoms do not manifest for several hours. As even low concentrations of vaporized blister agents quickly cause damage, it is unlikely that exposed individuals can remove these agents from the skin prior to injury. The initial symptoms of blister agent exposure are a reddening of the skin, resembling sunburn, combined with pain in the affected area. Swollen skin, blisters, and lesions may then develop, depending on the degree of exposure. Systemic symptoms, such as malaise, vomiting, and fever, may also develop in extreme cases. Exposure to large amounts of liquid mustard agent may prove fatal. The eyes are also very sensitive to blister agents. Following exposure to high concentration vapor, great pain, corneal damage, and scarring may occur. Liquid agent often causes the most severe eye damage. This may come from contact with airborne droplets or by self-contamination of the eyes from contaminated clothing or body parts. Victims inhaling blister agents may suffer damage to their lungs. While a single, low-level exposure may produce only temporary impairment, high concentrations or repeated exposures may cause permanent damage. Inhalation victims may have symptoms ranging from mild bronchitis to blistering of the lungs. Damage from blister agent exposure, lesions and other skin irritations, is symptomatically treated. Hospitalization may be required for respiratory tract injuries. Victims who suffer severe lung damage may require mechanical ventilation. Exposure to large amounts of mustard agent may weaken the whole immune system, requiring special precautions to avoid opportunistic infections during recovery. Chemicals categorized as choking agents act on the lungs, causing difficulty in breathing and, potentially, permanent lung damage. Examples of choking agents include chlorine, ammonia, and phosgene. Choking agents are generally gases, have marked odors, and may color the surrounding air. Choking agents were manufactured for wartime use, and were extensively used during World War I. The first major, successful, chemical attack of the war used chlorine gas at Ypres in 1915. Chlorine gas was later supplemented by phosgene use, which caused greater casualties. More recently, Iraqi insurgents attempted to use chlorine gas as part of improvised explosive devices in 2006 and 2007. Choking agents are encountered during industrial accidents. Many choking agents no longer have a military purpose, and instead industrial users predominantly employ them. Commercial applications use chlorine and ammonia in large quantities for water disinfection and food refrigeration. Methods for producing choking agents are well-known, but may be technically challenging. Choking agents require specialized equipment to produce, compress, and contain them. Choking agents injure their victims through inhalation and have a comparatively mild effect on the skin. Exposure to low chemical concentrations causes chest discomfort or shortness of breath, irritation of nose and throat, and tearing eyes. High agent concentrations may quickly cause swelling of the lungs, respiratory failure, and possibly death. Symptoms of lung damage can occur up to 48 hours after inhalation of moderate concentrations, and may not manifest themselves until physical effort aggravates the lungs. Victims of choking agents are generally treated symptomatically. Because exercise may exacerbate lung damage, victims are kept at rest until the danger of fluid in the lungs is past. Symptoms such as tightness of the chest and coughing are treated with immediate rest and comfort. Shallow breathing and insufficient oxygen may require supplemental oxygen. Swelling and accumulation of fluids in the lungs are likely after exposure to a high dose of choking agent. Administration of corticosteroids has been recommended in cases of fluid accumulation, but their beneficial effects have not been proven. Rest, warmth, sedation, and oxygen are still the primary treatments, even in the case of marked edema. Chemicals categorized as blood agents interfere with oxygen utilization at the cellular level. This category includes hydrogen cyanide and cyanide salts. Hydrogen cyanide is a very volatile gas, smelling of almonds, while cyanide salts are odorless solids. Militaries have considered hydrogen cyanide for use as a chemical warfare agent, but it has rare use in military situations because it quickly disperses. France manufactured hydrogen cyanide as a military agent during World War I. Hydrogen cyanide was used in other situations though; the principle agent used to kill individuals in German World War II concentration camps, Zyklon B, used hydrogen cyanide as its active agent. Hydrogen cyanide use was attributed to both sides during the Iran-Iraq war. Hydrogen cyanide and cyanide salts have industrial applications in the chemical, electroplating, and mining industries. As with choking agents, methods for producing blood agents are relatively well-known. However, the gaseous nature of hydrogen cyanide complicates production and storage. Blood agents act through inhalation or ingestion and impair cellular oxygen use. The central nervous system is especially susceptible to this effect. The symptoms of blood agent exposure depend upon the agent concentration and duration of exposure. In mild cases, headache, dizziness, and nausea may occur for several hours, followed by complete spontaneous recovery. Higher concentration or longer exposure may cause convulsions and coma. Very high concentrations may lead to powerful gasping for breath, violent convulsions, and cardiac failure within a few minutes. Treatment with specific antidotes, amyl or sodium nitrite combined with sodium thiosulfate, may reverse the effects of blood agents. The combination of these two chemicals removes cyanide, the active compound in blood agents, from the body. When convulsion or depressed breathing are present, treatment includes ventilation with oxygen and administration of anticonvulsant. Cyanide is metabolized more readily than most chemical weapons; with prompt treatment, victims may recover from otherwise-fatal doses. Protection against chemical agents is predominantly physical, rather than medicinal, in nature. Physical protections limit exposure by protecting the eyes, lungs, and/or skin from chemical contact. Physical protection against chemical agents includes gas masks and special protective clothing. Gas mask filters equipped with chemical filters are effective against inhaled chemical agents but may not provide sufficient protection against chemical agents active on skin contact, such as VX or mustard agents, or high concentrations of other nerve agents. Gas mask filters contain layers of activated charcoal and fine porous material to remove particles and chemicals from the airstream. The activated charcoal binds chemicals, preventing them from being inhaled. Each gas mask filter has a finite capacity, proportional to the amount of unbound activated charcoal remaining, and so has a limited lifetime once put into operation. A protective garment protects against those chemical weapons that cause effect upon skin contact. These garments range in complexity and protective ability. Hazardous materials suits are typically suits made of layered rubber containing activated charcoal. In comparison, military battle dress over-garments designed to protect against chemical weapons in the battlefield are generally cloth, sometimes treated to resist absorbing liquids, containing a layer of charcoal-impregnated foam. The rubber in protective equipment is impermeable to most chemical agents, while the activated charcoal acts in a manner similar to a gas mask filter. The combination of properly fitted and worn mask and suit should provide full protection against most chemical exposures. Few examples of medical prophylaxis against chemical weapons exist. Unlike against biological weapons, vaccines do not provide immunity from the effects of chemical weapons. However, pre-exposure use of pyridostigmine bromide provides some protection against the nerve agent soman. Pyridostigmine bromide acts to supplement post-exposure administration of the nerve agent antidotes atropine and pralidoxime chloride. Use of pyridostigmine bromide prevents permanent binding of nerve agents within the nervous system. Pyridostigmine bromide use is recommended only when there is a high imminent threat of chemical weapon use, as it has noticeable side effects. The U.S. Army Medical Research Institute of Chemical Defense developed as an added protection against skin contact, a chemical resistant topical skin cream. The Skin Exposure Reduction Paste Against Chemical Warfare Agents, also known as SERPACWA, aims to complement chemical protective equipment provided to soldiers in the field. Decontamination, where chemicals are removed from the victims, usually through washing the eyes and skin with water and (against some chemical agents) a dilute bleach solution, is an essential protection against secondary chemical exposure. In addition to stopping the victim's exposure to the chemical agent, this procedure prevents those treating the victim from becoming victims themselves, and avoids contamination of treatment facilities. Decontamination is especially important in those cases where victims have encountered liquid chemical agents, and may have significant amounts of chemical agent trapped in their garments. In events with gaseous agents, decontamination may be less critical. Treatment of the victims with general care or agent-specific antidotes occurs following decontamination. Chemical weapons detection has been predominantly an area of concern for military planners, although the manufacture of some of these agents for commercial use requires detection capabilities at manufacturing plants and by first responders trained to handle hazardous materials. While some military units have equipment for chemical weapon detection, civilian first responders use a variety of commercial equipment to detect and identify a wide range of chemicals, generally in a hazardous material context. Because of the wide spectrum of potential chemical agents, the development of a portable, integrated instrument that quickly detects all chemical agents remains an area of research and development. The Department of Defense employs a series of technologies to detect and identify chemical agents, including personal sensors, automated atmospheric sampling, and laboratory methods adapted for battlefield use. Detection of chemical agents can serve multiple purposes. One is to provide warning of a chemical attack, allowing additional time to react to potential exposure. Another is to identify the chemical agent used in an attack. This might provide for better treatment and more effective response. Finally, determining when an area is clear of chemical agents after an attack requires sensitive post-event detection. Some techniques for detecting chemical agents, such as detection paper, tickets, and tubes, rely on sampling the local environment. Detection paper is absorbent paper impregnated with special dyes. When the paper absorbs a drop of chemical agent, one of the pigments dissolves, causing the paper to change color. Detection tickets are similar to detection paper. The ticket is waved in the air or used with a hand pump to determine if chemical agents are present. Detection tubes use a similar technology, but rely on a hand pump to draw air samples through the tube, which discolors in the presence of an agent. A disadvantage to these techniques is that other substances can also dissolve these pigments, causing false positives. The pigments involved can be specific to a type of agent, so an array of papers, tickets, or tubes may be required to identify the exact agent encountered. Handheld detectors, such as the Chemical Agent Monitor (CAM), are able to detect some chemical agents, namely mustard agents and nerve agents. Automatic sampling devices, such as the Automatic Chemical Agent Detector/Alarm (ACADA), are also employed to provide automated, constant atmospheric sampling. These devices sometimes use a technique called ion mobility spectroscopy to detect the presence of chemical agents. Much of the above equipment is commercially available, and hazardous material response teams could use it to assess a chemical release. Typically, hazardous material response teams possess detection paper, tickets, or tubes, but these teams may not have standardized equipment across jurisdictions. To aid first responders in choosing the best or most appropriate system for their use, the Department of Homeland Security has provided guidelines to assess various types of detectors. Another way of detecting a chemical terrorism event would be through the public health system. The sudden arrival of chemical casualties in local hospitals will quickly alert health care professionals. Since September 11, 2001, increases in public health networking have improved information sharing between localities. This may increase the likelihood of identifying, for example, a covert release of blister agents through identification of symptoms. Public health monitoring also may aid in forensic investigations following a covert event, especially if symptoms are delayed. Such public health monitoring may also provide opportunities to identify terrorists who may have self-inflicted chemical weapon injuries. Additionally, the Laboratory Response Network has been established, which links together diagnostic laboratories for the identification of chemical agents, as well as disease outbreaks. In February 2012, the Director of the Defense Intelligence Agency identified that "terrorist organizations are working to acquire and employ chemical, biological, and radiological materials." Many experts believe that it would be difficult for terrorist groups to use chemical agents as weapons of mass destruction. In 1993, the Office of Technology Assessment estimated that VX, the most lethal of nerve agents, spread uniformly and efficiently would require tons of material to kill 50% of the people in a 100 km 2 area. On the other hand, chemical agents might be effectively used as weapons of terror in situations where limited or enclosed space might decrease the required amounts of chemical. That is, the use of the weapon itself, even if casualties are few, could cause fear that would magnify the attack's effect beyond what would be expected based solely on the number of casualties. Few examples exist of successful chemical terror attacks. In 1995, Aum Shinrikyo, a Japanese apocalyptic cult, used sarin on the Tokyo subway. The attack killed 12 people and sent more than 5,000 to the hospital with some degree of injury. This same cult reportedly carried out an attack in Matsumoto as well, where 7 people were killed and over 200 injured. Both of these attacks used G-series nerve agents, which are more toxic through inhalation than by contact. V-series agents employed in a similar manner might have caused greater fatalities. In comparison, blister agents would likely be less lethal, but more injurious, if used in a similar manner. Blister agents are dermally active, so contact with the agent would cause injury. Additionally, since mustard agent vapor penetrates most fabrics, victims near the point of release might suffer grievously. Blister agents, while not likely to cause mass destruction, might cause mass terror and injury. Military planners no longer consider choking agents as useful military weapons, since chemical suits and masks provide high protection. However, according the Director of National Intelligence, the 2006-2007 attacks in Iraq using conventional explosives combined with chlorine gas "highlighted terrorist interest in using commercial and easily available toxic industrial chemicals as weapons." As a weapon of mass destruction used against civilians, the comparatively low lethality of choking agents complicates their use as a weapon of mass destruction, since very large volumes would be needed. On the other hand, the industrial availability of some choking agents provides opportunities for acquisition and subsequent use of potentially very large volumes of such agents. For example, the United States produces approximately 1 billion pounds of chlorine a year for use in water treatment facilities. Experts have noted the potential vulnerabilities of chlorine-filled rail tank cars, its primary transport method. Terrorist attack on industrial stores at chemical or water treatment facilities or during shipment is another potential source of concern. In order to address the concern of security at chemical facilities with large amounts of hazardous chemicals, Congress provided DHS with statutory authority to regulate these facilities for security purposes. In 2007, DHS issued regulations, called chemical facility anti-terrorism standards (CFATS), but compliance with these regulations is incomplete. The 113 th Congress has held oversight hearings on CFATS and considered its reauthorization. Terrorists may find blood agents difficult to employ as weapons of mass destruction for many of the same reasons that apply to choking agents. The quick dispersal of blood agents, combined with the large amounts necessary to cause mass casualties, make such agents difficult to use on a mass scale. Some industrially manufactured blood agents are used on-site without being shipped. However, terrorist groups continue their interest in these agents, perhaps because of a belief that they may cause mass casualties.
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The potential for terrorist use of chemical agents is a noted concern highlighted by the Tokyo sarin gas attacks of 1995. The events of September 11, 2001, increased congressional attention towards reducing the vulnerability of the United States to such unconventional attacks. The possibility that terrorist groups might obtain insecure chemical weapons led to increased scrutiny of declared Libyan chemical weapon stockpiles following the fall of the Qadhafi regime. Experts have expressed similar concerns regarding the security and use of Syrian chemical weapons, reportedly including stocks of nerve (sarin, VX) and blister (mustard gas) agents. For analysis of chemical weapons in Syria, see CRS Report R42848, Syria's Chemical Weapons: Issues for Congress, coordinated by [author name scrubbed]. Military planners generally organize chemical agents, such as chemical weapons and toxic industrial chemicals, into four groups: nerve agents (such as sarin and VX), blister agents (such as mustard gas), choking agents (such as chlorine and phosgene), and blood agents (such as hydrogen cyanide). While the relative military threat posed by the various chemical types has varied over time, terrorist use of these chemicals against civilian targets is viewed as a low probability, high consequence event. Chemical weapons and toxic industrial chemicals cause a variety of symptoms in their victims. These symptoms depend on the chemical agent used, and a victim of chemical exposure may exhibit a combination of symptoms. Some chemical agents cause death by interfering with the nervous system. Some chemical agents inhibit breathing and lead to asphyxiation. Other chemical agents have caustic effects on contact. As a result, effective chemical attack treatment depends on identifying at least the type of chemical agent used. Additionally, chemical agents trapped on the body or clothes of victims may place first responders and medical professionals at risk. Civilian protection from and detection of chemical agents is an area of federal concern. Whether terrorist groups are capable of using chemical agents as weapons of mass destruction is unclear. Some experts have asserted that the volumes of chemicals required to cause mass casualties makes that scenario unlikely. They claim that chemical terrorism is more likely to be small in scale. Other experts have suggested that there has been an increase in terrorist interest regarding chemical agents, and that this interest could lead to their use in terrorist attacks. Some experts assert that insecure stockpiles of military-grade chemical agents would lower the barrier to terrorist acquisition of chemical agents and thus increase the possibility that terrorists might use them. The change of regimes in Libya and Egypt and recent events in Syria have increased concern that such military-grade chemical agents might transition into terrorist hands and then be used to attack U.S. sites either domestically or abroad.
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In response to the sustained period of high unemployment during the last recession, which began in December 2007 and ended in June 2009, Congress enacted several temporary laws to extend Unemployment Ins urance (UI) benefits. For instance, from July 2008 through December 2013, the now-expired Emergency Unemployment Compensation (EUC08) program provided federally financed UI benefits in addition to state-financed, regular benefits available through the permanent-law Unemployment Compensation (UC) program. This temporary extension of UI benefits took place at a time when the federal government and the states faced serious budgetary pressures. In recent years, various proposals have been offered to reduce the large and growing federal budget deficits, as well as to make various reforms to the UI system, including measures to alleviate state UI financing stress and to improve the solvency of the UI trust fund. In this context of increased spending on UI benefits amidst ongoing concerns about the level of federal budget deficits, proposals to restrict the receipt of unemployment benefits by high-income individuals emerged. For example, in the 112 th Congress, the House-passed version of H.R. 3630 , the Middle Class Tax Relief and Job Creation Act, included a provision that would have imposed an income tax on unemployment benefits for high-income individuals. Using a scaled approach, the percentage of unemployment benefits subject to tax would have increased with an individual's Adjusted Gross Income (AGI)—beginning with AGI of $750,000 for a single tax filer and $1.5 million for a married couple filing a joint return. Under this proposal, unemployment benefits would have been taxed at 100% for a single tax filer with AGI of $1 million and for a married couple filing a joint return with AGI of $2 million. The final version of H.R. 3630 enacted by Congress and signed into law by President Obama ( P.L. 112-96 , signed on February 22, 2012) extended UI benefits, among other provisions. It did not, however, include the provision in the House-passed version of the bill that would have restricted unemployment benefit receipt based on income. While the debate in Congress commonly refers to a proposed policy of restricting the receipt of unemployment benefits by "millionaires," various proposals have specified different income thresholds. For example, one proposal would have placed restrictions on unemployment benefit income for a single tax filer with AGI of at least $750,000 (or at least $1.5 million for a married couple filing a joint return). Another proposal would have placed restrictions on unemployment benefit income for a single tax filer with AGI of at least $500,000 (or at least $1 million for a married couple filing jointly). Although the proposals varied in how they define high-income individuals, each would have restricted individuals and households with incomes above a specified threshold from receiving unemployment benefits. This report addresses many of the questions that have arisen regarding such proposals, including the potential number of people who would be affected and the potential savings to federal and state governments. To place these proposals into context, the report provides a brief overview of the UI system and explains why receipt of UI benefits is not restricted based on income under current law. It then presents Internal Revenue Service (IRS) data on the distribution of household income and unemployment benefits for two tax years: 2010, when UI receipt was at a recent peak, and 2014, the most recently available data, to shed light on the size of the group potentially affected by such proposals. The report raises policy considerations such as the potential impact of such proposals on federal expenditures, given the joint federal-state nature of unemployment programs. Finally, it summarizes relevant, recent legislation. A variety of benefits are available to involuntarily unemployed workers to provide them with income support during their spell of unemployment. These benefits include the Unemployment Compensation (UC) program and the Extended Benefit (EB) program. UC is a joint federal-state program financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The federal taxes fund federal and state UC program administration, the federal share of EB payments, and federal loans to insolvent state UC programs. State taxes fund the UC payments and the state share of EB payments. Most states provide for up to 26 weeks of UC benefits to eligible workers who become unemployed through no fault of their own, and meet certain other eligibility requirements. The EB program may provide additional benefits after UC program benefits have been exhausted. Within broad federal guidelines, states determine many of the substantive aspects of their UC program, including the level of payment, duration, and eligibility. This authority for the states to decide on program matters effectively results in 53 different UC programs that are financed by the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Currently, states may not restrict UI benefits by income level other than those income sources deemed related to their unemployment. This requirement is based upon a 1964 U.S. Department of Labor (DOL) decision that precludes states from means-testing to determine UC eligibility. The U.S. Labor Secretary expanded the restriction on means-testing to severely limit the factors states may use to determine UC entitlement. Under this interpretation, federal law requires entitlement to compensation to be determined from facts or causes related to the individual's state of unemployment. Thus, the DOL requires that states pay compensation for unemployment to all eligible beneficiaries regardless of their income level because individual or household income would not be considered to impact the fact or cause of unemployment. Table 1 shows the number of tax filers that received unemployment benefit income by categories of AGI for tax years 2010 (a recent peak in UI receipt) and 2014 (most recent year available). For income tax purposes, unemployment benefits include more than regular UC. They include any amounts received under the unemployment compensation laws of the United States or of a state; state unemployment insurance benefits and benefits paid to an individual by a state or the District of Columbia from the Federal Unemployment Trust Fund; and railroad unemployment compensation benefits, disability benefits paid as a substitute for unemployment compensation, Trade Adjustment Assistance, and Disaster Relief and Emergency Assistance. Unemployment benefits do not include workers compensation. Among tax filers with AGI of $1 million or more, 3,171 reported receipt of unemployment benefit income in 2010. This represents 0.02% of all tax filers that reported receiving unemployment benefit income in each year. In tax year 2014, however, there were no tax filers with an AGI of $1 million or more who reported UI benefit income. There is a difference between the number of tax filers, the number of persons (or individuals), and the number of households. Households, which consist of one or more persons, may contain more than one tax filer. For example, a married couple may file separate tax returns or a joint tax return. This may impact the number of beneficiaries counted in Table 1 if both persons in a married couple receive unemployment compensation, and the couple files a single joint return, the number of tax filers receiving unemployment compensation would be equal to one. If they file separate tax returns, then they would be counted as two. Note that the tax filing data shown here somewhat understate the total number receiving unemployment benefit income. If an individual or married couple's total income from taxable sources is below the filing threshold, he or she is not required to file a tax return and therefore may not be included in the data for tax years 2010 and 2014. This would particularly understate the number of tax filers in the lower AGI categories. Table 2 shows the amount of unemployment benefit income received by tax filers by AGI category for tax years 2010 and 2014, where incomes are not adjusted for inflation. As shown in the table, the amount of unemployment benefit income received by tax filers with AGI of $1 million or more is relatively small. For tax year 2010, tax filers with at least $1 million in AGI reported receiving $40 million in unemployment benefit income, which represents 0.03% of total reported unemployment benefit income. For tax year 2014, however, there were no tax filers with at least $1 million in AGI who received unemployment benefits; therefore, there was $0 in reported unemployment benefit in come for this group. This section addresses some of the policy considerations associated with proposals to restrict the payment of UI benefits to those with high incomes. These include the potential effect on federal expenditures given the joint federal-state nature of unemployment programs and the potential increase in administrative costs associated with such proposals. Under permanent law, most UI benefit outlays are state funded (i.e., most UI benefits are funded with state taxes and paid by the states). This in turn implies that any savings under permanent law would mostly accrue to the states. States largely fund the primary program, the UC program, by collecting taxes from employers. The EB program is funded 50% by the federal government and 50% by the states under permanent law. However, until recently there were several temporary laws that provided 100% federal funding for (now-expired) EUC08 and EB benefits. For instance, P.L. 111-5 , as amended, temporarily provided for 100% federal funding of the EB program through December 31, 2013. The EUC08 program, which was 100% federally funded, was authorized under the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) until the week ending on or before January 1, 2014 (i.e., December 28, 2013, in all states except New York State, in which the program ends December 29, 2013). Given the small amount of unemployment benefit income paid to "millionaires" and in the absence of further legislative action to extend the now-expired federal laws, potential savings to the federal government diminished at the end of calendar year 2013. The amount of savings associated with such proposals would depend on the income threshold at which UI benefit receipt is restricted (the higher the income threshold, the lower the savings). If only millionaires were restricted from receiving UI benefits, there would be a small amount of savings. The savings estimate for a provision in the House-passed version of the Middle Class Tax Relief and Job Creation Act of 2012 ( H.R. 3630 ) serves as a guide. A provision in the House-passed bill would have taxed unemployment benefit income at 100% for single tax filers with AGI of $1 million (or for married couples filing a joint return with AGI of $2 million). The provision would have taxed unemployment benefit income at a lower percentage for single tax filers with AGI beginning at $750,000 (or for married couples filing jointly with AGI beginning at $1.5 million). The Joint Committee on Taxation (JCT), in conjunction with the Congressional Budget Office (CBO), estimated that this provision would have reduced federal outlays by $20 million over 10 years (2012-2021). This estimate excluded any increase in administrative costs because administrative costs are considered a discretionary item. Any additional funding for the administration of this provision of the bill (i.e., over and above the current funding for administration of the tax and UI systems) would have had to be written explicitly in the bill and passed into law. Lowering the proposed income threshold at which the proposed restriction is applied would make more people unable to receive UI benefit income and result in greater savings. However, determining the level at which to set the income threshold may depend upon the goals of the program. For example, making large numbers of people ineligible for UI benefits based on income to achieve greater savings may be perceived as unfair and may further compromise the objective of providing insurance against involuntary unemployment for all workers. The potential administrative costs could outweigh the potential savings. Although lawmakers could choose among different ways to administer the provision, one of the more cost effective ways may be to recoup UI benefits through the tax system rather than make high-income groups ineligible for benefits. For example, H.R. 3630 , S. 1931 , and S. 1944 of the 112 th Congress, which are summarized briefly in the " Legislation " section, would have imposed an income tax rate (of up to 100% in the case of H.R. 3630 and S. 1931 ) on unemployment benefit income for tax filers with AGI above a specified threshold. This approach would allow the federal government to recoup the value of UI benefits paid to certain individuals when they file their income tax returns. Taking advantage of the existing tax system to administer the provision may be more cost effective than other approaches because the tax system already requires individuals to report their unemployment benefits and other sources of income and it has a mechanism in place for individuals to pay back the value of UI benefits with a check to the federal government. Although administering the provision through the tax system may be a relatively cost effective approach, there are some potential disadvantages. Adding a separate tax rate for UI benefits may further complicate an already complicated tax form. Among the alternatives, one could restrict UI benefits for those who have or are expected to have at least $1 million in earnings . For example, states collect information on earnings for each job covered under the UI system. UI benefits could be denied to those with more than $333,333 of earnings in a four-month period. This would be a cost effective approach in that the UI database, which contains data collected by the states, could be used to identify such individuals. However, the UI database would not identify those who have at least $1 million in total income when other sources of income (such as stocks) are taken into account. Moreover, it would not identify all married couples or households that have at least $1 million in earnings or total income. Proposals to restrict the payment of UI benefits to those with high incomes may pose administrative issues for the states as well. This would be the case, for example, if the provision were to be administered by making modifications to the UI system, rather than by recouping benefits already paid through the tax system. Some of the potential administrative issues from the perspective of the states are described below. State UI administrators currently do not have the infrastructure needed to restrict UI benefits based on income. UI program administrators do not collect comprehensive income information. Earnings are used to calculate UI benefit amounts, but state UI administrators may not collect information on capital gains, interest, or other sources of income. In addition, income information for spouses and other family members is not collected for purposes of UC and other UI programs. This implies that any restriction based on household income would require states to collect additional data. Setting up such a system may prove expensive in comparison to the cost savings derived from restricting UI benefit payments to certain individuals. Some of the costs associated with establishing a system to administer the provision may be related to setting up new administrative procedures, setting up software programs, creating databases, and automating ways to validate income statements. In this case, the costs may be largely one-time setup costs. As the savings derived from restricting UI benefit payments to certain individuals accrue over time, they may eventually offset the one-time setup costs. However, the ongoing year-to-year administrative costs (related to working with applicants to collect the proper income statements, etc.) could prove to be large relative to the benefit savings. A policy of restricting UI benefit receipt based on income may discourage some eligible individuals from applying for benefits. For example, if the tax system were used to recoup some or all of the value of UI benefits paid to certain high-income individuals, some eligible unemployed workers may choose not to apply for UI benefits if they consider the time and other costs associated with applying for benefits to outweigh the additional funds. There may be other reasons why an eligible individual may not apply for UI benefits. For example, a person who becomes unemployed early in the year may expect (erroneously) to have income over the course of the year above the applicable threshold, and therefore may choose not to apply for benefits based on an expectation that those benefits would only be recaptured later through the tax system. Alternatively, if a restriction on the payment of UI benefits to certain high-income individuals were administered through the UI system, all applicants for UI benefits would be required to complete additional forms for the purpose of reporting income from various sources. (In addition to his or her own income, the applicant may be required to report the income of others in the household, such as a spouse.) Adding this complexity to the application process for UI benefits could discourage some eligible individuals from applying for benefits. An eligible individual may have trouble filling out the forms, expect little in UI benefits, and decide not to apply for benefits (e.g., new immigrants with language barriers). In the 112 th and 113 th Congresses, a number of proposals were introduced that would restrict or highly tax the unemployment benefit income of unemployed workers with high incomes. These bills are summarized below. As of the date of this report, no bills have been introduced in the 114 th Congress to restrict UI receipt based on income. H.R. 3630 . On December 9, 2011, Representative Camp introduced H.R. 3630 , the Middle Class Tax Relief and Job Creation Act of 2011. Among other provisions, House-passed version of H.R. 3630 would have taxed unemployment benefit income at 100% for single tax filers with AGI of $1 million (or for married couples filing a joint return with AGI of $2 million). The measure would have taxed unemployment benefit income at a lower percentage for single tax filers with AGI beginning at $750,000 (or for married couples filing jointly with AGI beginning at $1.5 million). (The unemployment benefit income would have continued to be counted in the calculation of AGI and thus subject to "regular" federal income tax.) S. 1944 . On December 5, 2011, Senator Casey introduced S. 1944 , the Middle Class Tax Cut Act of 2011. Among other provisions, S. 1944 would have created a new income tax on unemployment benefit income for a single tax filer with AGI of at least $500,000 (or at least $1 million for a married couple filing a joint return). The tax rate for unemployment benefit income would be 55% in tax years 2011 and 2012 and 50% for tax years after 2012. (The unemployment benefit income would continue to be counted in the calculation of AGI and thus subject to "regular" federal income tax.) S. 1931 . On November 30, 2011, Senator Heller introduced S. 1931 , the Temporary Tax Holiday and Government Reduction Act. Among other provisions, S. 1931 would have taxed the unemployment benefit income of certain high-income tax filers. The provision in this bill is the same as the one in H.R. 3630 (described above). H.R. 235 . On January 7, 2011, Representative Brady introduced H.R. 235 , the Cut Unsustainable and Top-Heavy Spending Act of 2011. Among other provisions, H.R. 235 would have prohibited the use of federal funds—from the EUC08 and EB programs—to pay unemployment benefits to an individual with resources of at least $1 million in the preceding year. An individual's resources would have been determined in the same way as the resource test for the Medicare Part D drug benefit subsidy (for purposes of the drug benefit subsidy, resources are defined by the individual states and include savings and investments but do not include the value of a primary residence or the value of a car). This provision would be effective for any weeks of unemployment benefits beginning on or after January 1, 2011. S. 310 . On February 8, 2011, Senator Coburn introduced S. 310 , the Ending Unemployment Payments to Jobless Millionaires Act of 2011 (see also companion bill H.R. 569 introduced by Representative Lankford). The bill would have prohibited any EUC08 or EB benefit payments to an individual with resources in the preceding year of at least $1 million, as determined through the resource test for the Medicare Part D drug benefit subsidy. For the purposes of the drug benefit subsidy, resources are defined by the individual states and include savings and investments but do not include the value of a primary residence or the value of a car. Unlike H.R. 235 , this provision in S. 310 would have been effective on Table 1 or after the date of enactment of this legislation. S. 18 . On February 27, 2013, Senator Ayotte introduced S. 18 , the Sequester Replacement and Spending Reduction Act of 2013. Section 401 of S. 18 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation, including EB and (now-expired) EUC08 payments. The effective date for this provision would have been the day after enactment. The CBO estimated that there would be no measurable savings from this proposal. H.R. 2448 . On June 20, 2013, Representative Lankford introduced H.R. 2448 , the Ending Unemployment Payment to Millionaires Act of 2013. Like S. 310 and H.R. 569 in the 112 th Congress, this bill would have prohibited any EUC08 or EB benefit payments to an individual with resources in the preceding year of at least $1 million, as determined through the resource test for the Medicare Part D drug benefit subsidy. This bill would have been effective for weeks of unemployment beginning on or after enactment. H.R. 3979 . On January 31, 2014, Representative Barletta introduced H.R. 3979 , the Emergency Unemployment Compensation Extension Act of 2014. Section 7 of H.R. 3979 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments. This provision would have been effective for weeks of unemployment beginning on or after enactment. S.Amdt. 2714 . On February 4, 2014, Senator Reid (for Senator Reed) proposed S.Amdt. 2714 to S. 1845 , the Emergency Unemployment Compensation Extension Act. Section 7 of S.Amdt. 2714 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation, including EB and (now-expired) EUC08 payments. The effective date for this provision would have been the day after enactment. This bill would have been effective for weeks of unemployment beginning on or after enactment. S. 2097 . On March 6, 2014, Senator Heller introduced S. 2097 , the Responsible Unemployment Compensation Extension Act of 2014. Section 9 of S. 2097 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation, including EB and (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment. S. 2148 and S. 2149 . On March 13, 2014, Senator Reed introduced S. 2148 , the Emergency Unemployment Compensation Extension Act of 2014. On March 24, 2014, Senator Reed introduced S. 2149 , a technical correction to S. 2149 . Section 7 of both S. 2148 and S. 2149 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment. S. 2532 . On June 25, 2014, Senator Reed introduced S. 2532 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , S. 2148 , and S. 2149 , Section 7 of S. 2532 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments. This provision would have been effective for weeks of unemployment beginning on or after enactment. H.R. 4415 . On April 7, 2014, Representative Kildee introduced H.R. 4415 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , S. 2148 , S. 2149 , and S. 2532 , Section 7 of H.R. 4415 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments. This provision would have been effective for weeks of unemployment beginning on or after enactment. H.R. 4550 . On May 1, 2014, Representative Fitzpatrick introduced H.R. 4550 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , H.R. 4415 , S. 2148 , S. 2149 , and S. 2532 , Section 106 of H.R. 4550 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment. H.R. 4970 . On June 25, 2014, Representative LoBiondo introduced H.R. 4970 , the Emergency Unemployment Compensation Extension Act of 2014. Like H.R. 3979 , H.R. 4415 , H.R. 4550 , S. 2148 , S. 2149 , and S. 2532 , Section 7 of H.R. 4970 would have prohibited any individual reporting more than $1 million in AGI in the preceding year from receiving any (now-expired) EUC08 payments, effective for weeks of unemployment beginning on or after enactment. As of the date of this report, no bills have been introduced in the 114 th Congress to restrict UI receipt based on income.
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Under the federal-state Unemployment Insurance (UI) system, there is currently no prohibition on the receipt of UI benefits by high-income unemployed workers. States, which determine many of the eligibility requirements for UI benefits, may not restrict eligibility based on individual or household income. Recent Congresses, however, have considered proposals to restrict the payment of unemployment benefits to high-income individuals. These proposals define high income in a variety of ways—often prohibiting UI benefits for "millionaires." For instance, in the 112th Congress, the House-passed version of H.R. 3630 (the Middle Class Tax Relief and Job Creation Act) included a provision that would have imposed an income tax on unemployment benefits for high-income individuals. Based on a scaled approach, the tax would have increased to 100% for a single tax filer with Adjusted Gross Income (AGI) of $1 million (or AGI of $2 million for a married couple filing a joint return). The provision, however, was not included in the final version of the legislation that became P.L. 112-96. Several other bills introduced in the 112th Congress would have restricted unemployment benefit receipt based on income (i.e., they would change the current requirement to provide unemployment benefits to all workers without income restrictions): S. 1944, H.R. 235, and S. 310. A number of bills in the 113th Congress would also have imposed income restrictions for the purposes of UI benefits: S. 18, H.R. 2448, H.R. 3979, H.R. 4415, H.R. 4550, H.R. 4970, S.Amdt. 2714, S. 2097, S. 2148, S. 2149, and S. 2532. As of the date of this report, no bills have been introduced in the 114th Congress to restrict UI receipt based on income. To inform the ongoing policy debate, this report provides information relevant to proposals that would restrict the payment of unemployment benefits to individuals with high incomes. Three primary areas that may be of interest to lawmakers are addressed: (1) the current U.S. Department of Labor (DOL) opinion on means-testing UI benefits; (2) the potential number of people who would be affected by such proposals; and (3) policy considerations such as the potential savings associated with such proposals, particularly in terms of federal expenditures. The latter two issues are discussed because a small percentage of tax filers who receive unemployment benefit income have an AGI of $1 million or more. For example, in tax year 2010, when UI receipt was at a recent peak, approximately 0.02% of tax filers had an AGI of at least $1 million, based on Internal Revenue Service (IRS) data. In tax year 2014 (most recent data available), however, there were no tax filers with AGI of $1 million who received UI benefits, according to IRS data.
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Government programs are no exception to the constraints of opportunity costs: that is, investing resources in any one program means that those resources cannot be used for some other program. A policymaker deciding whether to support a new action; a legislator deciding whether to vote for a new program; a regulator deciding whether to impose a stringent standard: each decisionmaker faces the question, What will be foregone if I decide to commit the resources for this activity? Especially with respect to environmental, health, and safety programs, increasing sensitivity to the costs of regulations has led some pundits, analysts, and stakeholders to challenge initiatives on the grounds that alternative choices are available that would provide more risk reduction or other benefits at lower cost. When Congress voted on the Clean Air Act Amendments of 1990, columnist George F. Will wrote, "Policy makers face difficult tradeoffs. Comparative returns to health must be considered. The $21 billion spent on cleaner air cannot be spent on immunization, infant mortality, care for poor pregnant women." At a 1997 hearing concerning the Environmental Protection Agency's (EPA's) proposal to tighten the National Ambient Air Quality Standards (NAAQS) for ozone and particulate matter, a Congressman commented, "What are the alternatives to the ... rulemaking? There are clearly better investments that can be made to promote public health. Eight billion dollars could save 3 or 4 times as many women from breast cancer by paying for mammograms." In a "viewpoint" article in Exxon's magazine for shareholders, its author states that sound science and sound economics could lead to smarter regulation by reallocating regulatory expenditures: for example, "it may be smart to invest more in smoking-cessation education for pregnant women and less in making the groundwater in a Michigan rail yard cleaner than drinking water." In a debate counterposing environmental and economic tradeoffs, Paul Portney of Resources for the Future said, "A hundred dollars spent on environmental protection is $100 that can't be spent on housing, or space, or health, or other alternatives." In 1992 Stephen Breyer (who became a Supreme Court Justice in 1994) addressed the need to improve the effectiveness of risk regulation in The Oliver Wendell Holmes Lectures, given at Harvard. His solution featured a centralized administrative group in the federal government to oversee and guide risk regulation. One of the group's missions could be to create a "risk agenda" … that looks for tradeoffs among programs that will lead overall to improved health or safety. It might, for example, look for practical ways to settle some toxic waste dump cases, thereby obtaining funds that might be used to help pay for vaccinations, or prenatal care, or mammograms.... It might, in other words, look for ways to reallocate, transfer, or combine health resources so that they perform more effectively. In the early 1990s the then-head of the Harvard Center for Risk Analysis, John D. Graham, together with his student and colleague Tammy O. Tengs, went beyond the rhetoric and studied these potential tradeoffs. They analyzed the cost-effectiveness of 185 life-saving interventions (including, for example, laws, regulations, and building codes) for which national cost and benefit estimates were available. They found that these interventions cost $21.4 billion per year and averted 56,700 premature deaths and saved 592,000 years of life annually; but there was no relationship between the cost-effectiveness of the interventions and their implementation. Tengs and Graham concluded that if the $21.4 billion per year were devoted only to the most efficient interventions, approximately twice as many lives and years of life could be saved. Alternatively, they found that the nation could maintain the current level of survival benefits—averting 56,700 deaths per year—and "save $31.1 billion over the status quo, because there are many untapped investment opportunities that save both lives and money. That is, not only would we save the $21.4 billion that we are currently spending, but another $10 billion—all the while maintaining our present level of survival benefits." Graham asserted that failing to follow through on the implications of studies showing that tradeoffs could improve the cost-effectiveness of health, environmental, and safety regulations was a "perverse pattern of investment [that] amounts to 'statistical murder' of American citizens." Graham concluded— Legislators should pass broad-based legislation requiring the use of risk analysis and cost-benefit analysis in government decisions. The President and Congress should reexamine annual appropriations to public health and environmental agencies to determine how reallocations of dollars could offer more health protection and no greater costs to the taxpayer or private sector. This view has been broadly accepted among those promoting risk assessment and cost-benefit analysis as ways of rationalizing regulatory activities. For example, summarizing a volume analyzing risk-benefit tradeoffs, Robert W. Hahn, a long-time student of regulatory costs, concluded: "We could save a substantial number of lives and money by reallocating resources from ineffective domestic regulations to other life-saving interventions in the United States or the developing world." Similarly, legal scholar Cass Sunstein observed that studies like Tengs' and Graham's create "a presumption that the current system of regulation suffers from serious misallocation of resources." Sunstein has promoted cost-benefit analysis as a way to require people "to look globally at the consequences of apparently isolated actions." Thus, going beyond rhetoric, analysts like Hahn and Tengs and Graham see quantitative analysis of tradeoffs as a practical way of achieving greater societal efficiency for health, safety, and environmental protection investments. Graham, in particular, has been a strong advocate of using risk and cost-benefit assessments of tradeoffs to improve decisionmaking —a view which he was in a position to further between 2001 and 2006 as Administrator of the Office of Information and Regulatory Affairs in the White House's Office of Management and Budget. And Cass Sunstein likewise has had, since 2009, the opportunity to apply his views on rationalizing regulation with cost-benefit analysis as Administrator of the Office of Information and Regulatory Affairs in the White House's Office of Management and Budget for the Obama Administration. Certainly, risk assessment and cost-benefit analyses of health, safety, and environmental policies have advanced substantially over the past several years, leading to efforts at quantifying tradeoffs to identify the most efficient/least efficient ones. But legislators and other policymakers have found it difficult to effect overt tradeoffs among environmental, health, and safety programs. One reason for this difficulty, and perhaps the one most often cited, is the perceived inadequacy of the assessments themselves. Problematic issues include incomplete assessment of costs and, especially, benefits; discounting future benefits; monetization of noncommercial benefits such as health and environmental amenities; the resources and time necessary to conduct analyses; and a utilitarian bias to the technique, among others. But leaving aside a more detailed discussion of how accurately it is possible to evaluate potential tradeoffs, or how fair such tradeoffs might be, this report examines two institutional reasons why policymakers may be disinclined to make tradeoffs—or may even find it impossible. For even if the tradeoffs can be defined and defended, difficulties in effectuating them remain. One institutional barrier is the limited authority of policymakers to affect decisions across institutional boundaries. For example, in part because of independent decisions made at different times by the relevant congressional committees of jurisdiction, the various health, safety, and environmental statutes manifest differing standards of acceptable risk and differing criteria for assessing them. The second barrier arises from the divergence in decision criteria applied by the different institutional decisionmakers involved in tradeoffs. Health, safety, and environmental policies can involve both public financing (e.g., appropriated grants or loans) and regulations that require private sector investments; they can involve a range of federal, state, local, and private decisionmakers. As tradeoffs change those responsible for making decisions, the bases for acting or financing programs shift as well. A decisionmaker can rarely if ever prescribe that resources freed up by his or her not supporting an environmental protection program or not choosing a regulatory option—or a more stringent option—will go to a more beneficial alternative. These constraints that arise from institutional contexts in which legislators and other policymakers address tradeoffs both limit alternatives that can usefully be considered, and tend to push decisionmakers to make up-or-down, case-by-case decisions rather than choosing among tradeoffs. Typically, a decisionmaker's only option is to approve or disapprove an action, to vote for or against a program, or to implement or delay a regulation—with little power to redirect the resources to a more cost-effective alternative if the choice at hand is rejected. The rules and structures of organizations channel decisions in ways that limit the options of decisionmakers. In Congress, rules of procedures and committee structures can limit tradeoffs available to Members. In particular, jurisdictional limitations affecting congressional subcommittees' and committees' choices and procedural requirements governing floor actions—including especially the "germaneness" rule of the House —impede treating comprehensively the many environmental, health, and safety statutes. These procedural and structural limits play key roles in determining the availability of potential tradeoffs both among program goals and among alternatives for federal expenditures of treasury funds. Similarly, procedures and the bureaucratic structure of the executive branch limit choices of administrators and program managers. The process by which Congress considers annual appropriations illustrates how structure can constrain tradeoffs. While the President, Congress as a whole, each Chamber, and the full Committees on Budget and on Appropriations have the ability to view comprehensively funding priorities and consider tradeoffs, only in exceptional cases can those with comprehensive authority devote attention to the level of detail at which most environmental, health, and safety tradeoffs occur. The House and Senate Appropriations Committees each divide the total amount of funds available for discretionary spending among their subcommittees (12 since the 109 th Congress; previously, 13). These 302(b) allocations, as they are known, set the funding limit for each subcommittee handling one of the 12 bills annually appropriating funds for the federal government. As a practical matter, most tradeoffs among programs—whether to spend dollars here or there—occur within each subcommittee's jurisdiction. For example, the Subcommittee on Interior, Environment, and Related Agencies has combined responsibility for the Department of the Interior, the Environmental Protection Agency (EPA), the Forest Service, the Indian Health Service, the Smithsonian, and the National Endowments for the Arts and the Humanities. The subcommittee may make judgments on the best use of a dollar within an agency's appropriation, or across agencies within its domain—so that EPA's dollars may be affected by appropriations decisions concerning Interior or the Forest Service, for example. Thus the ability to weigh the effectiveness of funds to be spent on water quality, for example, could balance EPA and Department of the Interior water programs, since they are under the jurisdiction of one appropriations subcommittee; but there would not be the ability to comparatively weigh the effectiveness of water programs managed by the Department of Agriculture, which is under the jurisdiction of a different subcommittee. Thus an option of spending money through the USDA for water pollution control is only theoretically an opportunity cost of a choice to spend money on sewage treatment grants through EPA: those choosing to spend the money through EPA did not have the option of spending those dollars through USDA. For an actual example, see the textbox "Clean Water Initiative Tradeoff." The competition among alternatives is not just on the basis of relative costs and benefits: there is also political reality. In an interview about federal research and development, Senator Bennett Johnston was asked about R & D tradeoffs among departments. Johnston observed: There is no research budget as such. So what happens at National Science Foundation, the National Institutes of Health and the Department of Energy are not connected to each other. You know, those silly scientists who said kill the SSC [Superconducting Super Collider] so there would be more money for something else. They did not fail economics 101, they failed freshman high school arithmetic. I mean [the budget process] just does not work that way. Similarly, when an Appropriations subcommittee proposed cutting the NASA budget by $1 billion in the late 1990s, a commentator said: Researchers unable to imagine their own discipline ever being graced with billion dollar budgets in the first place may simply shrug, or even smile. Some may even think that less money spent on space means more money on some worthier form of research. They'd be flying in the face of decades of experience, but then that's optimism for you. These bounded tradeoffs become explicit in floor amendments to add funds in an appropriations bill: as net dollars within the bill cannot exceed a ceiling, offsetting funds must be found elsewhere in the bill, so tradeoffs typically are restricted to programs within the subcommittee's jurisdiction. For an example from 1998, when there were 13 appropriations subcommittees, see the textbox, "Tradeoff Within a Subcommittee." The situation is analogous for authorizations of programs—that is, the statutes that establish their intent, rules, and limitations: jurisdictions are divided among committees (and their subcommittees). For environmental, health, and safety statutes, tradeoffs are largely determined by the statutes/programs of the subcommittee/committee of jurisdiction. Opportunities for tradeoffs across committee jurisdictional lines can be limited, especially in the House. At one level, legislative constraints hinder consideration of tradeoffs between regulatory impacts of programs; an example is the separate jurisdictions in the House for air pollution (Committee on Energy and Commerce) and water pollution (Committee on Transportation and Infrastructure). At the level of choosing between policy instruments, jurisdiction also has implications. Although most economists and many other policy analysts believe pollution reductions could be more efficiently achieved through economic mechanisms, such as pollution taxes, than through "command and control" regulations, the latter have been most often chosen. This tradeoff is constrained in large part because of split jurisdictional authorities. The committees establishing pollution control programs and policies can authorize regulations but cannot levy taxes. Adoption of pollution taxes would depend on favorable action by the House Ways and Means Committee—an added step with uncertain outcome that the authorizing committee can avoid by employing regulations only. Jurisdiction can also affect choices between regulatory programs and federally funded programs. Authorizing committees can authorize regulatory programs themselves. But when they authorize federally funded programs, the final funding decisions reside with the appropriations committees, whose priorities on such programs may differ from the authorizing committees' priorities. One way authorizing committees have effected their view of the appropriate funding priority for their programs is to establish entitlement programs, which are not subject to annual appropriations. Tengs and Graham tried to take institutional constraints into account in their assessment of cost-effective alternatives. They analyzed savings achievable if five government agencies each independently invested its regulatory efforts most cost-effectively. The analysis examined 134 agency rules that result in about $4.11 billion spent per year by those regulated and save 94,000 life-years. In the analysis, the marginal cost per life-year saved by each agency's regulations varied from $1,510,000 for the Consumer Product Safety Commission to $11,300 for the National Highway Traffic Safety Administration, but the more cost-effective application of those dollars within each agency's regulatory authorities would mean that the $4.11 billion in resource consumption would nearly double the life-years saved, to about 180,000. But even this agency-by-agency assessment of tradeoffs does not fully reflect the limitations on tradeoffs—especially for EPA. EPA's authorities derive from over a dozen statutes. Jurisdiction over these statutes is divided among several committees in the House; while jurisdiction over environmental laws is considerably more concentrated in the Senate, jurisdictional splits remain. Table 1 presents the House and Senate Committees that are among those with jurisdictions over selected environmental, health, and safety statutes. While this list may not capture all relevant committees with jurisdiction, it illustrates that programs often cited as candidates for tradeoffs are subject to separate legislative panels. One result is that each act containing regulatory programs has its own criteria for decisions on setting standards, cleanup, etc. With strong leadership, negotiations may lead to cross-committee deals to coordinate program authorities, but this is the exception, not the rule. Thus both legislators and EPA officials have limited opportunities to compare and make consistent standards and decision criteria among statutes. The resulting fragmented regulatory structure precludes EPA from proceeding with many putative tradeoffs and from weighing the costs and benefits decisions under different authorities on the same scales. Hence, at least for EPA, Tengs and Graham's analysis showing that regulatory actions could be more cost effective appears to be more conceptual and hortatory than implementable. EPA has some power to comprehensively assess the effectiveness of its programs, but the existing statutory patchwork that shapes EPA's administrative structure goes far to explain the variability in the cost-effectiveness of its many programs—at least as measured by available cost-benefit analyses and risk assessments. Both Congress and the White House have tried to bring more coherence and rigor to regulatory decisionmaking. A series of executive orders over the past 40-plus years have led to a process for assessing the impacts of regulatory proposals (most recently, President Clinton's E.O. 12866, with new implementing guidelines issued by the George W. Bush Administration). Congress has sought, with mixed success, to impose risk assessment and cost-benefit analysis requirements on the regulatory agencies, and to provide some centralized oversight of the process: the Unfunded Mandates Reform Act ( P.L. 104-4 ) requires agencies to prepare cost-benefit analyses for regulations costing $100 million or more—in effect codifying a part of E.O. 12866. However, in some cases statutory language prohibits the consideration of costs in regulatory decisions. Agency-by-agency attention to the effectiveness of regulations has been heightened by the Government Performance and Results Act (GPRA, P.L. 103-62 ), as well. Writing in 1995, Graham, along with Jonathan Baert Wiener, discussed possible reforms "to enable and impel decisionmakers to pursue a more comprehensive analysis of risk." They made proposals concerning Congress, the judiciary, and the executive branch. For the executive branch, Wiener and Graham suggested more forceful implementation by the Office of Information and Regulatory Affairs of the executive orders requiring cost and risk analysis (E.O. 12866). They noted that a more radical reform would be to reorganize "the executive branch to integrate the array of health and environmental protection agencies." Further, they observed that a centralized oversight unit for risk assessments, perhaps located in the White House or the U.S. Public Health Service, could enhance coordination. Several years later, Cass Sunstein proposed that Congress "create a new subcommittee entrusted specifically with the power to assess aggregate risk levels, to compare risks, and to initiate revision of statutes that increase net risks," and to "address the problem of health-health tradeoffs through a new directive in the Administrative Procedure Act"; and, in the executive branch, that the Office of Information and Regulatory Affairs [of the Office of Management and Budget], "should see, as one of its central assignments, the task of overcoming governmental tunnel vision, but ensuring that aggregate risks are reduced and that agency focus on particular risks does not mean that ancillary risks are ignored or increased." These proposals have particular salience since Graham was appointed by President George W. Bush to head up the Office of Information and Regulatory Affairs, and Cass Sunstein was appointed to the same position by President Barack Obama. Graham and Sunstein have both focused on making more transparent the regulatory decisionmaking process, on ensuring the soundness of the science underlying decisions, and on more rigorous cost- and risk-benefit analyses. These are essential parts of making not only better decisions, but also could lead to consciously made tradeoffs. So far, however, there is no example of an explicit, practical tradeoff across programs on the basis of the cost-effectiveness of lives saved. Even with the overarching authority of the White House behind the Director of the Office of Information and Regulatory Affairs, the Director's efforts are constrained by institutional boundaries and statutory dictates. Despite executive orders and legislated requirements for cost-benefit studies, advances in evaluating potential tradeoffs have not resolved the issue of how requiring risk assessment and cost-benefit analysis can be applied coherently across the many environmental, health, and safety programs, given the differences among the statutes. The decision to diminish resources and effort in one area is usually separate from a decision and authority to apply those or related resources and effort in another area. Reconstituting congressional and/or administrative structures to integrate risk reduction—so that programs now handled more or less independently would go onto the same table for possible tradeoffs—would imply legislators reallocating their authorities and responsibilities. This is a rare undertaking of uncertain outcome. In choosing among alternative tax-supported federal programs (e.g., grants, Superfund cleanups), federal decisionmakers decide where to direct resources from monies they control. In choosing among alternative federal environmental, health, and safety regulatory programs, federal decisionmakers mandate expenditures by state and local governments, the private sector, and/or individuals. It can be tempting to pose tradeoffs across these two situations—between federally funded programs and federal regulatory programs. Thus, among the examples cited in the preface, immunization, infant mortality, and care for poor pregnant women are rhetorically proposed as tradeoffs against clean air; mammograms against stricter air regulations; smoking-cessation education of pregnant women against groundwater cleanup; and housing, or space, or health against environmental protection. The putative tradeoffs counterpose public programs paid for primarily by federal (sometimes state) tax dollars with environmental protection programs paid for primarily by dollars mandated to be spent by individuals, state and local governments, and/or the private business sector. The conceptual commingling of federally funded programs and of federal regulatory mandates ignores a fundamental obstacle to making tradeoffs. This obstacle arises from the distinct identities and interests between those who establish the mandate and those who control the use of the money necessary to meet the mandate. In the case of tradeoffs among established federally funded programs, the decisionmaker for spending monies remains the same for selected alternatives: the appropriator and, ultimately, Congress. If Congress decides not to spend the money on option A, it can spend it on option B, subject to institutional constraints previously described. In the case of tradeoffs between federally funded programs and regulatory programs (or between regulatory programs), however, the legislative decisionmaker mandating the program and the appropriator ultimately responsible for expenditures to meet regulations are separated. And the administrator responsible for drafting regulations may find his or her options constrained not only by the statutes and by funding, but also by explicit congressional directions, which can include statutory authorizing language specifying deadlines and the inclusion or exclusion of certain options; appropriations language that earmarks or withholds monies for certain options; and report language that gives guidance that, even if not binding, may have considerable sway. Finally, the party which must meet a health, safety, or environmental regulation has to consider the consequences for the business and owners or stockholders. Each decisionmaker thus faces a set of incentives and options constrained by the institutional context. As a result, the alternative of spending tax monies on a federal program versus establishing a regulatory program not only trades off program benefits, but also changes the payer who decides on the alternative use of the dollars. From the different settings, each decisionmaker can be expected to employ different criteria in judging the return on the use of the monies. A federal program decisionmaker presumably makes tradeoffs on the basis primarily of national values and needs; a state or local program decisionmaker presumably makes tradeoffs on the basis primarily of state or local values and needs; a private sector business decisionmaker presumably bases tradeoffs primarily on profit and loss considerations; and an individual presumably bases tradeoffs on personal needs and preferences. These differences are shown in Table 2 . To propose tradeoffs between an environmental regulation and a potential alternative federal program disregards the different circumstances of the decisionmakers involved. For the regulatory mandate, the federal decisionmaker knows what purpose the dollars will be spent on; if the federal decisionmaker decides not to impose that mandate, those dollars remain available to the state/local, private sector, or individual decisionmaker to spend. If the regulatory mandate is not imposed or is rescinded as not cost-effective, there is little reason to assume that the state/local, private sector, or individual decisionmaker controlling those dollars will view an alternative public service program as a preferred destination for the monies freed up. As a practical matter, the alternative to a specific federal regulatory mandate is some unknown option(s) on which other decisionmakers responding to other values or pursuing other goals will spend those unmandated dollars. It is certainly possible—some would say highly likely, even indisputable—that some portion of dollars spent to meet federal requirements could be better spent otherwise by state and local governments, private businesses, or individuals. Underlying this tradeoff is the debate over the share of incomes that most effectively and efficiently advances national interests by being spent by government (federal or state or local) rather than privately (individually or corporately). Compare the following viewpoints (referring to taxes, but the principles expressed apply analogously to regulation, often called a "hidden tax"): ... Given a choice between keeping taxes high so the government has more money to spend and ... reducing the tax burden so families can put more money aside to invest in their own child-care needs, retirement needs, health-care needs or whatever needs they choose, my preference is the latter.... Letting people keep their money is the best way to address the social problems that confront us, now and in the future. * * * * * Sen. Pete Domenici (R-N.M.) publicly tells me I "ought to pay less taxes, ought to keep more" of my money because I "can make better decisions than we [our elected leaders in Washington] can." Thank you, Sen. Domenici, but I emphatically and sincerely disagree. My federal government does well hundreds of things I want done and which I would not have any idea of how to do by keeping every cent to myself. Because of the taxes we pay, the Great Lakes, the Chesapeake Bay, the Charles River, the Chicago River and the Potomac River are all cleaner, healthier and more alive than they were just a generation ago. What seems clear is that even if state and local, corporate, or private investments in alternatives to pollution control mandates would contribute equally—or even more—to net national welfare, there is little reason to assume the alternatives would be selected from more cost-effective environmental, health, or safety programs such as immunization, education, or care for poor pregnant women. As Thomas O. McGarity, a student of the legal implications of regulations, has noted: Even under the highly contestable assumption that a cost-benefit criterion would eliminate waste, no vehicle exists for channeling the savings to the most deserving social programs. The savings will invariably go to the regulatees, who may or may not spend them on activities that benefit society. Absent some governmental vehicle for directing how regulated entities spend the resources saved by less stringent regulation, they will devote resources to things that make their shareholders happy. The other side of the argument that money necessary to meet regulations could be spent more effectively on alternatives is that the beneficiaries of a regulation also have more money to spend. For example, if because of an air pollution regulation people avoid adverse health effects, any monies that would have been spent on consequent visits to doctors or hospitals are saved and available for alternative uses. But again, even if these beneficiaries can be identified, how they will use the savings is unknown. In short, there are tradeoffs for each dollar paid out to abate and control pollution. But it is not $1 for pollution control versus $1 for some comparable or superior public good. Rather, it is $1 for pollution control on the one hand, versus $1 for an unknown purpose on the other—with the probability that the criterion for deciding on how otherwise to spend the money will not be national welfare. (Which is not to say that the alternative expenditure would necessarily fail to equally or better serve national wellbeing: one just cannot know.) As a practical matter, it is not usually possible to specify tradeoffs for dollars expended on regulatory programs. Tradeoffs exist, but except through imposing alternative mandates, the policymaker seeking to protect the environment, health, or safety, is not in a position to direct those funds to particular options. Consequently, the policymaker is motivated to achieve whatever is possible through the program at hand: "... [R]egulators are not empowered to maximize collective welfare by allocating public funds among all manner of social problems. They face discrete issues that demand concrete responses. Even legislators, with their broad lawmaking authority, must work within the constraints of the political process." In the end, comparative assessments of costs (and benefits and risks) of alternative programs benefitting the public welfare, or of alternative regulatory mandates, provide information to policymakers and the public. The information can promote better understanding of risks, costs, and benefits. It may allow policymakers, within their constraints, to focus resources on the most cost-effective environmental, health, and safety interventions. But comparative risk information does not mean that a tradeoff can be or will be accomplished. A study of state and local comparative risk projects to establish environmental priorities concluded that Successes to date include increasing environmental awareness among participants; building consensus and establishing collaboration among diverse stakeholders; and establishing novel means of public involvement. However, no project that we evaluated has, as yet, documented achievement of a system for developing and implementing environmental priorities in order to mitigate their most significant environmental problems [italics added]. For the decisionmaker, a dollar is being spent on "this" rather than on "something else." While the "this" is in the decisionmaker's purview, the "something else" may well be either outside his or her purview, or it may be completely open-ended, in the realm of the marketplace. The debate over enactment of the Clean Air Act Amendments of 1990 was not over whether the $21 billion tab should be spent on clean air or on immunization, infant mortality, care for poor pregnant women, or something else; it was over whether to require $21 billion to be spent on clean air or more or less (or not at all). Similarly, the mid-1990s debate over proposed National Ambient Air Quality Standards for ozone and particulate matter was not over whether the multibillion dollar tab should be spent on cleaner air or on mammograms or some particular thing else, it was over whether to set standards that would result in those regulated to spend more (or less) money on cleaner air. For a legislator who faces a vote on imposing costs—for example, the Clean Air Act Amendments of 1990—or a policymaker who faces a decision on a regulation—for example, the ozone and particulate matter standards—the choice is basically up-or-down and more-or-less, not on tradeoffs with other programs. To turn down the amendment or defer the regulation does not mean more cost-effective environmental, health, or safety alternatives will take its place: it is a question of following through or starting the policy process anew (see text box, "A Policymaker's Options"). With choices tending be up-or-down and limited only to alternatives germane within relevant jurisdictional boundaries, proponents of environmental, health, and safety initiatives are loathe to forego or reduce any program, even if its cost-effectiveness is questionable, because they so seldom can ensure reinvestment of any saved resources in more cost-effective alternatives. Only in the abstract, then, is any and every alternative an opportunity cost of each federal dollar spent and of every federal regulation imposing costs. In reality, the actual tradeoff faced by a policymaker at a particular time and place—subcommittee, committee, or the floor of Congress; or Commission or Agency—is effectively limited by institutional structures and rules and by the incommensurable criteria brought by different decisionmakers who would ultimately decide on the actual alternatives for spending any dollars the tradeoffs make available. The question, How much of "this" could you buy if one didn't impose regulation "x," can therefore be answered in two divergent ways: One way is to take an estimated cost of regulation "x" and divide by the unit cost of "this," resulting in the equivalent number of mammograms, inoculations, or whatever. That number is information that may help to give perspective on the magnitude of the cost of regulation "x"—but at the same time it may give a sense that a tradeoff is feasible when it is not. The second way of answering the question is to put the compared costs into context, examining whether the monies involved in "x" and "this" are really fungible. Whether those expenditures are truly alternatives depends on the options posed, the decisionmakers involved, and the institutional setting. There may be definite options, as when an appropriations subcommittee allocates dollars among programs in its jurisdiction; but in other cases the tradeoff may be between an intended outcome and the nebulous consequence of not opting for that outcome. Putting the label "statistical murder" on the failure to make tradeoffs is rhetorically powerful, connoting a wilful choice to choose a less protective or more costly option. But in reality, legislators and administrators rarely if ever are in a position to select among the implied options as they authorize, fund, and implement health, safety, and regulatory programs. The problem is depicted in Figure 1 : Putative tradeoffs among environmental, health, and safety expenditures presume that all programs are on the table , as shown in Figure 1 -A , each with a specified dollar amount per unit that gives one measure of potential cost-effectiveness; but the voting legislator typically has only a single program on the table at a time, the result of a deliberate, formal process of agenda setting, as shown in Figure 1 -B ; and the administrator(s) of diverse programs generally finds each program on a separate table , with the boundaries of each defined by a separate statute that gives little or no authority to an administrator to compare and reallocate resources across them, as illustrated in Figure 1 -C . In the end, the underlying issue of environmental, health, and safety cost-effectiveness is how to foster decision processes and structures that enable tradeoffs that reflect the informed preferences of the citizenry. Evidence indicates that programs vary in cost-effectiveness. However, given that there is more to comparing programs than just costs, one could argue that the current environmental, health, and safety program mix—the result of the present decisionmaking structure—may in fact reflect citizen preferences (though not necessarily expert opinion). Where tradeoffs would appear to result in more consistent, cost-effective protection of health, safety, or the environment, better information may in the short run contribute to improved decisions in allocating resources, but legislators' and administrators' options are limited. There is a big gap between identifying a potential tradeoff and being able to make the tradeoff. The stakes are high for winners and losers, especially for those who gain or lose authority to make decisions about expenditures. In the long-run, better information about desirable tradeoffs may suggest realignments of decision structures—leading to a different, complex, and difficult set of institutional decisions. In the meantime, if an existing or a proposed program is identified as insufficiently cost-effective and therefore appropriate for trading off, there is rarely any way to actually terminate it while concomitantly creating a more cost-effective one. The most likely result of a "tradeoff" would be either to kill one program without gaining the more cost-effective alternative; or to create a new more cost-effective program while also maintaining the program with inferior cost-effectiveness. For either option, there is a stakeholder with a natural resistance—depending on whether one is more concerned about costs or benefits.
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A policymaker making a decision on approving a program may face the questions, What are the tradeoffs? What alternatives are foregone by committing resources to that program? This issue has been sharpened in environmental, health, and safety policy because studies indicate that some programs are more cost-effective than others, suggesting that redirecting resources from less efficient to more effective programs would increase overall national economic welfare. Actually making implied tradeoffs has proved difficult, however. One reason is continuing controversy over methods for evaluating the risks, costs, and benefits of alternative programs—leaving uncertainty about exactly what would be gained and lost in a tradeoff. Other constraints affecting tradeoffs include variations in regulatory standards among environmental, health, and safety statutes and political responses to nonquantifiable values such as equity. Legislative efforts to revise the statutes or to establish more comprehensive reviews of tradeoffs have moved slowly. Two further factors constrain the ability to make a tradeoff at a particular time and in a particular institutional context. One consists of institutional structures and procedures that impose limits on possible ranges of decisions within the legislative and executive branches. For example, an appropriations subcommittee typically weighs spending tradeoffs only among programs within its jurisdiction, but not tradeoffs with programs in the jurisdiction of other subcommittees even if the programs are related. Similarly, statutes authorizing environmental, health, and safety regulations may be written by separate committees, leading to variations in cost-effectiveness standards for protecting the public health and environment. A second complicating factor occurs when a program's alternative(s) would require a shift in who can decide on the use of the resources involved, as when a regulatory program is considered in lieu of a tax-supported program. Deciding to regulate industrial air pollutants mandates spending by industry and consumers; choosing not to regulate leaves those monies available to the industry's executives and consumers, who can invest/spend them according to their own preferences. Having little control over alternative expenditures, a decisionmaker tends to focus on each program as self-contained, not to compare options. The actual tradeoff faced by a legislator or policymaker at a particular time and place is constrained by institutional structure and rules, and by the fact that most decisions are up-or-down, not between program options. Many putative tradeoffs exist only in a theoretical sense: they are tradeoffs not then and there available to that policymaker. Making environmental, health, and safety tradeoffs on the basis of cost-benefit analyses implies restructuring decisionmaking processes, but such restructuring is very difficult in itself, and it is unclear whether the results would more accurately reflect the informed preferences of Congress—or the citizenry.
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Internal Revenue Code (IRC) § 4121 imposes an excise tax on domestically-mined coal when it is sold by the producer to the first purchaser. The producer is liable for the tax, but may pass it along to others through an increase in the coal's purchase price; thus, it is possible that the producer does not actually bear the burden of the tax. The Constitution's Export Clause states that "No Tax or Duty shall be laid on Articles exported from any State." Nonetheless, the coal excise tax was imposed on coal destined for export. In 1998, a federal district court held that the tax on such coal clearly violated the Export Clause. In 2000, the IRS acquiesced and stopped imposing the tax on coal that was in the stream of export when sold by the producer and actually exported. The IRC provides a process by which taxpayers who paid the unconstitutional tax may file for a refund from the IRS. The claim must be made within three years from the time the excise tax return was filed or two years from the time the tax was paid, whichever is later. The producer that paid the tax has first claim to any refund. Exporters may claim refunds only "if the person who paid such tax [i.e., the producer] waives his claim to such amount." A taxpayer filing a refund claim must establish that it: (1) did not include the tax in the coal's purchase price or otherwise collect the tax from the purchaser; (2) has repaid, in the event the tax burden was shifted, the amount of tax to the ultimate purchaser; or (3) has filed the ultimate purchaser's written consent for the refund with the IRS. Taxpayers seeking a refund in court must first file a timely refund claim with the IRS and then wait six months, unless the IRS makes a determination prior to that date, before bringing suit. Some coal producers and exporters brought suits under the Export Clause seeking damages from the United States in the amount of unconstitutional coal excise taxes they paid. They brought the suits in the Court of Federal Claims, arguing that it had jurisdiction to hear them under the Tucker Act. That act grants the court jurisdiction over "any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort." Taxpayers used these suits as a way to bypass two limitations in the IRC refund process. First, the Tucker Act has a longer statute of limitations—six years from the time the tax is paid —than the IRC. This allowed taxpayers to seek damages for taxes paid in the several years preceding the years for which they could receive IRC refunds. Second, the Tucker Act, unlike the IRC, does not give priority to producers' claims. Thus, it potentially allowed parties farther down the supply chain (e.g., exporters) to bring claims alleging they deserved damages because they bore the economic burden of the tax. A threshold issue has been whether the Court of Federal Claims could hear these suits. The Tucker Act only confers jurisdiction—it "does not create any substantive right enforceable against the United States for money damages." Thus, the substantive right must be found in another source of law. One question has been whether the Export Clause provides a right to monetary damages when the government violates it. If the answer is yes, a related question has been whether such a claim could be made independently of an IRC refund claim. If not, then taxpayers would need to meet the IRC's more stringent requirements. In Cyprus Amax Coal Co. v. United States , the Court of Appeals for the Federal Circuit addressed the jurisdictional question. The court's holding had two components. The first was that the Export Clause was a money-mandating provision, as required for Tucker Act jurisdiction. The second was that a cause of action founded in a violation of the Export Clause was self-executing. This meant the Clause provided a separate cause of action so that a taxpayer could bring a suit for damages independent of an IRC administrative refund claim. In a later case, the court clarified that the Export Clause was not a money-mandating provision for all parties seeking coal excise tax refunds. In that case, the court held that the Tucker Act did not provide jurisdiction to hear the claim of an ultimate purchaser who alleged it had paid the tax through higher coal prices but did not directly pay the tax to the government. After the Cyprus Amax decision answered the question of its jurisdiction under the Tucker Act, the Court of Federal Claims heard several cases brought by coal brokers and ultimate purchasers that it dismissed due to lack of constitutional standing. To have standing, "[a] plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." The parties alleged that they were injured by the government's unconstitutional imposition of the coal excise tax because the burden of the tax was shifted to them by coal producers charging higher prices for coal. The Court of Federal Claims found the requisite causal relationship between this injury and the government's action to be lacking. This was because it was the independent actions of the producers that determined whether the parties paid any amount of the unconstitutional tax. As noted, the Federal Circuit Court of Appeals also raised a barrier to claims by non-producer parties by holding there was no Tucker Act jurisdiction to hear the claim of an ultimate purchaser who did not actually pay the tax to the government. In a 2008 decision, United States v. Clintwood Elkhorn Mining Co. , the Supreme Court held that taxpayers seeking refunds for the unconstitutionally-imposed coal excise tax must comply with the IRC refund process. The taxpayers in that case had filed administrative refund claims for the three tax years open under the IRC's statute of limitations and filed suit in the Court of Federal Claims seeking the amount of taxes paid for the three previous years that were open only under the Tucker Act's longer limitations period. The Court of Appeals for the Federal Circuit had allowed their suit and denied the government's request to reverse its Cyprus Amax holding. The appeals court said that the issue of whether taxpayers could bring suit under the Export Clause without complying with the IRC refund scheme had been "fully aired" in Cyprus Amax and it could "discern no basis for reopening this question." The Supreme Court, in a unanimous decision, held that the plain language of the relevant IRC provisions, § 7422 and § 6511, clearly required that the taxpayers file a timely refund claim with the IRS before bringing suit. The Court stated that it had basically decided the issue in a 1941 case where it had reasoned that the Tucker Act's statute of limitations was simply "'an outside limit'" which Congress could shorten in situations requiring "'special considerations,'" such as tax refunds because "'suits against the United States for the recovery of taxes impeded effective administration of the revenue laws.'" The Court noted that it had explained in that case that the IRC's refund provisions would have "'no meaning whatever'" if taxpayers who did not comply with those provisions could still bring refund suits under the Tucker Act. The Court did not address whether the Export Clause provided a cause of action that could be brought under the Tucker Act, finding that the IRC refund provisions would apply regardless of the answer to that question. Noting that it was clear from its past cases that unconstitutionally-collected taxes could be subject to the same administrative requirements as other taxes, the Court rejected the taxpayers' argument that something unique about the Export Clause required different treatment. The Court explained that while the government may not impose unconstitutional taxes, it may create an administrative process to refund such taxes because of its "'exceedingly strong interest in financial stability,'" regardless of whether the tax violated the Export Clause or some other provision of the Constitution. The Court also rejected the taxpayers' claim that the IRC refund scheme could not apply to facially unconstitutional taxes, finding the plain language of IRC § 7422 clearly included such taxes. There appear to be two primary impacts of the Court's decision in Clintwood Elkhorn . The first is that taxpayers seeking refunds for the unconstitutionally-imposed coal excise tax must file refund claims with the IRS, subject to the IRC's limitations. Thus, taxpayers are subject to the shorter statute of limitations and non-producer parties may only seek a refund if the producer who paid the tax has waived its right to the refund. Second, the Court's analysis seems broadly applicable to refund claims in general, including those based on violations of other constitutional provisions. The Senate-passed version of H.R. 6049 , § 114 (Energy Improvement and Extension Act of 2008) and H.R. 7060 , § 114 (Renewable Energy and Job Creation Tax Act of 2008), passed by the House on September 26, 2008, would provide an alternative administrative procedure for refunding the unconstitutionally-imposed coal excise tax. In order to claim a refund, a coal producer would have to establish that it, or a related party, exported coal produced by it to a foreign country or shipped it to a U.S. possession, or caused such export or shipment, through means other than by an exporter that met the proposal's requirements to file a claim. A producer with a favorable court judgment related to the excise tax's constitutionality would be deemed to meet this requirement. An "exporter" would have to establish that it exported coal to a foreign country or shipped it to a U.S. possession, or caused such export or shipment. Additionally, the producer or exporter would need to (1) have filed a return between October 1, 1990, and the date of the act's enactment, and (2) file a claim for the refund within 30 days of the enactment. The Treasury Secretary would have to determine whether the refund requirements were met within 180 days of a claim being filed and pay any refund owed (with interest) within 180 days of that determination. Refunds to producers would equal the amount of coal excise tax paid on the exported or shipped coal (minus any amount paid pursuant to a favorable court judgment mentioned above). Refunds to exporters would equal $0.825 per ton of exported or shipped coal. Refund claims could only be made for coal exported or shipped between October 1, 1990, and the date of the act's enactment. No refund would be allowed if one had already been made to any taxpayer or there was a final settlement between the government and producer, party related to the producer, or exporter. The Senate bill states it would not give producers or exporters standing to commence or intervene in each other's judicial or administrative refund claim proceedings; the House bill does not include such a provision. It appears the bills' proposed refund process would have three significant impacts. First, taxpayers would be able to seek refunds for taxes paid in years not open under current law. The Supreme Court's holding in Clintwood Elkhorn makes clear that current law requires that a refund claim be filed within three years from the time the excise tax return was filed or two years from the time the tax was paid, whichever is later. The bills would allow refunds relating to coal exported or shipped as early as October 1990 so long as the taxpayer filed a refund claim within 30 days of the provision's enactment and met the other requirements. Second, the bills could expand the opportunity for exporters to claim refunds beyond that available under current law, so long as they are able to meet the requirements. Third, the bills would impose short time limits for the taxpayers and IRS to act on the refund claims. Thus, they would encourage quick resolution of the claims, although administrative issues could arise due to the requirement that refunds not be paid twice on the same coal and their silence on the issue of contestability.
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In 1998, a U.S. district court held that the imposition of the coal excise tax, or black lung excise tax, on exported coal was unconstitutional. Refunding the tax has been controversial. This is because some coal producers and exporters attempted to bypass the limitations in the Internal Revenue Code's refund scheme by bringing suit under the Export Clause in the Court of Federal Claims, seeking damages from the United States in the amount of coal excise taxes paid. The Federal Circuit Court of Appeals held there was Tucker Act jurisdiction to hear some of the suits and allowed them as an alternative to the Code's refund process. However, in a 2008 decision, United States v. Clintwood Elkhorn Mining Co., the Supreme Court held that taxpayers must comply with the Code's refund process. Meanwhile, several bills would provide an alternative method for coal excise tax refunds, including the amended version of H.R. 6049 (Energy Improvement and Extension Act of 2008) that was passed by the Senate on September 23, 2008, and H.R. 7060 (Renewable Energy and Job Creation Tax Act of 2008), which was passed by the House on September 26, 2008.
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House Rule X, clause 5(c)(2), adopted in 1995 limited committee (and subcommittee) chairs to three terms of consecutive service. Service for less than a full session in a Congress is disregarded. A rules change adopted on January 7, 2003, pursuant to H.Res. 5 , exempted the Intelligence Committee chair from the limit. A rules change adopted on January 4, 2005, pursuant to H.Res. 5 , exempted the Rules Committee chair from the limit. In 2009, the Democratic majority removed term limits from House rules. The rules adopted on January 3, 2013, reinstituted term limits for all committee chairs, but continued the exemption for the Rules Committee chair. Republican Conference rules delineate procedures for the selection of standing committee chairs and ranking minority members. The Speaker, with the Republicans in the majority, has the authority to nominate the chairs of the House Administration Committee and Rules Committee. In the minority, these appointments are made by the minority leader. The Speaker's or minority leader's nominations for these two positions are submitted directly to the full Republican Conference for ratification. If the conference rejects the leader's nominee, the Speaker or minority leader has the authority to submit another name to the conference. All other standing committee chairs or ranking minority members are nominated by the Republican Steering Committee and ratified by the full Republican Conference. Pursuant to conference rules, the Member nominated to be chair or ranking minority member does not need to be the Member with the longest continuous service on the committee. In recent Congresses, the Steering Committee "interviewed" prospective candidates for chair or ranking slots. Some of the new chairs and ranking members have been the most senior members of the committee, others were not. The Steering Committee is composed of party leaders, selected committee leaders, class leaders, and regional representatives. The Steering Committee is reconstituted each Congress. Regions are restructured to reflect as closely as possible an equal number of Republican Members from each region. Each region elects its Steering Committee member. If Steering Committee members are elected from states that have four or more Republican Members, a "small state" group is triggered to also elect a member to the Steering Committee; the small state group is composed of states that have three or fewer Republican Members. On November, 19, 2015, the House Republican Conference adopted a conference resolution redesigning the composition of the Steering Committee. The chairs of the Committees on Appropriations, Budget, Energy and Commerce, Financial Services, Rules, and Ways and Means were removed, except when the Steering Committee is considering members for election to one of those specific committees. If, for example, a member is elected to the Ways and Means Committee, that committee's chair would join the Steering Committee to deliberate and vote on the new member. Six members are to be elected by the conference as at-large members. The Speaker has the authority to appoint one at-large designee. The Speaker, who previously had five votes, will have four votes. The conference resolution stated that elections for the at-large members would be held not later than 30 calendar days after the resolution was adopted. The six members receiving the greatest number of votes would be elected. The Republican Conference elected the six members on December 10, 2015. It is anticipated that the number of regions and the regional allocation will be reviewed in the near future. Table 1 depicts the membership of the reconstituted Republican Steering Committee as of July 1, 2017. Democratic Caucus rules address selecting committee chairs and ranking minority members. The Democratic leader nominates a chair and ranking member for the Committees on Rules and House Administration, who must be approved by the entire Democratic Caucus. The Budget Committee chair and ranking member are selected from among members choosing to run for the position. Other chair and ranking Member nominations are made by the Democratic Steering and Policy Committee and voted on by the entire Democratic Caucus. In making selections, the Steering Committee considers, pursuant to caucus rules, "merit, length of service on the committee and degree of commitment to the Democratic agenda of the nominee, and the diversity of the Caucus." The Steering Committee is reconstituted each Congress, and regions can be restructured to reflect equal Democratic representation among regions. The number of appointments made by the party leader can also change. Table 2 depicts the Democratic Steering and Policy Committee as constituted as of July 1, 2017.
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House rules, Republican Conference rules, and Democratic Caucus rules each detail aspects of the procedures followed in selecting standing committee chairs and ranking minority members. The Republican Steering Committee and the Democratic Steering and Policy Committee are constituted during the early organization meetings traditionally held in November and December to determine most committee chairs and ranking minority members and to make committee assignments for most committees. Their recommendations are then forwarded to the full Republican Conference and Democratic Caucus for approval. Although structured slightly differently, both the Republican Steering Committee and the Democratic Steering and Policy Committee are composed of elected party leaders, regional members, class representatives, and other party officials. This report will be updated if rules or procedures change.
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This report describes how the International Monetary Fund (IMF) and World Trade Organization (WTO) deal with the issue of currency manipulation. It also discusses apparent discrepancies in their charters and ways those differences might be addressed. The IMF is the leading international organization in the area of monetary policy. With the end of the cold war, its membership is now nearly universal. Only North Korea, the Vatican, and four other mini-countries in Europe—none having its own currency—are not members of the Fund. The IMF makes loans to countries undergoing financial or balance of payments crises; provides technical assistance to governments on monetary, banking and exchange rate questions; does research and analysis on monetary and economic issues; and it provides a forum where countries can discuss international finance issues and seek common ground on which they can address common problems. Although the IMF is a monetary institution, the promotion of world growth and balanced international trade are also among its basic goals. Article I of its Articles of Agreement says, among other things, that the IMF was created in order to "facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy." It was also created to "assist in the establishment of a multilateral system of payments in respect to current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade." Between 1946 and 1971, the IMF supervised a fixed parity exchange rate system, in which the value of all currencies was defined in terms of the U.S. dollar and the dollar was defined in terms of a set quantity of gold. Countries could not change their exchange rates from the level recognized by the IMF by more than 10% without the Fund's consent. Moreover, said the original language of the IMF Articles, "A member shall not propose a change in the par value of its currency except to correct fundamental disequilibrium." This system broke down in 1971 when the United States devalued the dollar twice without any consultation with the IMF. After a period of turmoil in world currency markets, an amendment to the IMF Articles was adopted in 1978. It said that countries could use whatever exchange rate system they wished—fixed or floating—so long as they followed certain guidelines and they did not use gold as the basis for their currencies. The new language of Article IV, which went into effect in 1978, said that countries should seek, in their foreign exchange and monetary policies, to promote orderly economic growth and financial stability and they should avoid manipulation of exchange rates or the international monetary system to prevent effective balance of payments adjustment or to gain unfair competitive advantage over other members . Some countries claim that their exchange rate policies are not in violation of Article IV because they are not seeking to gain competitive advantage (though this may be the result of their actions) but rather to stabilize the value of their currency in order to prevent disruption to their domestic economic system. To date, the IMF has not publicly challenged this statement of their objective. The Fund was required by Article IV to "exercise firm surveillance over the exchange rate policies of all members and [to] adopt specific principles for the guidance of all members with respect to those policies." The IMF adopted the requisite standards in 1977 (before the Amendment went into effect) and it updated them in 2007. The 1977 agreement said that, among other things, "protracted large-scale intervention in one direction in exchange markets" might be evidence that a country was inappropriately manipulating the value of its currency. The 2007 agreement added a requirement that "A member should avoid exchange rate policies that result in external instability." When a country's current account (balance of payments) is not in equilibrium, the IMF said in its explanation of the new provision, the exchange rate is "fundamentally misaligned" and should be corrected. The IMF can exercise "firm surveillance" but it cannot compel a country to change its exchange rate. Nor can it order commercial foreign exchange dealers to change the prices at which they trade currencies. It can offer economic advice and discuss how changes in countries' exchange rates might be in their own interest. It can also provide a forum, such as its new multilateral consultation mechanism or discussion on the IMF executive board, where other countries can urge a country to change its exchange rate procedures. However, in the end, the authority to make the change resides with the country alone. The WTO is the central organization in the world trade system. When the WTO was created in 1995, countries were required to accept as a condition of WTO membership the existing trade rules embodied in the General Agreement on Tariffs and Trade (GATT). They also had to accept new rules governing other areas of international commerce, such as services and trade-related international property rights. The agreement establishing the WTO says that the members recognize "that their relations in the field of trade and economic endeavor should be conducted with a view to raising standards of living, ensuring full employment and a steady growing volume of real income and effective demand, and expanding the production of and trade in goods and services" and to do this in a manner "consistent with their respective needs and concerns at different levels of economic development." Unique among the major international trade and finance organizations, the WTO has a mechanism for enforcing its rules. If a country believes another country has violated WTO rules, to its detriment, it may request the appointment of a dispute settlement panel to hear its complaint. The other country cannot veto the establishment of a panel or adoption of a WTO decision by WTO members. The panel reviews the arguments in the case and renders judgment based on the facts and WTO rules. If the losing party does not comply with the ruling within a reasonable period of time, the WTO may, if requested by the complaining party, authorize it to impose retaliatory measures (usually increased customs duties) against the offending country or to take other appropriate retaliatory measures against that country's trade. Whether currency disputes fall under the WTO's jurisdiction is a debatable issue. The WTO rules specify that countries may not provide subsidies to help promote their national exports. Most analysts agree that an undervalued currency lowers a firm's cost of production relative to world prices and therefore helps to encourage exports. It is less clear, however, whether intentional undervaluation of a country's currency is an export subsidy under the WTO's current definition of the term. Countries are entitled, under WTO rules, to levy countervailing duties on imported products that receive subsidies from their national government. The term "subsidy" has a precise definition in the WTO. It requires that there must be a financial contribution by a government to the exporter or some other form of income or price support. Government financial support can take a variety of forms, such as direct payments to the exporter, the waiver of tax payments or special government purchases or the provision of low-cost goods or services (other than general infrastructure) that lowers the cost of production. Currency manipulation would not appear to qualify under the WTO definitions. In addition, an export subsidy is a subsidy that is "contingent on export performance." They must also be "specific to an industry" and not provided generally to all producers. In the past, most legal analysts have found that intentional undervaluation of a currency is not a subsidy that is "contingent on export performance" and not "industry specific" because everyone who exchanges currency gets the same rate even if they are not exporting. More recently, other analysts have asserted, based on an interpretation of the findings in a WTO dispute settlement case, that a subsidy may still be export contingent, even if it is available in some circumstances that do not involve exportation. Thus, they believe, subsidies provided through currency misalignment would be a prohibited subsidy under WTO rules even if non-exporters benefit from the exchange rate. Until the world financial system frayed in the 1970s, the IMF exercised strict control over exchange rates. It was inconceivable that a country could persistently value its currency at a level below that approved by the IMF. When the IMF's rules were changed in 1978, so that it no longer governed world exchange rates, the GATT rules were not adjusted to reflect the new reality of international finance. When the WTO was created in 1995, it adopted the existing GATT rules as its own without significant change and without acknowledging that the international system of exchange rates had changed substantially since the GATT was formed. The WTO and IMF both have major institutional responsibilities in the area of international trade. The WTO, and its predecessor organization, the GATT, were created specifically to facilitate the negotiation of multilateral trade agreements. One of the corresponding purposes of the IMF is to "facilitate the expansion and balanced growth of international trade" in order to facilitate high levels of employment, economic growth, and development in all its member countries." The WTO seeks to expand international trade through the reduction or elimination of tariffs or other barriers to trade. The IMF pursues this goal mainly through efforts to promote international monetary and exchange rate stability. It also has standards, which it has been reluctant to employ, for determining whether currencies are being manipulated and whether they are valued properly relative to other currencies. Trade policy issues may feature prominently in the IMF's surveillance activities, relative to its member countries, and steps to reduce barriers to trade are often included in its policy advice and its loan conditionality. IMF surveillance reports often provide important contributions for the WTO's own Trade Policy Reviews, which assess its member countries' trade policies. The IMF and GATT signed an agreement aimed at facilitating inter-agency cooperation soon after the trade organization was formed in 1947. The IMF and WTO adopted a revised and updated version of that agreement in 1996, shortly after the WTO came into being. The two organizations agreed (in paragraphs 1 and 2 of the agreement) that they "shall consult with each other in the discharge of their respective mandates," with a view towards "achieving greater coherence in global economic policymaking." Article XV of the GATT agreement says that the GATT (now WTO) shall cooperate with the IMF in order to "pursue a coordinated policy with regards to exchange questions that are within the jurisdiction of the Fund." The WTO and IMF also agreed in 1996 (in paragraph 8) that they would communicate with each other about "matters of mutual interest." WTO dispute settlement panels are specifically excluded from this agreement to communicate, but the agreement says that the IMF shall inform the WTO (specifically including its dispute settlement panels) when the WTO is "considering exchange measures within the Fund's jurisdiction [in order to determine] whether such measures are consistent with the Articles of Agreement of the Fund." Earlier (in paragraphs 3 and 4), the IMF agreed that it would inform the WTO about any decisions it had made approving any restrictions a country might impose on international payments, discriminatory currency practices, or other measures aimed at preventing a large or sustained outflow of capital. The IMF also agreed, in 1996, that it would participate in any WTO discussion of any such measures countries may have taken to safeguard their balance of payments. A number of countries have been suspected or accused in recent years of manipulating the value of their currency for the purpose of gaining unfair trade advantage. The George W. Bush and Barak Obama Administrations have had many conversations with China about exchange rate issues. Nonetheless, their officials were careful never to say publicly that China was manipulating its currency in violation of IMF rules. During his confirmation hearing on January 23, 2009, then Treasury Secretary-designate Timothy Geithner reported that "President Obama, backed by the conclusions of a broad range of economists, believes that China is manipulating its currency." The Obama Administration has not pursued this line of thought, however, in its subsequent public statements on the issue. If the Treasury Department were to find, in its semi-annual reports to Congress on the topic, that China or any other country were manipulating its currency in order to gain unfair trade advantage, certain provisions of the 1988 trade act would be triggered. TheSecretary would have to "to initiate negotiations with such foreign countries on an expedited basis, in the International Monetary Fund or bilaterally, for the purpose ofensuring that such countries regularly and promptly adjust the rate of exchange between their currencies and the United States dollar to permit effective balance of payments adjustments and to eliminate the unfair advantage." The country in question is not required, however, to meet with U.S. officials or to take any corresponding action. U.S. efforts to press China or other countries to revalue their currencies would likely be routed through the IMF, in order to secure its good offices and to mobilize international support on this issue. The 1988 trade act does not require the Administration to take this complaint about currency manipulation to the WTO in order to seek remedies through its procedures. As noted before, the IMF Articles of Agreement prohibit this currency manipulation for the purpose of gaining unfair trade advantage, but the Fund has no capacity to enforce that prohibition. By contrast, the WTO has the capacity to adjudicate trade disputes, but to date it has done nothing to suggest that trade issues linked to currency manipulation are within its zone of responsibility. If policymakers want to address this situation, several options might be considered. One option might be changes in the IMF's Articles of Agreement that would give the Fund more authority over international exchange rates and more authority to require that countries comply with its rules. This would restore, to some degree, the power the IMF exercised over exchange rates from 1946 to 1971. Two objections might be raised, however. First, an 85% majority vote of the IMF member countries is necessary if any change in the IMF Articles is to become effective. Most countries seem to believe that the present system of floating and fixed exchange rates is working reasonably well and there seems to be little desire, on the part of the members, to amend the IMF's current rules. Second, few countries want the IMF to have the kinds of power over their economies that it would need to compel violators comply with its rules. For example, if the IMF had the power to declare that China's currency was undervalued and to require adjustments, it would also have the power to declare the U.S. dollar or the euro were overvalued and to require the United States or the eurozone countries to make changes in their domestic policies that would bring down the relative value of their currencies. Another possibility might be a formal change in the WTO agreements that would define currency manipulation as a prohibited form of export subsidy. It is not easy to amend WTO agreements, however, since the process basically requires the unanimous consent of all Members. Countries that manipulate their currencies could easily block the approval of the amendment. However, they might argue that currency manipulation is an acceptable trade practice notwithstanding the language of the IMF's Article IV. It seems more likely that any such change in the WTO rules will be the result of discussions during multilateral trade negotiations, in which restrictions on currency manipulation will be balanced by other changes desired by the countries that believe currency manipulation is an acceptable trade practice. Recently, the Administration has indicated that it will be raising the issue of misaligned currencies and their impact on international trade at international meetings involving world leaders. Treasury Secretary Timothy Geithner has told Congress on several occasions that the Administration is working through multilateral channels, such as the G-20 meeting of world leaders, the Asia-Pacific Cooperation (APEC) forum, and the IMF to obtain international support for the effort to press China to revalue its currency. It is also seeking discussion about the international financial imbalances and steps that might be taken to address that concern. The Administration has been talking regularly with the Chinese about this and other related topics for several years. Arguably, resolving the U.S.- China disagreement about exchange rates is a desirable objective. However, one might argue, a bilateral settlement of this dispute would be of only limited value. Unless the agreement among world leaders also includes measures that would make WTO and IMF treatment of these issues more consistent, the question whether undervalued currencies provide improper export subsidies is likely to arise again in the future. A bilateral agreement with China would not preclude other countries from undervaluing their currencies in order to undercut China and get better access to its former export markets. One way for the issue to be resolved could be through WTO adjudication of disputes involving the United States and other countries. In the past, currency issues have not been pursued via the WTO dispute settlement process. The United States might seek WTO adjudication of this issue by taking China or other countries to a dispute resolution panel, on the basis of a claim that China's currency policy improperly subsidizes Chinese exports. Alternatively, the United States could take action under its domestic trade laws to address the problem and let other countries decide what they will do about the issue. Congress is considering legislation ( H.R. 2378 , reported by the House Ways and Means Committee on September 24, 2010) which would seek to address the question of undervalued exchange rates in a way that the sponsors believe is consistent with WTO rules. It provides that countervailing duties may be imposed to address possible subsidies that might result when other countries' currencies are fundamentally undervalued. It says that these subsidies may be treated as being "contingent upon export performance" (a key element of the WTO definition) even if others not exporting also benefit from the subsidy. If this legislation is enacted into law and duties are levied on Chinese imports, some analysts believe that China will assert that it is inconsistent with WTO rules and will seek remedies through the WTO dispute settlement process. There may be a role for the IMF in this adjudication process, if world leaders decide that it should be involved . Article II of the GATT agreement says that the valuations used in countries' tariff schedules shall be "expressed in the appropriate currency at the par value accepted or provisionally recognized" by the IMF. Though the par value exchange system is gone, this language might be construed as giving the IMF some role in determining whether the exchange rates used in trade agreements and schedules are appropriate. Currency values may be adjusted, it says, as long as this "will not impair the value of the concessions provided" in trade agreements. This language, as well as similar language in Article VII, dates from before the adoption of the present floating exchange rate system. However, the effect of inappropriate exchange rates on trade agreements seems to be a continuing concern. Article XV says that, when disputes between signatory countries involve questions about balances of payments, foreign exchange reserves or exchange arrangements, GATT countries shall "consult fully with the International Monetary Fund" and shall accept the IMF's determination as to matters of fact and as to whether a country's exchange arrangements are consistent its obligations under the IMF Articles of Agreement. GATT Article XV also says that countries "shall not, by exchange action, frustrate the provisions of this agreement nor, by trade action, the intent of the provisions" of the IMF Articles of Agreement. Traditionally, these references to "exchange arrangements" have been seen as referring (as they did when the GATT was created in 1947) to currency controls, exchange licenses, transaction taxes and other official actions that limit a potential purchaser's ability to get the foreign exchange needed to purchase goods from abroad. The GATT allows countries to impose temporary import restrictions when they face balance of payments difficulties (Article XII) or when they are at risk for a serious decline in their foreign exchange reserves (Article XVIII). In recent decades, however, the term "exchange arrangements" has expanded to reflect new developments in the world economy. The language of Article IV, adopted by the IMF in 1978, says (section 2) that each member country shall notify the IMF of the exchange arrangements it intends to apply—in other words, whether its currency will float in value or be pegged to another currency. It says the IMF shall oversee the international monetary system to ensure that each country's exchange arrangements are compatible with its obligations under Article IV. IMF Article IV also says that, in its oversight of countries' exchange arrangements, the Fund shall exercise firm surveillance over the exchange rate policies of its member countries. In effect, a case can be made that the term "exchange arrangements" arguably has become synonymous with the concept "exchange rate regime" and "exchange rate policies." As it is used in GATT Article XV, the term "exchange arrangement" refers to issues that are the sole province of the IMF. Thus, one could argue that the meaning of the term in the GATT should reflect its current meaning at the IMF and not the meaning prevalent in 1947. An undervalued currency encourages exports by reducing their cost and it discourages imports by making them more expensive than they might be otherwise. Consequently, one might argue that countries with this type of exchange arrangement are engaging in "exchange action" that may have the effect of frustrating "the provisions of the [GATT] agreement." There has never been a definitive ruling by the GATT or WTO on the meaning of Article XV, including how provisions of the GATT agreement might be frustrated by exchange action. Some might argue that currency undervaluation raises the price of imports in a way that unilaterally rescinds tariff concessions approved during multilateral trade talks. Accordingly, a case could be made that the WTO should use the broader meaning of the term "exchange arrangements" and take currency valuation arrangements into account in its dispute settlement process. There has also been increased interest, in recent years, in the issue of currency manipulation and its impact on world trade and financial relationships. It could be argued, therefore, that this might be an appropriate and perhaps auspicious moment for issues relating to the trade impact of currency manipulation to be raised in the WTO dispute adjudication process. The final option for rectifying the disconnect between WTO and IMF treatment of currency manipulation issues might involve some change or reinterpretation of the WTO-IMF inter-agency agreement. As noted above, the agreement states they will "cooperate in the discharge of their respective mandates" in order to achieve "greater coherence in global economic policymaking." Arguably, the different ways in which they approach the issue of currency manipulation and its impact on international trade does not further or facilitate such "greater coherence." The member countries of the two institutions might encourage them to identify other occasions where their rules and procedures are not consistent or mutually supportive. Changes in the existing inter-agency agreement can be adopted by a majority vote of each institution's governing board. However, it is not clear that changes in the text of the agreement are needed to promote greater cooperation between the two institutions. Paragraph 14 of the agreement says that the "Director-General of the WTO and the managing Director of the Fund shall be responsible for the implementation of this Agreement and, to that effect, shall make such arrangements as they deem appropriate." The GATT Agreement and the WTO-IMF inter-agency agreement both give the IMF a role in WTO dispute settlement procedures. A more up-to-date interpretation of those agreements, which take into account changes that have taken place during the intervening years in IMF operations and procedures, might help address some of the concerns discussed above. The IMF no longer determines par values for national currencies. Nevertheless, it does have standards and procedures for determining whether currencies are appropriately valued or whether they are being manipulated inappropriately. Consequently, the language in Articles II and IV of the GATT Agreement, in which currency values and exchange rate procedures must be consistent with the Articles of the IMF, would seem to give the IMF some role in any WTO discussions about whether currency manipulation "impairs the value of the concessions provided" in trade agreements. Likewise, as Article XV of the GATT Agreement seems to give the IMF plenary authority to determine whether the "exchange arrangements" used by the parties to the dispute are consistent with IMF requirements. The way the GATT now interprets the term "exchange arrangements" appears to be antiquated and it seems to predate the meaning which the IMF now gives to that term. Agreement by the leaders of the two institutions that they will use a consistent meaning of the term might help diminish some of the apparent inconsistencies in their operations. Even if the meaning of the inter-agency agreement is adjusted, as discussed above, to reflect the contemporary functions of the IMF, however, the IMF can play a role advising the WTO about exchange and currency manipulation issues only if it takes an official position on the question in hand. To date, the IMF has consulted with China behind the scenes and it has used its good offices to facilitate multilateral discussions, involving China, the United States, and several other relevant countries, as regards the appropriate valuation of China's currency. No official action has been taken by the IMF on this issue. As noted previously, the IMF has no way of enforcing decisions it might make as to whether countries are complying with the exchange rate provisions of Article IV. The IMF has adopted standards which make the requirements of Article IV operational, but it has not used those standards officially to assess the activities of particular countries. Perhaps the IMF's member countries are concerned that its prestige might be injured if the IMF Executive Board made an official determination that a country was manipulating its currency, in violation of its obligations in the IMF, and nothing happened as a result. A decision of this sort could be more meaningful, however, if it were to be the basis of information the IMF could provide to the WTO about the currency exchange aspects of disagreements that were being examined by a dispute settlement panel. Adjusting the terms of the inter-agency agreement between the IMF and WTO, or re-interpreting the meaning of that agreement in the light of current practices, might be one option policy makers could use to address the trade implications of currency manipulation.
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Congress has been concerned, for many years, with the possible impact that currency manipulation has on international trade. The International Monetary Fund (IMF) has jurisdiction for exchange rate questions. The World Trade Organization (WTO) is responsible for the rules governing international trade. The two organizations approach the issue of "currency manipulation" differently. The IMF Articles of Agreement prohibit countries from manipulating their currency for the purpose of gaining unfair trade advantage, but the IMF cannot force a country to change its exchange rate policies. The WTO has rules against subsidies, but these are very narrow and specific and do not seem to encompass currency manipulation. Recently, some have argued that an earlier ruling by a WTO dispute resolution panel might be a way that currency issues could be included in the WTO prohibition against export subsidies. Congress is currently considering legislation to amend U.S. countervailing duty law, based on this precedent, that the proponents believe is consistent with WTO rules. Others disagree as to whether the previous case is a sufficient precedent. Several options might be considered for addressing this matter in the future, if policymakers deem this a wise course of action. The Articles of Agreement of the IMF or the WTO Agreements could be amended in order to make their treatment of currency manipulation more consistent. Negotiations might be pursued, on a multilateral as well as a bilateral basis, to resolve currency manipulation disputes on a country-by-country basis without changing the IMF or WTO treatment of this concern. Some countries might argue that the actions of another violate WTO rules and seek a favorable decision by a WTO dispute resolution panel. Finally, the IMF and WTO could use their interagency agreement to promote better coordination in their treatment of this concern. .
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Growing recognition of the crucial role that technological innovation plays in the U.S economy has led to increased congressional activity with respect to the intellectual property laws. As evidenced by patent reform proposals currently before the 112 th Congress, the operation of the U.S. Patent and Trademark Office (USPTO) is among the subjects of legislative interest. Stakeholders have expressed concerns over a number of issues, including the USPTO's backlog of filed but unexamined applications, as well as the quality of the patents issued by the agency. Some knowledgeable observers have expressed concern that the USPTO does not possess the capability to process the large number of patent applications that it receives. The growing backlog of applications awaiting examiner review could potentially lead to long delays in the time the USPTO requires to grant patents. Extended USPTO delays in reviewing applications may increase industrial uncertainty about whether a patent will cover a particular technology or not. Lengthy approval delays may also decrease the usefulness of the patent system for industries subject to a brisk pace of technological change, as a patent on an invention that is rapidly becoming obsolete has limited value. The USPTO has long strived to approve only those patent applications that meet the statutory requirements for obtaining a patent. Because they meet all the requirements imposed by the Patent Act, quality patents may be dependably enforced in court and employed as a technology transfer tool. In contrast, improvidently granted patents may require firms to spend considerable resources either obtaining a license or mounting a legal challenge to the patent. Some commentators believe that within an era of increasingly complex, fast-moving technology, the task of issuing quality patents on a consistent basis presents a considerable challenge to the USPTO. The USPTO has actively engaged in efforts to address its application backlog and concerns over patent quality, and more generally to improve contemporary patent administration. A number of USPTO initiatives have responded to perceived concerns about the patenting process. Among them are The Patent Application Backlog Reduction Stimulus Plan, which allows an individual who has filed multiple pending applications to receive expedited review of one patent application when he agrees to withdraw another, unexamined application. The Patent Prosecution Highway (PPH), which potentially applies to inventors who have filed patent applications in multiple countries. If the inventor receives a favorable ruling from the patent office of the country where he filed first, he may request expedited review in other patent offices participating in the PPH. The Enhanced First Action Interview Pilot Program, which allows participants to conduct an interview with the patent examiner early in the application review process. The "Three-Track Initiative," under which applications would be placed into one of three queues: prioritized examination, traditional examination, or delayed examination. The Adoption of Metrics for the Enhancement of Patent Quality, which endeavors to improve USPTO mechanisms for measuring the quality of patent examination. This report reviews a number of recent USPTO initiatives designed to enhance the patent application review process. It begins by offering a brief review of patent acquisition proceedings as well as challenges faced by the USPTO. This report then reviews the innovation policy issues that are implicated by patent administration policies. Recent USPTO initiatives are then discussed. The report closes by reviewing possible congressional options. The U.S. Constitution provides Congress with the power "To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries...." In accordance with the Patent Act of 1952 (the "Patent Act"), an inventor may seek the grant of a patent by preparing and submitting an application to the USPTO. Under current law, each application is then placed into queue for eventual review by officials known as examiners. The USPTO publishes most, but not all, pending patent applications "promptly after the expiration of a period of 18 months" from the filing date. Among the applications that are not published prior to grant are those that the applicant represents will not be the subject of patent protection abroad. In particular, if an applicant certifies that the invention disclosed in the U.S. application will not be the subject of a patent application in another country that requires publication of applications 18 months after filing, then the USPTO will not publish the application. USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent. The USPTO examiner will consider a number of legal requirements, including whether the submitted application fully discloses and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must disclose the "best mode," or preferred way, that the applicant knows to practice the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must meet four primary requirements. First, the invention must fall within at least one category of patentable subject matter. According to the Patent Act, an invention that is a "process, machine, manufacture, or composition of matter" is eligible for patenting. Second, the invention must be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit. Third, the invention must be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. Finally, an invention is not patentable if "the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." This requirement of "nonobviousness" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art. If the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Although patent term is based upon the filing date, the patentee gains no enforceable legal rights until the USPTO allows the application to issue as a granted patent. A number of Patent Act provisions may modify the basic 20-year term, including examination delays at the USPTO and delays in obtaining marketing approval for the patented invention from other federal agencies. Like most rights, those provided by a patent are not self-enforcing. Patent owners who wish to compel others to respect their proprietary interests must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. The growing popularity of the patent system has placed strains upon the resources of the USPTO. During 2010, the USPTO received 520,277 applications—an increase of 7.8% from the 482,871 applications it received during the 2009 fiscal year. The increase in filings is substantial when viewed over a longer time frame. For example, the number of applications filed in 2005 was 417,508; and 293,244 applications were filed at the USPTO in 2000. The USPTO has candidly admitted that "the volume of patent applications continues to outpace our capacity to examine them." As a consequence, the USPTO reportedly holds an inventory in excess of 1.2 million patent applications that have yet to be reviewed by an examiner. In addition, a USPTO examiner in 2009 would not review a patent application until, on average, 25.8 months after it was filed. The "first action pendency" during 2000 was 13.6 months. Many observers believe that if current conditions continue, the backlog and delay are likely to grow at the USPTO in coming years. Long delays for patent approvals may negatively impact high technology industries by increasing uncertainty about the availability and scope of patent rights. For market segments that feature a rapid pace of innovation and short product cycles, such as consumer electronics, lengthy USPTO delays may also significantly devalue the patent right. Put simply, by the time a patent issues, the entire industry might have moved on to more advanced technologies. Commerce Secretary Gary Locke reportedly described the length of time the USPTO requires to issue patents as "unacceptable," explaining that "[t]his delay causes uncertainty for inventors and entrepreneurs and impedes our economic recovery." USPTO Director David Kappos recently opined that "[e]very quality patent application that sits on the shelf represents jobs not created." In addition, under current law, USPTO delays may qualify certain patents for an extension of term. For example, if the UPSTO does not respond to an application within 14 months of the day it is filed, the term of a patent that results from that application is extended by one day for each day of delay. Given that the average first action pendency is now almost 26 months, this rule of "Patent Term Adjustment" may cause many U.S. patents to have a term that exceeds 20 years. A patent with a longer term may be of greater value to its proprietor, but also may impact the ability of others to develop competing products. Many observers believe that the USPTO should only issue patents on inventions that meet each of the statutory criteria. Quality patents are said to enhance predictability within the marketplace by clarifying the ownership and scope of private rights associated with particular inventions. When inventors, investors, managers, and other stakeholders possess confidence that patents are reliably enforceable, they are said to have increased incentives to innovate, to finance research and development, and to bring new technologies into the marketplace. In contrast, poor patent quality may encourage activity that is not socially productive. Private parties may be required to engage in extensive due diligence efforts in order to determine whether individual issued patents would be enforced by a court or not. Entrepreneurial speculators may find it easy to obtain patents that can then be enforced against manufacturers and service providers. Patent owners and investors may also be negatively impacted. A patentee may make managerial decisions, such as building production facilities or hiring workers, based upon their expectation of exclusive rights in a particular invention. If a patent is declared invalid by a court, the patent owner—along with his financial backers—is stripped of this intellectual property right without compensation. The goal of consistently high levels of patent quality may pose a considerable challenge for the USPTO. Increasingly complex technologies appear to have resulted in patent applications that are both lengthy and potentially more difficult for examiners to parse. In addition, technological innovation is today a global phenomenon that is occurring at an increasingly rapid pace. As compared to previous years, USPTO examiners may face more difficulty in locating the most pertinent documents that describe the state of the art. Of course, the increasing number of patent applications—along with a large backlog of unexamined applications—also potentially impacts the ability of the USPTO to maintain high levels of patent quality. The USPTO has developed a number of initiatives in order to address modern challenges of patent administration. The agency has hired many new examiners, including 1,193 in 2006; 1,215 in 2007; and 1,211 in 2008. The significance of this hiring rate should be assessed in view of the fact that in 2009, the total size of the patent examining corps was 6,242. The recent economic downturn has caused the USPTO to limit new hiring, however. As the title of recent congressional testimony of the Government Accountability Office indicates—"Hiring Efforts Are Not Sufficient to Reduce the Patent Application" —many observers are of the view that "[d]ue to both monetary and infrastructure constraints, the USPTO cannot simply hire examiners to stem the tide of applications." The USPTO also proposed rules with respect to claims and so-called continuing applications that were designed to reduce its examination burdens. These rules would have limited the number of claims that could be filed in a particular patent application, unless the applicant supplied the USPTO with an "Examination Support Document" in furtherance of that application. They would have also limited the ability of applicants to re-file their applications—an opportunity more technically termed a "continuing application"—absent a petition and showing by the patent applicant of the need for such an application. These rules never came into effect due to a temporary court ruling enjoining their implementation. In the face of considerable opposition to these rules by many members of the patent bar and innovative firms, the USPTO announced on October 8, 2009, that it was rescinding the rules package entirely. The USPTO has continued to press forward with a number of additional initiatives. The remainder of this report reviews several of these programs. In November, 2009, the USPTO announced a "Patent Application Backlog Reduction Stimulus Plan." Under that program, an applicant may choose to abandon a previously filed application that the USPTO has not yet reviewed. If the applicant does so, he may select another application to be examined on an expedited basis. According to the agency, the Plan "allows applicants having multiple applications currently pending before the USPTO to have greater control over the priority with which their applications are examined while also stimulating a reduction of the backlog of unexamined patent applications pending before the USPTO." For its supporters, the advantage to the USPTO of the Patent Application Backlog Reduction Stimulus Plan is straightforward—the voluntary removal of unexamined applications from its backlog. Inventors might also benefit from obtaining more prompt review of a particular patent application. For example, an inventor may believe that one application relates to a technology that is particularly significant to his business plans, while the marketplace outlook of the invention claimed in another application is poor. In that circumstance, he may be well-served by expediting consideration of the former application while abandoning the latter. The Patent Application Backlog Reduction Stimulus Plan was originally restricted to applicants that qualified as "small entities"—a category that generally consists of individuals, small business concerns, and nonprofit organizations. The USPTO subsequently allowed any applicant to participate in the Plan. All applicants are limited to 15 individual uses of the Plan—that is to say, the abandonment of 15 unexamined applications in exchange for expedited review of 15 other applications. The USPTO will continue to operate the Patent Application Backlog Reduction Stimulus Plan until December 31, 2011, or until 10,000 applications have received expedited review. The USPTO retains the option of further extending the Plan, however. In view of applicant use of the Plan, the limitation of 10,000 applications may not be significant. Reportedly the Plan has thus far been the subject of only limited participation. It should be appreciated, however, that the Plan remains a relatively recent initiative and that innovative industry may make greater use of it in the future. There is no uniform, global patent system. Patents issued by the USPTO have no effect in other countries. Conversely, patents issued by foreign patent offices are not legally operative in the United States. For the most part, patents must be obtained on a nation-by-nation basis. An individual or firm that develops a new technology, and that seeks protection in more than one country, must therefore file multiple patent applications claiming the same invention. In turn, the patent offices of different nations must commit significant effort towards examining applications that are identical or similar to those filed elsewhere. The Patent Prosecution Highway (PPH) is an initiative intended to rationalize and expedite multinational patent acquisition in light of these legal realities. The PPH consists of a series of bilateral arrangements between the patent offices of a number of nations. In broad outline, the PPH designates one national office as the Office of First Filing (OFF) and the other as the Office of Second Filing (OSF). If the OFF approves of at least one claim, then the applicant may request that the OSF "fast track" the examination of corresponding claims in an application filed before that agency. Consider, for example, the PPH arrangement between the USPTO and Canadian Intellectual Property Office (CIPO). Suppose that a pharmaceutical firm initially files an application at the USPTO, and then subsequently files at the CIPO, claiming the same chemical compound. The USPTO subsequently issues an "Office Action" approving the U.S. application. The firm may then contact the CIPO and request expedited review of the Canadian application. The PPH potentially allows inventors to obtain patents more promptly and efficiently. Each participating patent office may also potentially benefit from the work previously done by another office. For example, examiners in the OSF may be able to take advantage of work done by examiners in the OFF—including searches of the relative technical literature and analysis of the applicant's invention—when conducting their own review of the application. Although this worksharing benefit is potentially substantial, the various PPH initiatives by no means guarantee that a favorable result at the USPTO will be followed elsewhere. Differences in the patent laws of different nations, or simply a differing assessment of the merits of the case by a foreign patent examiner, may potentially lead to rejections overseas even though a U.S. patent was granted. Nonetheless, the allowance rate of some foreign applications that have been previously approved in the United States is reportedly higher than average. The USPTO has currently entered into PPH arrangements with over a dozen foreign patent offices, including the European Patent Office and the patent offices of Australia, Canada, Germany, Japan, Korea, and the United Kingdom. A number of bilateral PPH arrangements exist between two foreign patent offices as well. For example, the European and Japanese Patent Offices currently operate a PPH between them. Certain of these programs have been established as pilot programs and could potentially be discontinued in the future. Patent applicants generally interact with the USPTO through the exchange of formal correspondence with an examiner. At times, applicants may wish to discuss their application with the examiner in person, telephonically, or even through the exchange of email. In patent parlance, each of these less formal exchanges is termed an "interview." Agency policy stipulates that an interview will generally not be held prior to the initial written communication by the examiner to the applicant (the "First Office Action"). The USPTO has explored an alternative to this longstanding procedure though an "Enhanced First Action Interview Pilot Program." Applicants that choose to participate receive a Pre-Interview Communication providing the results of a technical literature search conducted by the examiner. The applicant may then conduct an interview with the examiner with the hope of expediting approval of the application. This program originally applied only to certain divisions of the USPTO, but was recently extended to cover the entire agency under the title "Full First Action Interview Pilot Program." The USPTO reports that this pilot program has yielded several benefits to participants, including the ability to advance prosecution of an application, resolve issues one-on-one with the examiner, and potentially facilitate early allowance. The program has been operated on a provisional basis, and was recently extended through May 16, 2012, with future extensions possible. The USPTO recently announced a "Three-Track Initiative" that would place each patent application into one of three separate queues. Through this mechanism, inventors could pay a surcharge to obtain more prompt review of their applications; or alternatively delay examination and the payment of corresponding fees for those services. According to the White House report "A Strategy for American Innovation: Securing Our Economic Growth and Prosperity," the Three-Track Initiative "will allow applicants to prioritize applications, enabling the most valuable patents to come to market within 12 months." Under current procedures, the USTPO dockets each patent application in the order it was received. Some regulatory exceptions to this general practice allow inventors to both expedite and delay review of their applications, however. Inventors must ordinarily petition the USPTO to obtain this distinct treatment. An inventor may currently expedite USPTO review of his application by filing a "petition to make special" under the agency's accelerated examination program. This program aspires to complete examination of applications within 12 months of the filing date. A patent application must have no more than 20 claims to participate in the program. In addition, applicants must submit a "support document" reporting the results of a preexamination search for prior art references and explaining why their invention is patentable over these references. A fee of $130 applies, although the USPTO waives the fee if the invention will enhance the quality of the environment, relates to the development or conservation of energy resources, or contributes to counterterrorism. The USPTO will also expedite review of the application for applicants 65 years or older, or for those in poor health such that they might not be able to assist in the prosecution of their applications if that procedure ran its normal course. The USPTO also operates a "Green Technology Pilot Program" that allows applications relating to clean technologies, such as environmental quality, energy conservation, development of renewable energy resources, and greenhouse gas emission reductions. This program is set to expire on December 31, 2011, although it may be extended further in the future. No fee or support document is required under either of these programs. The USPTO also allows inventors to delay review of their applications. In order to defer, the applicant must pay an additional $130 processing fee and, at the outset, choose the number of months of deferral. The maximum period of deferral is 36 months. Applicants have reportedly used this procedure infrequently. As noted, the USPTO is contemplating a Three-Track Initiative that would provide additional mechanisms for governing the review of patent applications. Under this system, the USPTO would place all applications into one of three distinct separate queues: an accelerated Track One; traditional examination in Track Two; and a deferral of examination in Track Three. Entering Track One would require a prioritized examination fee of $4,000. The application would then be placed within a docket designed to provide a final disposition of the application within twelve months of the prioritized status grant. A Track One application must have no more than four independent claims and thirty claims total. Prioritized status is forfeited if the applicant ever requests an extension of time to respond to a USPTO communication. In contrast, if an inventor requests that a particular application be deferred, it is placed in Track Three. The inventor must request that the application be examined within 30 months from the filing date. Upon receipt of such a request, the USPTO will place the application into queue for review by an examiner. The remaining option, Track Two, includes applications that have been neither prioritized nor deferred. Track Two applications would be docketed immediately and will be reviewed by an examiner in the order in which they are received. The Three-Track Initiative would also significantly change USPTO procedures with respect to applications that were first filed outside the United States—for example, at the European Patent Office or the Japanese Patent Office. The USPTO currently does not consider the national origin of the application when it is placed into queue for examination. Under the proposal, an application will only be placed into one of the three tracks if it was originally filed in the United States. Applications that were originally filed abroad would not be docketed for examination at all. The USPTO would take no action on a foreign-origin application until it received copies of (1) the prior art search conducted by the foreign office, (2) the initial communication of the foreign office to the USPTO, and (3) the applicant's reply to that communication. An example illustrates the working of this procedure. Suppose that a German inventor filed an application at the European Patent Office on December 1, 2011. On December 1, 2012, the inventor then files the same application at the USPTO. Under the Three-Track Initiative, the USPTO would not consider the application until the European Patent Office had conducted a search of the literature, communicated its initial review of the European application to the applicant, and received a reply from the applicant. In contrast, an application that was first filed in the USPTO—by a U.S. or foreign citizen—would be placed on one of the three tracks immediately. The USPTO initially planned to implement Track One of the Three-Track Initiative as of May 4, 2011. However, on April 29, 2011, the USPTO announced that it would delay implementation of the program due to reduced spending authority in the Full-Year Continuing Appropriations Act of 2011. According to USPTO Director David Kappos, "[w]ithout the resources to hire a sufficient number of examiners to implement Track One, we must postpone the effective date of the program until we are in a position to implement it successfully while ensuring there will be no adverse impact on non-prioritized examination applications." According to the USPTO, the Three-Track Initiative "recognizes that the traditional 'one-size-fits-all' examination timing may not provide applicants much opportunity to choose the examination timing they need." The Three-Track Initiative has nonetheless attracted controversy. Some observers believed that the program might favor larger or wealthier firms over start-ups or smaller enterprises. Others were concerned that if industry made significant use of Track One, the ability of the USPTO to review Track Two applications might be diminished. The disparate treatment of applications based on the office of first filing has also aroused controversy. According to the USPTO, this "proposal would increase the efficiency of examination of [foreign] applications by avoiding or reducing duplication of efforts by the office of first filing and the USPTO." The USPTO also noted that "major patent filing jurisdictions like the Japanese and European patent office[s] have already adopted office-drive systems in which they address the applications for which they are the office of first filing." The United States is a signatory to the Paris Convention for the Protection of Industrial Property and also a member state of the World Trade Organization. Article 2 of the Paris Convention and Article 3 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) requires that nationals of foreign signatory states be treated as well as U.S. citizens. Even if the Three-Track Initiative may be justified under these measures, some observers have expressed concerns that "placing foreign nationals at a distinct disadvantage in their pursuit of patent rights in the U.S. ... could trigger, among other things, the imposition of new barriers for U.S. inventors to obtain patent rights in foreign jurisdictions." The USPTO has for many years maintained an internal quality control group that monitors the quality of the patent examination process by reviewing a sample of approved patents. In 2011, the USPTO endeavored to increase the effectiveness and transparency of its quality review procedure through the implementation of new metrics that measure patent quality. These metrics were designed to "reveal the presence of quality issues during examination" and "aid in identification of their sources so that problems may be remedied by training...." The USPTO identified seven individual metrics that are then tallied to produce a composite score. The seven metrics are: (1) the correctness of the final decision on the application (i.e., whether the examiner properly allowed or rejected the application), (2) the propriety of the examiner's actions taken during the course of the examination, (3) the degree to which the examiner's initial search of the technical literature comports with best agency practices, (4) the extent to which the examiner's initial review of the application follows best agency practices, (5) whether global USPTO data indicates compact, robust prosecution, (6) an external survey of patent applicants and practitioners, and (7) an internal survey of patent examiners. The USPTO displays the seven individual metrics, as well as the calculated composite metric, on the "Data Visualization Center" or "dashboard" portion of its website. The new USPTO metrics have, for the most part, been positively received by the patent bar. As explained by Douglas K. Norman, President of the Intellectual Property Owners Association, "metrics for measurement of appropriate indicia of patent quality, as well as their collection, reporting, review and analysis, are fundamental to evaluating the success of patent systems in issuing quality patents." However, some commentators believe that certain of the metrics may not always reflect an accurate and efficient review of a patent application and have suggested that other metrics—such as the outcomes of patent litigation—might also be introduced. At the same time the USPTO has engaged in changes to its administrative practices in order to address concerns over its backlog of unexamined applications and to improve patent quality, the 112 th Congress is engaged in extensive patent reform discussions. Two bills, H.R. 1249 and S. 23 , each titled the American Invents Act, would make a number of changes to current patent law. Reform proposals within these bills bear upon the ability of the USPTO to develop and implement new initiatives. In particular, both H.R. 1249 and S. 23 propose that the USPTO be given the authority to "set or adjust by rule any fee established or charged by the Office." Any fees set must, in the aggregate, cover the estimated costs of the agency's services. Under H.R. 1249 , USPTO authority to set fees terminates six years following the enactment of the statute; S. 23 does not include a sunset provision. This proposal would provide the USPTO with greater flexibility to adjust its fee schedule absent congressional intervention. This capacity may provide the agency with heightened capability to develop new initiatives without need for congressional activity. The statutory authority of the USPTO to promulgate regulations pertaining to patent law procedures and substantive law also bears upon current patent administration reform efforts. Current law provides the USPTO with the ability, among others, to establish regulations that "govern the conduct of proceedings" before it. However, it should be appreciated that "Congress has not vested the [USPTO] with any general substantive rulemaking power...." Certain of the predecessor versions of the America Invents Act would have enhanced the USPTO's regulatory authority. For example, in the 110 th Congress, H.R. 1908 would have allowed the USPTO to "promulgate regulations to ensure the quality and timeliness of applications and their examination...." However, in the 112 th Congress, neither H.R. 1249 nor S. 23 includes such a provision. USPTO experience with current and future initiatives may provide Congress with guidance over the most appropriate scope of that agency's regulatory authority. New realities within the intellectual property environment, including a growing number of patent applications, increasingly complex technologies, and heightened user demand for prompt and accurate patent services have encouraged the USPTO to innovate in recent years. Reforms to longstanding patent examination practices were introduced in an effort to maintain high levels of patent quality and to reduce the backlog of applications awaiting review by the examiner corps. Along with judicial opinions and potential legislative reforms, the recent USPTO initiatives form a notable part of the changing patent landscape within the United States.
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Congressional interest in the operation of the U.S. Patent and Trademark Office (USPTO) has been demonstrated by extensive discussion of patent reform proposals that would impact that agency. An increasing number of patent applications filed each year, the growing complexity of cutting edge technology, and heightened user demands for prompt and accurate patent services are among the challenges faced by the USPTO. Stakeholders have expressed concern over the agency's large backlog of patent applications that have been filed but have yet to receive examiner review. Others have expressed concerns about the agency's accuracy in approving applications only on those inventions that fulfill the statutory requirements to receive a patent. Even as discussion of patent reform has continued in Congress, the USPTO has actively engaged in efforts to address its application backlog, maintain high levels of patent quality, and more generally improve contemporary patent administration. The agency has launched a number of initiatives in recent years to address perceived concerns over the patent-granting process, including The Patent Application Backlog Stimulus Reduction Plan, which allows an individual who has filed multiple applications to receive expedited review of one patent application when he agrees to withdraw another, unexamined application. The Patent Prosecution Highway, which allows certain inventors who have received a favorable ruling from the USPTO to receive expedited review from foreign patent offices. The Enhanced First Action Interview Pilot Program, which allows applicants to conduct an interview with patent examiners early in the review process. The "Three-Track Initiative," under which an application would be placed into one of three queues: prioritized examination, traditional examination, or delayed examination. The Adoption of Metrics for the Enhancement of Patent Quality, which endeavors to improve USPTO mechanisms for measuring the quality of patent examination. A number of patent reform issues under consideration by the 112th Congress would potentially impact upon the ability of the USPTO to respond to changing circumstances in the intellectual property environment. In particular, two bills before the 112th Congress, H.R. 1249 and S. 23, would grant the USPTO the ability to set its own fees, potentially allowing the agency to act in a more flexible manner. In addition, discussion persists over whether the USPTO should have greater ability to engage in substantive rulemaking.
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Broadband deployment is increasingly seen as providing a path towards increased regional economic development and, in the long term, creating jobs. According to the 2010 National Broadband Plan, the lack of adequate broadband infrastructure is most pressing in rural America, where the costs of serving large geographical areas, coupled with low population densities, often reduce economic incentives for telecommunications providers to invest in and maintain broadband service. Historically, the federal government has provided assistance to rural telecommunications providers, helping them obtain capital to invest in rural telecommunications infrastructure and to maintain an adequate return on their investment. The National Broadband Plan estimated that $24 billion of further federal investment is necessary to bring all of rural America up to an adequate level of broadband service. Currently, there are two ongoing federal vehicles which direct money to fund broadband in rural areas: the broadband and telecommunications programs at the Rural Utilities Service (RUS) of the U.S. Department of Agriculture and the Universal Service Fund (USF) programs under the Federal Communications Commission (FCC). While both the RUS and USF programs share some of the same goals (e.g., improving broadband availability and adoption in rural areas), the two programs differ in their funding mechanism, scope, and emphasis. The 113 th Congress may assess how best to shape the evolution of both the RUS and USF broadband programs. The statute that authorizes the RUS broadband loan program will likely be amended by the 2013 farm bill. Meanwhile, the FCC is considering significant reforms of the USF, and Congress is currently maintaining an oversight role with respect to those reforms. In the current climate of budget deficit reduction, Congress is examining the different pieces of federal investment in broadband and determining how they can best fit together in order to reach the goal of most efficiently and effectively deploying broadband in rural America. The RUS has a portfolio of telecommunications and broadband programs offering loans, loan guarantees, grants, and loan/grant combinations. As seen in Table 1 , some programs are relatively recent, while others have been operating for over 60 years. Some are specifically and exclusively designed to support broadband infrastructure deployment (e.g., Rural Broadband Loans, Community Connect grants, Broadband Initiatives Program), while others (e.g., Telecommunications Infrastructure Loans) have historically supported infrastructure for telephone voice service, but have now evolved into support for broadband-capable service provided by traditional telephone borrowers. Additionally, other programs (e.g., Distance Learning and Telemedicine, Delta Health Services grants) support specific broadband-based applications. There are several issues and criticisms that typically surface during congressional consideration (whether oversight, funding, or reauthorization) of the RUS telecommunications and broadband programs. The rural nature of an area or community served by grant and loan projects is a key characteristic of RUS telecommunications programs. One of the primary strategic goals of the USDA is to "assist rural communities to create prosperity so they are self-sustaining, repopulating, and economically thriving." While many rural telecommunications providers already have deployed broadband networks, studies, surveys, and data collections continue to show that broadband access, on average, is less adequate in rural areas than it is in suburban or urban communities. The comparatively lower population density of rural areas is likely the major reason why broadband is less deployed than in more highly populated suburban and urban areas. Particularly for wireline broadband technologies—such as cable modem and DSL —the greater the geographical distances among customers, the larger the cost to serve those customers. Thus, there is often less incentive for companies to invest in broadband in rural areas than, for example, in an urban area where there is more demand (more customers with perhaps higher incomes) and less cost to wire the market area. Given the RUS emphasis on "rural" broadband, the issue becomes: what level of "rurality" is necessary for an area to be eligible for RUS broadband grants or loans? Within the RUS telecommunications portfolio, there is no standard definition of "rural," with programs such as the Rural Broadband Access Loan and Loan Guarantee program defining eligible rural areas as populations less than 20,000 (plus areas not in an urbanized area adjacent to a city of not more than 50,000), while the Telecommunications Infrastructure Loan program defines eligible areas as populations of 5,000 or less (extremely rural areas). Among all the RUS telecommunications programs, the different definitions of eligible service areas (which correspond to definitions of rurality) are presented in Table 1 . Shifting definitions of "rural" have generated controversy. For example, during the first round of BIP awards, a separate category called "remote areas" was created, defined as an unserved rural area at least 50 miles from the limits of a non-rural area. For last mile projects, only remote areas were eligible for BIP grants (as opposed to loans or grant/loan combinations). The remote area category was eliminated in the second round, due to criticism from many Members of Congress who argued that the remote rural definition excluded many areas of the country (primarily in the eastern half of the United States). The definition of "rural" has also generated much controversy over the Rural Broadband Loan and Loan Guarantee program, particularly as Congress continues to refine the program through periodic consideration of the farm bill. Over the life of the broadband loan program, the definition of a rural area eligible for the program has been changed three separate times by Congress. Ultimately, the definition of what constitutes a rural community is always a difficult issue for congressional policymakers in determining how to target rural communities for broadband assistance. On the one hand, the narrower the definition the greater the possibility that deserving communities may be excluded. On the other hand, the broader the definition used, the greater the possibility that communities not typically considered "rural" or "underserved" may be eligible for financial assistance. During the 113 th Congress, the 2013 farm bill—which would amend the statute authorizing the rural broadband loan and loan guarantee program—explicitly addresses the rural definition issue. For example, S. 954 , the Senate-passed version of the farm bill (the Agriculture Reform, Food, and Jobs Act of 2013), would adopt a uniform definition of "rural area" for all USDA rural development programs, including the broadband program. Under the Senate bill, a rural area would be defined as any area that is not a city or town with a population greater than 50,000, and that is not an urbanized area contiguous and adjacent to a city or town with a population over 50,000. Because the current definition of a rural area eligible for broadband loans is towns with populations under 20,000, this new definition would increase the number of larger communities eligible for broadband assistance. Because rural and sparsely populated areas typically offer providers less financial incentive to build broadband networks, it is generally the case that the more rural the area, the fewer the likely number of existing broadband providers. By contrast, urban and suburban areas are more likely to have a greater number of existing broadband providers offering service. One of the ongoing concerns expressed by some Members of Congress is the extent to which RUS grants and loans have been awarded to projects serving areas that already have existing providers offering broadband service. The issue of providing federal funding to areas and communities with existing providers is controversial, and has been previously raised with respect to the RUS Rural Broadband Access Loan and Loan Guarantee Program and the Broadband Initiatives Program. Broadband awards to areas with preexisting service—that is, areas where existing companies already provide some level of broadband—have sparked controversy because award recipients might compete to some extent with other companies already providing broadband service. On the one hand, one could argue that the federal government should not be subsidizing competitors for broadband service, particularly in sparsely populated rural markets which may be able only to support one provider. Furthermore, providing grants and loans for projects serving communities with preexisting broadband service may divert assistance from unserved areas that are most in need. On the other hand, many suburban and urban areas currently receive the benefits of competition among broadband providers—competition which can potentially drive down prices while improving service and performance. It is therefore appropriate, others have argued, that rural areas also receive the benefits of competition, which in some areas may not be possible without federal financial assistance. It is also argued that it may not be economically feasible for applicants to serve sparsely populated unserved communities unless they are permitted to also serve more lucrative areas which may already have existing providers. The existing provider issue was examined during congressional consideration of the 2012 farm bill. The 2008 farm bill (which is the current statute in force) set specific restrictions on the broadband loan eligibility of project areas with existing providers. However, RUS did not issue a rule reflecting those changes until March 2011. Organizations representing the cable industry have argued that existing provider restrictions should be strengthened to focus the loan program more exclusively on unserved areas with no existing providers. By contrast, organizations representing rural telecommunications providers (primarily the traditional rural telephone companies) counter that no changes should be made to the existing provider restrictions, given that RUS has had limited opportunity to award new loans under the new 2008 farm bill rules. In the 2013 farm bill, S. 954 , as passed by the Senate, would change the existing provider restrictions currently in statute. In the House, a hearing held on April 25, 2012, by the House Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture, Committee on Agriculture, debated whether or not the rural broadband loan program should be modified to prohibit loans to projects serving areas with incumbent broadband service providers. The ARRA broadband stimulus program—which is no longer offering awards—offered grants, loans, and grant/loan combinations. The Rural Broadband Access Loan and Loan Guarantee Program does not offer grants. Not surprisingly, those seeking federal broadband assistance typically prefer grants, given that loans must be paid back with interest. On the other hand, from a federal budgetary perspective, loans are more attractive than grants, not only because loans are paid back, but because loan programs are subsidized by a much smaller appropriation (called a loan subsidy). Thus, for example, the Rural Broadband Access Loan and Loan Guarantee Program was appropriated a loan subsidy of $6 million in FY2013, which is estimated to support a loan level of approximately $64 million. The Telecommunications Infrastructure Loan program, which has been issuing loans since 1949, is funded at a loan level of $690 million, yet typically requires no loan subsidy or appropriation. The issue of loans versus grants became part of the debate over the farm bill and the reauthorization of the Rural Broadband Access Loan and Loan Guarantee Program. Senate-passed S. 954 would add a new grant program to the rural broadband program, and would raise the authorization level from $25 million to $50 million per year. The Senate bill does not specify how much of the authorization would be targeted to grants versus loans. Given that financing loans costs the federal government significantly less than financing grants, the proportion of grants to loans would likely be of interest to the Appropriations Committees, which remain under pressure to reduce overall federal discretionary spending. In recent years, the Appropriations Committees in the House and Senate have approved lower levels for the RUS broadband loan program than the authorization level. Since its creation in 1934 the Federal Communications Commission (FCC, or Commission) has been tasked with "mak[ing] available, so far as possible, to all the people of the United States ... a rapid, efficient, Nation-wide, and world-wide wire and radio communications service with adequate facilities at reasonable charges." This mandate led to the development of what has come to be known as the universal service concept. The universal service concept, as originally designed, called for the establishment of policies to ensure that telecommunications services are available to all Americans, including those in rural, insular, and high cost areas, by ensuring that rates remain affordable. During the 20 th century, government and industry efforts to expand telephone service led to the development of a complex system of cross subsidies to expand the network and address universal service goals. For example, profits from more densely populated, lower cost urbanized areas helped to subsidize wiring and operation costs for the less populous, higher cost rural areas. With the advent of competition and the breakup of the Bell System, the complex system of cross subsidies that evolved to support universal service goals was no longer tenable. The Telecommunications Act of 1996 ( P.L. 104-104 ; 47 U.S.C., 1996 act) codified the long-standing commitment by U.S. policymakers to ensure universal service in the provision of telecommunications services (§254), and the FCC established a universal service fund (USF or Fund) to meet the objectives and principles contained in the act. The 1996 act enumerated specific universal service principles including that "access to advanced telecommunications and information services should be provided to all regions of the Nation" (§254 [b] [2]) and "consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas" (§254 [b] [3]). The concept of universal service was also expanded to include, among other principles, that elementary and secondary schools and classrooms, libraries, and rural health care providers have access to telecommunications services for specific purposes at discounted rates (§254[b][6] and 254[h]). One of the major policy debates surrounding universal service in the last decade was whether access to advanced telecommunications services (i.e., broadband) should be incorporated into universal service objectives. With the growing importance and acceptance of broadband and Internet access, gaps in access to such services, particularly in rural areas, generated concern. A growing number of policymakers felt that the USF should play a role in helping to alleviate this availability gap. They pointed to the provisions, cited above, contained in the Universal Service section of the 1996 act to support their position. However, with the exception of funding for schools and libraries and rural health care providers, the USF was not designed to directly support broadband. Provisions contained in the American Recovery and Reinvestment Act of 2009 (ARRA) called for the FCC to develop, and submit to Congress, a national broadband plan (NBP) to ensure that every American has "access to broadband capability." This plan, Connecting America: The National Broadband Plan , submitted to Congress on March 16, 2010, called for the USF to play a major role in achieving this goal. The federal Universal Service Fund (USF or Fund) was established in 1997 to meet the specific objectives and principles contained in the 1996 act. The USF is administered by the Universal Service Administrative Company (USAC), an independent not-for-profit organization, under the direction of the FCC. The FCC, through the USF, provides universal service support through a number of direct mechanisms that target both providers of and subscribers to telecommunications services. The USF was designed to provide subsidies for voice telecommunications services for eligible high-cost (typically rural or insular) telecommunications carriers (High Cost Program) and economically needy individuals (Low Income Program); access for telecommunications services and broadband access for schools and libraries (Schools and Libraries Program); and access to telecommunications, advanced telecommunications, and information services for public and non-profit rural health care providers (Rural Health Care Program). The USF disbursed $8.7 billion in 2012 with all 50 states, the District of Columbia, and all territories receiving some benefit. The FCC, in an October 2011 decision, adopted an order (USF Order, or Order) that calls for the USF to be transformed, in stages, over a multi-year period, from a mechanism to support voice telephone service to one that supports the deployment, adoption, and utilization of both fixed and mobile broadband. More specifically, the High Cost Program is to be phased out and a new fund, the Connect America Fund (CAF), which includes the targeted Mobility Fund and new Remote Areas Fund, is to be created to replace it; and the Low Income, Schools and Libraries, and Rural Health Care programs are to be modified and given wider responsibilities. High-cost support, provided through the High Cost Program, is an example of provider-targeted support. Under the High Cost Program, eligible telecommunications carriers, usually those serving rural, insular, and other high-cost areas, are able to obtain funds to help offset the higher-than-average costs of providing telephone service. This mechanism, which has always been the largest USF program based on disbursements, has been particularly important to rural America, where the lack of subscriber density leads to significantly higher costs. The goal of the USF Order is to restructure and transition the High Cost Program from one that primarily supports voice communications to one that supports a broadband platform that enables multiple applications, including voice. Although some carriers that received high-cost funding over the years have used high-cost funds to deploy broadband capable infrastructure, there was no requirement that recipients of high-cost funding provide any households in their service areas with broadband. The Order requires that the High Cost Program be phased out and replaced in stages, to directly support high-capacity broadband networks (fixed and mobile) through a newly created Connect America Fund which includes the targeted components Mobility Fund and Remote Areas Fund. The "identical support rule" is phased out. For the first time universal service support provided to carriers serving high-cost areas (which is defined to include all current high-cost support mechanisms as well as the Connect America Fund) is subject to a budget; the budget is frozen at 2011 levels at $4.5 billion (plus administrative costs) per year for the next six years (2012-2017), subject to FCC review. The Order created the Connect America Fund to support the provision of affordable voice and broadband services, both fixed and mobile, of at least 4 Mbps actual download speed and 1 Mbps actual upload speed. The CAF will eventually replace all the existing support mechanisms in the High Cost Program for eligible carriers. The path to this transition differs depending on whether a provider is a price cap carrier (i.e., a company whose interstate rates are subject to the price cap form of regulation) or a rate-of-return carrier (a company whose interstate rates are subject to rate-of-return regulation). Price Cap Carriers . Price cap incumbent local exchange carriers, which tend to be the large and mid-sized carriers, will transition to the CAF in two phases. Under Phase I, which commenced on January 1, 2012, legacy high-cost funding is frozen at December 31, 2011, levels (estimated at no more than $ 1.8 billion annually) for price cap carriers and is required to be used to achieve universal availability of both voice and broadband. Frozen high-cost support will equal the amount of support each carrier received in 2011 in a given study area (i.e., the defined geographic service area of an incumbent local exchange carrier's telephone operations). An additional $300 million in "incremental support" to stimulate broadband deployment in unserved areas is also established. This Phase I incremental support is available to those price-cap carriers that choose to deploy fixed broadband to areas not currently served, or targeted to be served, by a fixed broadband provider within their service territory. Access to Phase I incremental support is dependent on meeting specific criteria and build-out requirements, and is offered to jump-start the deployment of broadband to unserved areas within price-cap carrier service areas. Any price-cap carrier electing to receive Phase I incremental support will receive $775 in incremental support for each unserved location it provides broadband with actual speeds of at least 4 Mbps actual download speed and 1 Mbps of actual upload speed. Once the funds are accepted, carriers must meet deployment schedules to no fewer than two-thirds of the required locations within two years and complete all deployments within three years. Of the $300 million made available for Phase I incremental support, only $115 million was taken with $185 million remaining unclaimed. A second round of Phase I support will be offered in 2013. The FCC, in May 2013, released a Report and Order detailing the rules for the second round of Phase I incremental support. Provisions call for a disbursement of $485 million ($300 million plus the unclaimed $185 million from the previous round of incremental support) and expands eligibility to cover areas that are underserved as well as unserved. Support for unserved areas remains at $775 per location and support for underserved areas is set at $550 per location. The FCC anticipates that this will be the last "incremental support" round before the transition to Phase II Price Cap annual support and any unused funds will be given to the Phase II Fund. Under CAF Phase II Price Cap annual funds (estimated at no more than $1.8 billion annually) will be distributed through an FCC-developed cost model and through competitive bidding (e.g., reverse auctions) for a period ending year-end 2017. CAF support will be available only in areas where a federal subsidy is needed to ensure the build-out and continued operation of broadband networks. By the end of the third year, carriers that accept support must offer broadband speeds of at least 4 Mbps download speed and 1Mbps of upload speed. In addition, usage capacity must be reasonably comparable to urban residential terrestrial fixed broadband to at least 85% of their high-cost locations and to all supported locations by the end of the fifth year (2017). The incumbent carrier is given the right of first refusal, until the end-of- 2017, to receive the model-derived support, after which a shift to competitive bidding will be implemented. If an incumbent carrier declines Phase II funding the FCC will implement a competitive bidding process. CAF Phase II price cap is not expected to be implemented until sometime in 2014. Rate-of-Return Carriers . Rate-of-return carriers, which tend to be smaller carriers that solely provide service in rural areas, will continue to receive support, with some modifications, from current support mechanisms pending full transition to the CAF (through 2017). During this transition, rate-of-return carriers' legacy high-cost support is frozen at December 31, 2011, levels (estimated at no more than $2 billion annually). Unlike in the case of price-cap carriers, no additional "incremental support" is provided specifically targeted for broadband deployment in unserved areas. Modifications are made to the operations of the High Cost Program, as they impact rate-of-return carriers, during this transition period to improve "the efficiency and effectiveness" of USF support. For example, the Order phases out support over three years in study areas that overlap completely with an unsubsidized fixed, terrestrial broadband/voice competitor, and gradually phases down over three years (commencing July 1, 2012) per-line support to a cap of $250/per month ($3,000 annually). Rate-of-return carriers that continue to receive legacy support or begin accepting CAF support are given more flexibility than price-cap carriers when deploying broadband. Rate-of-return carriers are required to offer actual broadband service of at least 4 Mbps download speed and 1 Mbps of upload speed, with usage capacity reasonably comparable to urban residential terrestrial fixed broadband, but only upon their customers ' reasonable request and within a reasonable amount of time . Furthermore, rate-of-return carriers are not, at this time, subject to specific build-out requirements or increased speed requirements and will not necessarily be required to build out and serve the most expensive locations within their service territories. Many of the details and mechanics of how the transition of rate-of-return carriers from legacy high-cost support to the CAF have yet to be determined. These details will be announced pending the completion of an extensive Further Notice of Proposed Rulemaking issued as part of the USF Order. The CAF Mobility Fund (MF) is a new fund created within the Connect America Fund to provide targeted funding to wireless providers, to support the deployment of 4G (fourth generation) wireless networks. Recipients of funds will be subject to public interest obligations. Phase I provides $300 million in one-time support to provide wireless broadband in unserved areas (excluding areas already targeted for support) and was awarded through a reverse auction. The auction (auction 901), which was held on September 27, 2012, resulted in awards to 33 bidders with new deployment in 31 states and one territory covering 83,000 road miles. Winners will be required to deploy 4G service within three years, or 3G service within two years and make their networks available to others for roaming. The FCC is currently in the process of authorizing winning applications. A separate and complementary one-time Tribal Mobility Fund Phase I was also established to award up to $50 million in additional funds to Tribal Lands. The Tribal Mobility Fund Phase I auction (number 902) is anticipated to be held in October 2013 and will be used to support deployment of mobile voice and broadband to tribal areas lacking 3G or better service. Phase II of the Mobility Fund will provide up to $500 million per year in ongoing support to expand and sustain mobile voice and broadband services in areas where service would not be available absent federal support. Funding of $100 million per year, within the $500 million budget, will be set aside for ongoing support for Tribal Lands. The FCC sought further comment on specifics relating to the implementation of the Phase II of the Mobility Fund with comment and reply comment dates now closed. It is anticipated that the auction will be held in the third quarter of 2013 with support to commence in 2014. The Order creates a new CAF Remote Areas Fund to provide support in the most remote high-cost areas representing less than 1% of households. The budget for this Fund is set at a minimum of $100 million per year. While open to all technologies, it is anticipated that alternative technology platforms, such as satellite and unlicensed wireless services, will be among the major providers participating in this Fund. The FCC sought additional comment related to its implementation with operation anticipated in 2014. The identical support rule requires that competitive eligible telecommunications carriers (CETCs), typically (but not exclusively) wireless carriers, be given the same per-line level of high-cost support as incumbent local telecommunications carriers, typically wireline carriers, serving the same area. This rule, although not designed specifically to support mobility, in 2010 distributed an estimated $1.2 billion of high-cost support, largely to wireless carriers providing mobile services in areas that may already have such services. New support mechanisms, adopted in the USF Order (CAF Mobility Fund), are designed specifically for mobility to better target unserved areas and, according to the FCC, make the identical support rule no longer necessary or in the public interest. Therefore, effective January 1, 2012, the rule was eliminated. For those carriers currently receiving such support, funding levels are frozen at year-end 2011 levels (or an amount equal to $3,000 times the number of lines reported as of year-end 2011, whichever is lower) for six months and then phased out. This phase-out will occur, with some limited exceptions, in 20% yearly intervals over a five-year period commencing on July 1, 2012; all identical cost support will be eliminated as of July 1, 2016. Wireless carriers will have access to support from the Mobility Fund as well as this phased-down legacy support. The phase-down of identical support funding will stop if the Mobility Fund Phase II and Mobility Fund Phase II for Tribal Lands are not operational by June 30, 2014. The Order establishes a waiver process to be used by any carrier that can clearly demonstrate that, absent exemption from some or all of the reforms, its funding level would put consumers at risk of losing voice service, where there is no terrestrial alternative and in cases where it can be demonstrated that "consumers ... face a significant risk of losing access to a broadband-capable network that provides both voice as well broadband, at reasonably comparable rates, in areas where there are no alternative providers of voice or broadband." Consideration will also be given to whether specific reforms would result in default on existing loans and/or insolvency. This process entails the provision of detailed financial and market-specific data submitted for a rigorous case-by-case review. Waivers are not anticipated to be granted routinely. The Order also provides for prioritized review of waiver requests filed by providers serving Tribal Lands and insular areas (e.g., Alaska, island territories), and requires that review of such petitions be completed within 45 days. In the mid-1980s, FCC universal service policies were expanded to target low-income subscribers. Two income-based programs, Lifeline and Link Up, were established to assist economically needy individuals. The Link Up program, established in 1987, assists eligible low-income subscribers to pay the costs associated with the initiation of telephone service, and the Lifeline program, established in 1984, assists eligible low-income subscribers to pay the recurring monthly service charges incurred by telephone subscribers. Discounts are eligible for one connection, either wired or wireless, per household. The expansion of the USF to directly target low-income individuals is of particular significance to those in rural areas. According to the United States Department of Agriculture (USDA), the nonmetro poverty rate was 17.0 % in 2011 and has remained consistently higher than the metro poverty rate over time. An FCC-conducted broadband consumer survey found that 36% of non-adopters of broadband cited a financial reason as the main reason they do not have broadband service at home. To address this barrier, the FCC adopted an order on January 31, 2012, to modify the goals and operations of the Low Income Program. The Link Up program is eliminated on non-Tribal Lands, but the role of the Lifeline Program is expanded to increase broadband adoption levels for low-income households; a $9.25 flat per-line monthly reimbursement rate is established on an interim basis; and safeguards to combat waste, fraud, and abuse are also established. Actions pertinent to broadband include those which modernize the Lifeline Program as a vehicle to ensure the availability of broadband for all low-income Americans. This is to be achieved by allowing Lifeline support for bundled service plans that combine voice and broadband and establishing a Broadband Adoption Pilot Program to explore how to best use the Lifeline Program to increase broadband adoption among Lifeline eligible subscribers. In a December 19, 2012, decision the FCC selected 14 projects to participate in the Lifeline pilot program. The projects cover rural, suburban, and urban areas in 21 states and Puerto Rico. The FCC authorized approximately $13.8 million in funding, which comes from savings resulting from Low Income Program reforms. The Pilot Program will run for 18 months, beginning on February 1, 2013. Under universal service provisions contained in the 1996 act, elementary and secondary schools and classrooms, and libraries, are designated as beneficiaries of universal service discounts. Universal service principles detailed in Section 254(b)(6) state that "Elementary and secondary schools and classrooms ... and libraries should have access to advanced telecommunications services." The act further requires in Section 254(h)(1)(B) that services within the definition of universal service be provided to elementary and secondary schools and libraries for education purposes at discounts, that is at "rates less than the amounts charged for similar services to other parties." The FCC established the Schools and Libraries Division within the Universal Service Administrative Company (USAC) to administer the schools and libraries or "E (education)-Rate" program to comply with these provisions. The E-Rate Program supports connectivity, and funding is available under four categories of services: telecommunications and dedicated services; internal connections (e.g., wiring, routers, and servers); Internet access; and basic maintenance of internal connections, with the first category receiving funding priority. The applicant is responsible for providing additional resources such as end-user equipment (e.g., computers, telephones), software, and training. Under this program, which became effective January 1, 1998, eligible schools and libraries receive discounts ranging from 20% to 90% for eligible services depending on the poverty level of the school's (or school district's) population and its location in a high-cost telecommunications area (urban/rural status). Eligible schools, school districts, and libraries may apply on an individual or a consortium basis. The FCC established a yearly ceiling, or cap, of $2.25 billion, adjusted for inflation prospectively, beginning with funding year 2010, for this program. Since its inception this program has been over-subscribed, leaving requests by otherwise qualified applicants unfulfilled. Areas that do not have ready access to broadband are likely to depend on anchor institutions, such as schools and libraries, to meet growing broadband needs. The FCC has acknowledged the importance of anchor institutions in achieving broadband access goals, and has taken steps to upgrade the E-Rate Program by, among other actions, permitting schools to allow community use of E-Rate funded services outside of school hours; supporting eligible services to the residential portion of schools that serve students in special circumstances (e.g., schools on tribal lands); and committing $9 million to a pilot program, "Learning On-The-Go," to support off-campus connectivity in 20 schools and libraries, for K-12 students and library patrons, for portable (wireless) learning devices outside of regular school or library hours. Section 254(h) of the 1996 act requires that public and non-profit rural health care providers have access to telecommunications services necessary for the provision of health care services at rates comparable to those paid for similar services in urban areas. Subsection 254(h)(1) further specifies that "to the extent technically feasible and economically reasonable," health care providers should have access to advanced telecommunications and information services. The FCC established the Rural Health Care Division (RHCD) within the USAC to administer the universal support program to comply with these provisions. Under FCC-established rules only public or non-profit health care providers are eligible to receive funding. Eligible health care providers, with the exception of those requesting only access to the Internet, must also be located in a rural area. Like the Schools and Libraries program, this support program went into effect on January 1, 1998, and a funding ceiling, or cap, was established, in this case at $400 million annually. The primary use of the funding is to provide reduced rates for telecommunications and information services (e.g., transmission of data, images, or interactive video) necessary for the provision of health care to either qualified individual health care providers or consortia. Health care providers can use funding to save on service they already have, to upgrade current services, or to install new services. Equipment charges are not eligible for support. The telecommunications program was established in 1997 to ensure that rural health care providers pay no more than their urban counterparts for their telecommunications needs when providing health care services. The Internet access program, which was established in 2003, provides a 50% discount on the cost of monthly Internet access in states that are entirely rural and a 25% discount for all other rural health care providers. Only the monthly charge for access is eligible for support. These two programs are collectively known as the "Primary Program." The FCC, in 2007, established a "Rural Health Care Pilot Program" to help public and non-profit health care providers build state- and region-wide broadband networks dedicated to the provision of health care services. The Pilot Program funds up to 85% of the eligible costs of broadband infrastructure deployment of telehealth networks that connect rural and urban health care providers within a state or region. The Pilot is closed to new projects and participants will transition to the newly created Healthcare Connect Fund. The Healthcare Connect Fund, which was created by the FCC in a December 12, 2012, order, was established to expand access to broadband, particularly in rural areas, for eligible public or not-for-profit health care providers. The Healthcare Connect Fund, will absorb the Internet Access Program (which is currently part of the Primary Program), and replace the Rural Health Care Pilot Program with a permanent program. The Healthcare Connect Fund will encourage consortia between smaller rural health care providers and urban medical centers, but consortia must remain majority rural. The Fund will provide a 65% discount on broadband services, equipment, and connections with health care providers required to contribute the balance (35%). Upfront payments for the Healthcare Connect Fund is $150 million annually. It is anticipated that the FCC will begin accepting applications in late summer 2013. The FCC also established, as part of the Healthcare Connect Fund, a Skilled Nursing Facilities Pilot Program to assess how to support broadband connections for skilled nursing facilities. The pilot, which is scheduled for a 2014 implementation, will give preference to facilities in rural areas and will receive funding of up to $50 million total over a three-year period. Table 2 , below, provides a summary of the restructured USF program. The decision by the FCC to incorporate broadband and mobility mandates into the universal service concept, and the subsequent restructuring of the USF to accommodate this decision, will have a major impact on consumers and providers of telecommunications and broadband services. As the United States moves towards this transition, numerous policy issues and concerns have surfaced. Included among the issues confronting policy makers are how to define success; who should pay to support this mandate; how the nation should address the rural/rural divide; and how the nation should ensure that these changes do not negatively impact the financial health of, in particular, small, rural carriers that are significantly dependent on USF subsidies. The commitment made under USF reform to ensure universal availability of advanced broadband, at rates that are reasonably comparable in all regions of the nation, is a major undertaking. How policy makers determine if that goal has been successfully met, however, will depend, to a large part, on how success is defined. Most consider the universal service mandate to provide voice service to have been met, but the United States has never reached a 100% penetration rate. According to the FCC, as of July 2011 (the most recent published data available), the telephone subscribership penetration rate in the United States was 95.6%, and rates vary based on characteristics such as location, age, and income. For example, penetration rates among states ranged from a low of 91.4% to a high of 98.5%; households headed by a person under 25 years of age had a penetration rate of 93.8% compared with at least 95.9% for those headed by a person over 55; penetration rates for households in income categories below $20,000 were at, or below, 94.7%, while the rate in households in income categories over $75,000 was at least 98.9%. When it comes to broadband deployment, is anything under 100% an acceptable goal and, if so, what would the appropriate rate be? Even if at some point in time broadband is made available in all areas of the country, the question of access versus adoption needs to be considered. According to the FCC's NBP, broadband is available in 95% of the nation but adoption rates are about 65%. This significant gap is explained by three factors: cost, digital literacy barriers, and a perceived lack of relevance. The USF Order has attempted to address this issue through reforms including those to the Low Income Program, but the details of how this will be addressed are yet to be fully resolved. Additional issues that policymakers may wish to monitor include those related to performance metrics such as speed, capacity, and latency. Although the USF Order provides requirements for such metrics, these needs will continue to evolve. Just as voice access standards evolved from, for example, party line to single line service, society's expectations with regard to broadband will also evolve. Policymakers will face the task of assessing what the standard for access will be in terms of performance metrics. What may be considered an acceptable level of service today may be considered inadequate for future needs. The 1996 act requires that every telecommunications carrier that provides interstate telecommunications services be responsible for universal service support (§254[d]) and that such charges be made explicit (§254[e]). Therefore, the USF receives no federal monies but is funded by mandatory contributions from telecommunications carriers providing interstate service. These contributions are based on a percentage of the interstate and international telecommunications end-user revenues of telecommunications carriers and are called the contribution factor. This contribution factor has grown significantly since its inception from approximately 5.5% in 1998 to an all-time high of 17.9% in the first quarter of 2012; the factor for the first quarter of 2013 is 16.1 %. Increases in demand for, and expansion of services covered by, the USF, as well as technological change and decreases in the interstate and international revenue base, have all contributed to this upward trend. The FCC's decision to include broadband and mobility in the universal service definition has further highlighted the need to address how the funding mechanism should be modified to support such a mandate. At issue is the uncertainty and costs associated with mandating nationwide deployment of broadband as a universal service policy goal, and the impact that such a mandate will have on an already strained funding mechanism. Some have expressed concern that given the pressures currently facing the USF, and their impact on the contribution factor, a restructuring of the funding mechanism should have been addressed prior to, or at least simultaneously with, the expansion of the USF definition. Questions regarding who should contribute, how the mechanism to assess such contributions should be designed, and whether the contribution base should be expanded, are among the issues to be considered. The FCC, on April 27, 2012, adopted a further notice of proposed rulemaking seeking comment on comprehensive reforms to address the USF funding issue. Rural America is subject to a "rural-rural divide" when it comes to the presence of broadband infrastructure. Some parts of rural America have sophisticated high-level broadband access while other parts have little to no broadband access. Disparity in access to broadband among rural areas is known as the "rural-rural divide." Price-cap companies, which are largely classified as non-rural carriers, serve both urban and rural areas and in their rural service areas face issues, such as remoteness and lack of density resulting in high costs, more commonly associated with rural carriers. According to the FCC, more than 83% of the approximately 18 million Americans that lack access to residential fixed broadband at or above the FCC's broadband speed benchmark live in areas served by price-cap carriers. In other rural areas, often served by rate-of-return carriers, broadband is being deployed, often with the support of a combination of RUS loans and USF support. To address this disparity the FCC, in its USF Order, established a $300 million incremental support component in the Phase I CAF Fund for areas lacking broadband infrastructure, solely for the use of price-cap carriers. Concern has been expressed that providing for a CAF Phase I Fund for broadband deployment, solely for the use of price-cap carriers, disadvantages rural areas lacking broadband infrastructure that are served by the smaller, rural rate-of-return carriers. Some question why access to such funding should be limited to price-cap carriers when other areas of the nation are facing the same, or even more challenging, conditions to bring broadband to areas lacking access. If the ultimate goal is to bring broadband to all unserved areas, they ask, why should this funding be based on carrier classification rather than need? They also point to the fact that $185 million of the $300 million total for 2012 went unclaimed to further support their position that this support should be opened to all providers. Smaller, rural, rate-of-return carriers are particularly dependent on USF subsidies, and have expressed concern that the reforms that the USF Order will implement could place them under financial hardship. Many RUS telecommunications and broadband borrowers (loan recipients) receive high cost USF subsidies. In many cases, the subsidy received from USF helps provide the revenue necessary to keep the loan viable. The Telecommunications Infrastructure Loan program is highly dependent on high-cost USF revenues, with 99% (476 out of 480 borrowers) receiving interstate high-cost USF support. This is not surprising, given that the RUS Telecommunications Loans are available only to the most rural and high-cost areas (towns with populations less than 5,000). Regarding broadband loans, 60% of BIP (stimulus) borrowers draw from state or interstate USF support mechanisms, while 10% of farm bill (Rural Broadband Access Loan and Loan Guarantee Program) broadband borrowers receive interstate high-cost USF support. Thus, to the extent that USF may be reformed, this could have an impact on the viability of RUS telecommunications and broadband loans, and ultimately the overall financial health of the carrier. Although the FCC included a waiver process in its USF Order for those carriers that felt they would be subject to significant economic stress, due to the reforms, many smaller carriers assert that the waiver process is too burdensome and difficult and that the requirements for qualifying for relief are too restrictive. The RUS broadband programs and the FCC's Universal Service Fund (USF) share a common goal: increasing broadband infrastructure deployment and applications in rural areas. However, the way that each program addresses these goals is markedly different. RUS grants and loans are used as up-front capital to invest in broadband infrastructure, whereas the USF provides ongoing subsidies to keep the operation of telecommunications—and most recently broadband networks in high-cost areas—economically viable for providers. These subsidies, in turn, enable providers to invest in upgrading their telephone networks to make them broadband-capable. Aside from the Distance Learning and Telemedicine (DLT) program, RUS telecommunications programs address broadband infrastructure deployment, which is intended to increase the availability of broadband in rural America. The USF, while also addressing broadband availability (through the High Cost Program and the Connect America Fund), also addresses end-user broadband adoption through the Low Income Program. Regarding the health and education applications, the principal difference between RUS programs (Distance Learning and Telemedicine) and the USF programs (Schools and Libraries Program, Rural Health Care Program) is that RUS funds end-user equipment, while USF funds connectivity. DLT grants serve as initial capital assets for equipment, instructional programming, technical assistance, or instruction for using eligible equipment (e.g., video conferencing equipment, computers) that operate via telecommunications to rural end-users of telemedicine and distance learning. DLT does not fund the telecommunications that connects that equipment. By contrast, the USF Schools and Libraries Program supports the conduit or pipeline for communications using telecommunications services and/or the Internet, and includes four categories of service: telecommunications services, Internet access, internal connections, and basic maintenance of internal connections. Similarly, the Rural Health Care Program provides discounts for rural non-profit health care providers by providing connectivity. Finally, the RUS programs are funded through annual appropriations and are subject to the annual congressional budget process. By contrast, USF is not funded through annual appropriations, but is funded by mandatory contributions from telecommunications carriers that provide interstate service. Congress is seeking ways to best leverage federal programs to ensure that the goals of the National Broadband Plan—including universal broadband service by 2020—are met to the greatest extent possible. With the September 30, 2010, conclusion of the American Recovery and Reinvestment Act ( P.L. 111-5 ) broadband grant and loan awards, the RUS broadband programs and the USF programs remain the only ongoing federal vehicles to provide financial assistance for rural broadband deployment. With both programs currently at a pivotal point, an issue for the 113 th Congress is how best to shape those programs as they go forward. The statute authorizing the Rural Broadband Loan and Loan Guarantee—Section 601 of the Rural Electrification Act of 1936—was significantly modified in the 2008 farm bill, and is being addressed once more in the 2013 farm bill. Typically a new farm bill is developed every five years, principally by the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry. The Appropriations Committees in the House and Senate both have a major role to play as well, as each considers annual appropriations for the RUS broadband programs through the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act. Meanwhile, the USF is undergoing a major and unprecedented transition through a series of reforms being implemented by the FCC. Congress has largely adopted an oversight role and a "wait and see" posture with respect to the FCC's USF reforms. While numerous Members have written letters to the FCC urging various modifications in the reform package, there was no comprehensive legislation introduced into the 112 th Congress that addressed the FCC's USF reforms. The House Energy and Commerce Committee, the Senate Commerce, Science, and Transportation Committee, and the House Committee on Natural Resources continue to assess the impact of the reforms, and the FCC's progress in their implementation. To the extent that various constituencies and interest groups (whether it be small rate-of-return carriers, large price-cap carriers, competitive providers, state utility regulators, or broadband providers and consumers) feel they are disadvantaged by the reforms, and to the extent that programmatic inefficiencies or waste, fraud, and abuse come to light (as they have in the past through GAO reports, for example), Congress always has the prerogative in the future of formulating and considering legislation that could modify those reforms by amending the 1934 Communications Act. Given that the RUS and USF broadband programs share the goal of deploying broadband to rural America, Congress may also wish to assess how these two programs can best fit together. Are they effectively targeted towards providing broadband to the most unserved areas of the nation, while at the same time minimizing adverse impacts on private incumbent providers? Are they the most cost-effective way for Congress to fund rural broadband development? To what extent are the two programs complementary and to what extent do the two programs overlap? And finally, how will changes made to the USF program affect the viability of broadband loans made under the RUS programs?
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Since the initial deployment of broadband in the late 1990s, Congress has viewed broadband infrastructure deployment as a means towards improving regional economic development, and in the long term, to create jobs. According to the National Broadband Plan, the lack of adequate broadband infrastructure is most pressing in rural America, where the costs of serving large geographical areas, coupled with low population densities, often reduce economic incentives for telecommunications providers to invest in and maintain broadband infrastructure and service. Historically, the federal government has provided financial assistance to give telecommunications providers the capital to invest in rural telecommunications infrastructure and to maintain an adequate return on their investment. Currently, there are two ongoing federal vehicles which direct money to fund broadband in rural areas: the broadband and telecommunications programs at the Rural Utilities Service (RUS) of the U.S. Department of Agriculture, and the Universal Service Fund (USF) programs under the Federal Communications Commission (FCC). While both the RUS and USF programs share some of the same goals (e.g., improving broadband availability and adoption in rural areas), the two programs are different with respect to their funding mechanism, scope, and emphasis. For example, RUS grants and loans are used as up-front capital to invest in broadband infrastructure, while the USF provides ongoing subsidies to keep the operation of telecommunications and broadband networks in high cost areas economically viable for providers. Another key difference is that the RUS programs are funded through annual appropriations, while USF is funded through mandatory contributions from telecommunications carriers that provide interstate service, and is not subject to the annual congressional budget process. Both programs are at a pivotal point in the 113th Congress. The statute authorizing the Rural Broadband Loan and Loan Guarantee program was significantly modified in the 2008 farm bill, and is being addressed once more in the 2013 farm bill. Meanwhile, the USF is undergoing a major and unprecedented transition through a series of reforms being developed by the FCC, and Congress has adopted an oversight role with respect to those reforms. In shaping and monitoring the future evolution of these programs, Congress is assessing how best to leverage these programs to ensure that the goals of the National Broadband Plan—including universal broadband service by 2020—are met to the greatest extent possible.
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Transnational organized crime groups flourish in Burma, trafficking contraband that includes drugs, humans, guns, wildlife, gems, and timber. Transnational crime is highly profitable, reportedly generating roughly several billion dollars each year. The country's extra-legal economy, both black market and illicit border trade, is reportedly so large that an accurate assessment of the size and structure of the country's economy is unavailable. Contraband trafficking also remains a low-risk enterprise, as corruption among officials in Burma's ruling military junta, the State Peace and Development Council (SPDC), appears to facilitate trafficking and effectively provide the criminal underground immunity from law enforcement and judicial action. Synergistic links connect various forms of contraband trafficking; smugglers use the same routes for many forms of trafficking, following paths of least resistance, where corruption and lax law enforcement prevail. The continued presence of transnational crime in Burma and the illicit trafficking routes across Burma's borders share many features of so-called "ungoverned spaces"—regions of the world where governments have difficulty establishing control or are complicit in the corruption of the rule of law. Among the commonalities that Burma's border regions share with other ungoverned spaces is physical terrain that is difficult to control. Burma's long borders, through which much smuggled contraband passes, stretch across vast trackless hills and mountains that are poorly patrolled. In addition, continuing ethnic tensions with some ethnic armed rebel groups hamper government control in some regions of the country, which is another common feature of ungoverned spaces. Recent cease-fire agreements in other border regions have not markedly improved the situation; instead, these cease-fires have provided groups known for their activity in transnational crime with near autonomy, essentially placing these areas beyond the reach of Burmese law. Congress has long been active in U.S. policy toward Burma for a variety of reasons, including on issues related to transnational crime. Because the State Department lists Burma as a major drug-producing state, the country is barred access from U.S. foreign assistance under several long-standing legislative provisions. Congress also authorizes sanctions against countries that the State Department deems in non-compliance with the minimum standards for the elimination of trafficking in persons, which includes Burma. The 110 th Congress sought to strengthen unilateral sanctions against Burma. In response to the Burmese government's forced suppression of anti-regime protests in August and September of 2007, as well as its internationally criticized humanitarian response to destruction resulting from tropical cyclone Nargis in May 2008, Congress passed P.L. 110-286 , the Tom Lantos Block Burmese JADE Act of 2008 (signed by the President on July 29, 2008). This law imposes further sanctions on SPDC officials and prohibits the indirect import of Burmese gems, among other actions. H.Rept. 110-418 , which accompanies H.R. 3890 , also cites "Burma's rampant drug trade" and "its role as a source for international trafficking in persons and illicit goods" as additional reasons for these new sanctions. The 111 th Congress may choose to continue its interest in oversight of U.S. policy toward Burma, including the country's role in criminal activity. Secretary of State Hillary Clinton announced in February 2009 the beginning of a review of U.S.-Burma relations. In September 2009, the conclusions of this policy review were released, noting in particular the beginning of direct dialogue with Burmese authorities on international crime-related issues, including compliance with U.N. arms sanctions and counternarcotics. Already in the first session of the 111 th Congress, both the Senate and the House have held hearings in which crime issues related to Burma have been addressed. The United Wa State Army (UWSA), Shan State Army-South (SSA-S), Shan State Army-North (SSA-N), Democratic Karen Buddhist Army (DBKA), ethnic Chinese criminal groups (including the Triads), and other armed groups have criminal networks that stretch from India to Malaysia and up into China. Many of the transnational criminal elements along Burma's border are linked to past or ongoing ethnic insurgencies. While not necessarily a threat to SPDC control, they continue to constitute a transnational security threat for Burma and the region. The State Department states that the UWSA is the largest of the organized criminal groups in the region and operates freely along the China and Thailand borders, controlling much of the Shan State with a militia estimated to have 16,000 to 20,000 members. Other criminal groups, including the 14K Triad, reportedly operate in the north of the country and in major population centers. According to the Economist Intelligence Unit (EIU), these criminal organizations remain nearly immune from SPDC interference, because of widespread collusion with junta military, police, and political officials. Many analysts agree that much of this apparent collusion is part of concerted SPDC efforts to coopt ethnic groups and avoid hostilities with them. One possible consequence of this policy is that the influence of organized crime in Burma and the region could remain virtually impossible to reduce. The U.S. State Department and other observers indicate that corruption is common among the bureaucracy and military in Burma. Burmese officials, especially army and police personnel in the border areas, are widely believed to be involved in the smuggling of goods and drugs, money laundering, and corruption. Burma has no laws on record specifically related to corruption and has signed but not ratified the U.N. Convention against Corruption. The 2006 EIU country report on Burma states that "corruption and cronyism" are widespread "throughout all levels of the government, the military, the bureaucracy and business communities." Burma is reported to be the third-most corrupt country in the world according to Transparency International's 2009 Corruption Perceptions Index , after Somalia and Afghanistan. In addition, the State Department states that Burma's weak implementation of anti-money laundering controls remains at the root of the continued use by narcotics traffickers and other criminal elements of Burmese financial institutions. Burma has signed, but not ratified, the United Nations Convention against Corruption, which entered into force in December 2005. Although there is little direct evidence of top-level regime members' involvement in trafficking-related corruption, there is evidence that high-level officials and Burmese military officers have benefitted financially from the earnings of transnational crime organizations. In the case of the drug trade, reports indicate Burmese military officials at various levels have several means to gain substantial shares of narcotics trafficking earnings. Some reports indicate that the Burmese armed forces, or Tatmadaw , may be directly involved in opium poppy cultivation in Burma's Shan state. Some local Tatmadaw units and their families reportedly work the poppy fields and collect high taxes from the traffickers, as well as fees for military protection and transportation assistance. According to the State Department, Burma has not indicted any military official above the rank of colonel for drug-related corruption. The SPDC also reportedly allows and encourages traffickers to invest in an array of domestic businesses, including infrastructure and transportation enterprises, receiving start-up fees and taxes from these enterprises in the process. The traffickers usually deposit the earnings from these enterprises into banks controlled by the military, and military officers reportedly deposit much of their crime-related money in foreign bank accounts in places like Bangkok and Singapore. In 2003, the Secretary of the Treasury reported that some Burmese financial institutions were controlled by, or used to facilitate money laundering for, organized drug trafficking organizations. In the same report, the Secretary of the Treasury also stated that Burmese government officials were suspected of being involved in the counterfeiting of U.S. currency. Possible links between drug trafficking operations and official corruption have been raised recently in the context of SPDC reconstruction contracts in the aftermath of cyclone Nargis. Specifically, some reports have pointed to SPDC's reconstruction contract with Asia World Company Ltd., a firm managed by Steven Law (Tun Myint Naing), as a possible indication of continued links between drug traffickers and official corruption. Steven Law, against whom the U.S. government has maintained financial sanctions since February 2008, allegedly provides material support to the Burmese junta, receives business concessions from the junta, facilitates the movement of illicit narcotics, and launders drug profits through his firms, including Asia World Company Ltd. The most frequent destinations for much of Burmese contraband—opium, methamphetamine, illegal timber, endangered wildlife, and trafficked humans—are China and Thailand. Other destinations include India, Laos, Bangladesh, Vietnam, Indonesia, Malaysia, Brunei Darussalam, South Korea, and Cambodia. Demand for Burma's contraband reaches beyond the region, including the United States. The U.S. Drug Enforcement Administration (DEA), for example, reports that Burmese-trafficked methamphetamine pills have been confiscated within the United States. The United States is also reputed to be among the world's largest importers of illegal wildlife; no concrete data exist, however, to link such transnational ties with Burma. Ready recruits for organized crime activities can be found in both urban ghettos and impoverished rural areas. According to the Asian Development Bank, 27% of Burma's population live below the poverty line, making the country one of the poorest in Southeast Asia. Many analysts state that peasant farmers, rural hunters, and other poor often serve at the base of Burma's international crime network, growing opium poppy crops, poaching exotic and endangered species in Burma's lush forests, and serving as couriers and mules for contraband. In addition, the State Department and other observers have found that many victims of transnational crime in Burma are the poor, becoming commodities themselves as they are trafficked to be child soldiers for the junta or slaves for sexual exploitation. Burma is party to all three major United Nations international drug control treaties—the 1961 Single Convention on Narcotic Drugs, as amended; the 1971 Convention on Psychotropic Substances; and the 1988 Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Burma's official strategy to combat drugs aims to end all production and trafficking of illegal drugs by 2014, a goal that parallels the region's ambition to be drug free by 2015. Many analysts, however, consider the goal of achieving a drug-free Burma as unlikely. In September 2007, the Administration once again included Burma on the list of major drug transit or major illicit drug producing countries. Located at the heart of the "Golden Triangle" of narcotics trafficking, Burma is among the world's top producers of opium, heroin, and methamphetamine. Illicit narcotics reportedly generate between $1 billion and $2 billion annually in exports. In addition, Burma's drug trafficking activities appear to be linked to the recent spread of HIV and AIDS in the region, as drug users along Burma's trafficking routes share contaminated drug injection needles. Some analysts warn that clashes between the government of Burma, rebel groups in the border areas of Burma, and neighboring countries could be possible. For example, should the SPDC begin to combat the drug trade more vigorously, current cease-fire groups may choose to break their agreements with the SPDC in order to protect their drug trade territories. Several cease-fire groups, including the UWSA, have chosen not to heed calls by the SPDC to disarm and reportedly use illicit drug proceeds to equip and maintain their paramilitary forces. Beginning in June 2009 through at least late August 2009, the Burmese Army initiated a military campaign against several ethnic minority groups, including the Karen and the Kokang. Thai counterdrug officials report a concurrent spike in heroin and methamphetamine sales in the region. It appears that various ethnic rebels are selling off their stockpiles of drugs in order to expand their weapons arsenals and prepare for the possibility of active conflict. Further, some suggest that the continued flow of illicit drugs from Burma to Thailand may be a source of tension between the two countries—especially in the face of Thailand's renewed war on drugs. The most recent campaign to combat illegal drugs, which began in April 2009, is a reprise of a 2003 campaign. Though media reports indicate that the current Thai war on drugs appears to be more restrained than the 2003 version, which resulted in the deaths of several thousand people over a three-month period, human rights activists remain on alert. Burma is the world's second-largest producer of illicit opium, behind Afghanistan. Further, the DEA reports that Burma accounts for 80% of all heroin produced in Southeast Asia and is a source of heroin for the United States. Although poppy cultivation has declined significantly in the past decade, prices have increased significantly in recent years, reflecting ongoing demand despite production declines since a decade ago (see Table 1 ). Some suggest that future dynamics of the opiate market in Burma may be dependent on developments in other opium-producing regions, particularly Afghanistan, which replaced Burma as the primary opium producer in the world. Much of the decline in recent years has been attributed to UWSA's 2005 public commitment to stop its activity in the opium and heroin markets, after prolonged international pressure to do so. However, recent reports suggest that the UWSA's self-imposed ban may be short-lived. The UWSA has reportedly warned that alternative livelihood sources will be necessary in order to sustain its ban against opium poppy cultivation—a point with which many international observers agree. Most analysts acknowledge that opium production in certain parts of Burma is one of the few viable means for small-scale peasant farmers to compensate for structural food security shortages. A 2009 United Nations Office on Drugs and Crime (UNODC) study supports this, finding that households in former poppy-growing villages were unable to find sufficient substitutes for their lost income from opium. According to the same UNODC study, the average annual cash income of a household involved in opium poppy cultivation was approximately $700, while the annual income of a household not involved in opium poppy cultivation was approximately $750. In Burma's Shan State in 2009, known for its pockets of opium production, 28% of poppy growing households (versus 22% of non-poppy growing households) reported food insecurity due to a shortage of rice. In the meantime, reports indicate that opium poppy production is shifting to areas controlled by other cease-fire ethnic groups, and to areas apparently administered by Burma's armed forces, the Tatmadaw, who tax the farmers and traders for a portion of the farmgate value. The UWSA may also be organizing Wa poppy farmers to seasonally migrate to nearby provinces, where the UWSA did not commit to a ban, in order to continue their cultivation. In addition to producing heroin and opium, Burma is reportedly the largest producer of methamphetamine in the world and a significant producer of other synthetic drugs. Methamphetamine is produced in small, mobile labs in insurgent-controlled border areas, mainly in eastern Burma (for export mainly to Thailand) and sometimes co-located with heroin refineries. Burma's rise to prominence in the global synthetic drug trade is in part the consequence of UWSA's commitment to ban opium poppy cultivation. According to some, UWSA leadership may be intentionally replacing opium cultivation with the manufacturing and trafficking of amphetamine-type stimulants. As a result, Burma has emerged as one of the world's largest producers of methamphetamine and other amphetamine-type stimulants. The State Department states that this sharp increase in methamphetamine trafficking is "threatening to turn the Golden Triangle into an 'Ice Triangle.'" A July 2008 media report indicates that international assistance for relief from the cyclone Nargis may have been used as a cover to smuggle illegal drugs into Burma. According to the Irrawaddy , an independent Burmese newspaper, several customs officials were suspected of involvement in a scheme to smuggle ecstasy pills into Burma as part of shipments of relief aid from Burmese communities abroad. Burma is a party to the United Nations Convention against Transnational Organized Crime and its protocol on migrant smuggling and trafficking in persons. However, Burma has been designated as a "Tier 3" state in every Trafficking in Persons (TIP) Report ever published by the State Department. Tier 3 is the worst designation in the TIP Report, indicating that the country does not comply with minimum standards for combating human trafficking under the Trafficking Victims Protection Act of 2000, as amended (Division A of P.L. 106-386 , 22 U.S.C. 7101, et seq.). As the TIP reports explain, laws to criminally prohibit sex and labor trafficking, as well as military recruitment of children, exist in Burma—and the penalties prescribed by these laws for those convicted of breaking these laws are "sufficiently stringent." Nevertheless, the State Department continues to report that these laws are arbitrarily enforced by the SPDC and that cases involving high-level officials or well-connected individuals are not fully investigated. Victims are trafficked internally and regionally, and junta officials are directly involved in trafficking for forced labor and the unlawful conscription of child soldiers, according to several reports. Women and girls, especially those of ethnic minority groups and those among the thousands of refugees along Burma's borders, are reportedly trafficked for sexual exploitation. Victims are reportedly trafficked from rural villages to urban centers and commerce nodes, such as truck stops, border towns, and mining and military camps. One incident in early 2008 revealed the risks associated with migrant smuggling from Burma to Thailand, when 54 Burmese migrants were found dead in the back of a seafood truck headed to Thailand after the truck's air conditioning failed. Based on media accounts, 67 migrants survived, including at least 14 minors. In September 2009, the U.S. Department of Labor released a report and initial list of goods produced by child labor or forced labor. This is a congressionally mandated report, pursuant to the Trafficking Victims Protection Reauthorization Acts of 2005 and 2008, which required that the Department of Labor's Bureau of International Labor Affairs (DOL/ILAB) develop and publish a list of goods from countries in which ILAB had "reason to believe" were produced as a result of child or forced labor. Burma is listed among the 58 countries described in the ILAB report, with 14 separate production sectors implicated. Burma is rich in natural resources, including extensive forests, high biodiversity, and deposits of minerals and gemstones. Illegal trafficking of these resources is reportedly flowing to the same destination states and along the same trafficking routes as other forms of trafficking. Global Witness, a London-based non-governmental organization, estimates that 98% of Burma's timber exports to China, from 2001 to 2004, were illegally logged, amounting to an average of $200 million worth of illegal exports each year. Many analysts also claim that the region's illegal timber trade is characterized by complex patronage and corruption systems. Wild Asiatic black bears, clouded leopards, Asian elephants, and a plethora of reptiles, turtles, and other unusual animals reportedly are sold in various forms—whole or in parts, stuffed, ground, or, sometimes, alive—in open-air markets in lawless border towns. Growing demand in countries such as China and Thailand has increased regional prices for exotic wildlife; for example, a tiger's skin can be worth up to $20,000, according to media reports. One report suggests that valuable wildlife is used as currency in exchange for drugs and in the laundering of other contraband proceeds. Rubies, sapphires, jade, and other gems have also been used as non-cash currency equivalents for transborder smuggling. The legal sale of Burmese gems is among the country's most significant foreign currency earners—$297 million during the 2006-2007 fiscal year, according to Burma's customs department; more may be traded through illicit channels. Some observers claim that the junta is heavily involved in both the legal and illegal trade of gemstones, as the regime controls most mining operations and the sale of gems through official auctions and private sales reportedly arranged by senior military officers. Congress has also accused the Burmese regime of attempting to evade U.S. sanctions against the import of Burmese gemstones by concealing the gems' origin from potential buyers. Congress estimates that while 90% of the world's rubies originate from Burma, only 3% of those entering the United States are claimed to have originated there. AK-47s, B-40 rocket launchers, and other small arms are reportedly smuggled into Burma along the Thai-Burmese border. These weapons reportedly go to the Karen guerrillas, who continue to fight a decades-long insurgency against the Burmese junta. Another report implicates the Shan State Army in trafficking in military hardware. Although analysts say it is unlikely that the ruling junta benefits from the criminal profits of small arms trafficking, reports indicate that the government distributes such weapons to its cadre of child soldiers. Other less high-profile markets for contraband reportedly exist, including trafficking in cigarettes, cars, CDs, pornography, antiques, religious items, fertilizer, and counterfeit documents—many of which are believed to involve at least the complicity of some Burmese government officials. In April 2008, Japan's public broadcaster NHK reported that Burma has been importing multiple-launch rockets from North Korea, raising international concerns and speculation about why Burma would seek out such weapons in violation of U.N. sanctions imposed on North Korea after its nuclear test in October 2006. Some observers speculate that the Burmese military has been seeking to upgrade its artillery to improve the country's protection against potential external threats. Burma and North Korea are thought to have been involved in conventional weapons trade in violation of U.N. sanctions since spring 2007, when North Korea and Burma resumed diplomatic relations with each other. Observers further claim that "Western intelligence officials have suspected for several years that the regime has had an interest in following the model of North Korea and achieving military autarky by developing ballistic missiles and nuclear weapons." The State Department reports in 2008 that Burma is a money laundering risk because of its underdeveloped financial sector and large volume of informal trade. In 2001, the international Financial Action Task Force on Money Laundering (FATF) designated Burma as a Non-Cooperative Country or Territory (NCCT) for deficient anti-money laundering provisions and weak oversight of its banking sector. A year later in 2002, the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) issued an advisory to U.S. financial institutions to give enhanced scrutiny to any financial transaction related to Burma. In 2003, two of Burma's largest private banks—Myanmar Mayflower Bank and Asia Wealth Bank—were implicated by FATF as involved in laundering illicit narcotics proceeds and counterfeiting. The Secretary of the Treasury in 2003 listed Burma as a "major money laundering country of primary concern" and in 2004 imposed additional countermeasures. Burma has since revoked the operating licenses of the two banks implicated in 2003. However, the U.S. government and international bodies, such as FATF, continue to monitor the widespread use of informal money transfer networks, sometimes also referred to as "hundi" or "hawala." Monies sent through these informal systems are usually legitimate remittances from relatives abroad. The lack of transparency and regulation of these money transfers remain issues of concern for the United States. In other parts of the world, hawala or hawala-like techniques have been used, or are suspected of being used, to launder proceeds derived from narcotics trafficking, terrorism, alien smuggling, and other criminal activities. Burma is subject to a broad sanctions regime that addresses issues of U.S. interest, which include democracy, human rights, and international crime. Specifically in response to the extent of transnational crime occurring in Burma, the President has taken additional actions against the country under several different legislative authorities. Burma is listed as a major drug-producing state, and because of its insufficient effort to combat the narcotics trade, the country is barred access to some U.S. foreign assistance. As an uncooperative, major drug-producing state, Burma is also subject to trade sanctions. In 2005, the Department of Justice indicted eight Burmese individuals identified in 2003 by the U.S. Treasury's Office of Foreign Assets Control (OFAC) for their alleged role in drug trafficking and money laundering. On November 13, 2008, OFAC named 26 individuals and 17 companies tied to Burma's Wei Hsueh Kang and the UWSA as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act (21 U.S.C. 1901-1908). Burma is characterized by the State Department's 2009 Trafficking in Persons report as a Tier 3 state engaged in the most severe forms of trafficking in persons; as such, Burma is subject to sanctions, barring the country from non-humanitarian, non-trade-related U.S. assistance and loss of U.S. support for loans from international financial institutions. As a major money laundering country—defined by Section 481(e)(7) of the Foreign Assistance Act of 1961, as amended, as one "whose financial institutions engage in currency transactions including significant amounts of proceeds from international narcotics trafficking"—Burma is subject to several "special measures" to regulate and monitor financial flows. These include Department of Treasury advisories for enhanced scrutiny over financial transactions, as well as five special measures listed under 31 U.S.C. 5318A. The United States does not apply sanctions against Burma in specific response to its activity in other illicit trades, including wildlife. The Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2007 ( H.R. 3890 ), however, would prohibit the importation of gems and hardwoods from Burma, among other restrictions. After more than a decade of applying sanctions against Burma, however, many analysts have concluded that the sanctions have done little to change the situation. The effectiveness of U.S. sanctions is limited by several factors. These include (1) unevenly applied sanctions against Burma by other countries and international organizations, including the European Union and Japan; (2) a booming natural gas production and export industry that provides the SPDC with significant revenue; (3) continued unwillingness of Burma's fellow members in the Association of Southeast Asian Nations (ASEAN) to impose economic sanctions against Burma; (4) Burma's historical isolation from the global economy; and (5) China's continued economic and military assistance to Burma. In addition, some analysts suggest that sanctions are, in part, culpable for the flourishing black markets in Burma, including trafficking in humans, gems, and drugs, because legal exports are barred. Several analysts indicate that many Burmese women who lost their jobs in the textile industry as a result of Western sanctions are among the victims of trafficking for sexual exploitation. The United States is assisting neighboring countries with stemming the flow of trafficked contraband from Burma into their territories. Although most U.S. assistance to combat transnational crime in Burma remains in suspension, the United States is working to train law enforcement and border control officials in neighboring countries through anti-crime assistance programs. Currently, the bulk of funding to Burma's neighbors remains concentrated in counter-narcotics and anti-human trafficking projects; no funding is allocated to the State Department for combating "organized and gang-related crime" in the region. Overall funding to combat trafficking has been in decline for several years; the Administration's FY2008 appropriations request for Foreign Operations in the region represents a 24.2% decrease from FY2006 actual funding. Despite Burma's recent progress in reducing opium poppy cultivation, most experts believe U.S. policies have not yielded substantial leverage in combating transnational crime emanating from Burma. In light of the most recent displays of junta violence against political demonstrators in September 2007, however, there are indications of increasing political interest in re-evaluating U.S. policy toward Burma. Among the considerations that policy makers have recently raised are (1) whether the United States should increase the amount of humanitarian aid sent to Burma; (2) what role ASEAN and other multilateral vehicles for dialogue could play in increasing political pressure on the junta regime; (3) what role the United States sees India, as the world's largest democracy and Burma's neighbor, playing in ensuring that Burma does not become a source of regional instability; and (4) how the United States can further work with China and Thailand, as the largest destinations of trafficked goods from Burma, to address transnational crime along Burma's borders.
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Transnational organized crime groups in Burma (Myanmar) operate a multi-billion dollar criminal industry that stretches across Southeast Asia. Trafficked drugs, humans, wildlife, gems, timber, and other contraband flow through Burma, supporting the illicit demands of the region and beyond. Widespread collusion between traffickers and Burma's ruling military junta, the State Peace and Development Council (SPDC), allows organized crime groups to function with impunity. Transnational crime in Burma bears upon U.S. interests as it threatens regional security in Southeast Asia and bolsters a regime that fosters a culture of corruption and disrespect for the rule of law and human rights. Congress has been active in U.S. policy toward Burma for a variety of reasons, including combating Burma's transnational crime situation. At times, it has imposed sanctions on Burmese imports, suspended foreign assistance and loans, and ensured that U.S. funds remain out of the regime's reach. The 110th Congress passed P.L. 110-286, the Tom Lantos Block Burmese JADE Act of 2008 (signed by the President on July 29, 2008), which imposes further sanctions on SPDC officials and prohibits the indirect importation of Burmese gems, among other actions. On the same day, the President directed the U.S. Department of Treasury to impose financial sanctions against 10 Burmese companies, including companies involved in the gem-mining industry, pursuant to Executive Order 13464 of April 30, 2008. The second session of the 111th Congress may choose to conduct oversight of U.S. policy toward Burma, including the country's role in criminal activity. Secretary of State Hillary Clinton announced in February 2009 the beginning of a review of U.S.-Burma relations. In September 2009, the conclusions of this policy review were released, noting in particular the beginning of direct dialogue with Burmese authorities on international crime-related issues, including compliance with U.N. arms sanctions and counternarcotics. Already in the first session of the 111th Congress, both the Senate and the House have held hearings in which crime issues related to Burma have been addressed. This report analyzes the primary actors driving transnational crime in Burma, the forms of transnational crime occurring, and current U.S. policy in combating these crimes. This report will be updated as events warrant. For further analysis of U.S. policy to Burma, see CRS Report RL33479, Burma-U.S. Relations, by [author name scrubbed].
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Administrative subpoena authority is the power vested in various administrative agencies to compel testimony or the production of documents or both in aid of the agencies' performance of their duties. Although most prevalent in a regulatory environment, administrative subpoenas may be used in a limited range of criminal investigations, such as those of the various inspectors general or inquiries into possible health fraud or sex offenses committed against children. During the 108 th Congress, the President urged Congress to expand and reinforce statutory authority to use administrative subpoenas in criminal investigations, and legislation was introduced for that purpose. Yet the 109 th Congress and those thereafter saw only modest proposals. In the 110 th , Congress did create an inspector general's office for the Architect of the Capitol with administrative subpoena power comparable to that enjoyed by other inspectors general. It also expanded the administrative subpoena power available in certain child sex offense investigations to include investigations of sex trafficking. Since then, proposals relating to the use of administrative subpoenas in criminal investigations have been confined to unregistered sex offenders, of the type ultimately enacted as part of the Child Protection Act of 2012. Proponents of the expanded use of administrative subpoenas emphasize their effectiveness as an investigative tool and question the logic of their availability in drug and health care fraud cases but not in terrorism or other cases. Critics suggest that administrative subpoena authority is little more than a constitutionally suspect "trophy" power, easily abused and of little legitimate use. More precisely, it might be said in favor of the use of administrative subpoenas in criminal investigations that they: provide a time-honored, court-approved means for agencies to acquire information in order to make well informed decisions; should be available for terrorism investigations; do not ordinarily require probable cause and consequently can be used from the beginning of an inquiry to gather information; can be used to gather information held by third parties other than the target of an inquiry; often can encourage the cooperation of third parties by providing immunity for cooperation similar to that available in a judicial context; often can make third parties subject to nondisclosure requirements thereby reducing the possibility that the target of an investigation will flee, destroy evidence, intimidate witnesses, or pose a risk to national security; can be made judicially enforceable both to ensure compliance and to safeguard against abuse; are less intrusive than search warrants; material is gathered and delivered by the individual rather than seized by the government; there is ordinarily an interval between the time of service of the subpoena and the time for compliance, allowing parties to consult an attorney; can be more easily and quickly used than grand jury subpoenas, but are otherwise similar; and are now available for investigations relating to some crimes and there is no obvious reason why they should not be available for other equally serious criminal investigations. On the other hand, it might be said that in the context of a criminal or foreign intelligence investigation that administrative subpoenas: are more likely to lead to unjustified intrusions of privacy; in terrorism cases, seem to replicate and expand existing national security letter authority, without an explanation as to why additional authority is needed; lack the judicial safeguards that accompany the issuance of a search warrant, probable cause and issuance by a neutral magistrate, among other things; generally lack the safeguards that accompany the issuance of a grand jury subpoena in that they ordinarily are not subject to a motion to quash or to the necessary participation of an Assistant United States Attorney; are distinguishable from grand jury subpoenas by the simple fact that the extensive powers available to the grand jury are justified in part by the fact that the grand jury is not the government but a buffer against the abuse of governmental authority; can be extremely expensive and disruptive for the person or entity to whom they are addressed long before the thresholds of overbreadth or oppression (the point at which a subpoena will not be enforced) are reached; are subject to easy abuse when they are issued against third parties who may have little interest in contesting their legitimacy; are subject to easy abuse when they are issued against third parties who are granted immunity from civil liability for the disclosures; are subject to easy abuse when they are issued against third parties who are subject to long term or permanent gag orders precluding disclosure to targets who might otherwise contest the abuse; and are sought for their speed, an environment in which mistakes often breed. At common law, a subpoena was a writ ordering an individual to appear before a court or tribunal, sub poena (under penalty) for failure to comply. The writ might simply command the individual to appear ad testificandum (for purposes of testifying), or it might also include a clause instructing the witness to appear, again under penalty for his failure ( sub poena ), duces tecum (bringing with you [some designated item]). Testimonial subpoenas and subpoenas duces tecum remain a prominent feature of judicial proceedings to this day. Administrative agencies have long held the power to issue subpoenas and subpoenas duces tecum in aid of the agencies' adjudicative and investigative functions. When Congress established the Interstate Commerce Commission, for example, it endowed the Commission with subpoena power: "[F]or the purposes of this act the [Interstate Commerce] Commission shall have power to require the attendance and testimony of witnesses and the production of all books, papers, tariffs, contracts, agreements, and documents relating to any matter under investigation, and to that end may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of books, papers, and documents under the provisions of this section," Interstate Commerce Act, §12, 24 Stat. 383 (1887). There are now over 300 instances where federal agencies have been granted administrative subpoena power in one form or another. The statute granting the power ordinarily describes the circumstances under which it may be exercised: the scope of the authority, enforcement procedures, and sometimes limitations on dissemination of the information subpoenaed. In some instances, the statute may grant the power to issue subpoena duces tecum, but explicitly or implicitly deny the agency authority to compel testimony. The statute may authorize use of the subpoena power in conjunction with an agency's investigations or its administrative hearings or both. Authority is usually conferred upon a tribunal or upon the head of the agency. Although some statutes preclude or limit delegation, agency heads are usually free to delegate such authority and to authorize its redelegation thereafter within the agency. Some statutes contain a specific mechanism to protect the confidentiality of subpoenaed information, others may rely upon the general proscriptions such as those that protect trade secrets, or those found in the Privacy and Freedom of Information Acts. Failure to comply with an administrative subpoena may pave the way for denial of a license or permit or some similar adverse administrative decision in the matter to which the issuance of the subpoena was originally related. In most instances, however, administrative agencies ultimately rely upon the courts to enforce their subpoenas. Generally, the statute that grants the subpoena power will spell out the procedure for its enforcement. Objections to the enforcement of administrative subpoenas "must be derived from one of three sources: a constitutional provision; an understanding on the part of Congress ... or the general standards governing judicial enforcement of administrative subpoenas," SEC v. Jerry T. O'Brien, Inc. Constitutional challenges arise most often under the Fourth Amendment's condemnation of unreasonable searches and seizures, the Fifth Amendment's privilege against self-incrimination, or the claim that in a criminal context the administrative subpoena process is an intrusion into the power of the grand jury and the concomitant right to grand jury indictment. In an early examination of the questions, the Supreme Court held that the Fourth Amendment did not preclude enforcement of an administrative subpoena issued by the Wage and Hour Administration notwithstanding the want of probable cause, Oklahoma Press Pub. Co. v. Walling . In the eyes of the Court: The short answer to the Fourth Amendment objections is that the records in these cases present no question of actual search and seizure, but raise only the question whether orders of the court for the production of specified records have been validly made; and no sufficient showing appears to justify setting them aside. No officer or other person has sought to enter petitioners' premises against their will, to search them, or to seize or examine their books, records or papers without their assent, otherwise than pursuant to orders of court authorized by law and made after adequate opportunity to present objections, which in fact were made. Nor has any objection been taken to the breadth of the subpoenas or to any other specific defect which would invalidate them. Neither the Fourth Amendment nor the unclaimed Fifth Amendment privilege against self-incrimination were thought to pose any substantial obstacle to subpoena enforcement: Without attempting to summarize or accurately distinguish all of the cases, the fair distillation, in so far as they apply merely to the production of corporate records and papers in response to a subpoena or order authorized by law and safeguarded by judicial sanction, seems to be that the Fifth Amendment affords no protection by virtue of the self-incrimination provision, whether for the corporation, or for its officers; and the Fourth, if applicable, at the most guards against abuse only by way of too much indefiniteness or breadth in the things required to be particularly described, if also the inquiry is one the demanding agency is authorized by law to make and the materials specified are relevant. The gist of the protection is in the requirement, expressed in terms, that the disclosure sought shall not be unreasonable. Congress had not expressly confined the Wage and Hour Administration's subpoena power to instances where probable cause for inquiry existed. Moreover, far from taking offense at any perceived intrusion upon the prerogatives of the grand jury, proximity was thought to commend rather than condemn the procedure. The Court considered the Administration akin to the grand jury whose searches end—rather than begin—with the discovery of probable cause. A few years later, dicta in United States v. Morton Salt C o. echoed the same message—the Fourth Amendment does not demand a great deal of administrative subpoenas addressed to corporate entities, "a governmental investigation into corporate matters may be of such a sweeping nature and so unrelated to the matter properly under inquiry as to exceed the investigatory power. But it is sufficient if the inquiry is within the authority of the agency, the demand is not too indefinite, and the information sought is reasonably relevant. 'The gist of the protection is in the requirement, expressed in terms, that the disclosure sought shall not be unreasonable.'" Of course, Fourth Amendment reasonableness is most often an issue when there is a justifiable expectation of privacy, and Fifth Amendment self-incrimination only where an individual is compelled to speak. As the Court made clear, an individual can claim neither Fourth nor Fifth Amendment privileges to bar a subpoena for documents held by a bank or other third party nor to a right to notice of the subpoena's demand. A statute or conditions precedent to judicial enforcement, however, may require what the Constitution does not. Nevertheless when asked if the Internal Revenue Service (IRS) must have probable cause before issuing a summons for the production of documents, the Court intoned the standard often repeated in response to an administrative subpoena challenge: Reading the statutes as we do, the Commissioner need not meet any standard of probable cause to obtain enforcement of his summons.... He must show [1] that the investigation will be conducted pursuant to a legitimate purpose, [2] that the inquiry may be relevant to the purpose, [3] that the information sought is not already within the Commissioner's possession, and [4] that the administrative steps required by the Code have been followed.... This does not ... mean[] that under no circumstances may the court inquire into the underlying reason for the examination. It is the court's process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. United States v. Powell . The lower courts continue to look to principles articulated in Oklahoma Press , Morton Salt , and Powell , when called upon to enforce administrative subpoenas. Both sides of the debate find support in the law that surrounds the grand jury. Proponents of the use of administrative subpoenas in criminal cases point out that the courts have often analogized the administrative inquiry and subpoena power to the inquiries and powers of the grand jury. Opponents contend the grand jury's powers depend upon its unique and independent constitutional status, a foundation the administrative subpoena lacks. The federal grand jury is certainly unique. It is a constitutionally acknowledged institution empowered to indict and to refuse to indict: "No person shall be held to answer for a capital, or otherwise infamous [federal] crime, unless on a presentment or indictment of a grand jury," U.S.Const. Amend.V. "[T]he whole theory of its function is that it belongs to no branch of the institutional government," but serves "as a kind of buffer or referee between the government and the people." Nevertheless, the federal grand jury is attended by Justice Department attorneys who, through the use of subpoenas and subpoenas duces tecum, arrange for the presentation of evidence before it. Unlike the search warrant, there is no threshold of probable cause or similar level of suspicion that must be crossed before the grand jury subpoena can be issued. "[T]he grand jury can investigate merely on suspicion that the law is being violated, or even because it wants assurance that it is not. It need not identify the offender it suspects, or even the precise nature of the offense it is investigating." Its proceedings are conducted in secret and even attorneys for the witnesses who testify before it must await their clients outside the closed doors of the grand jury chamber. The subpoena power upon which the grand jury relies, however, is the process of the court and may be enforced only through the good offices of the court. "And the court will refuse to lend its assistance when the compulsion the grand jury seeks would override rights accorded by the constitution or even testimonial privileges recognized at common law." A subpoena is generally considered less intrusive than a warrant. The warrant authorizes an officer to enter, search for and seize, forcibly if necessary at a reasonable time of the officer's choosing, that property to which the officer understands the warrant refers; the subpoena duces tecum instructs the individual to gather up the items described at his relative convenience and bring them before the tribunal at some designated time in the future. The validity of a warrant may only be contested after the fact; a motion to quash a subpoena can ordinarily be filed and heard before compliance is required. There are at least two relatively uncommon exceptions to this general scheme of disparity. First, a subpoena may order "forthwith" compliance, demanding immediate appearance and delivery. Second, while subpoenas ordinarily involve no bodily intrusions, grand jury subpoenas duces tecum have been issued for blood and saliva samples. Even here, however, the individual served may choose not to comply and challenge the validity of the subpoena should the government seek judicial enforcement—an option the individual whose property is subject to a search warrant clearly does not have. The Federal Rules of Criminal Procedure declare that grand jury subpoenas duces tecum may be neither unreasonable or oppressive, a standard originally borrowed from the civil rules which are now much more expressive. The criminal rule, which at a minimum is grounded in Fourth Amendment principles, is said to bar only the imprecise, overly burdensome, irrelevancy-seeking, or privilege-intrusive grand jury subpoena duces tecum. The Supreme Court demonstrated the deference owed the grand jury's power of inquiry in United States v. R. Enterprises, Inc . It observed that a party seeking to quash a grand jury subpoena duces tecum bears the burden of establishing that a particular subpoena is unreasonable because it is unduly burdensome or because of its want of specificity or relevancy and that a motion to quash on relevancy grounds "must be denied unless there is no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject of the grand jury's investigation." Several statutes at least arguably authorize the use of administrative subpoenas primarily or exclusively for purposes of a criminal investigation. They are: (1) 21 U.S.C. 876 (Controlled Substances Act cases); (2) 18 U.S.C. 3486 (administrative subpoenas in certain health care fraud, child abuse, and Secret Service protection cases); and (3) 5 U.S.C. App.(III) 6 (inspector general investigations). In addition, five statutory provisions vest government officials responsible for certain foreign intelligence investigations with authority roughly comparable to administrative subpoena access to various types of records. The earliest of the three federal statutes, that are used extensively for criminal investigative purposes, appeared with little fanfare as part of the 1970 Controlled Substances Act, 84 Stat. 1272 (1970): In any investigation relating to his functions under this subchapter with respect to controlled substances, listed chemicals, tableting machines, or encapsulating machines, the Attorney General may subpoena witnesses, compel the attendance and testimony of witnesses, and require the production of any records (including books, papers, documents, and other tangible things which constitute or contain evidence) which the Attorney General finds relevant or material to the investigation.... In spite of its spacious language, the legislative history of Section 876 emphasizes the value of the subpoena power for administrative purposes—its utility in assigning and reassigning substances to the act's various schedules and in regulating the activities of physicians, pharmacists, and the pharmaceutical industry—rather than as a criminal law enforcement tool: Subsection (a) of this section authorizes the Attorney General to subpoena witnesses and compel their attendance and testimony in investigations relating to his functions under title II [relating to authority to control; standards and schedules]. He is also authorized to compel production of records or other tangible things which constitute or contain evidence and upon which he has made a finding as to materiality or relevancy. H.Rept. 91-1444, at 53 (1970). Nevertheless, the Attorney General has delegated the authority to issue subpoenas under Section 876 to both administrative and criminal law enforcement personnel, and the courts have approved their use in inquiries conducted exclusively for purposes of criminal investigation. Section 876 authorizes both testimonial subpoenas and subpoenas duces tecum. It provides for judicial enforcement; failure to comply with the court's order to obey the subpoena is punishable as contempt of court. The section contains no explicit prohibition on disclosure. Even in the case of subpoenas issued during a criminal investigation, the courts have applied the traditional standards, worded one way or another, to convey the principle that a court must enforce an administrative subpoena that satisfies minimum statutory and constitutional prerequisites: "The critical questions are: (1) whether Congress has granted the authority to investigate; (2) whether procedural requirements have been followed; ... (3) whether the evidence is relevant and material to the investigation[; and (4) whether] Fourth Amendment 'reasonableness' [requirements have been] satisfied." The subject of a criminal investigation lacks a reasonable expectation of privacy upon which to base a Fourth Amendment objection to an administrative subpoena directed to a third party. In a criminal investigation, however, the cases suggest that Fourth Amendment probable cause and warrant prerequisites may apply, when execution of the administrative subpoena involves the attributes of a search. The language of the Inspector General Act of 1978 provision is just as general as its controlled substance counterpart: "each Inspector General, in carrying out the provisions this act, is authorized ... to require by subpoena the production of all information ... necessary in the performance of the functions assigned by this Act...." Its legislative history supplies somewhat clearer evidence of an investigative tool intended for use in both administrative and criminal investigations: Subpoena power is absolutely essential to the discharge of the Inspector and Auditor General's functions. There are literally thousands of institutions in the country which are somehow involved in the receipt of funds from Federal programs. Without the power necessary to conduct a comprehensive audit of these entities, the Inspector and Auditor General could have no serious impact on the way federal funds are expended. . . . The committee does not believe that the Inspector and Auditor General will have to resort very often to the use of subpoenas. There are substantial incentives for institutions that are involved with the Federal Government to comply with requests by an Inspector and Auditor General. In any case, however, knowing that the Inspector and Auditor General has recourse to subpoena power should encourage prompt and thorough cooperation with his audits and investigations. The committee intends, of course, that the Inspector and Auditor General will use this subpoena power in the performance of its statutory functions. The use of subpoena power to obtain information for another agency component which does not have such power would clearly be improper. [The committee recognizes that there is a substantial ongoing dispute about the propriety of so-called third party subpoenas: i.e., subpoenaing records of an individual which are in the hands of an institution, such as a bank. Since U.S. v. Miller , 425 U.S. 435 (1976), individuals have been regarded as having no protectable right of property with respect to their bank records. A law enforcement agency can obtain such records from a bank without any showing of cause to a neutral magistrate or any notice to the individual involved. The committee notes that progress has been made on legislation concerning financial privacy which would require notice to be given to an individual whose bank records are being obtained by a law enforcement agency. Hopefully, this progress will lead to legislation of general applicability to all law enforcement authorities, including Inspector and Auditor Generals]. The Justice Department reports that the "the Inspector General['s administrative subpoena] authority is mainly used in criminal investigations," and the courts have held that "the Act gives the Inspectors General both civil and criminal investigative authority and subpoena powers coextensive with that authority." In either case, the Inspector General Act contains no explicit prohibition on disclosure of the existence or specifics of a subpoena issued under its auspices. Subpoena authority under the Inspector General Act is delegable, and subpoenas issued under the act are judicially enforceable. As is the case elsewhere, the court must enforce an inspector general's administrative subpoena that complies with the authorizing statute and that is reasonable in the eyes of the Fourth Amendment. Unlike its companions, there can be little doubt that 18 U.S.C. 3486 is intended for use primarily in connection with criminal investigations. Section 3486 is an amalgam of four relatively recent statutory provisions—one, the original, dealing with health care fraud; one with child abuse offenses; one with threats against the President and others who fall under Secret Service protection; and one with sex offender registration. The first of these, the health care fraud provision, comes from the Health Insurance Portability and Accountability Act, where it caused little comment during consideration of the act. The child abuse subpoenas, on the other hand, generated some illuminating commentary. Enacted as part of the Protection of Children from Sexual Predators Act, and originally codified as 18 U.S.C. 3486A, the subpoena provision represented a compromise. The House version authorized a general subpoena power for use in the investigation of five federal child abuse offenses. The version that ultimately passed, however, encompassed a wider range of federal child abuse statutes but only permitted subpoenas for the records of Internet and telephone communications providers. Senator Leahy, the ranking member of the Senate Judiciary Committee, explained this portion of the compromise during debate on the bill: The House bill would have given the Attorney General sweeping administrative authority to subpoena records and witnesses [for] investigations involving crimes against children. This proposed authority to issue administrative subpoenas would have given federal agents the power to compel disclosures without any oversight by a judge, prosecutor, or grand jury, and without any of the grand jury secrecy requirements. We appreciate that such [secrecy] requirements may pose obstacles to full and efficient cooperation of federal/state task forces in their joint efforts to reduce the steadily increasing use of the Internet to perpetrate crimes against children, including crimes involving the distribution of child pornography. In addition, we understand that some U.S. Attorneys' Offices are reluctant to open grand jury investigations when the only goal is to identify individuals who have not yet, and may never, commit a federal (as opposed to state or local) offense. The Hatch-Leahy-DeWine substitute accommodates these competing interests by granting the Department a narrowly drawn authority to subpoena the information that it most needs: Routine subscriber account information from Internet Service Providers (ISP) which may provide appropriate notice to subscribers. The compromise did not long survive. Buried in the omnibus funding bill for that year was a second child abuse section (18 U.S.C. 3486A) in addition to Section 3486. In the following Congress when the Secret Service sought subpoena authority in presidential protection cases, its request and the authority in health care fraud and child abuse cases were merged into the language of general authority now found in Section 3486, and Section 3486A disappeared. In the process, the demise of the compromise was scarcely mentioned, but its legacy may live on in the form of the greater detail found in the revamped Section 3486. Congress added the final piece to Section 3486 in the Child Protection Act of 2012. It vests Section 3486's administrative subpoena power in the United States Marshals Service for use in tracking unregistered sex offenders. Section 3486 is both more explicit and more explicitly protective than either of its controlled substance or IG statutory counterparts. In addition to a judicial enforcement provision, it specifically authorizes motions to quash and ex parte nondisclosure court orders. It affords those served a reasonable period of time to assemble subpoenaed material and respond, and in the case of health care investigations the subpoena may call for delivery no more than 500 miles away. In child abuse and presidential investigation cases, however, it imposes no such geographical limitation and it may contemplate the use of forthwith subpoenas. It includes a "safe harbor" subsection that shields those who comply in good faith from civil liability; and in health care investigations limits further dissemination of the information secured. The authority of Section 3486 has been used fairly extensively. Yet, the reported case law has been relatively sparse and follows the pattern of the controlled substance and inspector general subpoena cases. One of the first simply held that the subject of a record subpoenaed from a third party custodian has no standing to move that the administrative subpoena be quashed. Others cite Oklahoma Press , Powell and Morton Salt for the proposition that administrative subpoenas under Section 3486 need not satisfy a probable cause standard. In one form or another, they endorse the general view that district courts must enforce administrative subpoenas that satisfy statutory requirements and conform to the reasonableness demands of the Fourth Amendment. Of the three statutes that most clearly anticipate use of administrative subpoenas during a criminal investigation, Section 3486 is the most detailed. Neither of the others has a nondisclosure feature nor a restriction on further dissemination; neither has an explicit safe harbor provision nor an express procedure for a motion to quash. All three, however, provide for judicial enforcement reinforced by the contempt power of the court. Only the controlled substance authority of 21 U.S.C. 876 clearly extends beyond the power to subpoena records and other documents to encompass testimonial subpoena authority as well. The Inspector General Act speaks only of subpoenas for records, documents, and the like, and has been held not to include testimonial subpoenas. Section 3486 strikes a position somewhere in between; the custodian of subpoenaed records or documents may be compelled to testify concerning them, but there is no indication that the section otherwise conveys the power to issue testimonial subpoenas. Appendix A. 21 U.S.C. 876. Subpoenas (a) Authorization of use by Attorney General In any investigation relating to his functions under this subchapter with respect to controlled substances, listed chemicals, tableting machines, or encapsulating machines, the Attorney General may subpoena witnesses, compel the attendance and testimony of witnesses, and require the production of any records (including books, papers, documents, and other tangible things which constitute or contain evidence) which the Attorney General finds relevant or material to the investigation. The attendance of witnesses and the production of records may be required from any place in any State or in any territory or other place subject to the jurisdiction of the United States at any designated place of hearing; except that a witness shall not be required to appear at any hearing more than 500 miles distant from the place where he was served with a subpoena. Witnesses summoned under this section shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. (b) Service A subpoena issued under this section may be served by any person designated in the subpoena to serve it. Service upon a natural person may be made by personal delivery of the subpoena to him. Service may be made upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering the subpoena to an officer, to a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. The affidavit of the person serving the subpoena entered on a true copy thereof by the person serving it shall be proof of service. (c) Enforcement In the case of contumacy by or refusal to obey a subpoena issued to any person, the Attorney General may invoke the aid of any court of the United States within the jurisdiction of which the investigation is carried on or of which the subpoenaed person is an inhabitant, or in which he carries on business or may be found, to compel compliance with the subpoena. The court may issue an order requiring the subpoenaed person to appear before the Attorney General to produce records, if so ordered, or to give testimony touching the matter under investigation. Any failure to obey the order of the court may be punished by the court as a contempt thereof. All process in any such case may be served in any judicial district in which such person may be found. Appendix B. 5 U.S.C. App. III, 6. Authority of Inspector General; Information and Assistance from Federal Agencies; Unreasonable Refusal; Office Space and Equipment (a) In addition to the authority otherwise provided by this Act, each Inspector General, in carrying out the provisions of this Act, is authorized— (1) to have access to all records, reports, audits, reviews, documents, papers, recommendations, or other material available to the applicable establishment which relate to programs and operations with respect to which that Inspector General has responsibilities under this Act; (2) to make such investigations and reports relating to the administration of the programs and operations of the applicable establishment as are, in the judgment of the Inspector General, necessary or desirable; (3) to request such information or assistance as may be necessary for carrying out the duties and responsibilities provided by this Act from any Federal, State, or local governmental agency or unit thereof; (4) to require by subpoena the production of all information, documents, reports, answers, records, accounts, papers, and other data and documentary evidence necessary in the performance of the functions assigned by this Act, which subpoena, in the case of contumacy or refusal to obey, shall be enforceable by order of any appropriate United States district court: Provided, That procedures other than subpoenas shall be used by the Inspector General to obtain documents and information from Federal agencies; (5) to administer to or take from any person an oath, affirmation, or affidavit, whenever necessary in the performance of the functions assigned by this Act, which oath, affirmation, or affidavit when administered or taken by or before an employee of an Office of Inspector General designated by the Inspector General shall have the same force and effect as if administered or taken by or before an officer having a seal; (6) to have direct and prompt access to the head of the establishment involved when necessary for any purpose pertaining to the performance of functions and responsibilities under this Act; (7) to select, appoint, and employ such officers and employees as may be necessary for carrying out the functions, powers, and duties of the Office subject to the provisions of Title 5, United States Code, governing appointments in the competitive service, and the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates; (8) to obtain services as authorized by section 3109 of Title 5, United States Code, at daily rates not to exceed the equivalent rate prescribed for grade GS-18 of the General Schedule by section 5332 of Title 5, United States Code; and (9) to the extent and in such amounts as may be provided in advance by appropriations Acts, to enter into contracts and other arrangements for audits, studies, analyses, and other services with public agencies and with private persons, and to make such payments as may be necessary to carry out the provisions of this Act. (b)(1) Upon request of an Inspector General for information or assistance under subsection (a)(3), the head of any Federal agency involved shall, insofar as is practicable and not in contravention of any existing statutory restriction or regulation of the Federal agency from which the information is requested, furnish to such Inspector General, or to an authorized designee, such information or assistance. (2) Whenever information or assistance requested under subsection (a)(1) or (a)(3) is, in the judgment of an Inspector General, unreasonably refused or not provided, the Inspector General shall report the circumstances to the head of the establishment involved without delay. (c) Each head of an establishment shall provide the Office within such establishment with appropriate and adequate office space at central and field office locations of such establishment, together with such equipment, office supplies, and communications facilities and services as may be necessary for the operation of such offices, and shall provide necessary maintenance services for such offices and the equipment and facilities located therein. (d) For purposes of the provisions of title 5, United States Code, governing the Senior Executive Service, any reference in such provisions to the "appointing authority" for a member of the Senior Executive Service or for a Senior Executive Service position shall, if such member or position is or would be within the Office of an Inspector General, be deemed to be a reference to such Inspector General. (e)(1) In addition to the authority otherwise provided by this Act, each Inspector General appointed under section 3, any Assistant Inspector General for Investigations under such an Inspector General, and any special agent supervised by such an Assistant Inspector General may be authorized by the Attorney General to— (A) carry a firearm while engaged in official duties as authorized under this Act or other statute, or as expressly authorized by the Attorney General; (B) make an arrest without a warrant while engaged in official duties as authorized under this Act or other statute, or as expressly authorized by the Attorney General, for any offense against the United States committed in the presence of such Inspector General, Assistant Inspector General, or agent, or for any felony cognizable under the laws of the United States if such Inspector General, Assistant Inspector General, or agent has reasonable grounds to believe that the person to be arrested has committed or is committing such felony; and (C) seek and execute warrants for arrest, search of a premises, or seizure of evidence issued under the authority of the United States upon probable cause to believe that a violation has been committed. (2) The Attorney General may authorize exercise of the powers under this subsection only upon an initial determination that— (A) the affected Office of Inspector General is significantly hampered in the performance of responsibilities established by this Act as a result of the lack of such powers; (B) available assistance from other law enforcement agencies is insufficient to meet the need for such powers; and (C) adequate internal safeguards and management procedures exist to ensure proper exercise of such powers. (3) The Inspector General offices of the Department of Commerce, Department of Education, Department of Energy, Department of Health and Human Services, Department of Homeland Security, Department of Housing and Urban Development, Department of the Interior, Department of Justice, Department of Labor, Department of State, Department of Transportation, Department of the Treasury, Department of Veterans Affairs, Agency for International Development, Environmental Protection Agency, Federal Deposit Insurance Corporation, Federal Emergency Management Agency, General Services Administration, National Aeronautics and Space Administration, Nuclear Regulatory Commission, Office of Personnel Management, Railroad Retirement Board, Small Business Administration, Social Security Administration, and the Tennessee Valley Authority are exempt from the requirement of paragraph (2) of an initial determination of eligibility by the Attorney General. (4) The Attorney General shall promulgate, and revise as appropriate, guidelines which shall govern the exercise of the law enforcement powers established under paragraph (1). (5)(A) Powers authorized for an Office of Inspector General under paragraph (1) may be rescinded or suspended upon a determination by the Attorney General that any of the requirements under paragraph (2) is no longer satisfied or that the exercise of authorized powers by that Office of Inspector General has not complied with the guidelines promulgated by the Attorney General under paragraph (4). (B) Powers authorized to be exercised by any individual under paragraph (1) may be rescinded or suspended with respect to that individual upon a determination by the Attorney General that such individual has not complied with guidelines promulgated by the Attorney General under paragraph (4). (6) A determination by the Attorney General under paragraph (2) or (5) shall not be reviewable in or by any court. (7) To ensure the proper exercise of the law enforcement powers authorized by this subsection, the Offices of Inspector General described under paragraph (3) shall, not later than 180 days after the date of enactment of this subsection, collectively enter into a memorandum of understanding to establish an external review process for ensuring that adequate internal safeguards and management procedures continue to exist within each Office and within any Office that later receives an authorization under paragraph (2). The review process shall be established in consultation with the Attorney General, who shall be provided with a copy of the memorandum of understanding that establishes the review process. Under the review process, the exercise of the law enforcement powers by each Office of Inspector General shall be reviewed periodically by another Office of Inspector General or by a committee of Inspectors General. The results of each review shall be communicated in writing to the applicable Inspector General and to the Attorney General. (8) No provision of this subsection shall limit the exercise of law enforcement powers established under any other statutory authority, including United States Marshals Service special deputation. Appendix C. 18 U.S.C. 3486. Administrative Subpoenas (a) Authorization . — (1)(A) In any investigation relating [to]— (i)(I) a Federal health care offense; or (II) a Federal offense involving the sexual exploitation or abuse of children, the Attorney General; (ii) an unregistered sex offender conducted by the United States Marshals Service, the Director of the United States Marshals Service; or (iii) an offense under section 871 or 879, or a threat against a person protected by the United States Secret Service under paragraph (5) or (6) of section 3056, if the Director of the Secret Service determines that the threat constituting the offense or the threat against the person protected is imminent, the Secretary of the Treasury, may issue in writing and cause to be served a subpoena requiring the production and testimony described in subparagraph (B). (B) Except as provided in subparagraph (C), a subpoena issued under subparagraph (A) may require— (i) the production of any records or other things relevant to the investigation; and (ii) testimony by the custodian of the things required to be produced concerning the production and authenticity of those things. (C) A subpoena issued under subparagraph (A) with respect to a provider of electronic communication service or remote computing service, in an investigation of a Federal offense involving the sexual exploitation or abuse of children shall not extend beyond— (i) requiring that provider to disclose the information specified in section 2703(c)(2), which may be relevant to an authorized law enforcement inquiry; or (ii) requiring a custodian of the records of that provider to give testimony concerning the production and authentication of such records or information. (D) As used in this paragraph— (i) the term "Federal offense involving the sexual exploitation or abuse of children" means an offense under section 1201, 1591, 2241(c), 2242, 2243, 2251, 2251A, 2252, 2252A, 2260, 2421, 2422, or 2423, in which the victim is an individual who has not attained the age of 18 years. (ii) the term "sex offender" means an individual required to register under the Sex Offender Registration and Notification Act (42 U.S.C. 16901 et seq.). (2) A subpoena under this subsection shall describe the objects required to be produced and prescribe a return date within a reasonable period of time within which the objects can be assembled and made available. (3) The production of records relating to a Federal health care offense shall not be required under this section at any place more than 500 miles distant from the place where the subpoena for the production of such records is served. The production of things in any other case may be required from any place within the United States or subject to the laws or jurisdiction of the United States. (4) Witnesses subpoenaed under this section shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. (5) At any time before the return date specified in the summons, the person or entity summoned may, in the United States district court for the district in which that person or entity does business or resides, petition for an order modifying or setting aside the summons, or a prohibition of disclosure ordered by a court under paragraph (6). (6)(A) A United States district court for the district in which the summons is or will be served, upon application of the United States, may issue an ex parte order that no person or entity disclose to any other person or entity (other than to an attorney in order to obtain legal advice) the existence of such summons for a period of up to 90 days. (B) Such order may be issued on a showing that the things being sought may be relevant to the investigation and there is reason to believe that such disclosure may result in— (i) endangerment to the life or physical safety of any person; (ii) flight to avoid prosecution; (iii) destruction of or tampering with evidence; or (iv) intimidation of potential witnesses. (C) An order under this paragraph may be renewed for additional periods of up to 90 days upon a showing that the circumstances described in subparagraph (B) continue to exist. (7) A summons issued under this section shall not require the production of anything that would be protected from production under the standards applicable to a subpoena duces tecum issued by a court of the United States. (8) If no case or proceeding arises from the production of records or other things pursuant to this section within a reasonable time after those records or things are produced, the agency to which those records or things were delivered shall, upon written demand made by the person producing those records or things, return them to that person, except where the production required was only of copies rather than originals. (9) A subpoena issued under paragraph (1)(A)(i)(II) or (1)(A)(iii) may require production as soon as possible, but in no event less than 24 hours after service of the subpoena. (10) As soon as practicable following the issuance of a subpoena under paragraph (1)(A)(iii), the Secretary of the Treasury shall notify the Attorney General of its issuance. (b) Service . —A subpoena issued under this section may be served by any person who is at least 18 years of age and is designated in the subpoena to serve it. Service upon a natural person may be made by personal delivery of the subpoena to him. Service may be made upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering the subpoena to an officer, to a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. The affidavit of the person serving the subpoena entered on a true copy thereof by the person serving it shall be proof of service. (c) Enforcement . —In the case of contumacy by or refusal to obey a subpoena issued to any person, the Attorney General may invoke the aid of any court of the United States within the jurisdiction of which the investigation is carried on or of which the subpoenaed person is an inhabitant, or in which he carries on business or may be found, to compel compliance with the subpoena. The court may issue an order requiring the subpoenaed person to appear before the Attorney General to produce records, if so ordered, or to give testimony concerning the production and authentication of such records. Any failure to obey the order of the court may be punished by the court as a contempt thereof. All process in any such case may be served in any judicial district in which such person may be found. (d) Immunity from civil liability . —Notwithstanding any Federal, State, or local law, any person, including officers, agents, and employees, receiving a subpoena under this section, who complies in good faith with the subpoena and thus produces the materials sought, shall not be liable in any court of any State or the United States to any customer or other person for such production or for nondisclosure of that production to the customer. (e) Limitation on use . —(1) Health information about an individual that is disclosed under this section may not be used in, or disclosed to any person for use in, any administrative, civil, or criminal action or investigation directed against the individual who is the subject of the information unless the action or investigation arises out of and is directly related to receipt of health care or payment for health care or action involving a fraudulent claim related to health; or if authorized by an appropriate order of a court of competent jurisdiction, granted after application showing good cause therefor. (2) In assessing good cause, the court shall weigh the public interest and the need for disclosure against the injury to the patient, to the physician-patient relationship, and to the treatment services. (3) Upon the granting of such order, the court, in determining the extent to which any disclosure of all or any part of any record is necessary, shall impose appropriate safeguards against unauthorized disclosure.
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Administrative subpoena authority is the power vested in various administrative agencies to compel testimony or the production of documents or both in aid of the agencies' performance of their duties. Administrative subpoenas are not a traditional tool of criminal law investigation, but neither are they unknown. Several statutes authorize the use of administrative subpoenas primarily or exclusively for use in a criminal investigation in cases involving health care fraud, child abuse, Secret Service protection, controlled substance cases, inspector general investigations, and tracking unregistered sex offenders. Proponents cite administrative subpoenas as a quick, efficient, and relatively unintrusive law enforcement tool. Opponents express concern that they may result in unchecked invasions of privacy and evasions of the Fourth Amendment warrant and probable cause requirements. The courts have determined that, as long as they are not executed in a manner reminiscent of a warrant, administrative subpoenas issued in aid of a criminal investigation must be judicially enforced if they satisfy statutory requirements and are not unreasonable by Fourth Amendment standards. The Child Protection Act of 2012, P.L. 112-206 (H.R. 6063) authorized the United States Marshals Service to issue administrative subpoenas in aid of tracking unregistered sex offenders. This report is available abridged—without footnotes, appendixes, and most of the citations to authority—as CRS Report RS22407, Administrative Subpoenas in Criminal Investigations: A Sketch, by [author name scrubbed].
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The Economic Growth and Tax Relief Act of 2001 (EGTRRA; P.L. 107-16 ), among other tax cuts, provided for a gradual reduction in the estate tax. The estate tax applies to wealth transferred at death and had, at that time, a unified exemption for both lifetime gifts and the estate of $675,000. Under EGTRRA, the estate tax exemption rose from $675,000 in 2001 to $3.5 million in 2009, and the top tax rate fell from 55% to 45%. Although combined estate and gift tax rates are graduated, the exemption is effectively in the form of a credit that eliminates tax due at lower rates so there is a flat rate on taxable assets under 2009 law. The gift tax exemption was, however, restricted to $1 million. For 2010, EGTRRA scheduled the elimination of the estate tax, although it retained the gift tax and its $1 million exemption. EGTRRA also provided for a carryover of basis for assets inherited at death, so that, in contrast with prior law, heirs who sold assets would have to pay tax on gains accrued during the decedent's lifetime. This provision has a $1.3 million exemption for gain (plus $3 million for a spouse). As with other provisions of EGTRRA, the tax revisions expire in 2011, returning the tax provisions to their pre-EGTRRA levels. The exemption would revert to $1 million (a value that had already been scheduled for pre-EGTRRA law) and the rate to 55% (with some graduated rates). The carryover basis provision effective in 2010 would be eliminated (so that heirs will not be taxed on gain accumulated during the decedent's life when they inherit assets). During debate on the estate tax, most agreed that the 2010 provisions would not be continued, and, indeed, could be repealed retroactively. President Obama proposed a permanent extension of the 2009 rules (a $3.5 million exemption and a 45% tax rate), and the House provided for that permanent extension on December 3, 2009 ( H.R. 4154 ). The Senate Democratic leadership has indicated a plan to retroactively reinstate the 2009 rules for 2010 and beyond. Senate Minority Leader McConnell proposed an alternative of a 35% tax rate and a $5 million exemption. A similar proposal for a $5 million exemption and a 35% rate, which also includes the ability of the surviving spouse to inherit any unused exemption of the decedent, is often referred to as Lincoln-Kyl after the two Senators who have supported it. Proposals have also been to begin with the $3.5 million/45% rate and phase in the $5 million/55% rate. Others have argued for a permanent estate tax repeal. At the end of 2010, a temporary extension for two years, with a $5 million exemption, a 35% rate, and inheritance of unused spousal exemptions was enacted in P.L. 111-312 . At the end of 2012, absent legislation, the provisions will revert to the pre-EGTRRA rules ($1 million exemption, 55% top rate). To address abuses and tax avoidance, President Obama has included proposals in his 2011 budget outline. One of these proposals, to reform the Grantor Retained Annuity Trust (GRAT), is included in H.R. 4849 . This provision is discussed in detail below. After a brief description of the estate and gift tax and of options, this report compares the alternatives, focusing largely on a $1 million exemption and 55% rate, a $3.5 million exemption and a 45% rate, and a $5 million exemption and a 35% rate. Several policy effects and issues are analyzed: the share of decedents subject to tax; revenue effects; distributional effects; and effects on savings, charitable contributions, and compliance and administration. The report also considers other aspects of the proposals, such as whether the exemptions are indexed for inflation, a proposed inheritance of the exemption for spouses (which applies under the new rules to 2011 and 2012), and proposals to address perceived abuses. This section describes the estate tax as it existed in 2009 and will exist in future years, absent legislative change. For 2010, there is no estate tax, although the gift tax remains and there is a tax on gains accumulated during the decedent's lifetime when assets are sold by heirs (with a $1.3 million exemption plus $3 million for a spouse). An election can be made for 2010 to apply either 2010 or 2011 rules. Because the exemption from gains is smaller than the overall estate tax exemption for 2011, some estates would have lower tax liability by electing the 2011 rules. The estate and gift tax is a unified tax, so that assets transferred as gifts during a person's lifetime are combined with those transferred at death (bequests) and subject to a single rate schedule. The tax is imposed on the decedent's estate and the rate structure applies to total bequests and gifts given; heirs are not subject to tax. In the past, a single effective exemption applied, but under the 2001 tax revisions effective in 2009, the gift tax exemption was more limited than the combined exemption for both estate and gift taxes. Thus, although a unified rate schedule applies to both bequests and gifts, the exemptions differed in 2009. The combined exemption was $3.5 million, whereas the exemption for gifts was $1 million. For 2011 and 2012, the combined exemption is $5 million and that exemption applies to gifts as well. In 2013, the combined exemption will be $1 million, absent legislative change. Although the rates of the tax are graduated, the exemption is applied in the form of a credit and offsets taxes applied at the lower rates, under the 2009 and the 2011-2012 rules. Thus the taxable estate was subject to a flat 45% rate in 2009 and will be subject to a flat 35% rate in 2011-2012. Under pre-EGTRRA law, which will apply in 2013, absent legislation, there are some graduated rates on taxable estate amounts between $1 million and $3 million because the exemption is not large enough to offset tax at lower rates. Rates begin at 41% for amounts over $1 million and rise by 2 percentage points at each additional $500,000, reaching 53% on amounts between $2.5 million and $3 million. There is also a 5% surtax designed to phase out the benefits of lower rates so that very large estates are taxed at a flat 55% rate. Individuals are also allowed to exempt annual gifts of $13,000 per recipient, which are not counted as part of the lifetime exemption. The annual gift tax exemption is indexed for inflation in $1,000 increments. A generation skipping tax is also imposed, to address estate tax avoidance through gifts and bequests to a later generation. Estates are allowed to exempt some assets from the estate tax and take a deduction for selected other transfers. Transfers between spouses are exempt. Estates are also allowed to take deductions for charitable contributions and administrative expenses. Currently estates are also allowed a deduction for taxes paid on estates and inheritances imposed by states. Prior to 2001, a credit was allowed, subject to a cap, for state estate taxes, but the credit was phased out and replaced by a deduction in that legislation. (Should EGTRRA provisions expire, the state credit would reappear.) Under the rules for 2011 and 2012, a spouse can inherit any unused exemption. Thus if a husband dies and leaves an estate of $3 million, the remainder of his $5 million exemption can be used by his wife, whose exemption would be increased by the $2 million difference. A series of provisions benefit small businesses, including farms or landowners. These include the ability of family businesses to pay the tax in installments with only interest payments during part of the installment period, special use valuation, conservation easements, and, if the law reverts to its 2001 rules, a deduction for family owned business assets. Minority discounts, although granted by courts rather than specifically in the law, may also benefit small businesses. Although the estate tax return is due within nine months of the death, small businesses are allowed to defer payment (except for interest) for the next five years, and pay the remaining installment payments over 10 years. Since the last interest payment and the first installment coincide, the overall delay in full payment is 14 years. The benefit is allowed only for the business portion of assets and only if 35% of the estate is in a farm or closely held business. Small businesses are also allowed to value their assets at use as a farm or business. This provision is particularly beneficial to farms and allows a reduction in the estate value of up to $1 million. It means, for example, that the value of the farm will be what it could be sold for if restricted to farm use rather than, for example, to be subdivided for development. Heirs are required to continue use as a farm or business for 10 years. Farmers and other landowners may also benefit from conservation easements, a perpetual restriction on the use of the land where, in addition to the reduction in value due to the easement itself, an exclusion of up to 40% of the restricted value of the land, capped at $500,000, is allowed. In prior law, another provision benefitting small businesses was the Qualified Family Owned Business Income (QFOBI) deduction. This provision allowed estates with at least half of their assets in a family business to take a deduction for these business assets. This provision originally allowed up to $675,000 of business deductions at a time when the basic estate tax exemption was $625,000, and imposed an overall cap of $1.3 million on the total of both deductions. Once the regular exemption passed the $1.3 million level, the provision was no longer relevant. If the 2001 tax cuts sunset in 2013, the exemption will become $1 million and QFOBI will be relevant again, allowing an additional $300,000 exemption. With the $5 million exemption for 2011 and 2012, this provision is ineffective. To qualify for the QFOBI deduction, heirs must continue the business for 10 years or the tax saving must be repaid. Heirs take as their basis (the amount to be deducted from the sales price) for purposes of future capital gains the value of the asset at the date of the decedent's death. This treatment is referred to as step-up in basis and means that no capital gains tax is paid on the appreciation of assets during the decedent's lifetime. For example, if decedent purchased stock for $100,000 and the value of the stock at the time of death is $200,000, if the heir sells the property for $250,000 a gain of $50,000 ($250,000 minus the stepped-up basis of $200,000) is recognized. The $100,000 of gain that accrued during the decedent's lifetime is never taxed. The step up rules do not apply to gifts, where carryover basis is applied. In that case, the original basis of $100,000 would be carried over and the gain would be $150,000 ($250,000 minus $100,000). Both the gain accrued by the donor and the gain accrued by the donee are taxed. The step-up rules do not apply to bequests for 2010, if 2010 rules are elected, where carryover basis, with an exemption, applies, as noted above. Aside from the different exemption levels in some estate tax rules, there are other differences between the taxation of gifts and bequests. As noted above, gifts do not benefit from the step up in basis. The donor takes the basis in the hands of the donor, generally the original cost of acquiring the assets. The basis cannot be less than the fair market value at the time of the gift if a loss is realized. At the same time, the gift tax is tax exclusive (the tax is imposed on the gift net of the tax) whereas the estate tax is tax inclusive (the tax is applied to the estate inclusive of the tax). To illustrate, consider a 50% tax rate. Assuming the exemption is already used, to provide a gift of $1 million costs $1.5 million: the tax rate of 50% is applied to the gift of $1 million for a $0.5 million tax. To provide a net amount of $1 million for a bequest, $2 million is required: a tax of $1 million (50% of $2 million) and a net to the heir of $1 million. Another way of stating this is that the gift tax rate, if stated as a tax inclusive rate like the estate tax, would be 33%. Thus for the 55%, 45%, and 35% estate tax rates, the gift tax rate equivalents are 35%, 31%, and 26%. The principal components of any policy that continues the estate tax are the amount of the exemption and the tax rate. As indicated earlier, the exemption in 2009 was $3.5 million, the exemption is scheduled at $5 million for 2011 and 2012, and in 2013 the estate tax will revert to an exemption of $1 million, absent a change in the statute. Thus, while any level of exemption might be considered, the two most common levels mentioned are $3.5 million and $5 million. The level of the exemption affects not only the revenue but the number of estates that are subject to the tax. The second principal component of a continued estate tax is the rate, which will return to 55% in 2013 absent legislative change; rates of 45% applied in 2009 and a 35% rate applies in 2011-2012. Some proposals would apply the capital gains tax rate (currently 15% but scheduled to go to 20% in 2013) or some multiple of it. Another issue is whether to index the exemption for inflation. Some components of the income tax, such as rate brackets and standard deductions, are indexed, while others (such as child credits) are not. Over time, as prices rise, a fixed exemption causes more estates to be subject to tax. Without indexation, Congress may return from time to time to reconsider the exemption. A final issue is the potential carryforward of an unused estate tax exemption to the surviving spouse. The provision, adopted in recent legislation for 2011 and 2012, would allow spouses to inherit unused estate tax exemptions. Since bequests to the spouse are excluded from the estate, the couple together can have a larger total exemption if the first spouse to die leaves assets to the children or other heirs large enough to absorb his or her estate exemption. This action will reduce the size of the estate subject to tax when the second spouse dies. There are reasons, however, that the taxpayer may prefer to leave more assets to a spouse (for example, if there are concerns about having enough assets to live in comfort or cover emergencies). The proposed change is to permit the second spouse to inherit any unused exemption and add it to his or her own future exemption. Proposals have also been made to increase the percentage or dollar limits of special use valuations and conservation easements. At the same time, there are proposals, including those in President Obama's budget, to restrict practices considered as abuses. One proposal, relating to a certain type of trust (a Grantor Retained Annuity Trust or GRAT) was adopted in H.R. 4849 , the Small Business and Infrastructure Jobs Tax Act of 2010. Another proposal would restrict minority discounts for estates that are sometimes allowed by courts when no one heir has a controlling interest in the property. A third provision would require estates and heirs use the same fair market value in determining the valuation for purposes of the estate tax and for determining basis in the hands of the heir. Data, other empirical evidence, and economic theory can help address proposals to revise the estate tax. Relevant economic issues include the scope and effect of the tax on the total population and the distribution of the tax, the revenue yield, and the potential effects on family businesses, savings, administration and compliance, and charitable giving. To the extent possible, different options are compared in the context of these issues. Other issues are perhaps more philosophical or, as Gale and Slemrod discuss in their article on the estate tax, rhetorical. For example, some people oppose the estate tax because they hold a philosophical view that the estate tax is a death tax and death should not be taxed. Arguments are also made that estate taxes result in a double tax, because assets have already been taxed under the income tax and should not be taxed again. Gale and Slemrod do point out, however, the complexity of the rhetorical questions. For example, they point out that for the vast majority of people (at the time they were writing, 98%) death actually brings potential tax benefits through the forgiveness of tax on accrued but unrealized gains (gains on assets that have not been sold). They also note that income from unrealized appreciation in assets is not taxed during the lifetime and so is not subject to double taxation. They indicate that 36% of estate assets and 80% of the wealth in closely held business and farm estates is from unrealized appreciation. Supporters of the estate tax may believe it is important to constrain the accumulation of wealth generation after generation. While empirical evidence can demonstrate that the estate tax is highly progressive, the degree to which taxes should be applied to large amounts of wealth in pursuit of reducing inequality in society, much like the question of whether it is wrong for death to trigger a tax, is a value judgment. The estate tax has never affected more than a small fraction of decedents. Table 1 indicates that if the law reverts to the $1 million exemption, less than 2% of decedents would pay an estate tax. Table 1 also indicates that restoring the $3.5 million exemption leads to a quarter of 1% of decedents paying the tax. Moving to a $5 million exemption reduces the share to 0.14%. The column for 2019 illustrates the effects of indexing the $3.5 million and the $5 million for inflation, starting from 2009. Note that even with indexing for inflation, real asset growth leads to an increased share of decedents paying the estate tax. With or without indexing, the $3.5 million option will affect less than one-half of 1% of decedents and the $5 million option will affect less than one-fourth of 1% of decedents. If the main focus of legislation is to exclude all but a small fraction of estates from the tax, the $3.5 million exemption and the $5 million exemption accomplish that goal, and indexing does not matter very much over short time horizons. An issue in the choice of estate tax provisions is the revenue cost. Although the estate tax accounts for a small share of total federal revenues, 1.3% in 2012 if the $1 million exemption/55% rate provisions are retained, concerns remain about revenue losses. Revenue costs are normally estimated against a current law baseline. Thus, the cost of keeping the 2009 rules in place retroactively to 2010, with a $3.5 million exemption and a 45% tax rate, would be compared to no estate tax in 2010; therefore there would be a revenue gain compared to no estate tax. In subsequent years, where current law reverts to a larger estate tax (a $1 million exemption and 55% rate) the smaller estate tax will lead to a revenue loss. Receipts are also measured when they flow into the Treasury and there is a delay in the filing of estate tax returns. The Joint Committee on Taxation (JCT) in 2009 estimated a gain of $0.5 billion in FY2010, then a loss, rising to $38 billion in FY2019 for a total of $234 billion over the 10-year period (FY2010-FY2019) from retaining the 2009 exemptions. Treasury's estimates are smaller, with a $3 billion and a $1 billion gain respectively in the first two fiscal years, becoming a $28 billion loss by FY2019, and losing $171 billion over a 10-year period. Another way to examine the alternatives is to look at the estimated yield for alternative proposals, that is, the liability rather than the flow of revenue to the Treasury. Table 2 provides data from the Urban Brookings Tax Policy Center for the three exemption levels. In 2011, the scheduled rules ($1 million exemption, 55% rate) are estimated to produce a liability of $34.4 billion; the $3.5 million exemption, 45% rate a revenue of $18.2 billion, and the $5 million exemption/35% rate a revenue of $11.4 billion. Thus, in 2010, the reduced liability from moving to a $3.5 million exemption with a 45% rate is $16.3 billion, whereas moving to the $5 million exemption with a 45% rate loses an additional $6.9 billion, for a total of $26.2 billion. The cost increases over time as the real and nominal value of wealth grows, so that, for example, the reduction in tax from moving to a $3.5 million exemption and 45% rate increases from $16.3 billion in 2011 to $30.7 billion in 2019. Table 2 also contains estimates of estate tax liability if exemptions are indexed (assuming indexing back to 2009). Indexing does not make a great deal of difference over this time period. Real growth in wealth is more important. For example, the difference between revenues in 2011 and 2019 for the $3.5 million exemption/45% rate is $13.4 billion but only $2.6 billion of the difference is due to lack of indexing for inflation. The estimates in Table 2 indicate that the difference between the $1 million, 55% rate and the $5 million, 35% rate would be $23.2 billion ($34.4 minus $11.2), in turn suggesting a cost for two years of $46 billion. The Joint Committee on Taxation (JCT) has estimated the cost of the estate tax revisions at $68 billion. Some of this difference may reflect differences in data and projections, but the JCT estimates would also be increased because of the increase in the gift tax exemption and the ability to inherit exemptions. For example, if a husband or wife left all assets to his or her spouse, the maximum exemption of the second spouse would be larger by $5 million. As indicated above, the two proposals generally discussed during the 111 th Congress were the $3.5 million exemption and 45% tax rate, and the $5 million exemption and 35% tax rate. However, various combinations of rates and exemptions could be considered. Table 3 reports the estimates of estate tax liability for each of the three exemption levels at different rates. It shows that, compared with the default $1 million exemption, a larger amount of the revenue loss results from moving to the $3.5 million exemption rather than the 45% rate. Similarly, in moving from the $1 million to the $5 million exemption, the cost of the exemption increase is smaller than lowering the rate to 35%. However, once the exemption is set at $3.5 million and the rate at 45%, the cost of moving to a $5 million exemption ($14.2 billion) is about the same as the cost of moving to a 35% tax rate ($14.1 billion). The rate reductions tend to benefit, relatively, a wealthier group of estates than exemptions, and thus reduce progressivity of the estate tax. However, rate reductions also reduce the average marginal tax rate more than exemption increases, which could matter for economic efficiency. These distributional issues are discussed more fully in the next section. One of the rationales for an estate tax is to impose a tax on high income and high wealth taxpayers, and contribute to the progressivity of the tax system. As indicated in the discussion of coverage, all of the proposals fall on a small proportion of decedents and thus, due to the size of the exemption level, on those with the greatest wealth. The alternative proposals have different effects on the size of estates covered and the distribution of taxes. As indicated in Table 4 , the number of estates is concentrated in the smaller estates. With the $1 million exemption, about half of the estates subject to tax have assets of under $2 million and almost 80% have assets of under $3.5 million, and these estates would be eliminated from estate tax coverage with either the $3.5 million or the $5 million exemption. With a $3.5 million exemption, the share of taxable estates under $5 million is smaller than the share falling between $5 million to $10 million group. Of the returns taxed under the $3.5 million exclusion, 23% are less than $5 million in assets and would not be taxed under the $5 million exclusion. As shown in Table 5 , revenue from the estate tax is more concentrated in larger estates. The largest share of revenue is in the $20 million and above class regardless of the exemption. With a return to the $1 million exemption that class would pay one-third of the revenue; with a $3.5 million exemption it would pay over 60%; and with a $5 million exemption it would pay almost three-quarters of the estate tax. These estimates indicate that the estate tax not only applies to high wealth families, but with either the $3.5 million or the $5 million exemption more than half the revenue is collected from estates with $20 million or more in assets. Although the statutory marginal tax rates are often criticized as being very high, the average share of the estate paid in tax is much lower. Part of the reason for the lower effective tax rate is the exemption. For example, even if a $10 million estate has no other deductions and exemption, a $3.5 million exemption means only $6.5 million is taxed. The tax of $2.95 million (45% of $6.5 million) is a tax of 29.5% on the $10 million. As shown in Table 6 , the effective tax averages less than 20% for estates up to $20 million and the average rate on those estates is less than 20%. The effective tax rate also rises, generally, with estate size, which would be expected as the exemption is a smaller share of the estate. With the $1 million exemption, the tax is 16.5% in the highest class, while it is 16% under the $3.5 million exemption and 11.5% under the $5 million exemptions. Important reasons for lower effective tax rates are the exemption, spousal transfers, and charitable contributions. The decline in effective tax rate at the very highest estate size for the $1 million exemption may reflect the greater likelihood of charitable contributions and the lesser importance of the exemption. Most distributional analyses of taxes are reported relative to income. As shown in Table 7 , the Tax Policy Center has estimated the distribution by income class of the tax for the $1 million exemption/55% rate and the $3.5 million exemption/45% tax rate. As this table indicates, the estate tax is highly concentrated in the higher income classes. For the $1 million exemption, 83% of the tax falls in the top quintile and 45% of the tax in the top 1%. For the $3.5 million exemption, 96% of the tax is imposed on the top quintile and 72% on the top 1%. These results indicate that the estate tax is a highly progressive feature of the federal tax system. An issue that has played an important role in the debate over the estate tax is the possible impact on small businesses and farms. The role played by the small business issue in the original 2001 legislation is detailed by Graetz and Shapiro. Arguments were made that the estate tax causes families to have to sell businesses to pay the estate tax because there are not enough liquid assets to pay the tax. According to aggregate data for 2008, farm assets account for 2.4% of assets reported on estate tax returns, and business assets constitute 17.9%. These shares include assets of estates where business or farm assets may be a minor part of the estate. Evidence on the effect of the tax on small business suggests that the taxable business estates are a small share of all taxable estates and a small share of estates of all business decedents. Table 8 provides estimates for the coverage of the estate tax reported or derived from the Urban Brookings Tax Policy Center of estates with at least half of their assets in business. As shown in the table, these estates are less than 10% of taxable estates, and, as with other estates, only a small fraction of business estates pay the estate tax (0.2% for the $3.5 million and $5 million exemption). As shown in Table 9 , data indicate that returns with business assets account for a somewhat higher share of the estate tax than they do of the number of taxable estates, suggesting some larger concentration of business assets in larger estates. (Note that in this case, the tax paid reflects total estate tax, and thus includes tax on business and non-business assets.) However, the effective tax rates (taxes paid as a percentage of the assets of all estates of $1 million or more) are somewhat lower for these small business returns, suggesting the use of discounts may be important. Although the Urban Brookings Tax Policy Center did not separately estimate farmer estates or consider questions of whether these estates had adequate liquid assets to pay the tax, a study done by the Congressional Budget Office (CBO) did examine these issues. This CBO study likely defined farmers more broadly than the Tax Policy Center criterion. At the same time, it examined the subset of estates that took the QFOBI exemption, which would be both small business and farm estates where the heirs expected to continue the business and where more than half of the estate was in the family business. The analysis was for 2000. Column 2 of Table 10 reports those values at an average annual growth rate of 3.5% for 11 years (for 2000 to 2011), to project the distribution across estate sizes for 2011. (This measure increases the value by the average annual growth rate of the economy minus growth in the labor force for 2000-2009, applied over 11 years, thus taking into account real wealth growth as well as inflation.) Table 10 indicates that the number of farm estates, using their measure of farms subject to the tax, would be less than 123 estates at the $3.5 million exemption and about 65 at the $5 million exemption. These estates are about 2% of all estates owing tax. The number of returns claiming QFOBI are also small, accounting for 2% to 2.5% of all taxable estate returns. Table 11 shows results the study found for a second question: how many estates of these types are likely to have insufficient liquid assets in the estate to pay the tax liability? While there were 138 farm estates in these circumstances for the $1 million exemption, there were only about 15 for the larger exemptions. These returns account for 0.2% and 0.4% of returns paying estate tax. For estates claiming the QFOBI deduction there were 62 at the $3.5 million exemption and 41 at the $5 million exemption. These returns accounted for about 1% of taxable estates. A different survey of farmers performed by the Department of Agriculture estimated that farm estates would pay $683 million in estate taxes in 2009, which would be just under 4% of total estate tax liability, and that 1.6% of farms decedents would pay the estate tax under the 2009 provisions. This share is much larger than the share for businesses overall reported by the Tax Policy Center and is also about twice as large as the estimates implied by the CBO study. Regardless of the data source used, the evidence suggests two important characteristics of businesses and the estate tax: businesses pay a small fraction of the estate tax and a tiny fraction of total estates of businesses and farmers are liable for the tax. If estate tax policy decisions are driven by these concerns, a more target-efficient alternative would be to provide additional benefits for business assets, such as an expanded QFOBI deduction. Some claims have been made that the estate tax causes a significant reduction in savings. This effect may be alleged to be so damaging that it justifies eliminating the tax. However, there is no clear basis for this claim. Economic theory does not provide a clear guide. If the bequest motive is primarily to leave a bequest to one's heirs because of concerns about their welfare, the estate tax could lead to less saving (because a gift to one's children is made more costly relative to one's own consumption, the substitution effect), or it could lead to more savings to retain a larger amount after the estate tax is paid (the income effect). These offsetting income and substitution effects create an ambiguous theoretical prediction about the effect of the estate tax on savings. If the main purpose of accumulating assets is to provide a precautionary savings amount (to account for catastrophic illness, for example), the estate tax does not matter, since it is irrelevant to that purpose. With theoretical uncertainty, the issue becomes an empirical one. Here, however, there is virtually no empirical evidence. In the single study of the wealth elasticity of estates (the percentage change in wealth divided by the percentage change in taxes), Kopczuk and Slemrod characterized their results as fragile, meaning that the results depended on model specification. A study by Holtz-Eakin and Smith used an elasticity from one of the specifications in the Kopczuk and Slemrod study to estimate that the estate tax caused a decrease in wealth of $1.6 trillion. Although this estimate was based on total projected wealth associated with those filing estate tax returns (in 2004), the report indicated the increase in capital was an increase in small business capital (although, as noted above small businesses account for only a fraction, about 16%, of the estate tax). That estimate was, in turn, used to project increases in hiring by small businesses. The effect projected in the Holtz-Eakin and Smith study appears quite large. As a simple illustration, consider that the effect of estate taxes on savings should be similar to the effect of capital income taxes in general. In 2007, the last year for which data on sources of income in the income tax were available, the estate tax accounted for only 4% of capital income tax revenue at the Federal level. This ratio implies that eliminating capital income taxes would increase wealth by $40 trillion ($1.6 trillion dividend by 0.04). This amount would be an approximate doubling of the total U.S. capital stock. Even the most generous model with infinitely elastic savings responses tends to produce an increase of about one-third that size, and estimates based on the higher end of empirically estimated time-series savings rates would suggest a result only one-tenth of that size. Some effects from dynamic models, depending on how the revenue loss is offset, are negative or negligible. One problem with the estimate in the estate tax study is that it did not take account of feedback effects from the economy, particularly the decline in pre-tax return when the capital stock expands. That feedback effect is the reason that an infinitely elastic response leads to a limited effect: the capital stock expands only enough to drive the after tax return back to its original value. Given lack of theoretical and empirical evidence it is not possible to precisely determine what the effect of repealing the estate tax on savings, but it is likely to be small, simply because the yield of the tax is small. Any effect on the stock of capital in small business should only be a fraction of that amount. The tax rate is more important than the exemption in determining any positive effects of reducing the estate tax on savings, since that rate is more important for the marginal rate that drives the substitution effect. Exemptions affect the substitution effect by pushing some income into a zero marginal tax rate, but are more important for the average rates that determine the income effect, so that higher exemptions are less likely to increase savings than higher rates. Unlike the effect of the estate tax on savings, there is an extensive empirical literature on the response of charitable bequests in the estate tax, and the evidence indicates a significant response of bequests. Nevertheless, according to a recent CRS study, the effect on overall charitable giving is likely to be small: moving from the $1 million exemption with a 55% tax rate to the $3.5 million exemption with a 45% tax rate would be projected to lower charitable giving by 1%; moving to the $5 million exemption with a 35% rate would be projected to reduce giving by 2%. These relatively small effects occur largely because only 4% to 6% of giving is affected by the estate tax. The effects would be larger for foundations and certain types of organizations (such as higher education) that are more likely to receive bequests. Another issue is the degree to which the estate tax causes excessive compliance and planning costs for taxpayers, and administrative costs for the IRS. Some arguments have been made that these costs, particularly for estate planning, are as large as the estate tax itself. Gale and Slemrod, however, review the limited evidence and conclude that the cost of administration and compliance is probably in the neighborhood of 7% of revenues, with almost all of that cost due to planning and compliance. This section briefly discusses proposals to revise certain features of the estate tax. These include portability of the spousal exemption, changing the rules on certain trusts, restricting minority discounts, and conforming definitions of fair market value for estates and heirs. Because transfers between spouses are exempt from the estate tax, the estate exemption is of no value to a person who transfers all of his or her estate to a spouse. For example, if the estate tax exemption is $3.5 million and a couple jointly owns assets of $8 million ($4 million each), if the first spouse to die leaves $4 million to the second spouse, and the second spouse then leaves $8 million to children, $4.5 million of the estate will be subject to tax. If the first spouse to die left $3.5 million to the children directly, then the second spouse would have an estate of $4.5 million, with only $1 million subject to the estate tax. There are estate planning options (such as credit shelter trusts) that can address this issue. However, these options (which may also require an initial transfer of assets between spouses) not only require complicated estate tax planning but also may cause taxpayers to dispose of their assets in a way that they would not prefer. Simply allowing a spouse to inherit any unused portion of the exemption is an alternative. In the example above, all of the assets could be left to the remaining spouse on the death of the first spouse, and the second spouse to die would be able to claim a total exemption of $7 million (the sum of both exemptions). Portability can also be valuable with assets, such as pension rights, that cannot be transferred. This portability feature has been adopted for the extension of the estate tax for 2011 and 2012. Although there are some advantages to this provision in both equity and simplified planning, there are problems as well. First, the portability provision, if made permanent, will cost increasing amounts of revenue in the future. The JCT provided estimates suggesting that the number of estates benefitting from portability will increase by 14 times over 10 years. Thus, allowing portability is likely to substantially decrease revenues in the long run. However, it may be more likely to benefit smaller estates where it may be more difficult to engage in the types of transfers and planning needed to absorb the credits. There are some complications as well for designing and administering this provision, some of which are detailed in the JCT study. Second (and more) marriages raise an issue. Should the inheritance be allowed for future marriages or should it be inherited only once? That is, suppose a widow remarries, and then dies leaving all her assets to a second spouse: does the second spouse inherit two exemptions or one? Is there a possibility for deathbed marriages to terminally ill low income individuals to generate an additional deduction (and how can that be distinguished from "legitimate" marriages with a tragic early death)? The 2011 provision allows multiple inheritances but limits the exclusion to the last predeceased spouse, which affects total exclusions available in second marriages depending on the order of death. Thus if a wife's husband number two dies first, she gets the smaller of the exemptions from husband one and husband two, whereas if the wife dies first, husband number two gets all unused exemptions, whether they are his wife's own exemptions or inherited from husband number one. Another question is: should the value of the inherited exemption be limited to the value of the spouse's estate? That seems to be a reasonable rule. Otherwise, if the second spouse continues to accumulate wealth, the portability would effectively increase the exemption over the amount available had each spouse absorbed the exemption in their own estate. Such a rule, however, would require the filing of estate tax returns and valuation of the estate when they would not otherwise be subject to tax. There would also be issues about how to reconstruct fair market value, if the portability were allowed if the first estate tax return were not filed. As with many solutions that seem simple, complications remain. The 2011 -2012 provision allows the exemption to exceed the value of the estate, but requires a declaration be made on the estate return for the exemption to be transferred. Thus, presumably those who do not file an estate return because they are below the filing threshold or otherwise make a declaration will not benefit from the portability rule. A Grantor Retained Annuity Trust (GRAT) is a trust that allows the grantor to receive an annuity, with any remaining assets transferred to the trust recipient. The value of the gift is reduced by the value of the assets used to fund the annuity. If the assets in the trust appreciate substantially, then virtually all of the gift can be reduced by the value of the annuity, while still providing a substantial ultimate gift to the recipient. If the grantor dies during the annuity period the remaining value of the annuity is included in the estate. Thus for this trust approach to be a method of transferring assets roughly tax free, the assets must appreciate at a rate faster than the discount rate used to value the annuity, and the grantor needs to survive over the period of the annuity. To assure the latter will be likely to occur, many of these trusts have very short annuity periods, as short as two years. The GRAT proposal contained in H.R. 4849 and in the President's budget proposals would impose a minimum annuity term of 10 years, disallow any decline in the annuity, and require a non-zero remainder interest. The Administration estimates this proposal would raise $3 billion over 10 years. There are existing restrictions to keep estates from engaging in artificial actions designed to reduce the value of estates (such as freezes on assets). As discussed above, courts sometimes allow estates to reduce the fair market value when assets are left in family partnerships where no one has a majority control. These discounts have even been allowed when assets are in cash and readily marketable securities, and the setting up of these family partnerships has become an estate tax avoidance tool. A provision in the Administration's proposal would set up a category of disregarded actions that could not be used to allow discounts. The estimated revenue gain is $18.7 billion over 10 years. There is no explicit rule preventing a low valuation of fair market value for an estate and a high valuation of the asset for purposes of stepped up basis in the hands of the heir. A provision in the Administration's budget proposals would require this value to be the same and is projected to raise $3 billion over 10 years. The analysis indicates that the estate tax is relatively small, in revenues, in coverage, and in its effects on family businesses, savings, charitable contributions, and tax administration and compliance. One-fourth of 1% or less of all estates and of family businesses are expected to be subject to tax under an exemption of $3.5 million or $5 million. This share would grow slightly over the 10-year budget horizon, but indexing the exemption would not be very important over this short time period. The estate tax is a small, but highly progressive, element of the tax system. Under the proposals under consideration (the $3.5 million exemption and the $5 million exemption), the majority of the tax falls on estates of $20 million or more, which in turn constitute only three-hundredths of 1% of decedents. For the $3.5 million exemption, 45% rate effective in 2009, 96% of the tax falls on the top quintile of the income distribution, 72% falls in the top 1%, and 42% in the top 0.1%. Effects on savings are uncertain in direction but likely small. Based on empirical evidence, a decline of 1% to 2% in charitable contributions from increasing the estate tax relative to the current law baseline of a $1 million exemption with a 55% rate would be expected. Costs of estate planning and administration are relatively small as a percentage of estate tax revenue. Because transfers between spouses are exempt, allowing spouses to inherit the exemption can increase the combined couples' exemption, and simplify estate planning. This change could cost increasing amounts of revenue over time, however, and lead to certain administrative complications. Several provisions to deal with perceived abuses might be considered, with the most important one relating to the use of discounts when assets are left to a family partnership and no one heir controls the property.
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The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16), among other tax cuts, provided for a gradual reduction and elimination of the estate tax. Under EGTRRA, the estate tax exemption rose from $675,000 in 2001 to $3.5 million in 2009, and the rate fell from 55% to 45%. In 2010, the estate tax was eliminated. The estate tax changes, however, were scheduled to sunset in 2011, when the exemption would have become $1 million (as scheduled in pre-EGTRRA law) and the tax rate would return to 55%. There was general agreement that some sort of estate tax would be retained. A proposal to make the 2009 rules ($3.5 million exemption and 45% rate) permanent was included in President Obama's 2010 and 2011 budget outlines and was passed by the House in December 2009 (H.R. 4154). Senate Democratic leaders supported the plan to enact the 2009 rules permanently (and make them retroactive to 2010). The Senate Republican leadership proposed a $5 million exemption and 35% rate. This latter provision was adopted for a two-year period, through 2012. At that point the exemption will revert to the pre-EGTRRA law. For estates of decedents in 2010, either the 2010 or 2011 rules can be elected. Spouses can inherit unused exemptions. With any of the exemption levels, few estates are affected by the tax. In 2011, the shares of estates taxed are projected by one study to be 1.76%, 0.25%, and 0.14% for the exemption levels of $1 million, $3.5 million, and $5 million, respectively. These numbers would grow to 3%, 0.46%, and 0.23% by 2019. The revenue yield in 2011 is projected to be $34.4 billion, $18.2 billion, and $11.4 billion for the $1 million exemption/55% rate, $3.5 million exemption/45% rate, and the $5 million exemption/35% rate. The estate tax accounts for a small share of revenue. The estate tax is a highly progressive tax; it not only applies to the largest estates, but within the distribution of estates a large share is concentrated in the over $20 million estate level: 72% for the $5 million/35% rate. Because of exclusions, the effective tax rates are smaller than the statutory rate, with an average of 14% for the $5 million exemption/35% rate. When distributed with respect to income, 96% falls in the top quintile of the income distribution, 72% in the top 1%, and 42% in the top 0.1%, under the $3.5 million exemption/45% rate. Although concerns have been raised about the effects of the tax on small businesses and farmers, estimates indicate that the share of estate taxes paid by small business estates under the proposed revisions would be small (16% to 18%) and the share of estates of small business owners taxed is small (about 0.2% of decedents with at least 50% of their assets in businesses). Evidence suggests that the number of returns with inadequate liquid assets to pay the estate tax is negligible. Other effects are likely small. The effects on savings are uncertain but likely small relative to the economy because the tax is small. Moving to either the $3.5 million plan or the $5 million plan would be projected to decrease charitable contributions by a small amount: 1% to 2%. Recent evidence suggests that the costs of administration and compliance are around 7% of revenues. Structural reforms that might be considered are inheritance of spousal exemptions, and some reforms directed at abuses. A provision to restrict Grantor Retained Annuity Trusts (GRATS), which can be used to virtually eliminate estate tax by providing an annuity with a remainder, is contained in H.R. 4849. Other provisions in President Obama's budget outline include restricting discounts for estates left to family partnerships and conforming fair market value for purposes of the estate tax and future capital gains realizations for heirs.
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Foreign outsourcing—the importing of some intermediate product (i.e., a portion of a final product or some good or service needed to produce a final product) that was once produced domestically—is not a new phenomenon, nor is it one that is economically distinct from other types of imports in terms of its basic economic impact. A steadily rising level of trade in intermediate products is one of the salient characteristics of U.S. trade and world trade for the last 30 years. Lower transportation costs, improved international communication, and the reduction of government barriers to trade have helped propel the transformation to an ever more internationally fragmented production process in many industries. An obvious example of this is the automobile: no matter what the nameplate, the raw materials are produced in many different places, and parts are manufactured all over the world for final assembly often, but not always, in the destination country. It has been estimated that as much as a third of the growth of world trade since 1970 has been the result of such outsourcing worldwide. In the United States, large shares of both exports and imports are intermediate products. In the recent years, just the capital goods category by itself has accounted for about 50% of nonagricultural goods exports and around 30% of nonpetroleum goods imports. And the greatest change, for the United States has occurred on the import side. Using capital goods as an example again, in 1970 such exports were about 40% of total exports, while imports had a share of only 11%. Outsourcing may seem different from traditional notions of trade in that it involves exchange of a productive resource (capital or labor) rather than an exchange of a final good and service, but it can be analyzed within the same framework as increased importing of a final product or increased trade in general. The central economic question to be answered is whether increased foreign outsourcing increases or decreases overall economic well-being. To answer that question will certainly require an accounting of the deleterious effects of foreign outsourcing on domestic workers and industries who once produced the now outsourced product, but it will also require an accounting of the gains to domestic consumers of the now imported product as well as any induced benefits to exporting industries. If benefits exceed costs, then measures to constrain outsourcing will tend to reduce overall economic well-being. But even if it is clearly a "net gain" foreign outsourcing brings into conflict the goals of increasing economic efficiency and maintaining an equitable distribution of those gains. This intertwining of economic efficiency and distributional equity will mean that policymakers may find it difficult to take advantage of the increase in economic efficiency that foreign outsourcing affords without also establishing policies to assure equitable treatment of those whose jobs are lost and whose lives are disrupted by this market churning force. What economic analysis also highlights is the inherent "two-way" nature of trade, including foreign outsourcing. Something is given up and something is gained. More imports tend to beget more exports. If there are economic reasons for U.S. firms to outsource abroad, there are likely similar reasons for foreign firms to outsource to the United States. Jobs are created and destroyed. What is produced and what is traded for will not be determined just by relative wages, but rather the relative efficiency in the production of traded products. Low wages will likely attract certain types of production. However, because of differences among countries in their capacity for innovation, in their technical prowess, and in their workers' skills and productivity, there will be many things that can be produced more efficiently in high-wage economies such as the United States. Over time an economy's relative advantages may change but there need be no general deterioration in what it gains from trade. Perhaps foreign outsourcing is now more noticed because it is occurring with rising frequency in the service sector and adversely effecting a strata of the labor force that heretofore was more insulated than goods producing industries from the pressures of international competition. But the nature of the process is the same whether it is trade between individuals, regions, or countries; or trade of final goods or services; or trade of intermediate goods and services: increased economic well-being results from producing what one does best and trading for the rest . In this economic framework it follows that, for the nation, trade is ultimately not about competition, rather it is a process of mutually beneficial exchange. As noted above and developed more fully below, the overall macroeconomic impact of foreign outsourcing will be a net effect , involving negative and positive impulses that create and destroy jobs. Unfortunately, there are no public data series that allows a ready tallying of the net impact of foreign oursourcing on the economy. Therefore, beyond the predictions of economic theory, analysis of this phenomenon must use indirect evidence. Since foreign outsourcing has already occurred on a relatively large scale in the goods-producing sector of the U.S. economy, this report takes the approach that this experience will be the best predictor of the economic effects of outsourcing's spread to the service sector. Further, it is assumed that the tools of economic analysis used to isolate and evaluate these past economic effects are appropriate for judging the probable economic effects of current and future outsourcing, wherever in the economy they might occur. Foreign outsourcing destroys jobs in those parts of the economy that once produced the now imported product, but economic analysis tells us that due to off-setting employment effects in other parts of the economy, foreign outsourcing (or imports in general) is unlikely to cause a net loss of jobs economy-wide. A steady churning of labor markets is a normal characteristic of a dynamic market economy like the United States. Foreign outsourcing and increased imports can contribute to that "churning," and in doing that can be expected to change the composition of total output and the composition of total employment, but they do not necessarily permanently reduce the level of either. There are two complementary reasons for the relative steadiness of total employment and output in the face of foreign outsourcing and other disruptive market forces. First, the Federal Reserve, using monetary policy, can set the overall level of spending in the economy to a level consistent with full employment. While deviations from full employment can occur, a well run monetary policy will minimize the incidence and duration of such episodes and help keep the total level of employment high in most years with or without outsourcing, trade deficits, or trade in general. To give some perspective on the relation between "job loss" and total employment, as well as the potential significance of foreign outsourcing in this dynamic process, consider that in any quarter of 2000, at the peak of the last economic expansion, with total employment at about 111 million, gross job losses tallied between 8.5 and 9.0 million. Nevertheless, the economy at that time was operating at the lowest rate of unemployment in 40 years. Over the whole course of that expansion gross job loss actually rose as the unemployment rate steadily fell. But with adequate economy-wide spending, it was possible to create job gains that more than offset job losses. In the somewhat more tepid labor market conditions of the current economic expansion, gross job losses per quarter between 2002 and 2005 have averaged around 7.4 million—compared with gross job gains in this period that have averaged about 7.8 million per quarter and, as a result, led to a rise in total employment during the 2002-2005 period. In either time period gross job losses occurred on a scale well beyond what is currently attributed to foreign outsourcing. Second, against the economic backdrop of adequate aggregate spending, any increase in the purchase of imports will tend to generate an equal increase in the sale of the country's exports of goods or assets . This outcome follows from the fundamental economic requirement that imports must be paid for and exports are the only means for making that payment. The export sold does not have to be a currently produced good or service, it can also be the sale of an asset such as a deposits in a bank account, shares of stock, bonds, or real property, but in the end when tallied across transactions in goods and assets, a nation's trade is always in balance in the sense that any imbalance in goods trade must be offset by a compensating imbalance in asset trade. Both types of export sales will have a positive effect on domestic output and employment, countering across the whole economy the negative effect of increased imports. In short, the U.S. deficit in trade is offset by the surplus in capital flows. Consider, for example, a situation where a service once provided domestically is now imported from a country such as India. Since foreign suppliers do not spend dollars, the U.S. importer will have to buy the foreign currency needed from its foreign exchange market or pay in dollars and let the foreign supplier buy local currency from its foreign exchange market. Either way, to generate the foreign exchange the United States must export something. It can sell U.S. goods or services, or it can sell U.S. assets (i.e., bank deposits, stocks, bonds, real property, etc.). The positive stimulus of the increased export of goods is direct. When foreigners purchase U.S. goods, U.S. output and employment rise to offset the loss of service jobs to India. If exports increase less than the amount needed to offset jobs lost, the United States then must, in effect, borrow the money needed to pay for the increased imports through the sale of an asset. The stimulus from an increased export of assets is indirect. Because the sale of an asset is equivalent to an increase in the flow of saving available to the U.S., it exerts a downward push on domestic interest rates, stimulating interest-sensitive activities such as spending on consumer durables and residential construction, and raising output and employment in these sectors. Therefore, whatever negative effects increased imports have on output and employment are offset by the positive economic effects of increased exports of goods or assets. The composition of output and employment will change in response to these changed demands, but so long as the Federal Reserve can maintain aggregate spending at the an appropriate level, total output and employment will not change. (As already highlighted above, the ultimate steadiness of total employment in the face of increased imports does not mean that there are not likely to be important short-run disruptions as displaced workers adjust to the new market conditions; and the manner of that adjustment is likely to be an area of pivotal importance to workers and policymakers.) Given the typical high incidence of intermediate products in export and import flows, we will probably find that outsourcing into and out of the United States both rise as trade increases. But this is not a necessary condition because while all foreign outsourcing are imports not all imports are foreign outsourcing. We might import an intermediate product and pay for it by exporting a final product. The general impact on employment and output are the same in either case, however. Multinational companies (MNCs) account for a very large share of the U.S. economy. In 2001, the MNC's domestic parents produced about 25% of U.S. gross domestic product (GDP) and employed over 23 million workers or about 20% of the nonbank work force. MNCs are even more important in U.S. international trade, being involved in nearly 60% of total goods exports and about 40% of total goods imports. Because of their central economic role, if a rising level of international trade and foreign outsourcing were diverting a large number of domestic jobs overseas, it would be evident in the pattern of employment between the MNC's domestic parents and foreign affiliates. No large scale diversion of employment has occurred, however. For the period that stretches from 1977 through 1993, MNC employment declined in both parents and foreign affiliates and the rate of decline was faster in the latter. From 1994 to 2001, MNC employment rose in both the parents and the foreign affiliates. This time employment in the affiliates grew slightly faster, but not so much faster as to indicate any major shift. Be mindful that a foreign affiliate's employment share can increase for reasons unrelated to outsourcing and may not reduce U.S. employment. Reasons for this would include expanding foreign markets not easily serviced by exports, faster economic growth abroad, or lower productivity in the foreign affiliate. That the parents in this time period were also increasing their output share suggests that the differences in the rates of employment growth largely reflected slower productivity growth in the affiliates. The natural "two-way" nature of trade suggests that for a complete view of trade's employment effects we also consider the behavior of foreign MNCs in the United States. A U.S. company can destroy jobs by diverting production abroad, but a foreign company can create jobs by diverting production to the United States. Economic reasoning tells us that if it is more efficient to produce some products abroad, it is also likely that it is more efficient to produce other products in the United States. Therefore, we might expect there to be outsourcing into and out of the U.S. economy. What we observe is that over the 1977-2001 period, employment in the U.S. by foreign MNCs grew by 4.7 million, exceeding the 2.8 million increase in employment in the foreign affiliates of U.S. MNCs. Again, employment shifts can occur for reasons other than outsourcing, but if outsourcing is a phenomenon of some significance for foreign and domestic companies, then these data could indicate that the United States was more likely to be the destination than the departure point for foreign outsourcing. The flow of investment spending on plant and equipment between the United States and other economies could also be an indirect indicator of a pattern of diversion of capacity and jobs to foreign locations. If, because of lower labor costs or other factors, foreign locations are increasingly the preferred site for the production of many goods and services, then we might expect that there would also be a pronounced tendency for American companies to expand productive capacity abroad so as to take advantage of these situations. For reasons similar to those outlined above, foreign investment does not have to lead to a diversion of domestic employment, but if foreign outsourcing by U.S. companies was occurring on a large scale there might also be a skewing of foreign investment flows in the same direction. The evidence in this regard points to a pattern of balance, not a net diversion to foreign locations. While the image of the American company destroying jobs by closing its domestic operations in favor of some offshore location comes quickly to mind for many people, it is an incomplete image of what has been occurring in the U.S. economy for many years now. A more accurate image and one wholly consistent with the typical "two-way" nature of international economic exchange is one that also includes large inflows of foreign investment into the United States. These types of investment flows are termed "direct investment" and their level and direction are tallied by the U.S. Commerce Department each year. The data reveal that over the course of the 1992-2000 economic expansion, the United States increased its direct investment in the rest of the world by $885 billion, while foreign investors increased their direct investment into this country by $926 billion. The similar size of these flows suggests that in this time period to the extent that such flows correlate with foreign outsourcing into and out of the United States, this country had been as likely to be the destination of foreign outsourcing as it is the departure point. In the current economic expansion, during the period of 2002-2004 for which data are currently available, the pattern has changed somewhat, with the United States increasing its direct investment in the rest of the world by about $400 billion, whereas foreign investors increased their direct investment in the United States by about $200 billion. But as the expansion continues, inbound direct investment will probably increase relative to outbound direct investment, in part because growth in the United States is expected to outpace that in the rest of the world. In addition, data for capital expenditures by U.S. multinational companies show that the shares of such spending between the parent and the foreign affiliates have been relatively steady suggesting no increase in preference for foreign over domestic locations for expansion of production capacity. A widely cited study by Forrester Resources projects that 3.3 million U.S. sector jobs will have moved offshore by 2015. Yet, Jacob Kirkegaard of the Institute for International Economics (IIE) has done a close examination of the employment trends since 1999 in those occupations deemed at risk of moving offshore in the Forester study. Some of the findings of the IIE study are as follows: The vast majority of the jobs lost from 2000 to 2002 in the "at risk" occupational categories were in the manufacturing sector and losses were, therefore, more likely the consequence of recession and productivity advance than foreign outsourcing. The majority of those occupations affected by foreign outsourcing pay less than the average U.S. wage and are as likely to face elimination through technological advance as outsourcing. The IT occupations that have seen declines are concentrated in low-skill occupations. High paying IT occupations have generally expanded since 1999. More than 70,000 computer programers have lost their jobs since 1999, but more than 115,000 higher paid software engineers have gotten jobs since 1999. These findings again suggest that to the extent that foreign outsourcing has affected these "at risk" occupations, it is part of a "two-way" process involving job destruction and job creation and that the jobs created may be better jobs than those destroyed. Therefore, while some are hurt, it is not clear that the overall impact is a negative one. Another common concern with a rising level of trade and the foreign outsourcing that accompanies it, is the belief that it must put downward pressure on the wages of domestic workers. Outsourcing is commonly seen as a process driven by the search by companies for low-wage environments, that ultimately places American workers in effective competition with a vast pool of lower-wage foreign labor, and exerts downward pressure on worker wages. This competition, it is argued, will result in the so-called "race to the bottom" between domestic and foreign workers. For many, the reality of the deleterious effect of trade on wages was given credence by the observed slowdown in the growth of real wages and the widening wage inequality between skilled and less-skilled workers that occurred concurrently with the growth of trade over the last 25 years. Further, there are credible economic reasons that increased trade and foreign outsourcing could have an adverse effect on the distribution of income. The adverse distributional effect could manifest itself as a deterioration of the position of labor relative to capital and a falling average wage, or as a deterioration of the position of one class of labor (less skilled) relative to another (more skilled) and increased inequality of wages. The effect of trade on wages in the U.S. economy has been the focus of numerous studies over the last 10 years, and the conclusions that may be drawn from these efforts are as follows: As regards the slow growth of the average real wage from the mid1970s to the late 1990s, increased trade is not seen as being the cause of that sluggish performance, rather the identified reason was slow productivity growth. Labor's share of the economic pie was not getting smaller; the economic pie just was not growing as fast. That the level of wages is most often reflective of the level of worker productivity also explains why higher wage American workers are not necessarily at a disadvantage to lower wage foreign workers. The critical comparison is of unit labor costs, not of the level of wages. The high productivity that is the basis of a high wage means that unit labor costs can be lower in the high-wage economy than in the low-wage economy because productivity in low-wage economies is commensurately low as well. As regards trade and increased wage inequality, the research indicates that trade was a contributing factor, but a minor one, accounting for perhaps 10% to 20% of the observed increase in wage inequality. It would seem then that from the standpoint of the economy as a whole, trade with low-wage economies has not triggered a "race to the bottom." A likely important reason for the small effect of trade on wages for the U.S. economy was that trade with low-wage countries was still relatively small, amounting to less than 5% of GDP in 2005. In fact, among U.S. trade partners the average wage level in manufacturing relative to the U.S. manufacturing wage level grew from 60% in 1975 to 76% of the U.S. level in 2000 . This has occurred because many trading partners who were once low-wage economies have, with open trade and steady economic growth, become high-wage economies. As the once poor have moved up the income ladder, they have also withdrawn from the production of goods that use low-skill and low-wage labor intensively and these products are then imported from the newer emerging economies. China has picked up this task, as other East Asian economies have withdrawn, and, in turn, as these economies did when Japan shifted away from this type of production. So U.S. trade with low-wage economies is not rising to a significant degree; rather, it is shifting location. Economies of scale are also a factor that likely helps hold up industrial wages in the face of low-wage foreign competition. Scale effects are thought to be a significant force in many industries and, when present, would tend to increase worker productivity and decrease unit labor costs. It is also possible that the increase of competition itself spurs companies to higher levels of efficiency that also lowers unit labor costs and helps preserve a higher wage level. Another reason for the small impact of trade on wages in the United States is that as the once low-wage economies transform to high-wage economies, two events occur: one, they tend to produce less of the goods typically produced by low-wage workers; and two, they tend to increase there demand for the products produced by low-wage workers. The two effects exert upward pressure on the wages of these workers, including any producing similar products in the United States. This outcome is consistent with the evidence that for the United States the relative price of unskilled, labor-intensive, import competing goods rose in the 1980s and 1990s. Of course, it cannot be ruled out that if trade with relatively low-wage economies does grow in importance, the negative effects on U.S. worker wages of such trade would grow in significance. Yet, there is probably an upper bound to this effect, for it is possible that in the future with only relatively moderate differences between home and foreign production costs, complete specialization would occur. That is, the United States would no longer produce much of what is imported from low-wage foreign economies. Since the United States would then no longer have industries that use low-wage labor intensively, there would be no downward pressure on domestic wages caused by such trade. To the extent that this pattern of trade allows for a fuller realization of economies of scale and lowers product prices, domestic workers' real wages could be increased. The change in the location of U.S. imports from low-wage economies noted above suggests that a sizable amount of such specialization may have already occurred. Reviewing the period 1994 through 2003, the Council of Economic Advisors concludes that for United States the increase in share of total U.S. imports accounted for by imports of goods from China has been largely offset by a decrease in the share of goods imports from other Pacific Rim countries. The value of imports from both sources has increased considerably. Still, many of the export jobs in non-China Asia are migrating to China, so the distributional effects of this change fell on workers in China and the Pacific Rim economies rather than workers in the United States. Also we know that industries that export pay wages that are, on average, higher wages than industries that compete with imports. Therefore, as a rising level of trade and outsourcing creates jobs in exporting industries, and destroys jobs in import-competing industries there is a tendency for the average industrial wage to rise. It is also useful to keep in mind that the U.S. economy is still largely domestic in orientation, with perhaps as much as two-thirds of the labor force working and having wages determined in activities largely unaffected by trade. For the economist, the central economic question to be answered in regard to foreign outsourcing, or increased international trade in general, is not its particular impacts on employment or wages. Those effects are not to be ignored, but they are symptoms of a larger process. The answer economic analysis attempts to provide is whether that larger process ultimately makes the United States richer or poorer. As economic growth abroad expands the number of competitive sources of production, will substituting foreign for domestic output generate gains from trade and raise overall economic well-being? Whether such foreign outsourcing is occurring in the service producing sector or the goods producing sector, there will be the same array of possible positive and negative effects on the economy. Because importing must be accompanied by exporting, the possible effects on the economy can be grouped into two general categories: economic effects related to exporting and economic effects related to importing. If increased foreign production is of goods that the United States also exports then domestic exporters will face more competition and their product prices will fall. A fall of export prices raises the effective cost of imports and decreases our gains from trade. Rising foreign production also raises income of foreign producers and workers. Higher income increases the demand for U.S. exports (goods or assets) and pushes up their price. A rise of export prices lowers the effective cost of U.S. imports and increases our gains from trade . Domestic households get foreign goods at a lower price. Lower prices also raise the real income of households allowing them to purchase more of all goods. Lower import prices increase the gains from trade . Domestic businesses get foreign-produced inputs at a lower price, reducing production costs and increasing profitability. If the good the domestic firm produces is an intermediate good itself, this effect will reverberate to other domestic companies that use it as an input. The real income of stock-holders increases and is a gain from trade . Increased capital inflows from increased export of assets allows companies to undertake higher levels of investment raising output, employment and wages. This is also a gain from trade. Domestic import-competing products will face more competition and their product price will fall. Output and employment along with wages and profits in the affected industry will likely fall. This is a cost of increased trade (and what popular concern about foreign outsourcing most often focuses on). The net effect of these several impacts of increased trade or outsourcing can, in theory, be positive or negative. In most circumstances, however, the strong expectation of economists is that gains outweigh losses and that trade's disruptive reshuffling of the economy's productive resources does ultimately result in an increase in overall economic well-being. That increased trade, whether for intermediate or final products, will likely raise economic well-being is confirmed by the preponderance of evidence. The gains from trade are, however, most often a net gain , because some will be hurt by this process. Trade, like other market forces, generates increased wealth through a process of "creative-destruction" which entails what is most often a disruptive re-shuffling of workers and capital. New opportunities for enrichment are created and resources are drawn towards them. But other activities that are less efficient are destroyed and resources are pulled away from them. Because there are net gains, it is also in principle possible for the losers to be compensated and still leave the winners better off than they were prior to the increased trade. In practice, however, there may be reason to question how equitable the compensation forthcoming is. It is likely that a general acceptability of increased trade will hinge on this equity issue. In most instances the crux of debates about trade are not about the value of trade to the overall economy, but over who will receive the benefits and who will bear the costs of trade. If a U.S. worker, without his employer's knowledge, were able to sub-contract (out-source) his work to a foreign worker for a fraction of his own wage he would likely do so. While still earning his full wage, the use of his freed time in other endeavors would make him better off. His employer and the ultimate consumers of the final product bear the cost in the form of lower profits and higher product prices than would be the case if the most efficient way of production was used directly. Of course, if his employer learned of the relative efficiency advantage of the foreign worker, she would most likely contract directly with that foreign worker (outsource) and lay off the domestic employee. The gains and costs of trade are still the same as in the first circumstance, but now they have been redistributed to the benefit of the domestic employer and her customers and to the detriment of the displaced employee. Economics cannot tell us which distributional outcome is preferred, but it does tell us that outsourcing the task increases overall economic well-being. Equity concerns notwithstanding, the expectation of enrichment though trade has propelled successive rounds of trade liberalization in the post-war era, a process the United States has consistently played a leadership role in sustaining. Trade has expanded rapidly as has economic well-being of most trading nations, and the increase in well-being is found to increase with a country's degree of openness—the more open to trade, the greater the gain. The gains from trade are mutual, occurring even if the trading partners have an absolute advantage or disadvantage in the production of all traded goods and services. As such, a country does not compete with its trading partners, it engages in mutually beneficial exchange with them. Increased foreign outsourcing is a symptom of these expanded opportunities for trade and mutual enrichment. As the United States has benefitted from increased trade and outsourcing associated with the post-war industrial resurgence of Europe and Japan, so would it likely benefit through increased trade associated with the ongoing economic development of China, India and other emerging economies. The gains from trade are not a static phenomenon, however. While at any point in time an increase in trade (outsourcing) increases economic well-being, over time the size of the gain could rise or fall as the relative economic circumstances of trading partners change. Therefore, it can be telling of the economy's international trade performance and its view of how it is faring from increased trade to consider whether there has been any long-term trend in the nation's share of the gains from trade. More specifically, this is a question about whether, over time, the U.S. economy's terms of trade has tended to rise or fall as economic growth has occurred in the rest of the world, and foreign outsourcing has grown in significance. The terms of trade is a ratio of average export price to average import price and as such is a measure of the export cost of acquiring imports. An increase in this ratio—an improving terms of trade—means that any given volume of export sales will now exchange for a larger volume of imports, indicating an increase in the gains from trade. A rising trend would indicate that a country's trade performance has improved relative to other trading countries, reaping an increasing share of the gains from trade, and real income benefits for the economy. Similarly, a decrease in the ratio of export prices to import prices—deteriorating terms of trade—raises the export cost of acquiring imports and reduces the gains from trade. A falling trend would be indicative of deteriorating trade performance, decreasing share of the gains from trade, and decrements to real income. Over time it is likely that economic growth, at home and abroad, will tend to show either a bias towards the production of goods a country exports or a bias towards production of the goods a country imports. If export biased, there is a more then a proportionate increase in the worldwide supply of goods that compete with U.S. exports, inducing a deterioration of the U.S. terms of trade over time, to the benefit of our trading partners. In contrast, if growth in the rest of the world is import biased, there is a more than proportionate increase in the worldwide supply of the goods the U.S. imports, inducing an improvement in the U.S. terms of trade over time, to the detriment of our trading partners. Increased foreign outsourcing is clearly a manifestation of economic growth in the rest of the world and in recent years this has included the expanded participation of lower income developing economies in the internationally fragmented production processes that now propel a large and growing share of international trade. As was discussed in the " Introduction " section of this report, foreign outsourcing is not a new phenomenon, but one that is occurring with a steadily rising incidence in goods producing industries for the last three decades. At the peak of the last business cycle in 2000, it is likely that a very large share of total U.S. non-agricultural merchandise trade, exports plus imports, is of some form of intermediate product and represents some form of foreign outsourcing. Has this increase in foreign outsourcing affected the U.S. economy's terms of trade? Has there been any tendency for the U.S. share of the gains from trade rise or fall as a result of outsourcing? Relative to its peak in the mid-1960s, the terms of trade declined at about 1.0% per year through 1980. But while significant, this fall was moderate in scale. This deterioration most likely reflects the recovery and return to competitive posture of the many high-income economies from the devastation of World War II. These are largely economies that have resource endowments similar to that of the United States and who with economic recovery from the war could be expected to increasingly compete against U.S. exports in world markets. This growth was certainly export biased and accordingly has pushed down the average price of U.S. exports. Since the 1980s the U.S. terms of trade has fluctuated, but, overall, has not shown a trend, up or down: up in the early 1980s, down in the late 1980s and early 1990s, and then up again through the late 1990s to the present. It is, of course, in this more recent trendless period that the use of foreign outsourcing was steadily climbing and the period when trade with low-income, low-wage economies was also on the rise. Yet, the trendless path of the U.S. terms of trade over this period suggests that these events were not inducing any significant persistent effect on the economy's gains from trade. Growth in the rest of the world and the outsourcing that went with it in this period was, on balance, without a bias towards the goods the United States exports or imports. At this point there does not seem to be a strong reason to expect the spread of outsourcing to the service sector to change this outcome. The idea of the product cycle provides a useful way of understanding how an economy's gains from trade over time emerges from a continually changing industrial landscape and how foreign outsourcing may influence that outcome. It has been long observed by economists that the production of many tradable products will move from country to country over the life of the product. Innovations have their greatest value and are more likely to occur in high-wage economies, for the reason that labor in these countries is relatively scarce and costly and innovations most often offer a means to economize on this expensive resource. In the early life of a product, production occurs on a small scale using relatively high skill workers. The relatively high price of the new product will also offer relatively high returns to the specialized capital stock needed to produce the new product. At this stage the factor endowments of high-income countries such as the United States will make them the most efficient location for production. As the product matures, with expanding foreign and domestic sales, a settled technology, the capability for standardized production, and a falling market price, it will become possible and more efficient to produce the product or significant portions of the product on a mass scale using relatively low wage labor. At this stage in the product's life it is likely that production will be pulled toward economies that have resource endowments relatively rich in low-wage labor, such as China. Foreign outsourcing, therefore, can be seen as a manifestation of this process of technological diffusion to other economies. This process is not only relevant to the production of goods. As a portion or all of the production of a service lends itself to standardization and international exchange, the incentives to capture efficiency gains by moving the site of production towards lower wage economies will increase. In the framework of the "product cycle," the United States is most likely to be operating at the innovation stage of this cycle. Therefore, to a significant degree its gains from trade will be determined by the dynamic balance between the economy's rate of innovation and the rate of technological diffusion. While not a necessary outcome, the rate of innovation will likely be correlated with the growth of new ideas for products and processes in the United States, and the rate of technical diffusion correlated with the growth of cost reducing incentives afforded by foreign outsourcing. Unless the economy can generate a pace of innovation to match the pace of diffusion, its terms of trade will fall, and its share of the gains from trade will decline. (Such a decline would not be an argument for not engaging in trade as that would reduce the gains from trade altogether, but it would be an erosion of economic well-being and explain a perception by some that the economy is getting less out of trade then it once did. As observed above, there has been no trend decline in the terms of trade over the last twenty years.) It can be argued that the advance of globalization has accelerated the rate of diffusion, the seeming rise in foreign outsourcing is a symptom of that acceleration, and the spread of outsourcing to services is the most recent manifestation of this process. What this suggests is that preserving or increasing the economy's gains from trade in the face of globalization will require an acceleration of the pace of innovation in goods and service producing activities. While market forces may respond positively to the incentives for innovation offered by expanding trade, a case can be made that this is an area subject to substantial market failure, and because of that the optimal amount of innovation will not be forthcoming. The creation of innovations is largely a process of generating new ideas. To the extent that new ideas lead to profitable outcomes and those profits can be secured by a private enterprise, the market economy will generate new ideas and foster technological change. An inherent attribute of ideas, however, is that they are non-rival, as in, my using the idea does not preclude someone else from using it. Further, ideas will often have the attribute of limited excludability , meaning the owner of the idea will find it difficult or impossible to charge a fee for its use. These attributes will likely cause a divergence of private benefit and social benefit in the idea production process. (What the creator of the idea can expect to gain will be less than what the overall economy can expect to gain.) In this situation, less than the socially desirable level of idea generation will occur. In this circumstance public policy can improve on the free market outcome if it can foster more idea production. Trade in services is nothing new to the U.S. economy. In 2005, $380 billion in services were exported, an increase of over $230 billion since 1990. Service exports now account for about 30% of the value of all U.S. exports. And the United States has consistently run a trade surplus in services. That surplus stood at $58 billion in 2005, and it can be expected to grow in response to faster economic growth abroad and a significantly more favorable exchange rate than has prevailed in recent years. For example, Global Insight projects a U.S. services trade surplus of over $120 billion by 2008, occurring along with a steady rise in the level (exports and imports) of U.S. trade in services. In the business, professional, and technical services sub-component of U.S. services trade, an area where outsourcing could be expected to be most likely, the U.S. had exports of nearly $62 billion against imports of about $23 billion, yielding a surplus in 2004 of about $39 billion, up from about $16 billion in 2000. This pattern of trade makes clear the "two-way" nature of services trade and that if the incidence of foreign outsourcing, in both directions, is proportional to the size of export and import flows, then the U.S. is likely to have more often been the destination rather than the departure point for the foreign outsourcing of services. This would also suggest that the United States has a large economic stake in the rising level of services trade. Employment data for the service sector also suggest significant economic viability. Unlike the hard hit goods producing sector where recession and a laggard recovery have since 2000 caused substantial employment losses, employment in service producing industries held up far better. In that sector employment fell only about 1.0% in the 2001 recession and in contrast to the goods producing sector, has increased employment since then so that by early 2005 the level exceeded the previous peak. It is also clear, however, that until recently services had not faced the degree of international competition that has prevailed in the goods-producing sectors. The need for more person-to-person interaction and the relatively high cost of international communication made many services difficult to trade. Now, however, because of the increasing ease, quality, and ever lower cost of international communication afforded by information technology advances, the possibilities for the trade of services have greatly expanded, and in response the level of international competition in services is rising fast. In this expanding arena for trade, it is likely that the United States, being the world's largest producer of services, will have a comparative advantage in many areas of service production, but not all areas, and not in all aspects of the production of any given service. Therefore, more foreign competition is likely to change the structure of many services industries. We can expect to see a substantial increase in the share of what was once done in-house being outsourced (and becoming a service import), as firms exploit more and more the efficiency advantages afforded by foreign production of many standardized tasks. Likely many other tasks will be outsourced to the United States. Again, trade and foreign outsourcing in services will, as it seems to have been in the wider economy, likely be a "two-way" process. What the service sector can expect from increased foreign outsourcing has already been experienced by the manufacturing sector over the last 30 years. That sector has certainly been greatly transformed, nevertheless manufacturing has maintained a healthy presence in the U.S. economy. Despite increased foreign outsourcing, through the last business cycle peak in 2000, the manufacturing sector had increased real output 144% since 1970. maintained a relatively steady share (17%) of real final demand since the 1980s. Despite a declining share of the civilian workforce, maintained a relatively steady level of employment (17 million) for the period 1980-2000. Received large net inflows of foreign investment. Increased export sales $400 billion (about 125%) between 1990 and 2000, despite an unfavorable exchange rate during most of this period. Since 2000, the manufacturing sector has struggled with falling output and employment. However, most of the negative effects the U.S. manufacturing sector has endured, particularly since 2000, are seen by economists to be the consequence of economic forces other than foreign outsourcing and a rising level of trade. Of greatest significance are changes in consumer expenditure patterns that place a rising importance on the consumption of services relative to goods (a change common to most industrial economies), rapidly rising productivity (something unambiguously good for the overall economy), and the burden of trade deficits on goods producing industries (distinct from the rising level of trade). The substantive economic conclusion of this report is that foreign outsourcing is international trade in a somewhat different guise. Like other market forces, it causes disruptions that are costly to some, but its ultimate effect on the economy is the same as any type of trade—an increase in overall economic well-being. Because foreign outsourcing has already occurred on a large scale in the goods producing sectors of the economy over the last 30 years, its impacts are reasonably evident and seem to confirm this judgement. What often seems to be missing in popular concern over foreign outsourcing is an appreciation for the mutual or "two-way" nature of the process. The U.S. economy outsources to foreign economies and foreign economies outsource to the U.S. economy, jobs are created and destroyed, and overall economic welfare increases through this exchange. If foreign outsourcing on balance raises economic well-being, policies aimed at arresting that activity would have a net economic cost. There are, however, other avenues for policy response that most economists think could be generally beneficial. One avenue is to work to expand overseas markets through further removal of foreign trade barriers against American exports. A second avenue would be to use policy to boost the benefits of trade by correcting deficiencies in the economy's ability to create new products and processes that could become attractive exports. A third avenue is to use economic policy to remove any unwarranted bias against the economy's tradable goods sector caused by an elevation of the incentives toward foreign outsourcing that arise from the economic forces generating the trade deficit. A fourth avenue would be to use policy to address the hardships and inequities arising from trade and foreign outsourcing by extending compensation and more effective tools for adjustment to those who are hurt by the disruptive effects of foreign outsourcing and other market forces. If international trade, including outsourcing, is economically enriching, using policy to arrest the phenomenon by imposing barriers to such exchanges will prevent the nation from fully realizing the economic gains from trade and, therefore, must reduce economic welfare. Economics has long taught that protection of import-competing industries with tariffs, subsidies, or other devices to shelter a domestic activity from international competition leads to an over-allocation of the nation's scarce resources in the protected sectors and an under-allocation of resources in the unprotected tradable goods industries. Standard economic theory indicates that reducing the flow of imports will also reduce the flow of exports because fewer exports are needed to pay for fewer imports. Clearly, the exporting sector must lose as the protected import-competing (outsource-competing) activities gain. But more important, the overall economy that consumed the imported goods would suffer because the more efficient production process—available through international trade—would not be used to the optimal degree. This would increase the price and reduce the array of goods available to the consumer from what they would otherwise be. Therefore, economic analysis indicates that the ultimate cost of the trade barrier is not a transfer of well-being between sectors, but a permanent net loss to the whole economy arising from the barrier's distortion toward the less efficient use of the economy's scarce resources. These costs would be magnified if the trading partners disadvantaged by these actions retaliated against U.S. exports. There is ample evidence that the economic cost of protection is high. The U.S. International Trade Commission has estimated the economy-wide cost of existing U.S. trade barriers to be about $12.4 billion. And this is probably a conservative estimate, because it is difficult to fully account for the costs associated with lost product variety and productivity. Therefore the full cost of protection is thought by economists to likely be significantly higher than that estimate. A study by Hufbauer and Eliott found that across 21 industries the economic cost per protected job ranged from $100,000 to more than $1million and averaged about $170,000. In each case the cost of protection was far higher than the protected workers average annual earnings and far higher than what any likely worker adjustment program would cost. A 2004 study of eight industrial nations, including the United States, provides estimates of the economic cost of existing trade barriers. It was found that despite considerable lowering of trade barriers during the period after World War II, sizable barriers still existed (in 1999). It was also found that removal of the remaining trade barriers among these eight countries would lead to an increase in global GDP of more than $500 billion (in 1997 dollars), or 2.1% of global GDP. The gain to the United States alone was estimated to be about $77 billion (in 1997 dollars), or about 1% of GDP. Highlighting the greater gain associated with a multilateral lowering of trade barriers, this study also estimated the gains to each of the eight countries if each removed their trade barriers unilaterally. In this circumstance, the GDP increase for the United States is pared to $30 billion, or 0.4% of GDP. In general, the welfare gains to the United States are smaller then those of the other eight countries. This is thought to occur for three reasons: (1) U.S. trade barriers were already lower than those in the other countries; (2) trade represents a comparatively smaller share of economic activity in the U.S. economy; and (3) because of the very large size of the U.S. market there are increases in import prices, causing some deterioration of the terms of trade and an associated decrement to economic welfare. The argument may be made that some form of protection is needed to counter the unfair trade practices of some trading partners. Such practices do occur, and in those instances some form of retaliatory policy may be appropriate. But it is very unlikely that such unfair trade practices are the principal force driving the ongoing expansion of world trade and the associated growth of foreign outsourcing. If most unfair trade practices were gone tomorrow, it is likely that trade would still be rapidly rising and that most of its associated pressures and problems would still be with us. A more credible explanation is that the expansion of world trade is propelled by the prospect of economic enrichment and enabled by an increasingly open world trading system that allows each nation to use its resource endowments in more efficient ways. It is differences in those endowments and how they are used that makes trade mutually beneficial. Yet, it is often those differences that give rise to perceptions of unfairness. What is an acceptable or unacceptable practice will not be considered here. But is probably unreasonable to expect our trading partners to be identical to the United States in their economic and social practices. From an economic perspective it makes sense that the level of labor and environmental standards would be correlated with a nation's level of income. At their current stage of development, many poor countries, with very low levels of productivity, simply can not afford the economic and social practices and institutions of a rich economy like the United States. With economic growth, which trade helps achieve, they may be able to. This is certainly the path that today's rich nations followed. The clear direction of U.S. trade policy in the post-World War II era has been to reduce trade barriers, not erect them. And it is widely recognized that this process has been beneficial to the United States and the world economy. With that gain will likely also come more foreign outsourcing, but we can reasonably expect that outsourcing to the United States would also rise as exporting opportunities improve along with importing opportunities. Given that existing foreign barriers are most often higher than existing U.S. barriers, removing those barriers is likely to have a relatively stronger beneficial effect on the United States, particularly since many of the remaining barriers are against trade in services, an area where the United States is likely to be very competitive. Analysis indicates that trade deficits do not cause a net loss of output or employment for the overall economy, but they do shift the composition of output and employment and that shift in composition will have an adverse effect on some domestic industries that produce tradable goods or services. This bias could tend to raise the incidence of foreign outsourcing. The U.S. trade deficit has risen more or less steadily since 1992. In 2005, it had grown to a record size of $805 billion and was equivalent to 6.4% of GDP. Trade deficits are a macroeconomic phenomenon that reflects a short-fall of domestic saving relative to the domestic investment that needs to be financed. (This is precisely the same thing as the economy spending beyond current output.) This imbalance can be reconciled by a net inflow of foreign capital that acts to augment the flow of saving available and allows the higher level of investment to occur. The capital inflow pushes up the exchange rate which induces a like sized net inflow of goods and services—a trade deficit. The rising exchange rate has induced this net inflow of goods by making imports more attractive to domestic buyers and the economy's exports less attractive to foreign buyers. Domestic exporting and import competing industries will find themselves somewhat worse off as a result. In the current context, job-creating export industries will do less of that, and a rising tide of imports will mean more outsourcing is occurring. This is a distributional effect, however, for as some sectors lose others gain. The capital inflow that is the necessary counterpart of a trade deficit serves to increase the flow of saving available to the economy and has favorable effects on output and employment in activities typically financed by saving flows such as business investment and residential construction. Therefore, removing this bias against the tradable goods sectors should be judged against the benefit to the overall economy of the capital inflow that animates this process. Most recently, the trade deficits of the 1993—2000 period allowed the U.S. economy to undertake rates of investment that otherwise could not have occurred. The payoff is faster economic growth. In the 1980s, however, large U.S. trade deficits were used to support public and private consumption and arose in part from public policies that increased the federal budget deficit. In this case there is no payoff from faster growth. It also raises the issue of whether the public policies involved were on balance good or bad. At present, an expanding economy along with large federal budget deficits may be a recipe for perpetuating large trade deficits more along the lines of the 1980s experience then that of the 1990s. If a smaller trade deficit is judged the appropriate goal, economic policy can be used to reach it. If it is also judged prudent not to achieve this reduction at the expense of domestic investment, then the economy's rate of saving will have to be raised. (This is the same thing as saying the economy's rate of consumption will have to be reduced.) Economic policy's ability to affect the private saving rate is problematic, but macroeconomic policy can certainly change the public saving rate. Government budget deficits are a subtraction from the nation's saving and budget surpluses are an addition to the nation's saving. Therefore policies that move the budget away from deficit and toward surplus, other things unchanged, will tend to reduce the trade deficit. This will occur, of course, as a depreciating exchange rate works to change the composition of domestic output, stimulates export sales, and dampens import spending, and in the process likely boosts the output and employment of the U.S. tradable goods sectors. This will not stop the rise in the level of trade, nor eliminate outsourcing, but it can remove some of the bite of that process on the tradable goods industries. The presence of a market failure in idea production can be corrected by an appropriate amount of public support for the idea creation process. Such support could include public funding of research and development (R&D), both basic scientific research (where the prospect of market failure is the greatest) and enterprise-specific research; public funding for investment in human capital, particularly education in the sciences and engineering; and public support for mechanisms to establish and enforce property rights, such as patent and copyright administration. The intent would be that these actions would boost the economy's ability to create new products and better jobs and produce a more appealing counterweight to the destructive effects of technological diffusion and increased imports and foreign outsourcing. As jobs are destroyed by foreign outsourcing in one part of the economy, it is hoped that the boost to the idea production process would improve the attractiveness of U.S. exports on the world market, leading to an acceleration of the flow of exports and foreign outsourcing into the United States, and boosting the rate of creation of better jobs in other parts of the economy. Of course, these are activities that the U.S. government supports now. But the open question is whether such support is well targeted and undertaken at an adequate scale. This is not an easy question to answer. As regards spending on R&D by private firms, there is a considerable amount of economic evidence that the social rate of return to R&D for a variety of research projects often greatly exceeds the private rate of return, suggesting that too little research is being undertaken. (At optimal scale research projects would be undertaken to the point where the social rate of return has been pushed down to the level of private return.) By some estimates, the level of investment undertaken by firms could be as little as 25% of the level what is economically optimal. Can economic policy entice firms to increase their R&D spending? The patent system is one manifestation of government's attempt encourage inventive behavior by providing "property rights" over new ideas. This is a well developed set of laws in the United States and it is questionable whether initiatives on this front will encourage much more R&D. There is the prospect that improvement in the establishment and enforcement of property rights internationally could have a positive effect on domestic R&D activity. The functioning of the patent system, however, likely involves an economic trade-off. There is an economic gain from inducing more R&D by companies, but the knowledge that is produced will not be widely disseminated for the term of the patent. Given the cumulative nature of knowledge production, this restriction on the flow of knowledge will tend to slow the rate of production of knowledge generally. Another policy device that attempts to coax more R&D out of business firms is the R&D tax credit . While the evidence indicates that the research tax credit does raise R&D spending by firms, many economists have significant doubts about how well the tax credit does at targeting and inducing R&D projects with large social benefits. Why not use direct grants by government to firms to undertake R&D projects that offer large social benefits relative to private return? The information requirements for operation of an efficient grant program are likely well beyond what government could hope to muster. The economic risk is that a program of direct grants would, by distorting the patten of investment and by encouraging rent-seeking behavior, generate more inefficiency than efficiency. The dollar spending levels by industry and government have increased, but as a percent of GDP, industry's share has risen and that of government has fallen since the 1980s. It is government spending on R&D that largely provides support to basic research; this is an area in which the incidence of market failure in idea production is probably the greatest. Basic research is currently supported through the budgets of many government agencies, including the National Science Foundation, National Institutes of Health, NASA, the Department of Energy's Office of Science, and the Department of Defense. Much of the actual research is done at major universities across the country. One policy issue for basic research is determining the appropriate level of government funding. The rate of accumulation of technical knowledge is likely to rise with the level of resources devoted to it, but the speculative nature of basic research makes it all but impossible to judge what the economically optimal size of government spending on such research would be. The absolute level of inflation-adjusted government spending on basic research has increased from about $1.4 billion in 1953 to about $39 billion in 2004. The intensity of government-funded basic research, however, has fallen, decreasing from about 0.7% of GDP in 1953 to about 0.2% of GDP in 2004. International evidence has shown that there is a positive correlation of the intensity of government-funded basic research and economic growth. Nevertheless, the understanding of linkage between basic research and economic growth is not well specified, making it difficult to predict the precise pay-off in economic growth from a given increase in spending on basic research. This, in turn, makes it difficult to say what the optimal level of such spending should be. A second policy issue with government-funded basic research is the mix of that funding across areas of scientific inquiry. The share of government research spending in health-related areas has risen steadily for the last 30 years and has increased dramatically over the last 10 years. Funding for life-sciences now accounts for 60% of the government's basic research expenditures. In contrast, inflation-adjusted funding for basic research in the physical sciences has not risen over the last 30 years and accounts for only 10% of the government's budget for basic research. Some argue that this disparity in funding is inconsistent with the often interdisciplinary nature of major innovations and is a movement away from the balanced basic research portfolio that is most likely to yield the maximum long-run return. This argument is not that research funds should be reallocated away from health areas, but rather that there should be a more balanced increase across all areas of basic research. Labor market disruptions are not new problems, and most advanced industrial economies have developed policies to provide some degree of support for those displaced by recession or the ever present churning of market forces including trade. Because equity goals are as likely to be of as much concern to citizens and policymakers as are efficiency goals, an economic response of foreign outsourcing can not be easily separated from consideration how those hurt in this process will be treated. To the economist, the policy challenge is to craft initiatives that equitably compensate and assist those who are displaced, while also securing the efficiency gains from increased trade. At the most general level, the economist would argue for a transfer of some of the gains from trade from the "winners" to the "losers." Because increased trade generates benefits in excess of costs such a transfer can, in principle, compensate those hurt by trade and still leave the wider economy better off then it would be without trade and outsourcing. Finding and implementing policies to effect such a transfer remains an area of controversy. It can be argued that in the United States and other industrial economies, the post-World War II economic order was built upon an explicit or implicit "social bargain." Workers would accept the periodic disruptions associated with the market economy's cyclical and destructive traits that are inherent to its rapid creation of wealth and rising economic well-being, if those disruptions were cushioned by government provision of various types of economic support to see them through these rough spots. Public support rather than workers themselves buying insurance against the risk of job loss is thought the preferred method because the "market failure" caused by the problem of "adverse selection" will prevent the private market from providing an adequate level of coverage. While the social policies may have changed in form and extent over the years, these worker support policies remain an integral piece of the modern industrial economy. The level of economic support an unemployed or displaced worker receives can be seen as a form of social insurance against the "risk" of job loss and its associated costs that a fluctuating and ever churning market economy exposes workers to. The argument can be made that if the velocity of market "churning" has increased in recent years due to the combined or individual effects of a rapidly rising level of international trade, accelerating productivity advance, or more quickly shifting consumer demand, then the volatility of the labor market and the risk of unemployment that each worker faces have also increased. Some argue that higher level of risk would warrant a higher level of economic support. This does seem to be the case among Organization for Economic Cooperation and Development (OECD) countries for exposure to the risk associated with international trade, where there is a fairly strong correlation between market openness and levels of government support expenditures. In addition to the level of support, consideration of the form of that support, particularly the incentives for quick re-employment, may be important. In this regard, policy areas that might merit closer examination include wage-insurance, portability of health and retirement benefits, and incentives for ongoing enhancement of worker skills that could have value to a wider spectrum of employers.
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Foreign outsourcing—the importing of some intermediate product (i.e., a portion of a final product or some good or service needed to produce a final product) that was once produced domestically—is not a new phenomenon, nor is it one that is economically distinct from other types of imports in terms of its basic economic consequences. A steadily rising level of trade in intermediate products is one of the salient characteristics of U.S. trade and world trade for the last 30 years. It has been estimated that as much as a third of the growth of world trade since 1970 has been the result of such outsourcing worldwide. While foreign outsourcing may seem different from traditional notions of trade in that it involves exchange of a productive resource (capital or labor) rather than an exchange of a final good and service, the ultimate economic outcome is exactly the same: a net increase in economic efficiency through the elimination of economic inefficiencies that occur when countries use only the productive resources found within their borders. This gain is not likely to be achieved, however, without causing costly disruptions for the particular workers and sectors tied to the now-imported good. Foreign outsourcing, trade in general, and trade deficits tend to change the composition of total output and the composition of total employment, but it is unlikely that economy-wide they lead to any change in the overall level of either. In some areas of the economy output falls and jobs are destroyed, but in other areas output is increased and jobs are created. There are two complementary reasons for this. First, the Federal Reserve using monetary policy can set the overall level of spending in the economy to a level consistent with full employment. With aggregate spending at the right level, full employment is possible with or without outsourcing, trade deficits, or trade in general. Second, according to basic economic principles any increase in the demand for an import will also lead to adjustments in the foreign exchange market that will induce an equal increase in the demand for the country's exports of goods or assets. The positive stimulus to employment of the increased export of goods is direct, that of the increased export of assets is indirect, but both tend to create jobs in other parts of the economy. Indirect evidence of this inherent "two-way" nature of trade and that increased outsourcing over the last 30 years has not likely led to a significant net diversion of employment or output abroad is found in the relatively stable patterns of employment and output between the domestic parent and foreign affiliates of U.S. multinational corporations. In addition, there is evidence of sizable foreign outsourcing to and job creation in the United States. The destructive aspects of foreign outsourcing are costly and distressing to those whose jobs are lost to increased imports. Therefore, matters of efficiency and equity are intertwined and one of the principal challenges for policymakers in the face of foreign outsourcing (and trade in general) is to find ways to ameliorate the associated harm, without sacrificing the economy-wide gains that such trade generates. Compensation for loss and adjustment assistance is thought by economists to offer the best chance for securing higher economic efficiency along with distributional equity. This report will be updated as events warrant.
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The Gulf Opportunity Zone Act of 2005 ( H.R. 4440 ) provides tax relief to businesses and individuals affected by Hurricanes Katrina, Rita, and Wilma. The House passed the act on December 7, 2005, by a vote of 415 to 4. The Senate passed an amended version by unanimous consent on December 16, 2005, and the House agreed to the Senate Amendment later that day. President Bush signed the bill into law, P.L. 109-135 , on December 22, 2005. The act's provisions distinguish between the "Hurricane Katrina disaster area," which is the presidentially-declared disaster area, and the "Gulf Opportunity Zone" (GO Zone), which is the portion of the Hurricane Katrina disaster area determined by President Bush to warrant individual or individual and public assistance under the Stafford Act. The same distinction is made between the "Hurricane Rita disaster area" and the "Rita GO Zone," and the "Hurricane Wilma disaster area" and the "Wilma GO Zone." The act allows Alabama, Louisiana, and Mississippi to issue tax-exempt GO Zone bonds between the date of the section's enactment and January 1, 2011. The bonds must be issued either to (1) use at least 95% of the proceeds for the cost of qualified GO Zone residential rental projects or the acquisition, construction, reconstruction and renovation of GO Zone nonresidential real property or public utility property or (2) finance below-market rate mortgages for low and moderate-income homebuyers under IRC § 142, with modifications. The maximum amount of bonds that each state may issue is $2,500 multiplied by the portion of the state's population in the GO Zone as determined prior to August 28, 2005. None of the bond issue's proceeds may be used to finance private and commercial golf courses, country clubs, massage parlors, hot tub and suntan facilities, racetracks and other gambling facilities and stores with the principal business of selling alcoholic beverages for consumption off premises. The act allows one additional advance refunding of qualifying bonds that were issued by those states and were outstanding on August 28, 2005. Additionally, while bonds issued to advance refund private activity bonds are generally not tax-exempt, the act allows one advance refunding for bonds used to finance airports, docks, and wharves. The refundings must occur between the date of the act's enactment and January 1, 2011, and each state is capped in the amount of bonds it may refund. The refunding provisions do not apply if any of the bond issue's proceeds are used to provide property that does not qualify for GO Zone bond financing, as discussed above. The act creates a special rule for applying IRC § 142(d), which allows residential rental projects for low-income tenants to qualify for tax-exempt bond financing. The act allows project operators who rent to individuals displaced by Hurricane Katrina to rely on those individuals' representations that their income is under the income limits so long as the tenancy begins within six months of the displacement. The low-income housing tax credit in IRC § 42 allows owners of qualified residential rental property to claim a credit for ten years that is a percentage of the costs of constructing, rehabilitating, or acquiring the building that is attributable to low-income units. Owners may claim a credit based on 130% of the project's costs if the housing is in a low-income or difficult development area. Owners must be allocated the credit by a state. Each state is limited in the amount of credits it may allocate to the greater of $2,000,000 or $1.75 times the state's population (both are adjusted for inflation and are currently $2,125,000 and $1.85), with adjustments. For 2006, 2007, and 2008, the act increases the credits available to Alabama, Louisiana, and Mississippi for use in the GO Zone by up to $18.00 multiplied by the portion of the state's population in the GO Zone prior to August 28, 2005. It also increases the credits available to Florida and Texas in 2006 by $3,500,000 for each state. For 2006, 2007, and 2008, the act treats the GO Zone, Rita GO Zone and Wilma Go Zone as difficult development areas and uses an alternate test for determining whether certain GO Zone projects qualify as low-income housing. The act increases the depreciation deduction otherwise allowed under IRC § 167 for qualified GO Zone property. The increase equals 50% of the taxpayer's adjusted basis in the property and is claimed the year the property is placed in service. Among other requirements, the property's original use in the GO Zone must commence with the taxpayer after August 27, 2005, and the property must be placed in service prior to January 1, 2008 (January 1, 2009, for nonresidential real and residential rental property). Qualified property does not include (1) property used in connection with private and commercial golf courses, country clubs, massage parlors, hot tub and suntan facilities, racetracks and other gambling facilities, and stores whose principal business is selling alcoholic beverages for consumption off premises or (2) gambling and animal property, which is the equipment, furniture, software and other property used directly in connection with gambling, the racing of animals, or the on-site viewing of such activity, and any portion of at least 100 square feet of real property dedicated to those activities. Under IRC § 172, net operating losses (NOL) may generally be carried back for two years. The act allows GO Zone NOL to be carried back for five years. The GO Zone loss is the lesser of (a) the year's NOL with adjustment or (b) the deductions used in computing the year's NOL for GO Zone casualty losses, employment-related moving expenses due to Hurricane Katrina, temporarily housing employees, depreciation of GO Zone property, and hurricane-related repair expenses. Property that is disqualified under the depreciation provision discussed above does not qualify as GO Zone property or its loss as a GO Zone casualty loss. In general, capital expenditures must be added to the property's basis rather than being expensed (i.e., deducted in the current year). IRC § 179 provides an exception so that a business may expense the costs of certain property in the year it is placed in service. The total cost of the property that the business elects to treat as section 179 property cannot exceed $100,000. Additionally, for every dollar that the total cost of all property that the business places in service in the year exceeds $400,000, the maximum deduction is decreased by one dollar. Both limitations are adjusted for inflation, and are $105,000 and $450,000 in 2005. IRC § 198 contains another exception to the rule against expensing capital expenditures. It allows taxpayers to expense environmental remediation costs from the abatement or control of hazardous substances at a qualified contaminated site. It does not apply to costs paid after December 31, 2005. The act increases the $100,000 limitation in IRC § 179 by up to $100,000 and the $400,000 limitation by up to $600,000 for qualified GO Zone property. Qualified property does not include the property that is disqualified from the depreciation and NOL provisions discussed above. The act amends IRC § 198 for sites in the GO Zone by extending the current deadline to December 31, 2007, and treating petroleum products as a hazardous substance. It also allows taxpayers to expense 50% of qualified clean-up costs paid or incurred between August 27, 2005, and January 1, 2008, for the removal of debris or the demolition of structures on business real property in the GO Zone. Under IRC § 47, taxpayers may claim a credit equal to 10% of the qualifying expenditures to rehabilitate a qualified building or 20% of such expenditures for a certified historic structure. The act increases these amounts to 13% and 26% for building and structures in the GO Zone for expenditures between August 27, 2005, and January 1, 2009. The act creates two special rules for timber producers with less than 501 acres of timber property. Under IRC § 194, taxpayers may expense up to $10,000 of qualifying reforestation expenditures. The act increases that limit by up to $10,000 for expenditures made for qualified timber property in the GO Zone, Rita GO Zone, or Wilma GO Zone. Under IRC § 172, the general rule is that taxpayers may carry net operating losses back for two years. The act increases this to five years for certain losses attributable to timber property in any of the three zones. Under IRC § 172, certain net operating losses, called specified liability losses, may be carried back for 10 years. The act treats GO Zone public utility casualty losses as such a loss. Under IRC § 165(i), certain disaster losses may be deducted in the year prior to the disaster. The act allows GO Zone public utility disaster losses to be deducted in the fifth taxable year preceding the disaster. The act allows holders of gulf tax credit bonds to claim a credit based on the credit rate on the date the bonds were sold and their outstanding face amount. The bonds may be issued by Alabama, Louisiana, and Mississippi to pay the principal, interest, or premiums on qualified governmental bonds or to make loans to political subdivisions to make such payments. Qualified bonds do not include those used to finance private and commercial golf courses, country clubs, massage parlors, hot tub and suntan facilities, racetracks and other gambling facilities, and stores with the principal business of selling alcoholic beverages for consumption off premises. The gulf tax credit bonds must be issued between December 31, 2005, and January 1, 2007, and may not have a maturity date beyond two years. Each state is capped in the amount of bonds it may issue. The new markets tax credit in IRC § 45D is capped at $2 billion for 2005 and $3.5 billion for 2006 and 2007. The act increases the cap by $300,000,000 for 2005 and 2006 and by $400,000,000 for 2007, and allocates these amounts to entities making low-income community investments in the GO Zone. Under IRC § 25A, individuals with eligible tuition and related expenses may claim the Hope Scholarship or Lifetime Learning credit. The maximum Hope credit is 100% of the first $1,000 of eligible expenses and 50% of the next $1,000 of eligible expenses. The maximum Lifetime Learning credit is 20% of up to $10,000 of eligible expenses. For individuals attending school in the GO Zone for 2005 and 2006, the act allows any qualified higher education expenses to qualify for the credits, doubles the $1,000 limitations in the Hope credit to $2,000, and increases the 20% limitation in the Lifetime Learning credit to 40%. The act excludes the value of certain employer-provided housing, limited to $600 per month, from the employee's income and allows the employer to claim a credit equal to 30% of that amount. The employee must have had a principal residence in the GO Zone on August 28, 2005, and perform substantially all employment services for that employer in the GO Zone. The employer must have a trade or business in the GO Zone and the lodging must be provided during the first six months after the act's enactment. IRC § 168(k) provides a bonus depreciation deduction that is similar to the act's depreciation provision discussed above in that it allows taxpayers to claim an increased depreciation deduction during the year qualifying property is placed in service. Certain types of property must be placed in service prior to January 1, 2006. The act grants the Treasury Secretary the authority to suspend this deadline, on a case-by-case basis, by up to one year for taxpayers affected by the hurricanes. The act states it is the sense of Congress that the Treasury Secretary designate at least one series of bonds as Gulf Coast Recovery Bonds. The act repeals several provisions that were enacted in KETRA to assist individuals affected by Hurricane Katrina and then reenacts them to also apply to individuals affected by Hurricanes Rita and Wilma. For certain post-hurricane retirement plan distributions, the act waives the 10% penalty tax in IRC § 72(t) that would otherwise apply on early withdrawals. The recipient must have had a principal place of abode in the Hurricane Katrina disaster area on August 28, 2005, the Hurricane Rita disaster area on September 23, 2005, or the Hurricane Wilma disaster area on October 23, 2005, and sustained an economic loss due to a hurricane. The distributions must be made before January 1, 2007, and the most that may be withdrawn without penalty is $100,000. Funds may be re-contributed to a qualified plan over a three-year period and receive tax-free rollover treatment. Additionally, with respect to the taxable portion of the distribution, the individual may include one third of such amount in his or her income for three years rather than the entire amount in the year of distribution. The act increases the amount that these individuals may borrow from their plans without immediate tax consequences. Under IRC § 72(p), the maximum amount that may be borrowed without being treated as a taxable distribution is the lesser of (a) $50,000, reduced by certain outstanding loans or (b) the greater of $10,000 or 50% of the present value of the employee's nonforfeitable accrued benefits. For loans made during the applicable period, the act increases this to the lesser of (1) $100,000, reduced by certain outstanding loans, or (2) the greater of $10,000 or 100% of the present value of the employee's nonforfeitable accrued benefits. The applicable period is between September 23, 2005, and January 1, 2007, for Katrina individuals and between the date of enactment and January 1, 2007, for Rita and Wilma individuals. The act also extends loan repayment due dates by one year if the original date falls between a certain date and January 1, 2007. The date is August 25, 2005, for Katrina individuals, September 23, 2005, for Rita individuals, and October 23, 2005, for Wilma individuals. The act also allows individuals to re-contribute without tax consequences distributions that were made to purchase or construct a principal residence in one of the disaster areas but were not used because of the hurricanes. The distribution must have been received after February 28, 2005, and before either August 29, 2005 (Katrina), September 24, 2005 (Rita), or October 24, 2005 (Wilma). The contributions must be made after August 24, 2005 (Katrina), September 22, 2005 (Rita), or October 22, 2005 (Wilma), and before March 1, 2006. The act includes a retention credit for hurricane-damaged businesses that continue to pay their employees' wages, regardless of whether they perform services. Eligible employers are those with an active business in the GO Zone on August 28, 2005, the Rita GO Zone on September 23, 2005, or the Wilma GO Zone on October 23, 2005, and whose business was rendered inoperable due to hurricane damage for any day prior to January 1, 2006. Eligible employees are those whose principal place of employment at the time of the hurricane was with the eligible employer in the appropriate zone. The credit equals 40% of the employee's first $6,000 in wages paid between the date the business became inoperable and the date it resumes significant operations there, but no later than December 31, 2005. Under IRC § 170, individuals may not claim a charitable deduction that exceeds 50% of their contribution base (adjusted gross income with adjustment) and corporations may not claim a deduction that exceeds 10% of their taxable income with adjustment. The act suspends the 50% and 10% limitations for cash contributions made between August 27, 2005, and January 1, 2006. For individuals, the deduction may not exceed the amount that the contribution base exceeds other charitable contributions. For corporations, the deduction is only allowed for contributions used for hurricane relief efforts and may not exceed the amount that taxable income exceeds other contributions. The act also suspends the overall limitation on itemized deductions. Under IRC § 165, taxpayers may deduct unreimbursed losses of property not connected to a trade or business when the losses are from a casualty, such as a hurricane. In addition to losses from the actual damage caused by the casualty, a taxpayer in a presidentially-declared disaster area has a casualty loss if ordered, within 120 days of the area's designation, by the state to demolish or relocate his or her home. The loss is the lesser of (1) the decrease in the property's fair market value due to the casualty or (2) the taxpayer's adjusted basis in the property. The deduction may only be claimed to the extent that the loss exceeds $100 plus the sum of 10% of the taxpayer's adjusted gross income and any taxable gains from property involuntarily converted due to the casualty. The act waives the $100 and 10% floors for casualty losses from Hurricanes Katrina, Rita, and Wilma. KETRA instructed the Treasury Secretary to extend certain tax-related deadlines for Hurricane Katrina victims until February 28, 2006. The act extends this relief to victims of Hurricanes Rita and Wilma. The act allows hurricane victims to use last year's earned income for computing the child tax credit [IRC § 24] and the earned income tax credit [IRC § 32] instead of this year's income. Eligible individuals are those whose principal place of abode was (a) in the GO Zone, Rita GO Zone, or Wilma Go Zone or (b) in one of the disaster areas and who were displaced by the hurricanes. The act allows the Treasury Secretary to make adjustments in the application of the tax laws for 2005 and 2006 so that taxpayers do not lose deductions or credits or have a change of filing status due to temporary relocations from the hurricanes. Under IRC § 143, tax-exempt mortgage revenue bonds finance below-market rate mortgages for low and moderate-income homebuyers who have not owned a home for the past three years. The act removes the three-year requirement if the home was in the GO Zone, Rita GO Zone, or Wilma Go Zone and financing was provided before January 1, 2011. It also increases the limitation on qualified home improvement loans from $15,000 to $150,000 for loans to repair damage to homes in the zones.
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The Gulf Opportunity Zone Act of 2005 (H.R. 4440) was signed into law on December 22, 2005 (P.L. 109-135). The act provides tax benefits to assist in the recovery from Hurricanes Katrina, Rita, and Wilma. Some of its provisions expand several sections of the Katrina Emergency Tax Relief Act (KETRA, P.L. 109-73) to apply to victims of Hurricanes Rita and Wilma. This report summarizes the act's provisions dealing with hurricane relief. For more information on P.L. 109-73, see CRS Report RS22269, Katrina Emergency Tax Relief Act of 2005, by [author name scrubbed].
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The first section of this report provides an overview of the consideration of FY2017 judiciary appropriations, with subsections covering each major action, including the initial submission of the request on February 9, 2016; hearings held by the House and Senate Financial Services Subcommittees; the House subcommittee markup on May 25, 2016; the House Appropriations Committee markup on June 9, 2016; the Senate subcommittee markup on June 15, 2016; the Senate Appropriations Committee markup on June 16, 2016; House floor consideration of H.R. 5485 on July 5, July 6, and July 7, 2016; and the continuing resolutions and the enactment of the Consolidated Appropriations Act, 2017, on May 5, 2017. The status is summarized in Table 1 . This overview is followed by a section on prior-year actions and funding. The report then provides an overview of judiciary accounts. The Budget for Fiscal Year 2017 was submitted on February 9, 2016. It contains a request for $7.58 billion in new budget authority for judicial branch activities, including $6.99 billion in discretionary funds and $0.59 billion in mandatory funding for judges' salaries and benefits. By law, the judicial branch request is submitted to the President and included in the budget submission without change. Neither the House nor Senate Appropriations Subcommittees on Financial Services held hearings on the FY2017 judicial branch budget request. The House subcommittee announced that it would accept programmatic and language submissions from Members through March 17, 2016. On May 25, the House Appropriations Committee Subcommittee on Financial Services and General Government held a markup of the FY2017 Financial Services and General Government (FSGG) bill. The subcommittee recommended $7.55 billion in funds for the judiciary, including mandatory funds for judges' salaries and benefits as required under current law. On June 9, 2016, the House Appropriations Committee held a markup of the FY2017 FSGG bill. The committee recommended $7.55 billion in funds for the judiciary, including mandatory funds for judges' salaries and benefits as required under current law. The bill was ordered reported by a vote of 30-18 ( H.R. 5485 , H.Rept. 114-624 ). No amendments were offered related to the judiciary. On June 15, the Senate Appropriations Committee Subcommittee on Financial Services and General Government held a markup of the FY2017 FSGG bill. The subcommittee recommended $7.58 billion in funds for the judiciary, including mandatory funds for judges' salaries and benefits as required under current law. On June 16, 2016, the Senate Appropriations Committee held a markup of the FY2017 FSGG bill. The committee recommended $7.58 billion in funds for the judiciary, including mandatory funds for judges' salaries and benefits as required under current law. The bill was ordered reported by a vote of 30-0 ( S. 3067 , S.Rept. 114-280 ). No amendments were offered related to the judiciary. On July 5, the House agreed to a structured rule ( H.Res. 794 , H.Rept. 114-639 ) for consideration of the Financial Services and General Government bill ( H.R. 5485 ). One amendment (#60) related to the judiciary was made in order. The amendment would reduce funding to the Salaries and Expenses Account under the Courts of Appeals, District Courts, and other Judicial Services heading by $1 million. On July 7, amendment #60 was offered as part of en bloc amendment ( H.Amdt. 1246 ), and was passed by voice vote. H.R. 5485 , as amended, was agreed to on July 7, with a vote of 239-185 (Roll no. 398). No further action was taken on H.R. 5485 or S. 3067 prior to the start of FY2017 on October 1, 2016. Judicial branch activities were funded through continuing appropriations resolutions ( P.L. 114-223 , P.L. 114-254 , and P.L. 115-30 ) until the enactment of the Consolidated Appropriations Act, 2017 ( P.L. 115-31 ). Division E of this act provides $7.5 billion for the judiciary, an increase of $176.2 million (2.4%) from FY2016 and $63.0 million (-0.8%) less than the request. FY2016 judiciary funding was provided in Division E, Title 3, of the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), which was enacted on December 18, 2015. The $7.344 billion provided by the act represented an increase of $73.9 million (1.0%) from FY2015 and was $184.1 million (-2.5%) less than the judiciary's request. FY2015 judiciary funding was provided in Division E, Title 3, of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ), which was enacted on December 16, 2014. The $7.261 billion provided by the act represented an increase of $221.9 million (3.2%) from FY2014 and was $37.9 million (-0.5%) less than the judiciary's request. Neither a Financial Services and General Government Appropriations bill nor a continuing appropriations resolution (CR) containing FY2014 funding was enacted prior to the beginning of the fiscal year on October 1, 2013. A funding gap, which resulted in a partial government shutdown, ensued for 16 days. The funding gap was terminated by the enactment of a CR ( P.L. 113-46 ) on October 17, 2013. The CR provided funding through January 15, 2014. Following enactment of a temporary continuing resolution on January 15, 2014 ( P.L. 113-73 ), a consolidated appropriations bill was enacted on January 17 ( P.L. 113-76 ), providing $7.039 billion for the judiciary for FY2014. Appropriations for the judiciary comprise approximately 0.2% of total budget authority. Two accounts that fund the Supreme Court (the salaries and expenses of the Court and the expenditures for the care of its building and grounds, which are the responsibility of the Architect of the Capitol) together total approximately 1% of the total judiciary budget. The rest of the judiciary's budget provides funding for the lower federal courts and related judicial services. The largest account, approximately 72% of the total FY2017 enacted level, is the Salaries and Expenses account for the U.S. Courts of Appeals, District Courts, and Other Judicial Services. This covers the "salaries of circuit and district judges (including judges of the territorial courts of the United States), justices and judges retired from office or from regular active service, judges of the U.S. Court of Federal Claims, bankruptcy judges, magistrate judges, and all other officers and employees of the federal judiciary not otherwise specifically provided for," and "necessary expenses of the courts." Two other large accounts provide funds for Defender Services (13.9%) and Court Security (7.5%). The remaining judiciary budget is divided among the U.S. Court of Appeals for the Federal Circuit (0.4% of FY2016 enacted), U.S. Court of International Trade (0.3%), Fees of Jurors and Commissioners (0.5%), Administrative Office of the U.S. Courts (1.2%), Federal Judicial Center (0.4%), U.S. Sentencing Commission (0.2%), and Judicial Retirement Funds (2.1%). Three specialized courts within the federal court system are not funded under the judiciary budget: the U.S. Court of Appeals for the Armed Forces (funded in the Department of Defense appropriations bill), the U.S. Court of Appeals for Veterans Claims (funded in the Military Construction, Veterans Affairs, and Related Agencies appropriations bill), and the U.S. Tax Court (funded under Independent Agencies, Title V, of the FSGG bill). Federal courthouse construction is funded within the General Services Administration account under Independent Agencies, Title V, of the FSGG bill. The judiciary uses non-appropriated funds to help offset its funding requirements. The majority of these non-appropriated funds are from fee collections, primarily court filing fees. These monies are used to offset expenses within the Salaries and Expenses accounts of Courts of Appeals, District Courts, and Other Judicial Services. Some of these funds may be carried forward from one year to the next. These funds are considered "unencumbered" because they result from savings from the judiciary's financial plan in areas where budgeted costs did not materialize. According to the judiciary, such savings are usually not under its control (e.g., the judiciary has no control over the confirmation rate of Article III judges and must make its best estimate on the needed funds to budget for judgeships, rent costs, and technology funding for certain programs). The budget request and appropriations figures presented here reflect the net resources for the judiciary, and do not include these offsetting non-appropriated funds. The judiciary also has "encumbered" funds—no-year authority funds appropriated for specific purposes. These are used when planned expenses are delayed, from one year to the next (e.g., costs associated with office space delivery, and certain technology needs and projects). The judiciary continues its cost-containment efforts begun over a decade ago. Specific areas of focus include office space rental, personnel expenses, information technology, and operating costs. In a press release accompanying the submission of the FY2017 budget, Judge Julia S. Gibbons, chair of the Budget Committee of the Judicial Conference of the United States, stressed the results and ongoing efforts of the judiciary's formal cost-containment initiatives, which began in 2004. "Our budget request is reflective of the cost-containment policies we have put in place and reducing cost growth in the Judiciary's budget continues to be a top priority," said Judge Gibbons. Current efforts focus on implementation of shared administrative services among various courts, as well as reducing the judiciary's space footprint. In response to a November 2015 Government Accountability Office (GAO) report on judicial branch cost savings (GAO-16-97), the judiciary is reevaluating its methodologies and reporting practices for cost savings accounting. In 2015, Judge Gibbons reported that the judiciary has achieved a cost reduction of "nearly $1.5 billion relative to [the] projected requirements" over the past 10 years. In 2013, the Judicial Conference set a goal of a 3% reduction in total space. According to Judge Gibbons, as of March 2015, 30% of that goal has been reached, resulting in $5.8 million in rent savings, and the judiciary "is on track to accomplish the full three percent reduction by the end of fiscal year 2018." The safe conduct of court proceedings and the security of judges in courtrooms and off-site has been a concern in recent years. Efforts to improve judicial security have been spurred by the double homicide of family members of a federal judge in Chicago in 2005; the Atlanta killings, in 2005, of a state judge, a court reporter, and a sheriff's deputy at a courthouse; the sniper shooting of a state judge in his Reno office in 2006; and the wounding of a deputy U.S. marshal and killing of a court security officer at the Lloyd D. George U.S. Courthouse and Federal Building in Las Vegas in 2010. An FY2005 supplemental appropriations act included a provision that provided intrusion detection systems for judges in their homes, and the Court Security Improvement Act of 2007 aimed to enhance security for judges and court personnel, as well as courtroom safety for the public. The judiciary has been working closely with the U.S. Marshals Service (USMS) to ensure that adequate protective policies, procedures, and practices are in place. The FY2017 appropriation continued a pilot program for the USMS to assume responsibility for perimeter security at selected courthouses that were previously the responsibility of the Federal Protective Service (FPS). This pilot was first authorized in FY2009 as a result of the judiciary's stated concerns that FPS was not providing adequate perimeter security. After the initial planning phase, USMS implemented the pilot program on January 5, 2009, and assumed primary responsibility for security functions at seven courthouses located in Chicago, Detroit, Phoenix, New York, Tucson, and Baton Rouge (location of two of the seven courthouses). The judiciary and USMS have been evaluating the program and identifying areas for improvement. The judiciary reimburses USMS for the protective services. Following its biennial evaluation and review of judgeship needs, the Judicial Conference of the United States, in March 2017, recommended Congress create 57 new federal judgeships: 5 in the courts of appeals and 52 in the district courts. Several bills have been introduced in recent Congresses to create one or more new judgeships; no action beyond committee referral has occurred on any of the bills. The Conference made a similar request in the 114 th Congress, recommending a total of 73 new judgeships. Subsequent legislation was introduced in both the House and Senate to address this request, but no final action was taken before the 114 th Congress adjourned. Since the enactment of an omnibus judgeship bill in 1990 ( P.L. 101-650 ), according to the Judicial Conference, the number of appellate judgeships has remained at 179 while appellate court case filings have increased by 40%. During this same time period, Congress enacted legislation that increased the number of district judgeships by 5% (from 645 to 677) while district court case filings increased by 38%. The FY2017 judiciary budget request totals $7.53 billion. Table 2 lists the amounts enacted for FY2016, the President's FY2017 request, the House-passed level in H.R. 5485 , the committee-reported level in the Senate, and the FY2017 enacted level. The total FY2017 request for the Supreme Court, $94.5 million, is contained in two accounts: (1) Salaries and Expenses of $79.3 million and (2) Care of the Building and Grounds of $14.9 million. The total represents a 7.0% increase over the FY2016 enacted level. The House-passed and Senate committee-reported bills provided the full request, as does P.L. 115-31 . This court, consisting of 12 judges, has jurisdiction over and review of among other things, certain lower court rulings on patents and trademarks, international trade, and federal claims cases. The FY2017 budget request is $33.1 million, a decrease of 2.1% over the FY2016 enacted level. The House-passed and Senate committee-reported bills provided the full request, as does P.L. 115-31 . This court has exclusive nationwide jurisdiction over the civil actions against the United States, its agencies and officers, and certain civil actions brought by the United States arising out of import transactions and the administration as well as enforcement of federal customs and international trade laws. The FY2017 request of $20.50 million is an increase of 1.7% over the FY2016 enacted level. The House-passed and Senate committee-reported bills provided the full request. P.L. 115-31 provides $20.46 million. The total FY2017 funding request of $7,141.5 million covers 12 of the 13 courts of appeals and 94 district judicial courts located in the 50 states, District of Columbia, Commonwealth of Puerto Rico, Commonwealth of the Northern Mariana Islands, and the territories of Guam and the U.S. Virgin Islands. The account is divided among salaries and expenses, the Vaccine Injury Compensation Trust Fund, court security, defender services, and fees of jurors and commissioners. The House-passed bill provided $7,104.7 million and the Senate committee-reported bill provided $7,135.8 million. P.L. 115-31 provides $7,076.9 million. The FY2017 request for this account is $5,469.8 million, an increase of 2.8% over the FY2016 enacted level. The House-passed bill provided $5,433.0 million and the Senate committee-reported bill provided $5,476.0 million. P.L. 115-31 provides $5,420.4 million. Established to address a perceived crisis in vaccine tort liability claims, the Vaccine Injury Compensation Program funds a federal no-fault program that protects the availability of vaccines in the nation by diverting a substantial number of claims from the tort arena. The FY2017 request is $6.3 million, a 3.5% increase over the FY2016 enacted level. The House-passed and Senate committee-reported bills provided the full request. P.L. 115-31 provides $6.5 million. This account provides for protective services, security systems, and equipment needs in courthouses and other federal facilities to ensure the safety of judicial officers, employees, and visitors. Under this account, the majority of funding for court security is transferred to the U.S. Marshals Service to pay for court security officers under the Judicial Facility Security Program. The FY2017 request is $565.4 million, an increase of 5.1% over the FY2016 enacted level. The House-passed and Senate committee-reported bills provided the full request, as does P.L. 115-31 . This account funds the operations of the federal public defender and community defender organizations, and compensation, reimbursements, and expenses of private practice panel attorneys appointed by federal courts to serve as defense counsel to indigent individuals. The cost for this account is driven by the number and type of prosecutions brought by U.S. attorneys. The FY2017 request is $1,056.3 million, an increase of 5.1% over the FY2016 enacted level. The House-passed bill provided the full request, while the Senate committee-reported bill provided $1,054.5 million. P.L. 115-31 provides $1,044.6 million. This account funds the fees and allowances provided to grand and petit jurors, and compensation for jury and land commissioners. The FY2017 request is $43.7 million, a decrease of 1.1% over the FY2016 enacted level. The House-passed bill provided the full request, while the Senate committee-reported bill provided $39.9 million. P.L. 115-31 provides $39.9 million. As the central support entity for the judiciary, the AOUSC provides a wide range of administrative, management, program, and information technology services to the U.S. courts. AOUSC also provides support to the Judicial Conference of the United States, and implements conference policies and applicable federal statutes and regulations. The FY2017 request for AOUSC is $87.7 million, an increase of 2.4% over the FY2016 enacted level. The House-passed bill provided $87.5 million, while the Senate committee-reported bill provided the full request. P.L. 115-31 provides $87.5 million. As the judiciary's research and education entity, the Federal Judicial Center undertakes research and evaluation of judicial operations for the Judicial Conference committees and the courts. In addition, the center provides judges, court staff, and others with orientation and continuing education and training. The center's FY2017 request is $28.3 million, an increase of 2.2% over the FY2016 enacted level. The House-passed bill provided $28.2 million and the Senate committee-reported bill provided the full request. P.L. 115-31 provides the full request. The commission promulgates sentencing policies, practices, and guidelines for the federal criminal justice system. The FY2017 request is $18.2 million, an increase of 3.3% over the FY2016 enacted level. The House-passed bill provided $18.0 million and the Senate committee-reported bill provided $18.2 million. P.L. 115-31 provides $18.1 million. This mandatory account provides for three trust funds that finance payments to retired bankruptcy and magistrate judges, retired Court of Federal Claims judges, and the spouses and dependent children of deceased judicial officers. The required funding for the account fluctuates with the periodic revisions of the estimated costs of retirement benefits. The FY2017 request is for $161.0 million. The House-passed and Senate committee-reported bills provided the full request, as does P.L. 115-31 . P.L. 115-31 contains provisions related to (1) salaries and expenses for employment of experts and consultant services; (2) transfers between judiciary appropriations accounts of up to 5%; (3) a limitation of $11,000 for official reception and representation expenses incurred by the Judicial Conference of the United States; (4) language enabling the judiciary to contract for repairs under $100,000; (5) the continuation of a court security pilot program; (6) a one-year extension of the authorization of certain temporary judgeships.
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Funds for the judicial branch are included annually in the Financial Services and General Government (FSGG) Appropriations bill. The bill provides funding for the Supreme Court; the U.S. Court of Appeals for the Federal Circuit; the U.S. Court of International Trade; the U.S. Courts of Appeals and District Courts; Defender Services; Court Security; Fees of Jurors and Commissioners; the Administrative Office of the U.S. Courts; the Federal Judicial Center; the U.S. Sentencing Commission; and Judicial Retirement Funds. The judiciary's FY2017 budget request of $7.58 billion was submitted on February 9, 2016. By law, the President includes the requests submitted by the judiciary in the annual budget submission without change. The FY2017 budget request represents a 3.3% increase over the FY2016 enacted level of $7.34 billion provided in the Consolidated Appropriations Act, 2016 (P.L. 114-113), Division E, Title III, enacted December 18, 2015. The House Appropriations Committee held a markup (H.R. 5485) on June 9, 2016, and recommended a total of $7.55 billion. The Senate Appropriations Committee held a markup (S. 3067) on June 16, 2016, and recommended a total of $7.58 billion. On July 5, the House agreed to a structured rule (H.Res. 794) for consideration of the Financial Services and General Government bill (H.R. 5485). One amendment (#60) related to the judiciary was made in order, and subsequently passed by voice vote. H.R. 5485 was agreed to on July 7, with a vote of 239-185 (Roll no. 398). No further action was taken on H.R. 5485 or S. 3067 prior to the start of FY2017 on October 1, 2016, and judicial branch activities were funded through continuing appropriations resolutions (P.L. 114-223, P.L. 114-254, and P.L. 115-30) until the enactment of the Consolidated Appropriations Act, 2017 (P.L. 115-31). Division E of this act provides $7.5 billion for the judiciary, an increase of $176.2 million (2.4%) from FY2016 and $63.0 million (-0.8%) less than the request. Appropriations for the judiciary comprise approximately 0.2% of total budget authority. This report will be updated as events warrant.
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This report provides summary information on supplemental appropriations legislation enacted since FY2000 after significant large-scale disasters. It includes funds appropriated to various departments and agencies. The funds cited in this report were provided by Congress in response to major disasters declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (P.L. 92-288, hereinafter the Stafford Act) and include appropriations for disaster relief, repair of federal facilities, and hazard mitigation activities directed at reducing the impact of future disasters. Disaster assistance provided for agricultural disasters, counterterrorism, law enforcement, and national security appropriations are generally authorized by an authority separate from the Stafford Act and are not included in this report. In addition, in some cases it is difficult to discern the specific purposes for the funds. Unless otherwise noted, this report does not take into account rescissions or transfers after Congress appropriated the funds for disaster assistance. When a state is overwhelmed by an emergency or disaster, the governor may request assistance from the federal government. Federal assistance is contingent on whether the President issues an emergency or major disaster declaration. Once the declaration has been issued, the Federal Emergency Management Agency (FEMA) provides disaster relief through its Disaster Relief Fund (DRF). Funds from the DRF are used to pay for ongoing recovery projects from disasters occurring in previous fiscal years, meet current emergency requirements, and as a reserve to pay for future incidents. In addition, FEMA often uses what are known as "Mission Assignments" to task and reimburse other federal entities that provide direct assistance during emergencies and major disasters. The DRF is funded annually and is a "no-year" account, meaning that unused funds from the previous fiscal year (if available) are carried over to the next fiscal year. In general, when the balance of the DRF becomes low, Congress has provided additional funding through both annual and supplemental appropriations to replenish the account. When a catastrophic incident threatens to deplete the DRF, the President typically submits a request to Congress for a supplemental appropriation (see Table 1 ). Historically, FEMA is the second-largest recipient of supplemental appropriations. In addition to the funds provided to the DRF to reimburse Mission Assignments, Congress often provides direct funding to various agencies such as the Small Business Administration (SBA), or the Department of Agriculture (USDA) for disaster assistance. This is particularly true for supplemental appropriations for large-scale incidents such as Hurricanes Katrina and Sandy. It is useful to note that a low DRF balance is not necessarily needed to spur congressional efforts to provide additional assistance. As previously mentioned, most supplemental appropriations originate with a request from the Administration for additional funds. However, Congress has initiated supplemental appropriations without a formal request from the Administration. For example, in 2007, Congress provided additional assistance for Hurricanes Katrina and Rita ( P.L. 110-28 ). In 2008, Congress added DRF supplemental funding ( P.L. 110-329 ) to the FY2009 Department of Homeland Security Appropriations bill on its own initiative, in response to the Midwest Flooding and Hurricanes Ike and Gustav. While there were no formal requests from the Administration for additional funds, the amount of funding for the supplemental appropriation was based on estimates provided to Congress by FEMA and other federal entities that were involved in response and recovery efforts. Supplemental appropriations often have an "emergency designation." Congress uses emergency designations to exempt a provision in legislation from the budgetary effects of certain enforcement procedures. As a result of the concern over the size of the federal deficit and debt, Congress has implemented measures to limit federal spending. For example, the Budget Control Act ( P.L. 112-25 , hereinafter the BCA), includes measures to limit spending. The BCA placed caps on discretionary spending for the next ten years, beginning with FY2012. If these caps are exceeded, an automatic rescission—known as sequestration—takes place across most discretionary budget accounts to reduce the effective level of spending to the level of the cap. The BCA, however, includes special accommodations to address the unpredictable nature of disaster assistance. First, it redefined "disaster relief" as being federal government assistance provided pursuant to a major disaster declared under the Stafford Act, rather than assistance provided through the DRF. Second, funding designated as disaster relief would now be "paid for" by adjusting upward the discretionary spending caps (also referred to as an allowable adjustment). The allowable adjustment for disaster relief is limited, however, to an amount based on the 10-year rolling average (excluding the highest and lowest years) of what has been spent by the federal government on relief for major disasters. The BCA requires OMB to annually calculate the adjusted 10-year rolling average of disaster relief spending that sets the allowable cap adjustment for disaster relief. These calculations are included in the final sequestration report and sequestration update report issued under Section 254 of the Balanced Budget and Emergency Deficit Control Act of 1985 as amended (BBEDCA). In recent years, Congress has provided more funding for the DRF through annual appropriations than in the past. Many policy experts believe that the BCA's cap adjustments have led Congress to rely more on annual appropriations to fund disaster assistance than in the past. The influence of the BCA on disaster assistance is discussed further in-depth in " The Debate over the Use of Supplemental Appropriations for Disaster Assistance " section of this report. It is worth noting that the cap is calculated in nominal dollars and does not adjust for inflation. This may become more significant over time if inflation rises, and if the allowable adjustment begins to decrease as projected in 2016. This section provides summary information on emergency supplemental appropriations legislation enacted since 2000. The funds cited include both supplemental appropriations and loan authority to certain federal agencies that undertook disaster relief, repair of federal facilities, and hazard mitigation activities directed at reducing the impact of future disasters. Funds used for activities such as research, oversight, or administrative costs have been omitted from this analysis in an attempt to focus solely on disaster relief and assistance. Moreover, counterterrorism, law enforcement, and national security appropriations are not included in this compilation. Unless otherwise noted, this report does not take into account rescissions approved by Congress after funds have been appropriated for disaster assistance. As reflected in Table 1 , supplemental appropriations have generally been enacted as stand-alone legislation. In some instances, however, disaster assistance funding has been enacted as part of regular appropriations measures, continuing appropriations acts (continuing resolutions), or as a part of omnibus appropriations legislation. Also, while the need for additional funds has historically been tied to a single, large-scale major disaster such as Hurricanes Katrina or Sandy, in recent years the need for assistance has increasingly been caused by a string of incidents. For example, legislation passed in FY2010 and FY2012 provided disaster relief for several incidents rather than a single, large scale disaster. Supplemental appropriations for disaster relief provide funding to a wide array of federal agencies depending on the unique needs of each disaster. In general, agencies, such as FEMA or the Department of Housing and Urban Development (HUD), are consistently included in supplemental appropriations for disaster relief. On the other hand, many smaller agencies or programs have received funding for certain disasters and not others. Figure 1 and Figure 2 below outline the total funding that has been given to each agency since FY2000. Of the total amount provided for all agencies ($265 billion), nearly 50%, or $122 billion, has gone to FEMA. Overall, eight agencies account for 96% of the total appropriation during this time. During the 113 th Congress, P.L. 113-2 , the Disaster Relief Appropriations Act, provided $50.3 billion in disaster assistance through numerous federal agencies and entities in response to Hurricane Sandy. The bill provided $11.5 billion for the DRF, $5.3 billion for the Army Corps of Engineers, and $13.0 billion for the Department of Transportation. Enacted during the 112 th Congress, P.L. 112-77 , the Disaster Relief Appropriations Act, 2012, provided an additional $8.1 billion in disaster assistance including $6.4 billion for the DRF and roughly $1.7 billion for the Army Corps of Engineers to repair damages to federal projects resulting from major disasters, operations and expenses, and other projects to prepare for floods, hurricanes, and other natural disasters. During the 111 th Congress, P.L. 111-212 , the Disaster Relief and Summer Jobs Act of 2010, provided $5.5 billion for disaster relief. The bill included $5.1 billion for the DRF. During consideration, the underlying bill ( H.R. 4899 ) became a vehicle for additional non-disaster funding, including $33 billion for the Department of Defense, and funding for court case relief for veterans, Native Americans, and minority farmers. During the 110 th Congress, President George W. Bush signed into law four measures ( P.L. 110-28 , P.L. 110-116 , P.L. 110-252 , and P.L. 110-329 ) that provided roughly $44.0 billion in supplemental appropriations for disaster relief and recovery (most of it for the DRF). P.L. 110-28 , signed on May 25, 2007, included an appropriation of $7.7 billion for disaster assistance, $6.9 billion of which was classified for Hurricane Katrina recovery. P.L. 110-116 , signed into law on November 13, 2007, provided a total of $6.4 billion for continued recovery efforts related to Hurricanes Katrina, Rita, and Wilma, and for other declared major disasters or emergencies. Specifically, $500 million of these funds were included for firefighting expenses related to the 2007 California wildfires. P.L. 110-252 , signed into law June 30, 2008, provided $8.4 billion in disaster assistance, most of which was directed at continuing recovery needs resulting from the 2005 hurricane season. P.L. 110-329 , signed into law on September 30, 2008, included an appropriation for emergency and disaster relief of $21.6 billion This amount included funds for both continued disaster relief from the 2005 hurricane season as well as funds for a string of disasters that occurred in 2008, including Hurricanes Gustav and Ike, wildfires in California, and the Midwest floods. One of the largest funding components in P.L. 110-329 was designated for the Department of Housing and Urban Development's (HUD's) Community Development Fund, which received $6.5 billion specifically for disaster relief, long-term recovery, and economic revitalization for areas affected by the 2008 disasters. Other funding in the law included $910 million for wildfire suppression, and a $100 million direct appropriation to the American Red Cross for reimbursement of disaster relief and recovery expenditures associated with emergencies and disasters that took place in 2008. There have been some questions raised in Congress concerning the rising costs of, and continued reliance on, supplemental appropriations for disaster assistance. Some have argued that the amount of funding provided to states and localities for emergency and disaster assistance should be curtailed primarily given concerns about the federal deficit and debt. As concern over the size of federal budget deficit and national debt has grown, so has the amount of congressional attention to both the amount of funding the federal government provides to states and localities for disaster assistance and the processes the federal government uses to provide that assistance. Although funds have been reallocated at times from one account to another to provide for disaster-related assistance, disaster relief funding has historically not been fully offset. Some have argued that supplemental funding is used too often to meet disaster needs. Table 3 indicates the number and amount of supplemental appropriations for disaster assistance from FY2000 to FY2013. In six of those years, Congress passed more than one supplemental appropriation (in addition to regular appropriations) to meet disaster needs. The allowable adjustment provision in the BCA may have reduced the need for supplemental appropriations for disaster assistance by encouraging larger annual appropriations for the DRF. In the past, the Administration's budget request for the DRF was based, in part, on a five-year rolling average of disaster spending. It appears that t he 10-year rolling average used to calculate the allowable adjustment is now being used to formulate the Administration's budget request for the DRF. The 10-year calculation may help generate a more accurate (and higher) estimate for disaster costs than the previous budgeting model. As shown in Table 3 , there were no supplemental appropriations for disaster assistance in FY2011; one was provided in FY2012 and one in FY2013. This may be an indication that fewer supplemental appropriations are needed. However, because the BCA was passed fairly recently, it may be too early to determine whether and to what extent the BCA has influenced the need for supplemental appropriations. Arguments against relying on supplemental appropriations for disaster assistance include supplemental appropriations for disasters often are designated as an emergency expenditure, which under congressional budgetary procedures can exceed discretionary spending limits—creating an opportunity for lawmakers to circumvent budgetary enforcement mechanisms by purposefully underfunding disaster assistance through annual appropriations to make room for other spending; supplemental appropriations for disasters often move through Congress on an expedited basis, limiting the amount of time available to assess actual disaster needs and scrutinize spending to ensure that the spending is appropriately targeted and that adequate safeguards are in place to address the potential for waste, fraud, and abuse. In addition, supplemental appropriations for disasters may result in unnecessarily high funding levels, as early damage estimates may overstate actual needs; and supplemental appropriations for disasters provide a vehicle for spending or other provisions in the legislation unrelated to the incident that may not pass on their own if they were not attached to disaster legislation. Conversely, the unrelated provision may make the appropriation legislation contentious, thus slowing down the delivery of federal disaster assistance. Arguments in favor of the use of supplemental disaster assistance include the timing and severity of disasters cannot be anticipated and appropriating a relatively large sum of funds through annual appropriations may require Congress to reduce funding for other programs to pay for an unknown, and possibly non-existent, future event; the President is authorized to unilaterally determine when federal assistance is made available after a major disaster incident. Congress retains authority to control federal spending by voting on supplemental appropriations. In essence, the use of supplemental appropriations for disasters enables Congress to express its own preferences in disaster assistance; large DRF balances may be subject to a transfer or rescission to meet other needs, which may have negative consequences if a large disaster were to take place after the funds have been withdrawn. For example, if a large scale disaster were to happen after the transfer, another transfer or supplemental appropriation might be needed to address disaster needs; and supplemental appropriations for disasters can be sized according to the needs of the actual incident. Those who oppose relying on supplemental appropriations to fund disaster assistance often suggest the following policy alternatives to reduce the need for supplemental appropriations for disaster assistance. Some have proposed that supplemental funding should be "offset." Appropriations legislation that is fully offset has no overall net cost in budget authority or outlays. Offsets can be achieved by cutting budget authority from one account and providing it to another account, or transferring budget authority from other programs. In recent years, the debate over the use of offsets for disaster relief or assistance has intensified due to the growing size of the federal budget deficit and national debt. There have been legislative attempts to offset the costs of disaster assistance. For example, Title VI of the House-reported version of H.R. 2017 , the Department of Homeland Security Appropriations Act, 2012, would have provided $1 billion of additional funding to the DRF by transferring resources from the Department of Energy. The provision reads as follows: Sec. 601. Effective on the date of the enactment of this Act, of the unobligated balances remaining available to the Department of Energy pursuant to section 129 of the Continuing Appropriations Resolution, 2009 (division A of P.L. 110-329 ), $500,000,000 is rescinded and $1,000,000,000 is hereby transferred to and merged with `Department of Homeland Security—Federal Emergency Management Agency—Disaster Relief': Provided, That the amount transferred by this section is designated as an emergency pursuant to section 3(c)(1) of H.Res. 5 (112 th Congress). Another example is the proposed amendment, H.Amdt. 4 , to the Disaster Relief Appropriations Act, 2013 in the 113 th Congress which would have provided an offset of the $17 billion in emergency funding to address the immediate needs for victims and communities affected by Hurricane Sandy. The offset would have been achieved by an across-the-board rescission of 1.63% to all discretionary appropriations for FY2013. The amendment was not adopted. Proponents of offsets argue that they provide a mechanism to control spending and offset the costs of disaster assistance. Opponents argue that offsets politicize disaster assistance because the program selected for the offset may have been selected because it is politically unpopular rather than being based on a sound policy basis. They also argue that the debate over the use of offsets may unnecessarily slow the delivery of needed assistance. One potential argument against the sole reliance on offsets to limit federal spending on disaster assistance is that it fails to address the significant amount of funding that would be needed to fully offset a very large-scale disaster. The Gulf Coast hurricanes of 2005 and 2008 and Hurricane Sandy cost the federal government $120 billion and $50.3 billion respectively. As such, critics might argue that the sheer size of the offset might have a very negative impact on other parts of the federal budget. The Stafford Act authorizes the President to issue major disaster declarations that provide states and localities with a range of federal assistance in response to natural and man-made incidents. Under a major disaster declaration, state, local, and tribal governments and certain nonprofit organizations are eligible (if so designated) for assistance for the repair or restoration of public infrastructure, such as roads and buildings. A major disaster declaration may also include additional programs beyond temporary housing such as disaster unemployment assistance and crisis counseling, and other recovery programs, such as community disaster loans . There is a direct relationship between the number of major disasters declared and federal spending for disaster assistance—an increase in declarations typically leads to an increase in federal expendi tures for disaster assistance. The number of m ajor disaster declarations has increased steadily since they were first declared in 1953. Initially, there was an average of 13 major disaster declarations per year from 1953 to 1959. T his average has steadily increased over time . A n average of 54 major disaster declarations was issued from 1990 to 2013 (see Figure 2 ) . Ninety-nine incidents were declared major disasters in 2011 alone. Although there was a decrease in the number of declared major disasters in 2012, that year may be considered an outlier given the number of declared disasters in 2010, 2011, and 2013. Critics may argue that too many of these major disaster declarations were for marginal incidents. The term "marginal incidents" refers to incidents that could arguably be handled by the state without federal aid. They argue that the amount of funding the federal government provides for disaster assistance could be reduced by reforming the declaration process to limit the number of declarations; adjusting the federal share for assistance; converting some, or all federal disaster assistance into a loan program; or shifting some of the responsibility for paying for recovery to the state and/or the private sector. Others argue that providing relief to disaster victims is an essential role of the federal government. In their view, while the concern over costs is understandable given the potential impact of disaster assistance on the national budget, the number of declarations being issued each year and their associated costs are justified given the immediate and long-term needs created by incidents. They argue that providing assistance to disaster-stricken areas is needed to help a state and region's economy recover from an incident that it otherwise may not be able to recover from on its own. In addition, they argue that the costs of disasters should be expected given changes in severe weather patterns, as well as increases in population and development. The following section discusses some potential changes to the Stafford Act that have been proposed to limit the number of declarations issued each year, and thus reduce federal expenditures on disaster assistance. Section 320 of the Stafford Act restricts the use of an arithmetic or sliding scale to determine when federal assistance can be provided. Repealing Section 320 would allow formulas that establish certain thresholds that states would have to meet to qualify for assistance. This might make declarations less discretionary and more predictable. Section 404 of the Stafford Act authorizes the President to contribute up to 15% of the cost of an incident toward mitigation measures that reduce the risk of future damage, loss of life, and suffering. Section 404 could be amended to make mitigation assistance contingent on state codes being in place prior to an event. For example, states that have met certain mitigation standards could remain eligible for the 75% federal cost-share for hazard mitigation grants. States that do not meet the standards would be eligible for a smaller share, such as 50% federal cost-share. The amendment may incentivize mitigation work on behalf of the state and possibly help reduce damages to the extent that a request for assistance is not needed, or the cost of the federal share may be lessened. The amendment could be set to take effect over a specified time, giving states time to adjust to the change. Other amendments to the Stafford Act could either limit the number of declarations being issued, or the amount of assistance provided to the state by the federal government. The Stafford Act could be amended so that federal assistance would only be available for states with corollary programs (such as Public Assistance, Individual Assistance, and housing assistance). Establishing these programs at the state level may increase state capacity to handle some incidents without federal assistance. The amendment could be designed to take effect over a specified time, giving states time to adjust to the change. The Stafford Act could be amended to discontinue all assistance for snow removal unless directed by Congress. The amendment could be designed to take effect over a specified time to provide states and localities an opportunity to adjust to the change over a specified time. Under the Stafford Act, the federal share for assistance paid out of the DRF is typically 75% and state and local governments provide 25% of disaster costs. Some contend that federal disaster expenditures could be reduced by shifting more of the costs to the state and local levels by increasing the state share of 25% to a higher percentage. Another option would be to make the cost-share arrangement not subject to administrative adjustment. Instead, the cost-share could only be adjusted upward through congressional action. Adjusting the federal cost-share could reduce federal disaster costs. Others argue that doing so would be burdensome to states and localities. For example, the Gulf Coast states would have had to pay over $50 billion if a 50% matching requirement were in place for hurricane damages in 2005 and 2008. As mentioned previously, federal assistance provided for emergency declarations could be provided through loans. For example, some or all of the assistance provided to the state after a major disaster could be converted to low-interest or no-interest loans through FEMA's Community Disaster Loan (CDL) program. Loans for disaster recovery could also be incentivized. For instance, states that undertook certain pre-established preparedness and/or mitigation measures could qualify for a larger federal share or a lower interest rate. Since the 1950s, the level of financial assistance given to states for disaster relief by the federal government has steadily increased. In light of stated concern with the federal deficit and debt, the increased federal involvement in disaster relief has raised policymaking questions concerning whether the federal government is providing too much assistance to states and localities, or not enough. To some, the state's fiscal capability to respond to an incident is not being adequately factored or tied into federal disaster assistance. Another concern is whether disaster assistance should be subject to certain thresholds and maximums. For example, federal law could be changed to require an emergency or major disaster costs to reach a certain level before federal funding is made available. Also, the current system uses a per capita amount in estimated eligible disaster costs to determine that level when federal disaster assistance can be provided. As another example, the total amount of federal relief for an event could be capped at a certain amount. After this level has been reached, the state would then be responsible to pay for the rest of recovery. Others oppose all of these policy options. Finally, some have questioned whether federal assistance to states and localities unintentionally creates a disincentive for states and localities to prepare for emergencies and major disasters. They argue that federal funding for disaster assistance has become entrenched to the point that it has contributed to what is referred to as a "moral hazard," where it is in the interest of states and localities to underfund mitigation measures. For example, it has been argued that some states do not properly fund mitigation measures because there is a presumption that federal funding is virtually guaranteed should an incident occur. Others claim the function of the federal government is to help states and localities in their time of crisis. Withholding or limiting the amount of funding a state could receive for an incident might not only result in economic hardships for that region and state, but could also have negative consequences for the national economy.
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The federal government has provided a significant amount of money through supplemental appropriations to state, local, and tribal governments to help them repair, rebuild, and recover from catastrophic incidents. For example, Congress provided roughly $120 billion for the 2005 and 2008 Gulf Coast hurricane seasons and $50 billion for Hurricane Sandy recovery. Congressional interest in disaster assistance has always been high given the associated costs. Additional issues associated with disaster assistance have been contentious. These issues include increasing disagreements over the appropriate role of the federal government in providing assistance including whether some of the federal burden for disaster assistance should be shifted to states and localities, the appropriate use of supplemental appropriations to pay for disaster relief, reducing federal costs by eliminating unrelated spending in disaster funding bills, creating alternative funding methods such as a rainy-day fund or a contingency fund, the use of offsets for disaster assistance, altering policies that would limit the number of declarations issued each year, and converting some or all disaster assistance to disaster loans. This report provides summary information on supplemental appropriations legislation enacted since FY2000 after significant large-scale disasters. It includes funds appropriated to various departments and agencies. The funds cited in this report were provided by Congress in response to major disasters declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act and include appropriations and loan authority for disaster relief, repair of federal facilities, and hazard mitigation activities directed at reducing the impact of future disasters. Disaster assistance provided for agricultural disasters, counterterrorism, law enforcement, and national security appropriations are generally authorized by an authority separate from the Stafford Act and are not included in this report. Unless otherwise noted, this report does not take into account rescissions or transfers after Congress appropriated the funds for disaster assistance. As demonstrated in Table 2, since FY2000, Congress has appropriated roughly $265 billion to various federal agencies to help states and localities recover from various large-scale disasters, repair federal facilities, and pay for hazard mitigation projects. In addition to the summary information on supplemental appropriations, this report also examines the influence the Budget Control Act has on disaster assistance. Additionally, this report frames the debate policymakers have had over the years concerning supplemental disaster assistance. Some argue that the current method of relying primarily on supplemental appropriations to fund disaster response and recovery to large scale events is functioning well and should not be changed. Others argue that the federal government should increase the amount of funding provided to states, tribal governments, and localities for major disasters. Still others argue that policy options that reduce federal costs for major disasters or reduce the number of supplemental appropriations needed (or both) should be pursued. This report concludes with policy questions that may help frame future discussions concerning supplemental funding for disaster assistance. This report will be updated as events warrant.
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Reporters have covered Congress since its earliest sessions. Press coverage of Congress and other government institutions helps inform citizens about public policy, the legislative process, and representation. It is also thought to improve government accountability. As the number of reporters and news outlets covering Congress increased during the 1800s, the House and Senate established formal press galleries, resources, and administrative rules to help manage the Capitol press corps while preserving its access and independence. The first congressional reporters mainly transcribed the floor debates and provided more detailed accounts of congressional proceedings than what was available in the official records maintained in the House Journal and the Senate Journal . This information, sometimes provided by Members of Congress themselves, would be sent as correspondence to newspaper publishers outside the capital area. Known correspondents were often permitted on the chamber floors so that they could better hear the proceedings, but correspondents were sometimes restricted to the public galleries. By the middle of the 1800s, each chamber had established its own designated reporters' gallery space. In 1877, the House and Senate decided to create a committee of correspondents to oversee press gallery membership and administration. The Official C ongressional Directory first published a list of 86 correspondents entitled to admission to the reporters' galleries in 1880 and published press gallery rules in 1888. Separate galleries and correspondents' committees now exist for the daily printed press, periodical press, radio and television press, and press photographers. Correspondents' committees, often upon request of gallery members, may propose changes to their gallery rules, subject to the approval of the Speaker of the House and the Senate Committee on Rules and Administration. Today, the congressional press galleries provide services both for journalists and for Members of Congress. For the media format and chamber it represents, each press gallery is typically responsible for credentialing journalists, maintaining Capitol workspace for correspondents, and coordinating coverage for news conferences, hearings, and other congressional events. The press galleries also distribute press releases; provide the press with information on floor proceedings, upcoming rules, amendments, and legislation; provide information on committee hearings, witness testimony, and mark-ups; and deliver messages or facilitate Member communications with journalists. In addition to these regular responsibilities, the House and Senate press galleries take on additional roles during presidential elections, overseeing arrangements and credentialing for daily press at the national political conventions and presidential inaugurations. The degree of autonomy granted to each press gallery and correspondents' committee results from responsibilities bestowed upon them by the Speaker of the House and the Senate Committee on Rules and Administration. Many rules and practices are similar across the different galleries and correspondents' committees. Additional House and Senate chamber rules that apply generally to photography, use of electronic equipment, and audio and video recording or broadcasting in the Capitol may also affect how members of the press cover Congress. Due to the similarities across galleries, this report first presents the general rules and authorities that affect the press galleries and media coverage of Congress, followed by the credentialing requirements that the galleries typically share. Key distinctions between the daily press galleries, periodical press galleries, radio and television galleries, and press photographers' gallery are then discussed. To highlight some of the changes in gallery composition over time, data are provided comparing the number of gallery members and news outlets represented in 10-year intervals between the 94 th Congress (1975-1976) and the 114 th Congress (2015-2016). The report concludes with a brief discussion of some of the considerations that commonly underlie the galleries' practices and some current developments in news production and distribution that may affect the congressional press galleries. The House and Senate press galleries have historically operated under a unified set of governing rules, approved by the Speaker of the House and the Senate Committee on Rules and Administration. The rules established for each press gallery type, and the names of gallery members, are published in the Official Congressional Directory . Because the galleries are creations of each chamber, separate House and Senate authorities are responsible for their own galleries, and each chamber hires its own administrative gallery staff. In practice, however, the galleries may often coordinate with one another on a number of matters. The sections below provide more details on press gallery rules and authorities for the House and for the Senate. A third section addresses the shared delegation of responsibilities from the chambers to the correspondents' committees, which began in 1877. Media access to the House of Representatives is subject to the discretion and control of the Speaker of the House. This tradition was first established by a House resolution in 1838 enabling the Speaker to admit press representatives to the floor. When the new House chamber was completed in 1857, a designated press space was created in the gallery above the Speaker's chair, and the rules of the House were amended to allow the Speaker to grant press gallery access. The press gallery was outfitted by the superintendent of the House with "desks and seats, and conveniences for taking notes," and a room was also reserved for the use of telegraph companies and reporters. In 1939, language was added to the House rules designating a portion of the gallery for radio, wireless, and similar correspondents, who were subject to rules similar to those that applied to print reporters. Today, the Speaker's role in regulating gallery admission and floor access for daily print and periodical journalists is found in Rule VI, clause 2, of the Rules of the House of Representatives . This clause also states that the Standing Committee of Correspondents will supervise the daily press gallery and designate its employees, and that the Executive Committee of Correspondents for the Periodical Press Gallery will perform those same functions for the periodical gallery. The Speaker's role in regulating gallery admission and any floor access for radio and television journalists is found in Rule VI, clause 3, which also delegates radio/TV gallery supervision and designation of its employees to the Executive Committee of Radio and Television Correspondents' Galleries. The professional staff who operate the House press galleries report to the Chief Administrative Officer and Committee on House Administration. Records indicate that in 1838, the Senate adopted rules granting floor privileges to local newspaper reporters, and in 1839, the Senate Committee on the Contingent Fund recommended that gallery seats be reserved for reporters. Initially, the vice president oversaw the Senate press gallery. On March 12, 1873, the Senate agreed to a resolution that gave the Rules Committee jurisdiction over the Senate press gallery and authorized that the committee provide no more than one gallery seat to each newspaper. Additionally, a seat on the floor could be reserved for Associated Press reporters. In 1939, the Senate amended its existing rules to include reporters transmitting news via radio, wire, wireless, and similar media. Under the current Standing Rules of the Senate , Rule XXV, paragraph 1(n)(1), provides the Committee on Rules and Administration with the general authority to make rules and regulations for the Senate floor and galleries. Further directives providing the Committee on Rules and Administration with authority to make rules and regulations for the reporters' galleries and related press facilities on the Senate side of the Capitol are found in Rule XXXIII, paragraph 2. Rule VI of the Rules for Regulation of the Senate Wing provides additional details on admission to and administration of each of the Senate press galleries, and notes that the Sergeant at Arms is responsible for maintaining order in the galleries. The professional staff who operate the galleries report to the Senate Sergeant at Arms and the Senate Committee on Rules and Administration. Since 1877, the Speaker of the House and the Senate Committee on Rules and Administration have provided for the correspondents' committees to make many of the decisions related to the operation of the galleries. One correspondents' committee exists per gallery type, which helps ensure that gallery practices are consistent between the chambers, even as the House and Senate maintain separate gallery facilities. Four correspondents' committees exist today: one for the House and Senate daily press galleries; one for the House and Senate periodical press galleries; one for the House and Senate radio/TV galleries; and one for the Senate press photographers' gallery. A main responsibility of each correspondents' committee is determining which journalists receive congressional press credentials. Press credentials may be offered on a temporary or permanent basis, and they entitle journalists admission to a particular gallery type in both the House and the Senate, along with access to the resources provided by the gallery's office. Changes to press gallery rules or credentialing requirements may be suggested by the correspondents' committees on behalf of gallery members, but are subject to the approval of the Speaker of the House and the Committee on Rules and Administration. Correspondents' committee members must be members in good standing of the gallery they oversee. They are selected by fellow gallery members in accordance with the rules set by that gallery. This system is thought to help preserve the independence of the press corps by removing it from direct congressional influence. It is also thought to help maintain journalistic integrity in the congressional press corps, as the rules agreed upon by gallery members reflect commonly held professional norms and standards of the news industry. As gallery members themselves, correspondents' committee members must remain primarily employed as journalists. The day-to-day management of the gallery facilities is instead tasked to professional, nonpartisan staff members hired by the House and Senate to operate the press facilities for each media type. Press gallery staff for each chamber report to the Chief Administrative Officer and the Committee on House Administration or the Senate Sergeant at Arms and the Senate Committee on Rules and Administration. In addition to the House and Senate rules that directly address the operation of the press galleries, other provisions in each chamber's rules affect media coverage of Congress. For more information on these topics, see CRS Report R44665, Video Broadcasting of Congressional Proceedings , by Sarah J. Eckman. Many of these provisions address photography or the broadcasting or recording of audio and video. The press gallery rules regulate these activities for credentialed correspondents, yet handheld electronic devices, like smartphones, have made it technologically possible for individuals who are not reporters to capture and transmit visual and/or audio materials. Some of these rules prohibit certain activities to preserve decorum in the chamber, like photographing or broadcasting proceedings, or prohibit use of particular electronic devices on which these activities might occur. In the House and Senate galleries, for example, use of cameras and electronic devices is generally prohibited. These provisions apply to any individual, including accredited journalists. The widespread ability to report news from smartphones and other handheld Internet-connected devices may be a relevant consideration for broader chamber rules and policies like these regarding photography, broadcasting, or use of electronic devices. Other rules enable the House, the Senate, and committees within each chamber to broadcast their own proceedings. Live audio and video feeds and past recordings of floor proceedings have been produced by the House since 1977, and by the Senate since 1986. Employees of the House Recording Studio and the Senate Recording Studio are responsible for operating the recording equipment for each chamber. Accredited radio/TV correspondents may request access to these audio or video feeds to rebroadcast, as long as the footage is used for news or public affairs programs, not for commercial or political purposes. The Legislative Reorganization Act of 1970 enabled the House and Senate to allow photographic, radio, and television coverage of proceedings, subject to additional rules established by each committee. Today, the House and Senate also provide live and archived video of floor proceedings on their websites, enabling anyone with an Internet connection to access these official video feeds. Beginning in 2010, the House made floor videos available under the direction of the Clerk of the House. The Senate began providing floor videos on its website in January 2012 under the direction of the Sergeant at Arms. Press credentialing requirements are published in each edition of the Official C ongressional Directory , and are often available on the press gallery websites. Press credentials admit individual journalists to the congressional press galleries and allow journalists access to the resources provided for their medium, like workspace in the Capitol. The Official C ongressional Directory also lists the names of the individuals who hold current permanent credentials for each gallery and the news organizations represented. Each correspondents' committee administers its own credentialing requirements at the start of every Congress, subject to the approval of the Speaker of the House and the Senate Committee on Rules and Administration. Journalists seeking press credentials must submit a new application at the start of every Congress to continue their gallery membership. Temporary credentials may be available to journalists who do not meet all of the gallery's regular requirements. These requirements are typically similar across the galleries and have been consistent over time. Generally, to receive a press credential from a congressional gallery, an individual must be a correspondent for that medium, in good standing at a reputable employing organization; must be primarily employed as a journalist; cannot pursue any claim before Congress or another department of government; cannot be employed by the U.S. government or a foreign government; and cannot engage in direct or indirect lobbying activity. Every four years, each correspondents' committee is also responsible for providing press credentials for the presidential nominating conventions and inauguration. Beyond these basic parameters, each gallery may set additional credentialing requirements. The original House and Senate press galleries were established in the 1800s for members of the daily printed press, which today includes newspapers, wire services, and electronic news organizations. Correspondents seeking daily press credentials must work for a publication that either (1) publishes daily and holds general publication periodicals mailing privileges from the U.S. Postal Service; or (2) has been in publication continuously for 18 months and has as its principal business "the daily dissemination of original news and opinion of interest to a broad segment of the public." The daily press galleries are overseen by the Standing Committee of Correspondents. The Standing Committee of Correspondents is comprised of members of the daily press gallery who are elected to two-year terms. Day-to-day operations of the daily press galleries are managed by professional staff members from each chamber. The House press gallery offices are located in H-315 - H-319 and employ four professional staff. The Senate press gallery offices are located in S-316 and employ seven professional staff. Although the Standing Committee of Correspondents is responsible for accreditation decisions, the Senate press gallery office serves as a liaison between the committee and the journalists, receiving applications, supporting materials, or fees submitted by journalists. In addition to other credentialing requirements, journalists in the daily press galleries must reside in the Washington, DC, area. The periodical press galleries of the House and Senate include correspondents working for magazines, newsletters, and non-daily newspapers or online publications. These periodicals must "regularly publish a substantial volume of news material of either general, economic, industrial, technical, cultural, or trade character" and "require Washington coverage on a regular basis." The periodical press galleries are overseen by the Executive Committee of Correspondents, which is comprised of seven periodical press correspondents. The Executive Committee of Correspondents is elected by periodical press gallery members every two years, coinciding with the start of a new Congress. Credentialing responsibilities rotate between the administrative staff of the House and Senate periodical galleries every four years. The House periodical press gallery offices are located in H-304 and employ four professional staff. The Senate periodical press gallery offices are located in S-320 and employ three professional staff. The radio and television galleries provide credentials for members of broadcast media outlets. The Senate radio/TV gallery coordinates the application process, but credentialing decisions are made by the Executive Committee of the Radio and Television Correspondents' Galleries. The Executive Committee is comprised of seven members. Electronic recording or broadcasting equipment is generally prohibited in the chamber galleries, but radio/TV gallery credentials enable journalists to rebroadcast the floor audio and video footage produced by the House and the Senate. The radio/TV galleries also maintain broadcast and recording studio spaces, which can be used by any correspondent with congressional credentials. In addition to the services provided to journalists, the radio/TV galleries also provide assistance to Members of Congress. The radio/TV galleries manage reservations from Members and congressional staff seeking to hold press conferences in various locations around the Capitol Complex. The radio/TV galleries can also assist Members with media logistics and security for these events. The House radio and television gallery is located in H-320 and employs seven professional staff. The House radio/TV gallery manages reservation requests for Members' press conferences at the "House Triangle," and provides information about other press conference locations suitable for radio or television coverage. Upon the invitation of an accredited journalist, and subject to other gallery rules, Members may host press conferences in the House radio/TV gallery's Capitol Visitor Center (CVC) studios. Any of the three House studios may be used by journalists seeking exclusive interviews with Members, subject to gallery rules. Other locations throughout the Capitol may be used by Members for broadcast media events, but are not managed by the House radio and television gallery. Committee rooms, for example, may be available by contacting the committee of jurisdiction; events in HC rooms on the House-side of the Capitol may be available by contacting the Speaker's Office. Gallery staff can assist Members with logistics for events in these locations. The Senate radio and television gallery is located in S-325 and employs six professional staff. The Senate radio/TV gallery manages reservation requests for Senators' press conferences outside the Capitol building at the "Senate Swamp," and provides information about other press conference locations suitable for radio or television coverage. Upon the invitation of an accredited journalist, and subject to other gallery rules, Senators may host press conferences in the Senate radio/TV gallery's Capitol Visitor Center (CVC) studio. The Senate studio may also be used by journalists seeking exclusive interviews with Senators. Senators may use other locations in the Capitol for broadcast media events that are not managed by the Senate radio and television gallery. Committee rooms, for example, may be available by contacting the relevant committee. Rooms in the CVC, including SVC-200/201 may be available from the Committee on Rules and Administration; S-211 may be available from the Secretary of the Senate; and S-207 may be available from the Sergeant-at-Arms. Gallery staff can assist Members with logistics for events in these locations. The Press Photographers' Gallery provides credentials for news photographers and assists in facilitating photographic coverage of the House and the Senate. The photo gallery offices are located on the Senate side of the Capitol, in S-317, and employ three professional staff. There is no separate House photo gallery facility. The press photographers' photo studio is located in 151 Dirksen. Requirements for press photography credentials are found in Senate Rule XXXIII. The Standing Committee of Press Photographers is a six-member board that is responsible for the administration of the photographers' gallery. Members of the photo gallery elect standing committee members each year, no later than March 31. The Press Photographers' Gallery rules also state that the standing committee must include one member from Associated Press Photos; Reuters News Pictures or AFP Photos; a magazine; a local newspaper; and an agency or freelance photographer. No organization may have more than one representative on the standing committee at any time. The news media environment has changed in a number of ways over the last several decades, and some of these changes are reflected by the composition of the congressional press galleries. Data regarding press gallery membership was collected from the Official Co ngressional Directory for 10-year intervals representing Congresses between 1975 and 2015. The changes in gallery membership and the current composition of the galleries may be relevant to consideration of the rules governing the press galleries or the resources allocated across different galleries. Table 1 provides the number of credentialed congressional correspondents in selected years, subdivided by gallery type. Credentials provide correspondents with access to the galleries and associated offices, but at any one time, it is unlikely that all eligible correspondents would be working from the Capitol. Between the 94 th and the 114 th Congresses, the overall number of accredited congressional journalists more than doubled, growing from 2,588 credentialed correspondents in 1975 to 6,016 in 2015. These findings suggest that, consistent with other measures to increase congressional transparency since the 1970s, more journalists have access to Congress today than in the past. Table 2 provides the number of credentialed news outlets in selected years, subdivided by gallery type. Correspondents may be credentialed as representatives of multiple news outlets, and although the number of accredited correspondents has increased, the number of media outlets they represent has diminished by more than half, decreasing from 1,272 in 1975 to 581 in 2015. This may reflect broader trends in the news industry, including the consolidation of smaller media outlets into larger entities. Figure 1 and Figure 2 illustrate how the proportion of journalists and outlets holding credentials from the daily press, periodical press, radio/TV, and press photographers galleries compare between the 94 th Congress (1975-1976) and the 114 th Congress (2015-2016). The number of accredited correspondents increased for all the press galleries during this time period, but the number of radio/TV correspondents grew most substantially, as shown in Figure 1 . In the 114 th Congress, a majority of the congressional correspondents (58%) held radio/TV credentials, whereas only 28% of correspondents held radio/TV credentials in the 94 th Congress. This change likely reflects the growth of video-based cable and satellite news that occurred during the same time period. The same dynamic may also be reflected in the larger proportion of credentialed radio/TV news outlets, relative to outlets in other gallery types, as shown in Figure 2 . The basic operating structure of the House and Senate press galleries has remained relatively unchanged over the years. This system is comprised of independent correspondents' committees, which establish gallery rules and credentialing requirements; professional nonpartisan administrative staff who manage day-to-day gallery operations; and the House Speaker and Senate Committee on Rules and Administration, which retain authority over the galleries' operations. This division of responsibilities, along with the longstanding gallery rules, has generally addressed potential concerns regarding conflicts of interest or infringements on press freedom. Occasionally, the congressional press galleries have adapted to significant changes in the news media environment; one key example was the establishment of the radio and television galleries in 1939. Although the Speaker of the House and the Senate Committee on Rules and Administration must formally approve of gallery rules and are responsible for oversight, the galleries themselves run fairly autonomously. Nonpartisan, professional personnel operate the galleries on a daily basis, and the correspondents' committees are responsible for many decisions, including accreditation of journalists. The independence of the correspondents' committees from Congress is an important feature of how the press galleries operate, helping to maintain a boundary between the two. Prior to the 1877 establishment of the first correspondents' committee, observers were concerned that, at times, Members seemed too close to the press, and at other times, were somewhat antagonistic to the press. Some observers continue to voice similar concerns, but generally, this separation is thought to improve media accountability and ensure that press access to Congress is not contingent on favorable coverage. Independence of correspondents' committees is also thought to relieve concerns about government infringements on the freedom of the press, since the press—and not any agent of the House or Senate—is largely responsible for formulating and enforcing its own rules. The system of press credentialing requirements and associated gallery rules can be viewed as ways to establish and maintain certain journalistic standards for congressional reporters. Many of the current rules can be traced back to the first rules created in the late 1800s. Press credentialing requirements originated, in part, as a way to ensure legitimate news reporters had access to Members of Congress while preventing lobbyists—who sometimes posed as reporters—from gaining similar access to advance their own agendas. In these early years, congressional staff sometimes also served as newspaper correspondents, leading to concerns about conflicts of interest and occasional speculation that staff might be responsible for the publication of unreleased information. The rules of the galleries continue to prohibit accredited journalists from participating in lobbying, paid advocacy, or advertising activity on behalf of any individual, corporation, organization, political party, or federal government agency. Credentialed correspondents must also be primarily employed as journalists, as concerns have been raised that additional sources of income may affect correspondents' impartiality. Occasional questions have also been raised about whether the disclosure requirements are sufficient and achieve their intended aims, or if enforcement of the rules by independent correspondents' committees introduces the risk that committee members may, at times, be somewhat permissive regarding their peers' activities. In addition to these individual-level restrictions, the media outlets that employ congressional correspondents must be editorially independent of any entity that lobbies the federal government. By excluding individuals and organizations that have a clear connection to policy advocacy, these rules help assure Members of Congress that congressional correspondents are primarily interested in reporting the news and are not seeking access in the interest of promoting their own policy objectives. Changes in how news is produced and distributed have sometimes led the House, Senate, and correspondents' committees to revisit the existing rules, facilities, and administration related to the congressional press. Once radio became a popular news format, for example, the House and Senate rules were amended to include radio reporters, and the chambers created the radio and television galleries. Since the addition of the radio/TV galleries, the overall structure of the congressional press galleries has remained fairly unchanged. Within that structure, new facilities for the existing galleries became available in 2008 upon the completion of the Capitol Visitor Center (CVC). Those who study the news industry have observed several trends in recent decades that may affect the composition of congressional press gallery membership and may be relevant to consideration of congressional rules or resources related to the galleries. Television, for example, has become the predominant news source for most Americans and many prefer to watch cable networks, which can include more editorializing than the broadcast networks. If it appears that journalists representing these outlets are advocating for particular interests, this might contradict the spirit of the longstanding lobbying and advocacy prohibitions in the press gallery rules. Media consolidation trends sometimes raise similar concerns, if a large corporation owns news outlets along with other holdings that may be affected by federal policies or regulations. Internet-based news represents another important development in news production and consumption that may receive additional consideration. Currently, Internet-based journalists apply to the gallery that best matches how they report the news and must meet similar employment and parent publication rules as traditional media journalists. Because websites can provide text, photographs, audio, video, or a combination of these formats, it may be more difficult to draw distinctions between media types for these outlets. Publication can also occur immediately and may obscure differences between daily and periodical publications. The low cost to self-publish on the Internet could also present challenges to the gallery requirements that journalists must be primarily employed by a news outlet. Non-journalists may also be able to effectively report news from the Capitol with handheld Internet-connected devices, like smartphones, and the ubiquity of social media publishing and broadcasting applications. These considerations may be relevant for the congressional press galleries, or for broader chamber rules and policies regarding photography, broadcasting, or use of electronic devices. Since the 1800s, a number of changes have occurred in how news is produced and distributed. The basic structure of the congressional press galleries, however, has remained fairly consistent. Credentialing requirements originated as a way to facilitate professional news reporting from Congress, preventing congressional staff from doubling as reporters and lobbyists from posing as reporters to gain access. Today, the accreditation process continues as a measure to provide access to Congress for credible journalists and news outlets. The system of having an independent correspondents' committee, comprised of gallery members, as the gatekeepers for congressional press credentials for that gallery, generally addresses potential concerns that Congress might infringe upon the rights of a free press or only allow for favorable news coverage. Although the Speaker of the House and the Senate Committee on Rules and Administration must approve any gallery rules, the substance of the rules often reflect measures initiated by the correspondents' committees and gallery members. Designated administrative staff in each gallery further help to insulate the press galleries from possible political pressure. The level of administrative resources granted to the galleries has increased since their creation, but the number of credentialed correspondents has also continued to grow, particularly in the radio/TV galleries. This may be relevant to the consideration of what resources are allocated to the galleries, or how these resources are distributed across each chamber's galleries. Previously clear distinctions between media types and publication schedules, which form the basis of the current gallery divisions, may become increasingly blurred, and this may be relevant as Congress considers how to accommodate multimedia journalists and Internet-based news.
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The House and Senate press galleries provide services both for journalists and for Members of Congress. The news media helps Members communicate with the public, and enables the public to learn about policy initiatives, understand the legislative process, and observe elected officials representing their constituents. In the earliest Congresses, news reports commonly provided the most comprehensive record of congressional proceedings, even for Members themselves, because few official documents were kept. To accommodate the press, and in response to its growth through the mid-19th century, the House and Senate established formal press galleries in 1877, providing resources and organization for journalists reporting from the Capitol. This report provides information about the rules and authorities that affect media coverage of Congress, current practices among the press galleries, and selected data on gallery membership since the 94th Congress. It also provides a brief discussion of considerations that commonly underlie the galleries' practices or may affect gallery operations and congressional media rules. Although they are separate entities, the House and Senate press galleries have traditionally operated under the same governing rules, approved by the Speaker of the House and the Senate Committee on Rules and Administration. Additionally, chamber rules addressing use of electronic devices, photography, and recording or broadcasting of audio and video, also affect journalists covering Congress. Increasingly, non-journalists may also be able to effectively report news from the Capitol with handheld Internet-connected devices. Many elements of the original press gallery rules have persisted over time, and include provisions to preserve journalistic independence from encroachment by Congress. One key feature that helps preserve this independence is the delegation of many gallery responsibilities to correspondents' committees, comprised of gallery members, and to nonpartisan House and Senate staff. Requirements for press credentials, along with other gallery practices, also reflect a balance between ensuring congressional access for professional reporters while managing the limited space and resources available in the Capitol. Today, four correspondents' committees exist to oversee the seven congressional press galleries: one for the House and Senate daily press galleries; one for the House and Senate periodical press galleries; one for the House and Senate radio/television galleries; and one for the Senate press photographers' gallery. Credentials from a correspondents' committee provide journalists with access to the relevant House and Senate galleries and office resources. Each committee's credentialing requirements, along with other gallery rules and the names of accredited journalists and news outlets, are published in the Official Congressional Directory. The congressional press galleries also provide services for Members of Congress and staff. This can include distributing press releases or helping to facilitate Member communications with journalists. Members can use a number of sites around the Capitol Complex for press conferences or interviews. Some of these locations need to be reserved through a particular press gallery. Press gallery staff can also assist Members with media logistics and security for certain events. Although the press galleries have retained similar structures and practices over the years, changes in gallery membership and broader trends in how news is produced and distributed may be relevant as the House, Senate, and correspondents' committees consider the existing rules related to media coverage of Congress and the press galleries. Since the 94th Congress, for example, the number of credentialed correspondents has grown, particularly for the radio/television galleries, but the number of outlets they represent has decreased. Cable and satellite television and the Internet allow for smaller, more specialized news outlets to exist, yet many news outlets are consolidated under larger parent companies. Additionally, journalists making use of the multimedia capacities of Internet-based journalism may find it difficult to categorize themselves under the current gallery structure.
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A little over two years ago, the Senate Finance Committee convened to hear testimony sparked by concern over the popular Merck anti-inflammatory drug Vioxx. A few weeks before, Merck had notified the Food and Drug Administration (FDA) that it was withdrawing Vioxx from the market in response to recent study results indicating an increased risk of heart attacks and sudden cardiac deaths among the millions of patients who had been using Vioxx since its introduction in 1999. Senators wanted to find out what had gone wrong and what could be done to prevent it from happening again. This was not the first time that this Congress had reacted to news about dangers posed by drugs that had already reached the market. Earlier that year, the House Committee on Energy and Commerce's Subcommittee on Oversight and Investigations had held hearings because of controversy over the safety of antidepressants when prescribed to children. In both cases, Members were worried that neither the public nor FDA were sufficiently informed by manufacturers—or, in the case of FDA, sufficiently forthcoming—about risks occurring after the drugs had been first approved. At the Finance Committee hearing, David Graham, Associate Director for Science and Medicine in FDA's Office of Drug Safety, was asked whether these concerns were warranted in the case of Vioxx. He stated, "I would argue that the FDA, as currently configured, is incapable of protecting America against another Vioxx. We are virtually defenseless." Pressed to name other marketed drugs he thought troublesome, Graham named five. The February 2005 meeting of two FDA advisory committees—coming three months after Dr. Graham's testimony to the Senate Finance Committee and five months after Merck withdrew Vioxx from the market—also drew intense public attention. After weighing the evidence on the safety and risk-to-benefit of Vioxx and similar drugs, the committees unanimously asserted that the three COX-2 inhibitors then holding FDA approval for sale in the United States—Vioxx, Celebrex, and Bextra—do increase the risk of heart attack and stroke. Illustrating the complexity of decisions that FDA faces, a majority of the committee members, noting that the benefits of the drugs outweigh the risks for certain groups of people, therefore, recommended to FDA that the agency permit the sale of these drugs—with, however, several severe limitations on advertising and strong warnings in consumer and clinician labeling about cardiovascular risk that is likely associated with dose and duration of use. The furor surrounding Dr. Graham's testimony reawakened interest in a variety of regulatory issues that have surfaced periodically ever since the storm of protest over "filthy, decomposed or putrid" food and "worthless" medicines resulted in FDA's creation during Theodore Roosevelt's presidency. Concerns about regulatory agencies' abilities to protect the public are not unique to FDA or public health. The life-and-death issues of medicine, however, strike most closely to home for many Americans. There has not been a decade since FDA's creation without a highly publicized incident involving drug safety that has led to legislation expanding and strengthening FDA's authority to protect the public. Examples include the scores of children killed by an untested antibiotic (elixir of sulfanilamide) marketed by a company in Tennessee in 1937; the mistakes at a plant manufacturing polio vaccine in 1954 that actually caused 260 cases of polio and 11 deaths; and, in 1962, thalidomide, the sleeping pill that eventually resulted in the birth of at least 8,000 severely deformed babies and thousands of prenatal deaths, mostly in Europe. Today, as the 110 th Congress prepares to consider a variety of health issues, Members still share concerns over drug safety and efficacy. The agency most responsible for such issues is the Food and Drug Administration (FDA). In FY2006, FDA operated on a budget of $1.88 billion ($1.49 billion in appropriated funds and $382 million from user fees), more than $6 per U.S. citizen. With that money, FDA was expected to oversee about $1 trillion of goods, which make up about one-quarter of all U.S. consumer spending. Congressional funding for FDA has increased at about half the rate as that of industry user fees, established by Congress as a way to defray the costs of hiring additional agency personnel so that drug approval review could be quicker. Even though the user fees account for somewhat less than 20% of the FDA total, they made up 59% of FDA's Center for Drug Evaluation and Research (CDER) FY2006 budget. Two regulatory frameworks exist for the review of prescription drugs. First, FDA reviews the safety and effectiveness of new drugs that manufacturers wish to market in the United States; this process is called premarket approval or preapproval review . Once a drug has passed that threshold and is FDA-approved , FDA acts through its postmarket or post-approval regulatory procedures. This report examines issues related to drug safety, specifically in the context of the regulatory process that Congress and the FDA have established for ensuring that drugs are safe and effective. It includes a primer on drug approval: how drugs are approved and come to market, including FDA's role in that process. It also describes FDA and industry roles once drugs are on the pharmacy shelves, the postmarket (also called the post-approval ) period. The report then moves on to a discussion of the problems in identifying and resolving the postmarketing safety and effectiveness issues that are raised most frequently in the debate. Finally, it outlines actions that a variety of analysts have suggested to improve the situation, both ones that FDA could adopt on its own and others for which legislation would be necessary. Derived from the Dutch word meaning to boast (quacken) , "quack" was the word Americans commonly used to describe charlatans in medicine. Quacks peddled adulterated and mislabeled medicines throughout the United States without penalty, until 1906, when Congress passed the Food and Drugs Act, outlawing the practice. It was the first in a series of laws intended to assure Americans that the medicines they used did no harm and actually worked—that they are, in other words, safe and effective . Over the next half-century, Congress passed two major pieces of legislation expanding FDA authority in pursuit of those goals. It passed the Federal Food, Drug, and Cosmetic Act (FFDCA) in 1938, requiring that drugs be proven safe before they could be sold in interstate commerce. Then, in 1962, in the wake of the thalidomide tragedy, Congress amended the law to require that drugmakers prove the effectiveness of their products as well. The process has not remained the same since 1962. The 1983 Orphan Drug Act began a series of additional laws passed by Congress in recent decades to boost pharmaceutical research and development, speed the approval of new medicines, or, in some cases, both. The Orphan Drug Act provided incentives for pharmaceutical manufacturers to develop drugs, biotechnology products, and medical devices for the treatment of rare diseases and conditions. Other laws include the 1984 Hatch-Waxman Act, the landmark compromise balancing greater patent protection of manufacturers with quicker public access to lower-priced generic drugs; the 1992 Prescription Drug User Fee Act (PDUFA), which ushered in user fees and performance goals for faster drug approvals; and the 1997 FDA Modernization Act (FDAMA), which relaxed clinical testing requirements, eased access to experimental therapies, and awarded drugmakers six more months of marketing protection for testing drugs in pediatric patients. The 107 th Congress reauthorized the FDAMA pediatric testing provision within the 2002 Best Pharmaceuticals for Children Act, and extended the drug user fee law for five more years under the Public Health Security and Bioterrorism Preparedness and Response Act. All six pieces of legislation inform the U.S. drug approval process, which is supervised by FDA in accordance with the laws from 1938 and 1962. In the following section, we describe the drug approval process as it functions now. A drug cannot be marketed in the United States without FDA approval, for which the manufacturer must demonstrate the drug's safety and effectiveness to FDA's satisfaction, see its manufacturing plant pass FDA inspection, and obtain FDA approval for the drug's labeling—a term that includes all written and electronic material about the drug, including packaging, prescribing information for physicians, and patient brochures. There are four steps leading to FDA approval of a drug for marketing in the United States: Before testing in humans—referred to as clinical testing—the drug's sponsor (usually its manufacturer) must file an IND application with FDA. It includes information about the proposed study protocol, completed animal test data, the lead investigator's qualifications, and the written approval of an Institutional Review Board based on its determination that the study participants will be made aware of the drug's investigative status and that any risk of harm will be necessary, explained, and minimized. The manufacturer will meet with FDA to discuss whether the clinical study design has sufficient statistical power to enable the manufacturer to draw valid estimates of the safety and effectiveness of the drug. The application must include an Indication for Use section that describes what the drug does and the clinical condition and population for which drug use is intended. Trial subjects should be representative of those who would receive the drug if it is approved. The FDA has 30 days to review an IND. If there is no objection, a manufacturer may begin clinical testing after that time. With IND status, researchers proceed to test in a small number of human volunteers the safety they had demonstrated in animals. These trials, called Phase I clinical trials , "try to determine dosing, document how a drug is metabolized and excreted, and identify acute side effects." If the product still seems viable, the sponsor continues with Phase II and Phase III trials to gather evidence of the drug's efficacy and effectiveness in larger groups of individuals with the particular characteristic, condition, or disease of interest, while continuing to monitor safety. Once the clinical trials are completed, the sponsor submits an NDA to FDA's Center for Drug Evaluation and Research (CDER), containing not only the clinical trial results, but also information about the manufacturing process and facilities, including quality control and assurance procedures. During the review, CDER officials evaluate the drug's safety and effectiveness data, analyze samples, inspect the facilities where the finished product will be made, and check the proposed labeling for accuracy. The Federal Food, Drug, and Cosmetic Act requires "substantial evidence" of drug safety and effectiveness. FDA has interpreted this to mean that the manufacturer must provide at least two adequate and well-controlled Phase 3 clinical studies, each providing convincing evidence of effectiveness. The agency, however, exercises flexibility. As its regulations describe in detail, FDA can assess safety and effectiveness in a variety of ways, relying on combinations of studies by the manufacturer and reports of other studies in the medical literature. FDA has 180 days to review an NDA. If it finds deficiencies, such as missing information, the clock stops until the manufacturer submits the additional information. If the manufacturer cannot respond to FDA's request (i.e., if a required study had not been done, making it impossible to evaluate safety or effectiveness), the manufacturer may voluntarily withdraw the application. If and when the manufacturer is able to provide the information, the clock resumes and FDA continues the review. For many NDAs, FDA convenes advisory panels of experts to review the clinical data. While not bound by an advisory panel's recommendation regarding approval, FDA usually accepts it. FDA makes the final determination: "approved," "approvable" (if certain changes, such as more testing, are made), or "unapprovable." FDA can reject an NDA on two grounds: if the manufacturer failed to perform adequate tests to demonstrate safety and effectiveness for its proposed use, or if the clinical data were not sufficient to show a favorable benefit-to-risk profile. A manufacturer may appeal FDA's decision by filing a complaint with CDER's Ombudsman. Finally, once a drug is marketed, its manufacturer and FDA monitor its overall safety using MedWatch, the agency's postmarketing surveillance system (described later in this report); any Phase IV clinical trials that FDA required as a condition of approval or for which the sponsor otherwise agreed with FDA and committed to undertake; and any other valid information that FDA has learned. FDA funds its new drug approval reviews with appropriations provided by Congress and fees paid by industry. The current funding arrangement grew out of the long-standing tensions between FDA and both industry and consumer groups over how long the FDA reviews took. In 1993, median review time for priority drugs was 16.3 months, a figure FDA acknowledged could be lower with more FDA staff. The pressure for quicker approvals came from two directions. First, manufacturers wanted it. Because the 20-year patent protection begins with NDA submission, manufacturers see the time from NDA submission to FDA approval decision as lost income. The Pharmaceutical Research and Manufacturers of America (PhRMA) argues that because of the long approval process and the Hatch-Waxman Act, encouraging generics, "the average effective patent life for prescription medicines ... is 11-12 years, compared to an average of 18.5 years for other products." Meanwhile, consumer groups also wanted quicker approvals to speed their access to promising drugs. Congress reacted by looking for legislative ways to speed up the drug review process without lowering approval standards, especially those whose weakening might compromise patient safety. In 1992, it passed the Prescription Drug User Fee Act (PDUFA) and five years later, in 1997, the Food and Drug Administration Modernization Act (FDAMA). These laws created a system in which congressional appropriations only partially fund new drug review; those monies are supplemented with "user fees" paid by pharmaceutical companies. A third of the user fee money comes from an application fee; the remaining two-thirds is unlinked to the application process, based instead on the type of manufacturing facility and product submitted for review. User fees are paid at the start of the fiscal year. Following the introduction of user fees, FDA quickly reduced its median approval time for priority new drugs from the 16.3 months of 1993. By 1995, it had fallen by half, where it generally remained until 2002 when it jumped to 13.8 months, coming down to 7.7 months in 2003. Beginning with its data for 2004, FDA includes Biologics License Application (BLA) approvals along with New Drug Applications (NDAs); for 2004, the median approval time was six months. FDA has established, and maintains, detailed records tracking its use of PDUFA fees. We now turn to a discussion of FDA's role after a drug appears on the market. First, we describe the current system. Then we present what critics have identified as problems—and the solutions they propose. The Federal Food, Drug, and Cosmetic Act gives the Secretary of Health and Human Services (HHS) the authority to withdraw marketing approval of a drug. FDA-issued regulations regarding new drug approval require postmarketing reports of adverse drug experiences and of other information produced or acquired by the sponsor. Offices throughout FDA, mostly in the Center for Drug Evaluation and Research, address the safety of the drug supply. These include the Office of Surveillance and Epidemiology (OSE, formerly the Office of Drug Safety); as well as the Office of Regulatory Affairs; the Division of Drug Marketing, Advertising and Communications; the Division of Drug Information; and the Division of Compliance Risk Management and Surveillance. The webpage of FDA's Office of Drug Safety (ODS) describes its duties to include using reports of adverse events that consumers, clinicians, or manufacturers believe might be drug-related to "identify drug safety concerns and recommend actions to improve product safety and protect the public health. Activities include updating drug labeling, providing more information to the community, implementing or revising a risk management program, and, on rare occasions, reevaluating approval or marketing decisions." OSE has three divisions. The staff in the Division of Drug Risk Evaluation works to detect and evaluate safety data and published literature, and assesses manufacturer-provided plans for epidemiologic studies and surveillance tools. The Division of Medication Errors and Technical Support assesses specific drug labeling questions. The Division of Surveillance, Research, and Communication Support manages risk communication activities that include research and patient materials, and MedWatch and other epidemiologic data resources. Other significant drug safety functions reside outside the Office of Drug Safety. These include risk management plans, routine inspection of manufacturing facilities, regulation of imported prescription drugs, and product recalls and withdrawals. A Drug Safety and Risk Management Advisory Committee was established in 2002. In November 2004, in a move widely considered to be in response to the heightened criticism of the agency's handling of possible dangers of COX-2 inhibitors and antidepressants, FDA announced actions "to strengthen the safety program for marketed drugs." These included plans to sponsor an Institute of Medicine (IOM) study of the drug safety system; implement a program for adjudicating differences of professional opinion; appoint a Director of the Office of Drug Safety; conduct drug safety/risk management consultations; and publish risk management guidances. These were followed by FDA's May 2005 announcement of a new "Drug Safety Initiative." New activities were to include more drug-specific information for healthcare professionals, patients, and other consumers; "Drug Watch," a new program to publicly share emerging drug safety information; and a Drug Safety Oversight Board. FDA's Manual of Policies and Procedures states, "The DSB [Drug Safety Oversight Board] has been established to provide independent oversight and advice to the Center Director on the management of important drug safety issues and to manage the dissemination of certain safety information through FDA's Web site to health care professionals and patients." While generally supporting the FDA safety initiative goal of increasing safety decision oversight, including extending membership beyond FDA officials, critics noted that by limiting membership to federal government employees, FDA could exclude the public from board proceedings. Some members of FDA's similarly named Drug Safety and Risk Management Advisory Committee also publicly criticized FDA's approach to the DSB, saying its "name is misleading ..." and that FDA is "setting [itself] up for failure ... in this age of transparency." For certain categories of new drug approvals (those applications approved under rules for accelerated approval, the animal efficacy rule, or the Pediatric Research Equity Act), the manufacturer and FDA negotiate timeframes and postmarket study requirements at the time of drug approval. Although not required for an application that falls outside of those categories, other postmarket study agreements between manufacturer and FDA can be set at the time of approval. Once FDA approves a drug, it monitors safety. Manufacturers must report all serious and unexpected adverse reactions within 15 days of becoming aware of them (21 C.F.R. § 310.305) to FDA's Adverse Events Reporting System (AERS). Health professionals and patients may report adverse reactions to FDA's MedWatch reporting system at any time. FDA can approve a drug even when it still has questions about the drug's longer-term effects; in such cases, FDA can require formal postmarket studies and summary reports as conditions of approval. These mechanisms of postmarket study are particularly important when it comes to identifying rare adverse events. Often, these become clear only after many people have taken the drug. Some adverse events warrant regulatory actions such as labeling changes, letters to health professionals, or, once in a great while, a drug's withdrawal from the market. The regulations require the company to make the label change as soon as there is reasonable evidence—not proof—of an association with serious hazard. The art and science of these judgments result, at times, in different decisions by different reviewers. A current example appeared on FDA's website February 9, 2005, regarding Adderall, a stimulant medication used to treat attention deficit disorder. On the basis of data from U.S. reporting systems, Canadian authorities chose to stop sales, whereas U.S. authorities chose to alert the public yet not restrict sales at this time. One year later, however, the FDA Drug Safety and Risk Management Advisory Committee reviewed data that "suggested stimulants might increase the risks of strokes and serious arrhythmias in children and adults" and recommended that FDA "require manufacturers to provide written guides to patients and place prominent warnings on drug labels describing these risks...." The effectiveness of labeling—and black-box warnings in particular—is a topic of debate. A recent study of physician compliance with the warnings found that when prescribing drugs with black-box warnings, doctors violated those warnings in 7% of prescriptions. FDA can institute label changes on the basis of information it gathers from mandatory industry reports to AERS and committed postmarket studies and from voluntary adverse event reports from clinicians and patients. When it believes data from original or published studies support a new use for a drug, a manufacturer itself can initiate a label change to support a new marketing claim. It submits to FDA the new data in a supplement to the original NDA, and requests that FDA allow it to modify the labeling. FDA describes its approach to risk management as "an iterative process" that includes both risk assessment and risk minimization. Actions available to FDA include education and outreach (e.g., new professional labeling, patient-oriented labeling, public notices); guides to prescribing, dispensing, or use (e.g., informed consent, program enrollment, practitioner certification, special packaging or limited refills); restricted access (e.g., registration of physicians, pharmacists, or patients, and documentation of laboratory tests before dispensing); and suspension or termination of product marketing. The FDA Manual of Policies and Procedures notes that risk management includes the attempt to "minimize [a drug's] risks while preserving its benefits." The balance is not always clear. For example, FDA put in place a rigorous risk minimization plan for Accutane, a drug that treats a severe type of acne and carries with it a risk of birth defects and possible suicidal actions. Some clinicians object to what they feel are onerous prescribing requirements, saying that those requirements serve to deny the drug to individuals who need it. FDA allowed an exception, for example, for oncologists prescribing Accutane for cancer treatment. At many recent congressional hearings, Members have asked FDA officials about the agency's enforcement authority. The responses have not included the specificity for which the questioners were looking; this seems to be unclear territory, and FDA's authority is limited. The law authorizes FDA to withdraw a drug's approval. To get label changes and most other actions, FDA must couch its concerns as requests to the manufacturer. Another FDA webpage, The Enforcement Story: Fiscal Year 2003 , presents the range of FDA-wide legal and other enforcement activities. The law prohibits a manufacturer from promoting or advertising a drug for any use not listed on the FDA-approved label: those claims for which FDA has reviewed safety and effectiveness evidence. However, the FFDCA does not give FDA authority to regulate the practice of medicine; that responsibility rests with the states and medical professional associations. Once a drug is approved, a licensed physician may—except in highly regulated circumstances—prescribe it without restriction. A prescription to an individual whose demographic or medical characteristics differ from those indicated in a drug's FDA-approved labeling is called off-label use and is accepted medical practice. Examples of off-label use: a drug that was tested in an eight-week trial may be prescribed for long-term use; if it was tested at one dose it may be used at higher or lower doses; one tested in adults may be prescribed to children; and a drug tested for the treatment of one disease may be prescribed in an attempt to prevent another. Using drugs in these new ways (for which researchers have not yet demonstrated safety and effectiveness) can create problems that premarket studies did not address. Off-label use also presents an evaluation problem to FDA safety reviewers. Manufacturers rarely design studies to establish the safety and effectiveness of their drugs in off-label uses, and individuals and groups wanting to conduct such studies face difficulties finding funding. The FY2006 program level budget for drug safety was $32.5 million, up from $15.4 million in FY2002. The growth came primarily from the addition of PDUFA user fees beginning in FY2003. The 2002 amendments known as PDUFA III were the first to authorize the use of user fees for postmarket activities. The FY2007 request is $39.2 million. Staff full-time equivalent (FTE) levels went from 77 in FY2002 to 109 in FY2005. The FY2006 budget request included an additional 20 FTEs, and the FY2007 would add another eight. In the last few years, several authors—historians, clinicians, and editors—have published books about what they see as problems with government and industry's handling of drug safety issues. These include Marcia Angell, The Truth About the Drug Companies: How They Deceive Us and What to Do About It (New York: Random House, 2004); Jerry Avorn, Powerful Medicines: The Benefits, Risks, and Costs of Prescription Drugs (New York: Alfred A. Knopf, 2004); and Philip J. Hilts, Protecting America ' s Health: The FDA, Business, and One Hundred Years of Regulation (New York: Alfred A. Knopf, 2003). Also, an FDA task force proposed sweeping changes in its 1999 report, Creating A Risk Management Framework: Report to the FDA Commissioner from the Task Force on Risk Management , May 1999, available at http://www.fda.gov/ oc/ tfrm/ riskmanagement.pdf . While these analysts are in broad agreement that FDA's approach should be changed, they differ about what should be changed. The rest of this report is organized around the six areas where most analysts view the problems in postmarketing surveillance, study, and regulatory action. Options listed in one section, however, might not be possible without those from other sections—especially "" FDA Budget ." Most difficult to categorize is the influence of industry. To make the discussion manageable, this report limits the options listed under Industry Role to those that would diminish what some analysts consider inappropriate industry behavior. The options aimed at increasing postmarket information, many of which involve expanding industry role, appear in the other procedure-defined sections. That said, the six areas around which most recommendations revolve are: FDA organization FDA budget Role of industry Opportunities to use the drug approval process to enhance postmarket activities Insufficient postmarket information Lack of public access to available data Some of the proposed changes lie within FDA's legislative authority to implement. Others would require congressional action. In Table 1 , we provide a list of concerns, FDA options, and congressional options. Some critics have argued that FDA's Office of Drug Safety (ODS) cannot be effective because it has so much less influence within CDER than the Office of New Drugs (OND) in regard to safety and effectiveness decisions. In his November 2004 testimony, Dr. Graham put it this way: The organizational structure within CDER is entirely geared towards the review and approval of new drugs. The same group that approved the drug is also responsible for taking regulatory action against it postmarketing. This is an inherent conflict of interest. At the same time, the Office of Drug Safety has no regulatory power and must first convince the new drug reviewing division that a problem exists before anything ... can be done. Often, the new drug reviewing division is the single greatest obstacle to effectively protecting the public ... A close second in my opinion is an ODS management that sees its mission as pleasing the Office of New Drugs. At the time of Dr. Graham's testimony, the FDA organization chart for CDER showed ODS as one administrative level lower than OND. ODS was part of the Office of Pharmacoepidemiology and Statistical Science, which was parallel to OND, both reporting directly to the CDER director. Dr. Graham has not been alone in his belief. A 2002 HHS Inspector General-conducted survey of FDA scientists found that almost one-fifth of them sometimes felt pressured to ignore their safety reservations. A 2004 commentary in the British medical journal The Lancet raises a more general point. It asks whether bureaucratic or other constraints inhibit ODS from finding fault with a drug that its sibling office, OND, had approved for marketing as safe and effective. Critics have recommended actions to address ODS scientists' feeling political pressure or being inhibited by a bureaucratic reluctance to restrict a drug that OND had earlier approved. Although some have suggested legislation to compel FDA to reorganize the agency, others suggest organizational solutions that FDA already has the authority to implement. They have also recommended other ways to increase ODS power relative OND, more staff, for example. While this certainly would be an organizational change, proponents point out that more staff would require a bigger budget. This option is discussed in the section titled "" FDA Budget ." Over the past two years, CDER has reorganized its drug safety activities. Two positions now report directly to the CDER Director: the new Director of the Office of Surveillance and Epidemiology (OSE) and the Associate Center Director for Safety Policy and Communication. Although a September 2006 FDA Fact Sheet states that OSE is the former ODS, responsibility for MedWatch moved to the office of the new Associate Center Director. Now, the Director of CDER is responsible for both. Some believe that FDA should continue with that structure because a drug's risks cannot be assessed independently from its benefits. Others maintain that having the offices together may create pressure to keep CDER-approved drugs on the market. In November 2004, FDA asked the Institute of Medicine (IOM) of the National Academies to examine its post-approval safety program. The IOM Committee on the Assessment of the U. S. Drug Safety System issued its report in September 2006. Although the committee discussed separating ODS and OND, it did not include that action in its recommendations, which included others on the agency's organization and culture. Right now, when a scientist at FDA disagrees with the decisions of a supervisor, there is no mechanism for resolving that disagreement except by discussion between the two of them. This may silence reviewers who want to raise drug safety concerns. In November 2004, FDA announced a one-year pilot program for "Documenting Differing Professional Opinions and Dispute Resolution," saying that this internal dispute-resolution process, under consideration during the preceding year, would use ad hoc panels outside the direct supervisory chain to adjudicate cases involving scientific disagreement among agency reviewers. According to the then acting director of the drug center, the intent is to formalize standard agency practices for resolving scientific disagreements. Critics, though, argue that keeping a dispute within FDA, no matter how the resolution is structured, makes scientific objectivity impossible because the judge is an interested party. For example, after someone requests a review through the CDER ombudsman, the decision to proceed still involves the CDER director. Supporters of this option compare such a move to the National Transportation Safety Board's placement outside of the Department of Transportation, which separates it from the Federal Aviation Administration. Harvard Medical School professor Jerry Avorn suggests that assigning drug safety tasks to the Centers for Disease Control and Prevention, the Agency for Healthcare Research and Quality, the National Institutes of Health, or a new unit in HHS could give safety reviewers the independence that he believes they need. Dr. Graham's testimony and subsequent reported agency actions to him have drawn attention to the fact that the protection given corporate whistleblowers does not extend to those in government. Congress may consider doing that in order to give scientists recourse when they feel improper pressure to disregard safety concerns. Two aspects of FDA's budget for post-approval activities attract criticism. One is the overall program level designated for safety issues after drugs are on the market. The other is the presence of industry user fees, which can be perceived—by both FDA reviewers and industry—as an influence on safety judgments and FDA action. Total user fee contributions to FDA spending have increased at a quicker rate than the contributions from congressional appropriations, provoking further concern among those critics worried about undue industry influence. Those who see budgetary solutions to postmarketing problems have offered solutions that are primarily legislative. Some critics maintain that FDA could keep the current structure intact, but, by reducing the industry contribution proportion, proportionally decrease industry influence. Others recommend using more of the user fees to support post-marketing safety activities. Still others, such as Marcia Angell, a former editor-in-chief of the New England Journal of Medicine , believe that no amount of industry support is acceptable, and that the public would be best served only when reviewers' independence is rigorously maintained. They propose that Congress repeal PDUFA and increase FDA appropriations to cover (or exceed) current user fee levels. Even with user fees, the FDA program level has decreased in buying power, FDA advocates explain, because routine inflation adjustments do not adequately cover increases in employee benefits or FDA's costs of recruiting and retaining highly educated and skilled scientists. That, coupled with the additional tasks and responsibilities the Congress has required that FDA take on, presents problems that go beyond drug safety, affecting FDA's food, biologics, and animal drug programs. Independent of any action regarding PDUFA, some analysts urge increases in congressional budget authority to FDA in general and the Office of Drug Safety in particular. Dr. Avorn points out that there actually are a wide variety of ways to conduct postmarket reviews other than by government. Some alternatives, all of which would require legislation to implement, include research by organizations such as HMOs, universities, or insurers. He suggests as possible ways to fund such reviews: a 10-cent fee per filled prescription; a user fee by payers on a per person-covered basis; or fees paid by manufacturers—although those studies would need to be managed independently. In some ways, criticism of the pharmaceutical industry is the most complicated issue in this list. While the immensely profitable and widely resented industry has drawn sharp criticism, many of the specific criticisms of its role are passionately rebutted, not just by industry spokespeople but by academics, and with substantive arguments. Many observers believe that FDA's dependency on industry user fees has gradually worn away at the agency's willingness to confront drug makers. They say that, more than a funding issue, the problems indicate what they have called a cultural issue. They contend that FDA, rather than exercising the respected scientific authority it has earned over the decades to combat corporations interested only in the bottom line, instead sees as its role to accommodate industry. Again, Dr. Graham's testimony articulated this point, and, because he argues from within FDA, his remarks attracted wide attention. The corporate culture within CDER is also a barrier to effectively protecting the American people. The culture is dominated by a world-view that believes only randomized clinical trials provide useful and actionable information and that postmarketing safety is an afterthought. This culture also views the pharmaceutical industry it is supposed to regulate as its client, over-values the benefits of the drugs it approves and seriously under-values, disregards and disrespects drug safety. The criticism of industry traditionally coalesces around one argument: that in its zeal to market drugs, companies could overlook dangers that might be more evident to unbiased researchers. Thus, Hilts writes that in the case of thalidomide, the "marketing department, not the medical department, ran the 'trial.'" Accounts of the Vioxx controversy, four decades later, indicate that some Merck scientists did argue for further study of the drug but were met with objections from marketing divisions. Certainly, industry makes its influence felt in many ways. For example: Data . Information on which FDA approval is based comes from studies funded by the manufacturer. While industry argues that its sense of social responsibility and concerns about litigation keep reporting honest, critics have found that difficult to square with cases such as the one involving Vioxx, in which data indicating increased risk were available to the manufacturer four or five years before it withdrew the drug. Funding . User fees have been mentioned elsewhere in this report because they influence issues such as FDA organization and, of course, budget. But there are those who are primarily interested in it as an example of inappropriate industry role. User fees support new drug reviews. In 2005, industry paid FDA more than $269 million in PDUFA fees, almost all of it directed to new drug reviews by law. This influx of money also allows FDA to pay for staff conferences, travel, and training—but is limited primarily, some say, to new-drug reviewers. Independent research . Although this is changing, journals, conferences, and researchers themselves do not always clearly identify their funding sources. Researchers presumed to be independent often receive grants, vacations, status, patients, or fees from industry; this could give the appearance of compromised objectivity. At universities, traditionally perceived to be the bastion of unbiased research, industry funding has become so pervasive that former Harvard University president Derek Bok, pointing to research showing clinical trials supported by industry are "more ... favorable to sponsors" than independent research, has warned, "the dependence on corporate support has reached such a point that it will be difficult for medical schools to free themselves of industry influence." Whether researchers are influenced by industry funding consciously, unconsciously, or not at all, the perception of influence on both premarket and post-approval research contributes to some people's lack of trust in findings. Direct-to-consumer (DTC) advertising . The United States is one of only two countries in the world that allow pharmaceutical companies to advertise directly to consumers—the other is New Zealand. Industry argues this is a powerful tool for informing consumers about diseases and the treatments available for them. Industry critics agree that it is powerful tool—for mis informing consumers about the same issues. These concerns regarding industry influence are listed elsewhere in this paper. The reason is that not everyone sees these problems in the same way. For example, is it the fault of industry for supporting a solution, such as user fees, that could compromise objectivity? Or does the fault lie with Congress for not appropriating enough money for safety—forcing, as one writer put it, "a marriage between the agency and industry years ago for the rich dowry that industry offered"? Despite debate over detail, there seems to be widespread consensus that FDA needs to be objective about the industry it regulates. Suggestions for revamping the industry role to reduce postmarketing problems lie almost entirely within the legislative arena. During the hearings and activities in 2004 and 2005, FDA had an acting commissioner and acting directors of the Center for Drug Development and Evaluation and its Office of Drug Safety. Acting officials throughout government tend to act with caution, in part because they are not perceived (even by themselves) as having the political backing to stand up to industry, researcher, and consumer pressure. Over the following few months, the President nominated—and the Senate confirmed—then Acting Commissioner Lester Crawford as commissioner. FDA also made permanent appointments to the CDER and ODS director positions. However, when the new commissioner abruptly resigned in September 2005, Andrew von Eschenbach, who then headed the National Cancer Institute at NIH, stepped in as the new acting commissioner. Dr. Angell believes that marketing considerations unduly influence even premarket studies. She argues that government—whether FDA or NIH—should control the clinical trials designed to test safety and effectiveness. One potential drawback of this proposal is the cost. According to PhRMA, its member companies spent $38.8 billion in research and development in 2005, an expense Congress might find difficult to fund. Some observers have proposed assessing industry for those costs but legislating ways to eliminate industry influence in how the funds are spent. As the Vioxx story makes clear, marketing is where pharmaceutical employees have the sharpest conflict of interest when it comes to scientific decisions. With 93 million Vioxx prescriptions having been written since its approval in 1999, with worldwide sales in 2003 of about $2.5 billion, it is not surprising that, in the gray area where research is not crystal-clear, marketers will clamor for more proof of safety or effectiveness concerns. More available funding for independent research could mitigate the pressure that marketing considerations place on research decisions. Congress could mandate full and open disclosure of industry contributions to premarket and post-approval research in the same way it has mandated the disclosure of campaign contributions. An essential ingredient in industry marketing efforts is its use of sales representatives, conferences, and direct advertising. Pharmaceutical companies argue that such efforts play a constructive role in educating consumers and doctors. Suggestions for limiting direct-to-consumer (DTC) advertising range from the minor to an outright ban of it. Industry promotion to physicians, too, is the focus of critics. Some, such as Dr. Angell, say that these provide little health benefit and those could be accomplished in other ways. She argues that the majority of Phase IV clinical trials are manufacturers' marketing opportunities to introduce products to clinicians and the public. Some have proposed banning or limiting such practices as industry sponsoring of conferences, gifts, and other practices that many see as compromising objectivity; alternatively, sponsors could announce their support publicly and physicians could declare receipt of the benefit. In particular, some recommend that members of the advisory committees that review data and make recommendations to FDA should not receive financial or other benefit from pharmaceutical companies. The members of the FDA advisory committees that met in February 2005 regarding Vioxx, Celebrex, and Bextra addressed consumer and physician advertising. They discussed a range of approaches, including a complete ban on DTC advertising, something FDA officials said was beyond their authority. The committees also suggested various ways to restrict DTC ads, some of them severe. One proposal, for example, would require government-produced alternative ads focused on a drug's risks. Former Secretary of Labor Reich readily acknowledges that both regulation and torts "can function far better than they do now." However, he went on to point out that when FDA is weak, "the tort liability system is our only real defense against corporate negligence." At a time when Congress is exploring tort reform, it may consider what such action could do to influence industry behavior when it comes to keeping drugs safe and effective. Aside from whether FDA is wholly independent, there is broad agreement among those who have looked closely at FDA's process for drug approval that a number of specific changes in the evaluation process could make FDA more likely to anticipate, identify, and handle problems in ensuring the safety and effectiveness of drugs. FDA has the power now to implement many of these changes. Congress may choose to act, however, if it appears that FDA is declining to act. Is it possible to identify more problems during Phase III trials before a drug goes to market? Not without slowing the process down. Premarket trials assess the safety and effectiveness of a drug when it is used for a specific purpose in a specifically defined group of people. But some problems may occur in one user out of a hundred thousand. Only when millions of people are using that drug can such an effect become apparent. But that is not to say there can be no changes in process for approving new drugs. Some problems, pointed to by a wide range of critics, include the following: Inability to attach strings to new drug approval . Some critics think that FDA assesses safety disproportionately at the approval stage by providing close to a one-time, all-or-nothing , approval. This severely restricts FDA's ability to act once a drug is on the market. Companies are under no obligation to continue research for safety and effectiveness—even though some kinds of dangers take years to spot. Inability to enforce postmarket research deadlines . Critics note that manufacturers do not always complete the postmarket studies the law requires in certain approval categories or to which a manufacturer has otherwise agreed. FDA reports industry-committed study status annually in the Federal Register , but many feel that not only does FDA not have adequate authority to compel compliance, it does not sufficiently follow through with the tools it does have to enforce those commitments. Inability to stimulate comparative effectiveness analysis . For premarket approval, current law requires evidence of effectiveness and safety only in comparison to a placebo treatment. Because most new drugs offer only incremental changes to older products, a comparison to placebo is not particularly relevant. Observers argue that consumers and physicians need to know—from unbiased sources—whether the new drug is better than others on the market. The Vioxx controversy brought into sharp relief the potential value of comparing one drug against other drugs used to treat the same illness. Even if Vioxx had proven to be perfectly safe, consumers and physicians would have wanted to know whether it was safer or more effective than ibuprofen. And was it safer for everyone or just the tiny number of people for whom nonsteriodal anti-inflammatory drugs (NSAIDs) produce gastric distress? Inability to approximate anticipated circumstances of use . FDA accepts as evidence of safety and effectiveness data from trials that do not include what some critics see as a reasonable range of patient, disease, and care characteristics. That is, clinical trials often limit study to people without problems other than the one being studied. The initial trials of COX-2 inhibitors, such as Vioxx, therefore, excluded patients likely to have heart attacks or strokes. Yet, once the drugs went on the market, such patients became COX-2 users—as one might expect of a drug prescribed for arthritis because both arthritis and increased cardiovascular risk are associated with getting older. Excluding groups from clinical trials is a well-established approach to drug research. If it is reasonable to expect that those groups not represented in the trials will buy the drug, however, it is argued that there must be alternative ways to make sure the drug is safe for them. Reluctance to set limits on the use of approved drugs . Right now, except in a very few circumstances outlined in FDA regulations, physicians can use any approved drug for any illness they deem appropriate. Such off-label use has been particularly controversial recently in the issue of antidepressants and children. An FDA Task Force noted that "[o]nce medical products are on the market, however, ensuring safety is principally the responsibility of healthcare providers and patients, who make risk decisions on an individual, rather than a population, basis." No one recommends banning off-label use because it can offer relief not otherwise available, and can identify a use that can later be tested. Some urge that mechanisms be set up to monitor it. Drug approval requirements are set in law. So most options to change the process would require legislation. Abandoning the all-or-nothing approach means that FDA could re-evaluate safety using postmarket data concerning prescribing patterns, use patterns, adverse events, and effectiveness, for example. One approach could be to routinely set license-renewal dates. Ongoing review authority would be consistent with FDA's broader mission, supported by the FFDCA and related regulations, to protect the public from unsafe and ineffective drugs. FDA has the authority now. With increased resources, FDA could gather data and analyses to justify additional requests, set due dates, and strengthen its enforcement. Congress could also give FDA the authority to assess and enforce penalties for noncompliance. As a condition of approval, FDA could require the postmarket continuation of preapproval clinical trials to assess, for example, the ramifications of long-term use or latent safety risks that may become evident years after use. FDA could require rigorous postmarket trials of whatever off-label uses become evident. These trials would assess the comparative safety and effectiveness of a new drug relative to other available drugs and treatments for the condition. FDA approval could require future studies that would be designed to test safety and effectiveness across the range of people to whom and conditions for which physicians will prescribe the drug. There are a few critics who argue for banning all off-label prescribing. More common are those who recommend limiting it and rigorously monitoring it. So far, this report has looked at problems that become apparent in the postmarket period that may have been avoided by actions in the preapproval process. But whatever the limitations of the premarket review and approval procedure, it produces useful and peer-scrutinized data and analysis. The focus of postmarket data collection and analysis dramatically shifts, with changed incentives and statutory and regulatory requirements for both the manufacturer and the FDA. Critics and even some supporters of the system find that postmarket information on the safety and effectiveness of FDA-approved drugs is insufficient to support the kinds of decisions clinicians and patients need to make. The following discussion divides these problems into two groups: insufficient postmarket information, and lack of access to existing information. Analysts of the current FDA system point out that it is one of passive surveillance. Rather than reaching out to identify problems, FDA waits for consumers and physicians to voluntarily report concerns with drugs; manufacturers are required to pass on to FDA the reports they receive. Such reports are valuable aids to researchers looking for potential risks. FDA's Adverse Events Reporting System (AERS) received 464,068 reports in 2005, about 25,000 as MedWatch reports from individuals and the rest from manufacturers. What are the limitations of a passive approach? A 2000 study by the General Accounting Office (GAO, renamed the Government Accountability Office in 2004) estimated that FDA receives reports on no more than 10% of all adverse drug events. The picture painted by the data, therefore, is "fragmentary and inconsistent." First, in relying on anecdotal evidence, it provides an incomplete and distorted picture of actual problems. Second, the system relies on a physician or consumer making the connection between an adverse event with a drug. Physicians are much more likely to report rare conditions that follow drug use than more common conditions that could be expected in an older user even without the drug. So, liver failure and anaphylactic shock get reported, but fatigue and heart attacks do not. There are other reasons that voluntary reports do not present a balanced picture. A 63-year-old, weekend tennis player taking a COX-2 inhibitor for knee pain may not even consider reporting a heart attack as a drug reaction. Meanwhile, consumers and physicians report many events that occur immediately after a drug's use that may have nothing to do with that drug. Furthermore, the system relies on physicians or consumers actually following through and reporting their concerns that adverse events are related to the drug. Finally, data from surveillance reports do not include sufficient information about the medical, behavioral, and sociodemographic characteristics of the patient. Scientists analyzing the data need that information to clarify what appear to be associations between drugs and events. MedWatch provides a count of events but does not provide the total number of people taking the drug. MedWatch may get 100 reports of adverse events. But, are 1000 people taking the drug or a million? Without the denominator, a cluster of events reported to a system such as MedWatch serves only as a red flag to prompt further investigation. There is a second, more aggressive way to find drug effects after a drug is on the market. Researchers can design studies to address a suspected association of a drug and an adverse event by trying to hold constant other characteristics of the illness and the patient. Researchers also can design studies to test hypotheses suggested by a drug's mechanism of action, or based on findings concerning other drugs in its class. They may also measure a drug's safety and effectiveness for known off-label uses; and can comply with commitments made as part of the drug approval process. Postmarket effort to identify safety and effectiveness problems requires a two-pronged approach: first, an accurate assessment of what is happening to patients—the warning signs that something may be wrong; and, second, carefully designed, rigorously impartial research to see what is wrong. Whatever the surveillance mechanism, FDA could reassess the criteria it uses to decide that the surveillance data indicate a problem—called a signal —and then could clarify what steps it could take. The next two postmarket activities also appear among preapproval options. There, the issue is commitment to do the studies. Here, in the postmarket options section, the issue is actually doing them. FDA could actively collect prescribing or pharmacy data, by characteristics of patient and medical reason for prescribing. FDA and the manufacturer could design studies based on anticipation of likely off-label use and postmarket data on actual off-label use. FDA could develop data collection and analysis procedures that validly capture necessary information. In doing so, FDA would need to establish privacy and confidentiality mechanisms that allow patient-level linkages among diagnostic, sociodemographic, treatment, coverage, and outcome data. Other approaches might include the use of automated databases and targeted medical record reviews or patient interviews when necessary. The President's budget submission for FY2007 describes database activities in its justification of drug safety spending. Planned projects include enhancing data integration with the Centers for Medicare and Medicaid Services (CMS) to allow FDA access, for example, to CMS-population drug safety information. Other data-access goals, including linked analyses, involve other federal agencies, insurers, hospital systems, and pharmacy benefit managers. Some critics urge a drug surveillance system similar to FoodNet, which aggressively seeks food poisoning reports from doctors and laboratories in nine states across the country. Others urge what GAO calls a "proactive examination of a random sample of patient records." Who would fund this system, and how? It is a question that applies to many of the solutions presented in this paper. There are not an infinite series of choices: increased federal appropriations and industry-generated funds—with restrictions on industry influence—are those mentioned most often by public health analysts. Right now, FDA can only request studies, using an implied or stated threat to withdraw a drug from the market. Congress could authorize FDA to require studies, avoiding the current gamesmanship and asserting FDA's role. There is another approach: Congress could give FDA authority to take specific enforcement steps other than the current all-or-nothing threat of revoking approval and, therefore, halting U.S. sales. The clinical trials that manufacturers field to support applications to FDA usually compare outcomes in two groups: people with the disease who are given the new drug and people with the disease who are given a placebo. What this approach does not provide, though, is any comparison of the new drug with other available treatments. A clinician who is deciding whether to prescribe drug A wants to know more than whether drug A is better than nothing; the clinician also wants to know whether drug A is better—more effective or safer—than drug B. In part because FDA does not require comparative effectiveness studies, manufacturers rarely mount them. And in part because comparative effectiveness studies are expensive, neither do other researchers. Congress has included some comparative effectiveness study provisions in bills that recently have become law. The 2003 Medicare Modernization Act directed the HHS Agency for Healthcare Research and Quality (AHRQ) to "conduct and support research" dealing with "the outcomes, comparative clinical effectiveness, and appropriateness of health care items and services (including prescription drugs)...." and authorized the appropriations to do so. AHRQ's FY2007 budget request refers to "the $15 million in continued support related to Section 1013 ... [that] has evolved into the Effective Health Care Program." Other bills in the 109 th Congress addressed comparative effectiveness: the Fair Access to Clinical Trials Act of 2005 (the FACT Act, S. 470 and H.R. 3196 ), the National Innovation Act of 2006 ( S. 2109 and H.R. 4654 ), the Medical Advertising Reform Act ( H.R. 3696 ), the Traumatic Brain Injury Act of 2006 ( H.R. 5738 and S. 3668 ), and the Prescription Drug Comparative Effectiveness Act of 2006 ( H.R. 5975 ). The Senate-passed language on comparative effectiveness in S.Con.Res. 18 did not appear in the final concurrent resolution on the budget FY2006 ( H.Con.Res. 95 ). A larger budget would enable intramural scientists to analyze data and design and carry out follow-up studies based on data-suggested hypotheses. Alternatively, or in addition, Congress could increase funds that FDA can provide to extramural researchers for this work, as well as supporting training programs. Congress may choose to examine some of the systems adopted in other countries—the "pharmaco-vigilance centers" used by doctors in France, or Great Britain's "green card" requests that researchers send to doctors asking for more information when they spot a possible problem. Lack of research into the kinds of safety and effectiveness questions that clinicians and patients could use in treatment decisions is one problem. But there is also significant research information that exists—but is not available. The reasons are more complicated than what some critics assert: that drug companies keep unfavorable results secret. Among other reasons: Publication bias . Medical journal editors have traditionally paid more attention to positive findings—that a treatment works, for example—than to reports of no differences or statistically insignificant differences between new treatments and old or no treatments. As a result, many researchers, whether industry-affiliated or not, often decide not to submit negative studies for publication. A clinician, patient, or insurer, therefore, could seek information on a drug and, finding only positive reports, assume that the drug is good. Insufficient FDA resources . A description of FDA's system for collecting possible adverse drug event information appears earlier in this report. Whether because of budget constraints or the unlikely prospect of identifying valid associations within haphazardly collected and incomplete reports, FDA leaves much of these surveillance data unanalyzed. In addition, the agency lacks enough trained pharmacologists, epidemiologists, pharmacoeconomists, and other researchers with the specialized skills necessary for analysis. FDA's budget justification of the FY2006 request appears to recognize this by referring to "the wealth of data in its Adverse Event Reporting System (AERS) to assist medical officers involved in the review process by providing a data mining tool to identify trends in adverse event data." Industry use of information as marketing . Drug manufacturers do not release all their findings to the public. Critics note that when manufacturers do publicize their findings, in DTC advertisements and marketing materials aimed at physicians, they may provide an incomplete and distorted view of a drug's indications, safety, and effectiveness. Physicians—relying on information packaged by the manufacturer or provided by its detailers—therefore may not have full safety and effectiveness information. Industry suppression of bad news . Researchers report that the companies sometimes move to suppress the publication or presentation of findings when they could harm a product's sales. This raises complicated matters of policy and scientific procedure. What should FDA do when researchers uncover a risk? What is FDA's duty to disclose industry data? Incorrect decisions can result from action taken too quickly or action delayed from an excess of caution. The problem is that in scientific research, chance, poor study design or analysis, or an unrelated event can imply that a drug is risky when it is safe or safe when it is risky. Limiting or withdrawing a drug, in that case (based on erroneous conclusions), protects no one—and hurts those who would have been helped by it. Labeling requirements . Labeling does not refer to the little sticker on a pharmacy-issued vial of a prescription drug. It is the detailed package insert, which the manufacturer ships to the drugstore with the medication, that provides prescribing information to the clinician and the patient. The law requires that pharmacists include them for patients, but that does not always occur. We have mentioned that once FDA approves a drug and the manufacturer puts it on the market, physicians are mostly free to prescribe it as they wish. A doctor may prescribe a drug approved for adults to a child; prescribe a lipid-lowering or anti-inflammatory drug as a possible preventive measure against dementia; or prescribe a drug that the manufacturer tested for six-week use at one dose to someone at a higher or lower dose or for months, years, or a lifetime. Neither the clinician nor the patient—nor FDA—can look up possible side effects of off-label use, either because these uses have not been tested or results not been revealed. Why? The FDA's passive system for picking up such problems certainly limits it usefulness. In addition, industry is not likely to ask questions that might hurt the drug's financial prospects. The result: even when off-label uses are widely known and suspected of being unsafe or ineffective, the labeling often does not change. Especially with use of the Internet, opportunities exist beyond traditional peer-reviewed professional journals, while maintaining standards of scientific quality. For example, the not-for-profit Public Library of Science (PLoS) established a Web-based public forum for published research results. Since May 2005, the National Library of Medicine has strongly encouraged NIH-funded researchers to voluntarily submit their reports (after peer review and acceptance by a research journal) to its PubMed Central database, which will be publicly accessible. Many applaud these types of actions. Others worry that, while these two activities involve only published material, other websites' posting unpublished reports, thereby circumventing the current system of anonymous peer review and editorial oversight, would weaken the protection and integrity the traditional system of research publication provides. FDA might explore developing an education outreach program to physicians. Such a system might use computer software; round-the-clock opportunities for telephone and e-mail consultations; and visits to physician offices, a practice called "academic detailing" in reference to the promotional visits, called "detailing," made by drug company representatives. Comparative effectiveness studies and safety monitoring need not await government's taking them on. Diverse groups have begun sharing data and results and making them available to others. Examples of such work are the Cochrane Collaboration, the British Medical Journal 's Clinical Evidence website, the Oregon Drug Effectiveness Review Project, and the Centers for Education and Research on Therapeutics (CERTs) program funded by the Agency for Healthcare Research and Quality. Many urge that, with funding contributed by government, as well as by foundations, healthcare payers, and industry, the information could—and should—be made public and free. Right now, labeling addresses the indications for which the manufacturer requested and received approval. When it is apparent that clinicians are prescribing a drug for other purposes or to populations other than those addressed in the approval application with its supporting safety and effectiveness data, FDA could require that the label include known information and an assessment of hypothesized safety and likely effectiveness in the off-label use. A less ambitious approach would be to require that the label clearly acknowledge that the safety and effectiveness of the common off-label uses have not been studied with the rigor (or at all) required by FDA for new drug approval. This information could be updated regularly. After a drug has been used long enough or by enough people, FDA could require formal assessment (with controlled clinical trials and well-designed observational studies) of safety and effectiveness for those off-label uses. Avorn suggests that HMOs, academics, insurers, contract research organizations, and other private groups could carry out postmarket studies under government or industry contracts. He gives as examples a 10-cent fee for every filled prescription, or user fees from payers on a per person-covered basis. If the funding came from a line-item in the federal budget or from industry contributions, a mechanism could be imposed to guarantee that the studies were managed independently, without input from the government or industry. That way, the data would not be owned by entities potentially reluctant to release them to the public. Congress acted in 1997 to require sponsors to publicly list any clinical trial at its outset to enable individuals to participate. This public notice had a collateral effect: the public could follow-up, years later, what the sponsor had found. Discussion in Congress has focused on registration as a way to compel this openness. Incentives suggested to increase compliance included linking registration either to permission to begin clinical studies in humans or to publication of studies' results. This would avoid the potentially dangerous withholding of data. It would present the opportunity to others to validate findings and conclusions or to analyze the data differently. Making data public could cause problems, too. If a proposed study might yield findings that would hurt a drug's sales, the manufacturer might choose not to pursue the research. If data were widely disseminated before they were replicated, understood, or rejected, they could prematurely form the basis of ill-informed treatment decisions. The enormity of data collected would be unwieldy and difficult to analyze (or analyze within a useful timeframe) without sophisticated statistical knowledge and computer software. Much of the information about drugs available to physicians and the public comes directly from the pharmaceutical industry. Although the law and regulations require that material include description of risks as well as benefits, DTC advertisements are designed to sell a product, and some think that the balance of information is distorted in favor of the product. Currently FDA reviews a DTC advertisement if it becomes aware of a problem. Some would prefer a total ban on DTC advertising; others urge stronger controls. One would require that FDA review and approve advertising copy before it is published. This may require budget action; according to Angell, in 2001 FDA had 30 reviewers for 34,000 DTC advertisements submitted. Other proposals would prohibit DTC advertising in the few years immediately following a new drug's approval. This may require coordination with Federal Trade Commission regulations. No drug is completely safe. In fact, the Federal Food, Drug, and Cosmetic Act even defines a prescription drug as one with "toxicity or other potentiality for harmful effect, or the method of its use, or the collateral measures necessary to its use, is not safe for use except under the supervision of a practitioner licensed by law to administer such drug." Physicians have a responsibility to weigh benefits against risks when prescribing drugs. To do so requires, in addition to their training and experience, available information. Many ethicists say that the public, too, must have enough information about risks to make up their own minds. However, in-depth analysis is often required to assess a drug's full effects. Some question whether individuals or even their physicians can meaningfully interpret all relevant information. The FDA's task involves providing that in-depth analysis as it weighs benefits against risks. For example, codeine provides pain relief but is addictive; Tamoxifen keeps breast cancer at bay for those who have had a single mastectomy, but can cause uterine cancer and blood clots; ibuprofen relieves inflammation but can cause gastrointestinal distress; and statins lower cholesterol but may weaken muscle fibers. Manufacturers and researchers should find new ways to diminish or mitigate risk. Furthermore, if a drug is not effective, there is no potential benefit to counterbalance even the smallest risk. FDA's advisory committees routinely tackle these tasks. But the February 2005 joint advisory committee meeting made clear how hard it is to assess the unique and intertwined qualities of safety , benefit , and risk. The committees heard patients testify that they would rather die than live without the COX-2 inhibitor that allows them to function. They heard highly trained researchers present analyses of a drug's risk and come up with different conclusions. Finally, they sat for three days surrounded by conversation and press releases carrying often sharply divergent views from drug companies, consumers, academic researchers, the media, Members of Congress, and the FDA itself. While few question that FDA applies the necessary statutory, regulatory, and procedural requirements for premarket approval, there is broad criticism of its postmarket enforcement activities. Many observers maintain that the law does not provide sufficiently strong authority for FDA to act. In this 100 th year of the Food and Drug Administration, Congress is clearly poised to examine whether FDA needs more legal authority to regulate the safety and effectiveness of drugs. It could also examine how FDA can better use the legal—and moral—authority it already has (1) to encourage and participate in developing, gathering, analyzing, and disseminating information; (2) to act on that information when necessary; and (3) by its powers to both offer incentives and enforce penalties—and by its own example—to encourage industry cooperation. There is broad agreement about what problems hamper postmarket activity. This paper has summarized what observers point to as possible solutions. Congress now has a much tougher job—picking the approaches that work best.
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COX-2 inhibitors and SSRIs—the U.S. public has become more familiar with these technical abbreviations for biochemical processes than one might expect from our general level of science knowledge. Safety concerns about these drugs—used primarily to treat pain and depression—have turned a spotlight on the Food and Drug Administration (FDA) and its approach to protecting the public from drug risks that had not been identified before FDA-approval allowed the drugs on the market. Two regulatory frameworks exist for the review of prescription drugs. First, in the premarket approval process, FDA reviews the safety and effectiveness of new drugs that manufacturers wish to market in the United States. A large part of this review is FDA's examining the manufacturer-provided data from clinical testing—studies in which humans take the investigational new drug in carefully controlled, and usually randomized, trials—from progressively larger Phase I, II, and III trials. Second, after a manufacturer has sufficiently demonstrated a drug's safety and effectiveness for a defined population and specified conditions, and the drug is FDA-approved, FDA acts through its postmarket regulatory procedures. Manufacturers must report all serious and unexpected adverse reactions to FDA and clinicians and patients may do so. The law gives FDA authority to take limited action if it finds a drug's post-approval use presents an increased risk of an adverse event. However, many suggest that not only does FDA need a broader range of enforcement tools, but that FDA also is not taking full advantage of the authority it does have. While critics of FDA differ in their assessment of what is wrong with FDA's approach to postmarket safety activities, there is broad agreement that it needs significant change. Discussion of the problems and possible solutions revolves around six areas: FDA organization, FDA budget, role of industry, opportunities to use the drug approval process to enhance postmarket activities, insufficient postmarket information, and lack of public access to available data. Some of the proposed changes lie within the power of FDA to implement. Others would require congressional action. This report examines various options for strengthening FDA's ability to protect the public. It will be updated from time to time to reflect legislative action by Congress.
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The Navy previously organized itself into aircraft carrier battle groups (CVBGs) and Amphibious Ready Groups (ARGs). An ARG typically included 3 amphibious ships that together were capable of embarking a Marine Expeditionary Unit (MEU), which is a force of about 2,200 Marines, their ground-combat equipment, and an aircraft detachment. ARGs traditionally operated overseas in the company of CVBGs. Navy officials more recently decided that the CVBG/ARG combination offered insufficient flexibility for deploying significant naval capability in several locations around the world at the same time. They also decided that with the increasing capabilities of Navy ships, naval formations other than the large CVBG/ARG combination could now be sufficient to perform certain missions. As a result, the Navy has implemented a new Global Concept of Operations (CONOPS) that reorganized the Navy into a larger number of independently deployable, strike-capable formations. The most significant change was the conversion of ARGs into independently deployable formations called Expeditionary Strike Groups (ESGs). An ESG is an ARG that has been reinforced with 3 surface combatants, an attack submarine carrying Tomahawk cruise missiles, and perhaps a land-based P-3 Orion long-range maritime patrol aircraft. The Global CONOPS also created independently deployable surface strike groups (SSGs), each consisting of a few surface combatants (most or all Tomahawk-armed), and independent operations by 4 Trident SSGN submarines that have been converted to carry Tomahawks and special operations forces. CVBGs under the Global CONOPS plan were redesignated Carrier Strike Groups (CSGs). Implementing the Global CONOPS changed the Navy from a fleet with 11 independently deployable CVBG/ARG formations into one with 20 major independently deployable strike groups (11 CSGs and 9 ESGs) and additional independently deployable capabilities in the form of SSGs and Trident SSGNs. The Navy's traditional means of maintaining forward-deployed presence had been the standard six-month deployment. Although the six-month limit on deployment length and the predictability of the rotational deployment schedule were considered key to the Navy's ability to maintain its forward deployments while meeting its personnel recruiting and retention goals, Navy officials concluded that the deterrent value of forward-deployed naval forces might be enhanced by making naval forward deployments more flexible and less predictable. Navy officials also concluded that orienting Navy readiness toward maintaining standard six-month deployments resulted in a fleet that offered insufficient flexibility for surging large numbers of naval forces in a short time to respond to major regional contingencies. As a result, although six-month (and now seven-month) deployments will still take place, the Navy has put more flexibility into its deployment plans by deploying some CSGs and ESGs for less than or more than six or seven months, as operational needs dictate. The Navy has implemented an initiative called the Fleet Response Plan (FRP) that is intended to increase the Navy's ability to surge multiple formations in response to emergencies. Under the FRP, CSGs and ESGs that have just returned from deployments will be kept, for a time, on alert for potential short-notice redeployment if needed, and CSGs and ESGs that are approaching their next scheduled deployment will be maintained in a higher readiness status so that they, too, could be deployed on short notice, prior to their scheduled deployment dates. Implementing the FRP with 11 CSGs, the Navy says, permits the Navy to deploy up to 6 CSGs within 30 days, and an additional CSG within another 60 days after that. For this reason, the FRP is also referred to as "6+1." A February 2008 Government Accountability Office (GAO) report stated: The Navy has taken several positive steps toward implementing a sound management approach for FRP, but has not developed implementation goals, fully developed performance measures, or comprehensively assessed and identified the resources required to achieve FRP goals. GAO's prior work has shown that key elements of a sound management approach include: defining clear missions and desired outcomes, establishing implementation goals, measuring performance, and aligning activities with resources. The Navy has made progress in implementing FRP since GAO's prior reports. For example, it has established a goal of having three carrier strike groups deployed, three ready to deploy within 30 days of being ordered to do so, and one more within 90 days (referred to as 3+3+1). The Navy also has established a framework to set implementation goals for all forces, established some performance measures that are linked to the FRP phases, and begun efforts to identify needed resources. However, the Navy has not yet established a specific implementation goal for expeditionary strike groups and other forces. In addition, the Navy has not fully developed performance measures to enable it to assess whether carrier strike groups have achieved adequate readiness levels to deploy in support of the 3+3+1 goal. Moreover, the Navy has not fully identified the resources required to achieve FRP goals. Until the Navy's management approach fully incorporates the key elements, the Navy may not be able to measure how well FRP is achieving its goals or develop budget requests based on the resources needed to achieve expected readiness levels. The Navy has not fully considered the long-term risks and tradeoffs associated with the changes made as FRP has been implemented, such as carrier operational and maintenance cycles and force structure. The Navy has extended the intervals between carrier dry-dock maintenance periods from 6 years to 8 years and begun a test program that will extend some carrier dry-dock intervals to as much as 12 years, and it has lengthened operational cycles for carriers and their airwings to 32 months. GAO previously advocated that the Department of Defense adopt a risk management approach to aid in its decision making that includes assessing the risks of various courses of action. However, the Navy has not fully considered the long-term risks and tradeoffs of these recent changes because it has not performed a comprehensive assessment of how the changes, taken as a whole, might affect its ability to meet FRP goals and perform its missions. In addition, while the Navy has developed force structure plans that include two upcoming periods when the number of available aircraft carriers temporarily drops from 11 to 10, the plans included optimistic assumptions about the length of the gaps and the availability of existing carriers and did not fully analyze how the Navy would continue to meet FRP goals with fewer carriers. Until the Navy develops plans that use realistic assumptions and accurately identify the levels of risk the Navy is willing to accept during these gap periods, senior Navy leadership may not have the information it needs to make informed tradeoff decisions. Homeporting Navy ships in overseas locations, called forward homeporting, can reduce transit times between home port and operating area and thus permit the Navy to provide a larger number of ship days on station in overseas operating areas. The U.S. Navy's principal forward homeporting location is Japan, where the Navy since the early 1970s has forward homeported a CVBG (now a CSG) and an ARG (now the core of an ESG). The Navy traditionally has also forward-homeported a small number of other ships, such as fleet command ships and repair ships, in forward locations such as Italy and the U.S. territory of Guam. The Navy in recent years has forward-homeported four mine warfare ships at Bahrain in the Persian Gulf and three attack submarines at Guam. Increasing the number of ships forward-homeported in the Pacific can improve the Navy's ability to respond to contingencies in locations such as the Korean Peninsula or the Taiwan Strait. A March 2002 CBO report presented an option for homeporting as many as 11 attack submarines at Guam. The final report of the 2005 Quadrennial Defense Review (QDR) directed the Navy to provide at least six aircraft carriers and 60% of its submarines in the Pacific. The Navy is implementing these two measures, which do not necessarily require additional forward homeporting. (They can be accomplished, for example, by moving ships from Atlantic Fleet home ports to San Diego or the Puget Sound area.) The Navy in recent years has experimented with the concept of long-duration deployments with crew rotation. This concept, which the Navy calls Sea Swap, is another way to reduce the amount of time that deployed ships spend transiting to and from operating areas. Sea Swap involves deploying Navy ships overseas for periods such as 12, 18, or 24 months rather than 6 or 7 months, and rotating successive crews out to the ships for 6-month periods of duty. Sea Swap can reduce the number of ships the Navy needs to have in its inventory to maintain one such ship on station in an overseas operating area by 20% or more. Potential disadvantages of Sea Swap include extensive wear and tear on the deployed ship due to lengthy periods of time at sea, a reduced sense of crew "ownership" of a given ship (which might reduce a crew's incentive to keep the ship in good condition), and reduced opportunities for transit port calls (which have diplomatic value and are beneficial for recruiting and retention). The Navy in recent years has conducted Sea Swap experiments with surface combatants and mine warfare ships that Navy officials have characterized as successful in terms of ship days on station, total costs, ship maintenance and material condition, and crew re-enlistment rates during deployment. In 2004, it was reported that a review of the Sea Swap experiment conducted by the Center for Naval Analyses found that although Sea Swap was successful in these terms, crew members participating in the experiment who were surveyed viewed the concept negatively and indicated they would be less likely to stay in the Navy if all deployments were conducted this way. The Navy made changes in later Sea Swap experiments to address issues that led to crew dissatisfaction, including lost liberty calls and increased training and work. In 2005, Navy officials testified that applying Sea Swap somewhat widely throughout the fleet could help permit the fleet to be reduced from a then-planned range of 290 to 375 ships down to a range of 260 to 325 ships. More recently, Navy officials have expressed less enthusiasm for extending Sea Swap beyond surface combatants. A July 2006 press article reported that the Navy may limit Sea Swap in the surface fleet to smaller combatants such as patrol craft, Littoral Combat Ships (LCSs), and frigates. The Navy plans to use Sea Swap to keep two of its four SSGNs continuously deployed. A May 2008 GAO report stated: Rotational crewing represents a transformational cultural change for the Navy. While the Navy has provided leadership in some rotational crewing programs, the Navy has not fully established a comprehensive management approach to coordinate and integrate rotational crewing efforts across the department and among various types of ships.... The Navy has not assigned clear leadership and accountability for rotational crewing or designated an implementation team to ensure that rotational crewing receives the attention necessary to be effective. Without a comprehensive management approach, the Navy may not be able to lead a successful transformation of its crewing culture. The Navy has promulgated crew exchange instructions for some types of ships that have provided some specific guidance and increased accountability. However, the Navy has not developed an overarching instruction that provides high-level guidance for rotational crewing initiatives and it has not consistently addressed rotational crewing in individual ship-class concepts of operations.... The Navy has conducted some analyses of rotational crewing; however, it has not developed a systematic method for analyzing, assessing and reporting findings on the potential for rotational crewing on current and future ships. Despite using a comprehensive data-collection and analysis plan in the Atlantic Fleet Guided Missile Destroyer Sea Swap, the Navy has not developed a standardized data-collection plan that would be used to analyze all types of rotational crewing, and life-cycle costs of rotational crewing alternatives have not been evaluated. The Navy has also not adequately assessed rotational crewing options for future ships. As new ships are in development, DOD guidance requires that an analysis of alternatives be completed. These analyses generally include an evaluation of the operational effectiveness and estimated costs of alternatives. In recent surface ship acquisitions, the Navy has not consistently assessed rotational crewing options. In the absence of this, cost-effective force structure assessments are incomplete and the Navy does not have a complete picture of the number of ships it needs to acquire. The Navy has collected and disseminated lessons learned from some rotational crewing experiences; however, some ship communities have relied on informal processes. The Atlantic Sea Swap initiative used a systematic process to capture lessons learned. However, in other ship communities the actions were not systematic and did not use the Navy Lessons Learned System. By not systematically recording and sharing lessons learned from rotational crewing efforts, the Navy risks repeating mistakes and could miss opportunities to more effectively implement crew rotations. Another strategy for increasing the percentage of time that Navy ships can be deployed is multiple crewing, which involves maintaining an average of more than one crew for each Navy ship. Potential versions include having two crews for each ship (dual crewing), 3 crews for every 2 ships, 4 crews for every 3 ships, 5 crews for every 4 ships, or other combinations, such as 8 crews for every 5 ships. The most basic version of Sea Swap maintains an average of one crew for each ship in inventory, but Sea Swap could be combined with multiple crewing. For many years, the Navy's nuclear-powered ballistic missile submarines (SSBNs) have been operated successfully with dual crews. The above-mentioned March 2002 CBO report presented the option of applying multiple crewing to the attack submarine fleet. Potential disadvantages of multiple crewing include the costs of recruiting, training, and retaining additional crews, the difficulty of achieving fully realistic training using land-based simulators (whose use would be more necessary because a given crew would not always have access to a ship for training), a reduced sense of crew "ownership" of a given ship, and increased wear and tear on the ship due to more intensive use of the ship at sea (which can reduce ship life). The Navy plans to use dual crewing for its first few LCSs, and then switch the LCS fleet to a "4-3-1" crewing strategy when the total number of LCSs grows to a larger number. Under the 4-3-1 plan, four crews would be used for every three LCSs to keep one of those three LCSs continuously deployed. The Navy is experimenting with a concept, first announced in 2006, called global fleet stations, or GFSs. The core of a GFS is an amphibious ship or high-speed sealift ship that is forward deployed to a region of interest. Smaller Navy ships, such as LCSs, might then operate in conjunction with this core ship to perform various missions. The Navy in 2007 is conducting six-month pilot GFS in the Caribbean built around the high-speed sealift ship Swift, and plans to follow this in late 2007 with a second, year-long, GFS in the Gulf of Guinea, off the western coast of Africa, that is to be built around an amphibious ship. The Navy states that the GFS concept offers a means to increase regional maritime security through the cooperative efforts of joint, inter-agency, and multinational partners, as well as Non-Governmental Organizations.... From its sea base, each GFS would serve as a self-contained headquarters for regional operations with the capacity to repair and service all ships, small craft, and aircraft assigned. Additionally, the GFS might provide classroom space, limited medical facilities, an information fusion center, and some combat service support capability. The GFS concept provides a leveraged, high-yield sea based option that achieves a persistent presence in support of national objectives. Additionally, it complements more traditional CSG/ESG training and deployment cycles. Potential oversight issues for Congress include the following: How might the changes discussed above affected the planned size and structure of the fleet? For what kinds of ships should Navy use Sea Swap or multiple crewing? How will FRP and the forward-homeporting of additional ships affect the distribution of Navy ship overhaul and repair work? How many additional ships, of what types, should the Navy forward homeport in the Pacific, and precisely where?
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The Navy has implemented new kinds of naval formations, more flexible forward-deployment schedules, and a ship readiness plan (called the Fleet Response Plan, or FRP) for surge-deploying several aircraft carriers in a short period of time to respond to contingencies. The Navy has also forward-homeported additional ships, experimented with long-duration deployments with crew rotation (which the Navy calls Sea Swap), investigated multiple-crewing of ships, and is experimenting with a new forward-deployment concept called global fleet stations, or GFSs. These actions raise several potential issues for Congress. This report will be updated as events warrant.
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I n 1964, the Wilderness Act established a national system of congressionally designated areas to be preserved in a wilderness condition: "where the earth and its community of life are untrammeled by man, where man himself is a visitor who does not remain." The National Wilderness Preservation System (the Wilderness System) was originally created with 9 million acres of Forest Service lands. Congress has since added approximately 100 million more acres to the Wilderness System (see Table 1 ) among some 608.9 million acres of land managed by the federal land management agencies—the Forest Service in the Department of Agriculture, and the National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM) in the Department of the Interior. Federal agencies, Members of Congress, and interest groups have recommended additional lands for inclusion in the Wilderness System. Furthermore, at the direction of Congress, agencies have studied, or are studying, the wilderness potential of their lands. This report provides a brief history of wilderness, describes what wilderness is, identifies permitted and prohibited uses in wilderness areas, and provides data on the 109.9 million acres of designated wilderness areas as of April 15, 2016. For information on current wilderness legislation, see CRS Report R41610, Wilderness: Issues and Legislation . As the United States was formed, the federal government acquired 1.8 billion acres of land through purchases, treaties, and other agreements. Initial federal policy was generally to transfer land to states and private ownership, but Congress also provided for reserving certain lands for federal purposes. Over time, Congress has reserved or withdrawn increasing acreage for national parks, national forests, wildlife refuges, etc. The general policy of land disposal was formally changed to a policy of retaining the remaining lands in the Federal Land Policy and Management Act of 1976 (FLPMA). The early national forests were managed for conservation—protecting and developing the lands for sustained use. It did not take long for some Forest Service leaders to recognize the need to preserve some areas in a natural state. Acting at its own discretion, and at the behest of an employee named Aldo Leopold, the Forest Service created the first wilderness area in the Gila National Forest in New Mexico in 1924. In the succeeding decades, the agency's system of wilderness, wild, and primitive areas grew to 14.6 million acres. However, in the 1950s, increasing timber harvests and recreational use of the national forests led to public concerns about the permanence of this purely administrative system. The Forest Service had relied on its administrative authority in making wilderness designations, but there was no law to prevent a future change to those designations. In response, Congress enacted the Wilderness Act in 1964. The act described the attributes and characteristics of wilderness, and it prohibited or restricted certain activities in wilderness areas to preserve and protect the designated areas, while permitting other activities to occur. The act reserves to Congress the authority to designate areas as part of the National Wilderness Preservation System. The Wilderness System began with the 9.1 million acres of national forest lands that had been identified administratively as wilderness areas or wild areas. The Wilderness Act directed the Secretary of Agriculture to review the agency's 5.5 million acres of primitive areas, and the Secretary of the Interior to evaluate the wilderness potential of National Park System and National Wildlife Refuge System lands. The Secretaries were to report their recommendations to the President and to Congress within 10 years (i.e., by 1974). Separate recommendations were made for each area, and many areas recommended for wilderness were later designated, although some of the recommendations are still pending. In 1976, FLPMA directed the Secretary of the Interior to conduct a similar review of the public lands administered by BLM within 15 years (i.e., by 1991). BLM submitted its recommendations to the President, and presidential recommendations were submitted to Congress (see " BLM Wilderness Review and Wilderness Study Areas "). The 90 th Congress began expanding the Wilderness System in 1968, as shown in Table 1 . Five laws were enacted, creating five new wilderness areas with 792,750 acres in four states. Wilderness designations generally increased in each succeeding Congress, rising to a peak of 60.8 million acres designated during the 96 th Congress (1979-1980), the largest amount designated by any Congress. This figure included the largest single designation of 56.4 million acres of wilderness through the Alaska National Interest Lands Conservation Act. The 98 th Congress enacted more wilderness laws (21) and designated more acres (8.5 million acres in 21 states) outside of Alaska than any Congress since the Wilderness System was created. The 112 th Congress was the first Congress to designate no additional wilderness acres. Including the Wilderness Act, Congress has enacted more than 100 laws designating new wilderness areas or adding to existing ones, as shown in Table 1 . To date, the 114 th Congress has designated three new wilderness areas. The Wilderness System now contains 765 wilderness areas, with approximately 109.9 million acres in 44 states and Puerto Rico, managed by the four federal land-management agencies, as shown in Table 2 . The agencies have recommended that additional lands be added to the Wilderness System; these lands are generally managed to protect their wilderness character while Congress considers adding them to the Wilderness System (see " Wilderness Review, Study, and Release "). The agencies are studying additional lands to determine if these lands should be added to the Wilderness System. However, comprehensive data on the lands recommended and being reviewed for wilderness potential are not available. The Wilderness Act described wilderness as an area of generally undisturbed federal land. Specifically, Section 2(c) defined wilderness as A wilderness, in contrast with those areas where man and his works dominate the landscape, is hereby recognized as an area where the earth and its community of life are untrammeled by man, where man himself is a visitor who does not remain. An area of wilderness is further defined to mean ... an area of undeveloped Federal land retaining its primeval character and influence, without permanent improvements or human habitation, which is protected and managed so as to preserve its natural conditions and which (1) generally appears to have been affected primarily by the forces of nature, with the imprint of man's work substantially unnoticeable; (2) has outstanding opportunities for solitude or a primitive and unconfined type of recreation; (3) has at least five thousand acres of land or is of sufficient size as to make practicable its preservation and use in an unimpaired condition; and (4) may also contain ecological, geological, or other features of scientific, educational, scenic, or historical value. This definition provides some general guidelines for determining which areas should, or should not, be designated wilderness, but the law contains no specific criteria. The phrases "untrammeled by man," "retaining its primeval character," and "man's work substantially unnoticeable" are far from precise. Even the numerical standard (5,000 acres) is not absolute; smaller areas can be designated if they can be protected, and the smallest wilderness area—Wisconsin Islands Wilderness in the Green Bay National Wildlife Refuge—is only 2 acres. These imprecise criteria stem in part from differing perceptions of what constitutes wilderness. To some, wilderness is an area where there is absolutely no sign of human presence: no traffic can be heard (including aircraft); no roads, structures, or litter can be seen. To others, sleeping in a camper in a 400-site campground in Yellowstone National Park is a wilderness experience. Complicating these differing perceptions is the wide range of ability to "get away from it all" in various settings. In a densely wooded area, isolation might be measured in yards; in mountainous or desert terrain, human developments can sometimes be seen for miles. Section 2 of the Wilderness Act also identified the purposes of wilderness. Specifically, Section 2(a) stated that the act's purpose was to create wilderness lands "administered for the use and enjoyment of the American people in such manner as will leave them unimpaired for future use and enjoyment as wilderness, and so as to provide for the protection of these areas, the preservation of their wilderness character, and for the gathering and dissemination of information regarding their use and enjoyment as wilderness." These criteria also contain degrees of imprecision, sometimes leading to different perceptions about how to manage wilderness. Thus, there are contrasting views about what constitutes wilderness and how wilderness should be managed. In an attempt to accommodate contrasting views of wilderness, the Wilderness Act provided certain exemptions and delayed implementation of restrictions for wilderness areas, as will be discussed below. At times, Congress has also responded to the conflicting demands of various interest groups by allowing additional exemptions for certain uses (especially for existing activities) in particular wilderness designations. The subsequent wilderness statutes have not designated wilderness areas by amending the Wilderness Act. Instead, they are independent statutes. Although nearly all of these statutes direct management in accordance with the Wilderness Act, many also provide unique management guidance for their designated areas. Ultimately, wilderness areas are whatever Congress designates as wilderness, regardless of developments or activities that some might argue conflict with the act's definition of wilderness. The Wilderness Act and subsequent wilderness laws contain several provisions addressing management of wilderness areas. These laws designate wilderness areas as part of and within existing units of federal land, and the management provisions applicable to those units of federal land, particularly those governing management direction and restricting activities, also apply. For example, hunting is prohibited in most NPS units but not on most Forest Service or BLM lands. Thus, hunting would be prohibited for the wilderness areas in those NPS units but would be permitted in Forest Service or BLM wilderness areas, absent specific statutory language. In addition to the management requirements applicable to the underlying federal land, most of the subsequent wilderness statutes direct management of the designated areas in accordance with or consistent with the Wilderness Act, although some management provisions have been expanded or clarified. S tate Fish and Wildlife Jurisdiction and Responsibilities. The Wilderness Act explicitly directed that wilderness designations had no effect on state jurisdiction or responsibilities over fish and wildlife jurisdiction (Section 4(d)(8)). Comparable language, sometimes only referring to state jurisdiction (not responsibilities) has been included in many of the wilderness statutes. Jurisdiction and Authorities of Other Agencies . Several wilderness statutes have directed that other agencies' specific authorities, jurisdiction, and related activities be allowed to continue. For example, some wilderness statutes specify that the wilderness designation has no effect on law enforcement, generally, or on U.S.-Mexico border relations, drug interdiction, or military training. Water Rights . Wilderness statutes have provided different directions concerning federal reserved water rights associated with the designated wilderness areas. The Wilderness Act expressly states that it does not claim or deny a reserved water right (Section 4(d)(7)), whereas some wilderness statutes have expressly reserved, or denied, claims to federal water rights. Wilderness statutes frequently provide that state law dictates regulation of water allocation and use. Buffer Z ones . The Wilderness Act is silent on the issue of buffer zones around wilderness areas to protect the designated areas. However, in response to concern that designating wilderness areas would restrict management of adjoining federal lands, language in many subsequent wilderness bills has prohibited buffer zones that would limit uses and activities on federal lands around the wilderness areas. Land and Rights Acquisition and Future Designations . The Wilderness Act authorizes the acquisition of land within designated wilderness areas (called inholdings ), including through donation or exchange for other federal land (Section 5(a-c)), subject to appropriations. Congress has also enacted several wilderness statutes with intended or potential wilderness that are within or adjoining designated wilderness areas. These areas are to become wilderness when certain conditions have been met, such as acquisition, as specified in the statute. Wilderness Study, Review, and Release . Many of the wilderness statutes have directed the agencies to review the wilderness potential of certain lands and present recommendations regarding wilderness designations to the President and to Congress. (See the " Wilderness Review, Study, and Release " section, below.) However, the Wilderness Act and most of the initial statutory wilderness review provisions were silent on the management of the areas during and after the review, leading to concerns about how to manage areas not recommended for wilderness designation. A legislative provision, called release language , was developed to address this concern. Release language provides direction on the timing of future wilderness review and of the management of areas not designated as wilderness until the next review. The Wilderness Act, and subsequent statutes, authorized some uses to continue, particularly if the uses were authorized at the time of designation. For example, the Wilderness Act specifically directs that "the grazing of livestock, where established prior to the effective date of this Act, shall be permitted to continue subject to such reasonable regulations as are deemed necessary by the Secretary of Agriculture" (Section 4(d)(4)(2)). Congress expanded on this language by providing additional guidance on continuing livestock grazing at historic levels in designated wilderness areas (H. Rept. 96-617, which accompanied P.L. 96-560 , and Appendix A—Grazing Guidelines—in H.Rept. 101-405, which accompanied P.L. 101-628 ). Many of the subsequent wilderness statutes also expressly directed continued livestock grazing in conformance with the Wilderness Act and the committee reports. The Wilderness Act extended the mining and mineral leasing laws for wilderness areas in national forests for 20 years, through 1983. Until midnight on December 31, 1983, new mining claims and mineral leases were permitted for those wilderness areas and exploration and development were authorized, "subject, however, to such reasonable regulations governing ingress and egress as may be prescribed by the Secretary of Agriculture." On January 1, 1984, the Wilderness Act withdrew the specified national forest wilderness areas from all forms of appropriation under the mining laws. Some subsequent wilderness statutes have specifically withdrawn the designated areas from availability under the mining and mineral laws, whereas others have directed continued mineral development and extraction or otherwise allowed historical use of an existing mine to continue within designated areas. The Wilderness Act, directly and by cross-reference in virtually all subsequent wilderness statutes, generally prohibits commercial activities; motorized uses; and roads, structures, and facilities in designated wilderness areas. Specifically, Section 4(c) states: Except as specifically provided for in this Act, and subject to existing private rights, there shall be no commercial enterprise and no permanent road within any wilderness area designated by this Act and, except as necessary to meet minimum requirements for the administration of the area for the purpose of this Act (including measures required in emergencies involving the health and safety of persons within the area), there shall be no temporary road, no use of motor vehicles, motorized equipment or motorboats, no landing of aircraft, no other form of mechanical transport, and no structure or installation within any such area. Thus, most businesses and commercial resource development—such as timber harvesting—are prohibited, except "for activities which are proper for realizing the recreational or other wilderness purposes of the areas" (§4(d)(6)). The use of motorized or mechanized equipment—such as cars, trucks, off-road vehicles, bicycles, aircraft, or motorboats—is also prohibited, except in emergencies and specified circumstances. Human infrastructure—such as roads, buildings, dams and pipelines—is likewise prohibited in wilderness areas. However, the Wilderness Act is silent on the treatment of infrastructure in place at the time of the designation, although many of the wilderness statutes do address it through " Nonconforming Permitted Uses " provisions. Many wilderness statutes have authorized closing certain wilderness areas (or parts thereof) to public access. In addition, many statutes have withdrawn the designated areas from the public land disposal laws and the mining and mineral leasing and disposal laws, although valid existing rights are not terminated and can be developed under reasonable regulations. The Wilderness Act and many subsequent wilderness statutes have allowed various nonconforming uses and conditions, especially if such uses were in place at the time of designation. Motorized access has generally been permitted for management requirements and emergencies; for nonfederal inholdings; and for fire, insect, and disease control. Continued motorized access and livestock grazing have also generally been permitted where they had been occurring prior to the area's designation as wilderness, as discussed above. In addition, construction, operations, and maintenance—and associated motorized access—have been permitted for water infrastructure and for other infrastructure in many instances. Motorized access for state agencies for fish and wildlife management activities has sometimes been explicitly allowed. Several statutes have expressly permitted low-level military overflights of wilderness areas, although the Wilderness Act does not prohibit overflights. Access for minerals activities has been authorized in some specific areas and for valid existing rights. Finally, several statutes have allowed access for other specific activities, such as access to cemeteries within designated areas or for tribal activities. Congress directed the four land-management agencies to review the wilderness potential of their lands and make recommendations regarding the lands' suitability for wilderness designation. Congress acted upon many of those recommendations, by either designating lands as wilderness or by releasing lands from further wilderness consideration. However, some recommendations remain pending. Questions and discussions persist over the protection and management of these areas, which some believe should be designated as wilderness and others believe should be available for development. This debate has been particularly controversial for Forest Service inventoried roadless areas and BLM wilderness study areas. The Wilderness Act directed the Secretary of Agriculture to review the wilderness potential of primitive areas identified by the Forest Service and to make wilderness recommendations for those lands within 10 years (i.e., by 1974). In 1970, the Forest Service expanded its review of potential wilderness areas to include lands that had not been previously identified as primitive areas. This Roadless Area Review and Evaluation (RARE) was conducted under the newly enacted National Environmental Policy Act (NEPA). The Forest Service issued the final environmental impact statement in 1973 and was sued for not properly following the NEPA process in identifying potential wilderness areas. It chose not to present the recommendations to Congress. In 1977, the Forest Service began a second review (RARE II) of the 62 million acres of national forest roadless areas, to accelerate part of the land-management planning process mandated by the Forest and Rangeland Renewable Resources Planning Act of 1974 and the National Forest Management Act of 1976 (NFMA). The RARE II final environmental impact statement was issued in January 1979, recommending more than 15 million acres (24% of the study area) for addition to the Wilderness System. In addition, nearly 11 million acres (17%) were to be studied further in the ongoing Forest Service planning process under NFMA. The remaining 36 million acres (58% of the RARE II area) were to be available for other uses—such as logging, energy and mineral developments, and motorized recreation—that might be incompatible with preserving wilderness characteristics. In April 1979, President Jimmy Carter presented the recommendations to Congress with minor changes. In 1980, the state of California successfully challenged the Forest Service RARE II recommendations for 44 areas allocated to non-wilderness uses, with the court decision substantially upheld on appeal in 1982. The Reagan Administration responded in 1983 by directing a reevaluation of all RARE II recommendations. Tensions between Congress and the Administration, and among interest groups, led to a particularly intense debate during the 98 th Congress (1983-1984). Many statewide wilderness laws were subsequently enacted, each containing language releasing some lands in that state from potential wilderness designations ( release language ). The completion of RARE II and subsequent enactment of bills designating national forest wilderness areas has not ended the debate, and the Forest Service has other directives to consider the wilderness values or the undisturbed condition of national forest lands (e.g., NFMA). Further, there are extensive roadless areas within the National Forest System that have not been designated wilderness. To address the management and protection of the 58.5 million acres of inventoried roadless areas (primarily RARE II areas not designated as wilderness), the Clinton Administration developed regulations that would keep all roadless areas free from most development (the Roadless Rule). More than a decade of litigation followed, with the Clinton Administration's rule being enjoined twice and the Bush Administration promulgating a rule that also was enjoined. The courts deciding the cases upheld the Clinton Administration's rule, and in October 2012, the Supreme Court refused to review the issue. Currently, under the Clinton policy, road construction, reconstruction, and timber harvesting are prohibited on most of the inventoried roadless areas within the National Forest System, with some exceptions. Congress directed BLM to consider wilderness as a use of its public lands in the 1976 enactment of FLPMA. FLPMA required BLM to make an inventory of roadless areas greater than 5,000 acres and to recommend the suitability for designation of those areas to the President within 15 years of October 21, 1976, and the President then had two years to submit wilderness recommendations to Congress. BLM presented its recommendations by October 21, 1991, and Presidents George H. W. Bush and William Clinton submitted wilderness recommendations to Congress. Although these areas have been reviewed and Congress has enacted several statutes designating BLM wilderness areas, many of the wilderness recommendations for BLM lands remain pending. There are two continuing issues for potential BLM wilderness: protection of the wilderness study areas and whether BLM has a continuing obligation under FLPMA to conduct wilderness reviews. From 1977 through 1979, BLM identified suitable wilderness study areas (WSAs) from roadless areas identified in its initial resource inventory under FLPMA Section 201. Section 603(c) of FLPMA directs the agency to manage those lands "until Congress has determined otherwise … in a manner so as not to impair the suitability of such areas for preservation as wilderness." Thus, BLM must protect the WSAs as if they were wilderness until Congress enacts legislation that releases BLM from that responsibility. This responsibility is sometimes referred to as a non - impairment obligation or standard. WSAs have been subject to litigation challenging BLM's protection. In the early 2000s, BLM was sued for not adequately preventing impairment of WSAs from increased off-road vehicle use. In Norton v. Southern Utah Wilderness Alliance , the U.S. Supreme Court ruled that the non-impairment obligation was not enforceable by court challenge. The Court held that although WSA protection was mandatory, it was a broad programmatic duty and not a discrete agency obligation. The Court also concluded that the relevant FLPMA land use plans (which indicated that WSAs would be monitored) constituted only management goals that might be modified by agency priorities and available funding and were not a basis for enforcement under the Administrative Procedure Act. Therefore, it appears that although BLM actions that would harm WSAs could be enjoined, as with any agency enforcement obligation, forcing BLM to take protective action would be difficult at best. Despite BLM's continuing obligation under FLPMA Section 201 to identify the resources on its lands, giving priority to areas of critical environmental concern, it is unclear whether BLM is required to review its lands specifically for wilderness potential after expiration of the reviews required by Section 603. In contrast to the Forest Service, which must revise its land and resource management plans at least every 15 years, BLM is not required to revise its plans on a specified cycle; rather, it must revise its land and resource management plans "when appropriate." Furthermore, while NFMA includes wilderness in the planning process, both directly and by reference to the Multiple Use-Sustained Yield Act of 1960, FLPMA is silent on wilderness in the definitions of multiple use and sustained yield and in the guidance for the BLM planning process. Thus, future BLM wilderness reviews are less certain than future Forest Service wilderness reviews. With each Administration, DOI has changed its policy regarding how it administers areas with wilderness potential. In September 2003, then-DOI secretary Gale Norton settled litigation challenging a 1996 policy identifying large amounts of wilderness-suitable lands. Following the settlement, the BLM assistant director issued guidance (known as Instruction Memorandum 2003-274) prohibiting further reviews and limiting the term wilderness study areas and the non-impairment standard to areas already designated for the original Section 603 reviews of the 1970s and 1980s. The guidance advised, in part, that because the Section 603 authority expired, "there is no general legal authority for the BLM to designate lands as WSAs for management pursuant to the non-impairment standard prescribed by Congress for Section 603 WSAs." On December 22, 2010, then-DOI secretary Ken Salazar issued Order No. 3310, known as the Wild Lands Policy, addressing how BLM would manage wilderness. This order indirectly modified the 2003 wilderness guidance without actually overturning the direction (or even acknowledging it). The order relied on the authority in FLPMA Section 201 to inventory lands with wilderness characteristics that are "outside of the areas designated as Wilderness Study Areas and that are pending before Congress" and designated these lands as "Wild Lands." It also directed BLM to consider the wilderness characteristics in land use plans and project decisions, "avoiding impairment of such wilderness characteristics" unless alternative management is deemed appropriate. Whereas Instruction Memorandum 2003-274 indicated that, except for extant Section 603 WSAs, the non-impairment standard did not apply, Order No. 3310 appeared to require an affirmative decision that impairment is appropriate in a Section 201 wilderness resource area. Otherwise, under Order No. 3310, impairment must be avoided. After Congress withheld funding, Secretary Salazar revoked the order in June 2011 and stated that BLM would not designate any wild lands. Despite the order being formally revoked, Congress has continued to withhold funding in annual appropriations acts. The wilderness statistics presented in Table 2 are the most recent acreage estimates for wilderness areas that have been designated by Congress as compiled by the agencies. Acreages are estimates, since few (if any) of the areas have been precisely surveyed. In addition, the agencies have recommended areas for addition to the National Wilderness Preservation System, and continue to review the wilderness potential of other lands under their jurisdiction, both of congressionally designated wilderness study areas and under congressionally directed land management planning efforts. However, statistics on acreage in pending recommendations and being studied, particularly in the planning efforts, are unavailable. As of April 15, 2016, Congress has designated 109.9 million acres of federal land in units of the National Wilderness Preservation System, as shown in Table 2 and Figure 1 . Wilderness areas have been designated in 44 states plus Puerto Rico; only Connecticut, Delaware, Iowa, Kansas, Maryland, and Rhode Island have no federal lands designated as wilderness. Figure 2 shows the regional distribution of lands designated as wilderness. Just over half (52%) of this land—57.4 million acres—is in Alaska, and includes most of the wilderness areas managed by NPS (75%), FWS (90%), and FS (16%). California has the next-largest wilderness acreage, with 15.0 million acres designated in the state. However, Washington is the state with the largest percentage of federal land designated wilderness, with the 4.5 million acres of wilderness accounting for 38% of the federal land within the state. NPS manages the most wilderness acreage (43.9 million acres, 40% of the Wilderness System), followed by the Forest Service, which manages 36.6 million acres (33%). FWS manages 20.7 million acres (19%), and BLM manages the least wilderness acreage, 8.7 million acres (8%).
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Congress enacted the Wilderness Act in 1964. This act created the National Wilderness Preservation System, reserved to Congress the authority to designate wilderness areas, and directed the Secretaries of Agriculture and of the Interior to review certain lands for their wilderness potential. The act also designated 54 wilderness areas with 9 million acres of federal land. Congress began expanding the Wilderness System in 1968, and today, there are 765 wilderness areas, totaling nearly 110 million acres, in 44 states. Numerous bills to designate additional areas and to expand existing ones have been introduced and considered in every Congress. The Wilderness Act defined wilderness as an area of undeveloped federal land, among other criteria, but due to differing perceptions of wilderness and its purpose, it did not establish criteria or standards to determine whether an area should be designated. In general, wilderness areas are undeveloped, and commercial activities, motorized access, and roads, structures, and facilities are prohibited in wilderness areas. In response to conflicting demands, however, Congress has granted both general exemptions and specific exceptions to the general standards and prohibitions. Questions also persist over the frequency and extent to which federal agencies must review the wilderness potential of their lands, and how those lands should be managed. Wilderness designation can be controversial. Because the designation generally prohibits commercial activities, motorized access, and human infrastructure from wilderness areas, opponents see such designations as preventing certain uses and potential economic development in rural areas where such opportunities are relatively limited. Advocates propose wilderness designations to preserve the generally undeveloped conditions of the areas. The federal government owns about 28% of the land in the United States, although the proportion in each state varies widely. Four federal agencies—the Bureau of Land Management, National Park Service, and Fish and Wildlife Service in the Department of the Interior; and the Forest Service in the Department of Agriculture—manage most of the 110 million acres of designated wilderness, as well as many other lands. They also protect certain other lands as possible additions to the Wilderness System, and review the wilderness potential of lands. In total, nearly 18% of federal land administered by the four major federal land management agencies, and nearly 5% of all land in the United States, has been designated as wilderness, largely in Alaska. Alaska, because of its size and relatively pristine condition, dominates wilderness statistics—more than 52% of designated wilderness is in Alaska (57.4 million acres). In total, nearly 16% of the entire state of Alaska has been designated as wilderness. In contrast, 3% of all land in the United States outside Alaska has been designated as wilderness.
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Climate change is a global issue; however, greenhouse gas emissions data on a global basis are incomplete. Some developing countries have no institutions for monitoring greenhouse gas emissions and have never reported such emissions to the United Nations Framework Convention on Climate Change (UNFCCC). In a similar vein, data on individual greenhouse gases, sources, and land-use patterns vary greatly in quality. Despite shortcomings in the data, the emerging picture of emissions has implications for considering alternative policies for controlling emissions. First, the picture outlines the estimated contributions of individual countries. Second, evaluating those emissions in terms of socio-economic characteristics (e.g., population and economic activity) provides insights on the potentially divergent interests of differing groups of nations—especially concerning developed nations versus developing ones. The World Resources Institute (WRI) has compiled greenhouse gas emissions and related data from a variety of sources into a database that is available for analysis. Covering 185 nations (plus a separate entry combining the members of the European Union), the database includes total emissions, per capita emissions, and greenhouse gas (or carbon) intensity; selected socio-economic indicators; and other measures. Emissions data for all six greenhouse gases identified by the UNFCCC are available for 1990, 1995, 2000, and 2005 for both developed and non-Annex I nations. Data for carbon dioxide (CO 2 ) are available back to 1850 and up to 2006 for both developed and non-Annex I nations. Data on the effects of land use change and forestry on CO 2 emissions are only available from 1990 to 2005, and only for a subset of nations. This report uses the data compiled by WRI to examine a pivotal and long-running issue surrounding U.S. climate change policy: the appropriate roles of developed and developing countries in addressing climate change. The UNFCCC states as its first principle in Article 3: The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof. U.S. policymakers have struggled with the "common but differentiated responsibilities" of all nations and with the pledge for the developed countries to "take the lead in combating climate change." Under the UNFCCC and the subsequent Kyoto Protocol, common actions include the responsibility to monitor and report emissions; differentiated actions include the commitment to reduce emissions for designated developed nations (including the United States), listed on Annex I to the UNFCCC (and hence known as Annex I nations). The original UNFCC commitment was voluntary, and many Annex I nations, notably including the United States, failed to meet the objective of reducing 2000 emissions to a 1990 baseline. Thus the Kyoto Protocol made mandatory individual Annex I nations' commitments of percentage reductions for 2008-2012, but meeting them has proved difficult—and the United States refused to join the commitment. Under both the UNFCCC and the Kyoto Protocol, non-Annex I nations would be exempt from these specified control requirements—although they could voluntarily join in. This split in responsibilities—with the consequent lack of greenhouse gas control requirements for major emitting non-Annex I countries—played a key role in the United States' refusal to agree to the Kyoto Protocol. Two key issues emerged from the UNFCC and Kyoto commitments to reduce emissions by developed nations: first, meeting the commitments is proving to be both technically and politically difficult; and second, it has become increasing evident that any reductions achieved by Annex I nations could be nullified by increases in emissions from non-Annex I nations like China and India that have been undergoing rapid economic growth and emitting increasingly large amounts of greenhouse gases—such that by 2005 China passed the United States to become the number one emitter of greenhouse gases in the world. Justifications for the differential treatment of the developed, Annex I nations compared to the developing nations are both environmentally and economically based. Environmentally, the developed, Annex I nations have dominated emissions. Cumulatively, from 1850 to 2006, Annex I nations had emitted approximately 74% of energy-related CO 2 , while non-Annex I nations had contributed 24%. In 1990, when the UNFCCC was being conceived, Annex I nations accounted for 60% of emissions of all six greenhouse gases, while the non-Annex I nations accounted for 40%. By 2005, however, non-Annex I nations dominated, accounting for 51% of total emissions, while Annex I nations accounting for approximately 47%. Thus, while Annex I nations still dominate cumulative emissions, the fact that non-Annex I nations are now contributing more than half the emissions confounds the assignment of future obligations. Economically, as the UNFCCC explicitly recognizes, the economic development being pursued by the non-Annex I nations depends importantly on expanded use of energy, including fossil fuels, which are the main source of carbon dioxide, the dominant greenhouse gas. From this perspective, a logic for the differing treatment of the two groups is that the developed, Annex I countries can afford to control emissions because they have achieved a relatively high standard of living, while the developing nations have the right and should have the opportunity to expand energy use as necessary for their economic development. This distinguishing of the responsibilities of the Annex I and non-Annex I nations generates crucial and interrelated tensions: First, this approach means that Annex I nations bear the preponderance of the direct economic costs for addressing global climate change; Second, non-Annex I nations retain the opportunity to develop their economies using least-cost energy regardless of greenhouse gas emissions; this in turn means that from the perspective of the Annex I nations, at least some developing nations—which may be competing in certain economic sectors—appear to be getting a free ride; And third, despite investments in controls and resulting tensions between competing economies, actual global emissions will continue to rise if the increase in emissions from non-Annex I nations exceeds any decrease in emissions achieved by Annex I ones. The crux of the Copenhagen Conference, to plot a post-Kyoto course for addressing climate change, was how to engage the two largest emitters, the United States and China—the former having rejected Kyoto in part because developing nations were not obligated to curtail emissions; and the latter having become the world's largest emitter of greenhouse gases. Politically, while George W. Bush administration had been a reluctant partner in the UNFCC process, including early negotiations pointing toward Copenhagen, President Obama has been a vigorous proponent of engagement. At the Copenhagen Conference, he met twice with Chinese Premier Wen Jiabao in an effort to move the negotiations forward. The Copenhagen outcome showed both some progress in bridging the gap between the developed and developing nations, and continuing difficulties in finding common ground on how to reduce greenhouse gas emissions. The accord did not mandate specific reductions, but set a goal of reducing global emissions "so as to hold the increase in global temperature below 2 degrees C, and take action to meet this objective consistent with science and on the basis of equity." Annex I nations commit to implement "quantified economy-wide emissions targets for 2020" and non-Annex I nations commit to implement "mitigation actions." Both sets of nations commit to reporting and verification procedures "in accordance with guidelines adopted by the Conference of the Parties." (Monitoring, reporting, and verification were a key demand of the United States of developing nations.) Also, the accord contained the promise of $100 billion a year by 2020 "to address the needs of developing countries." To clarify how nations' emissions levels intersect with social and economic contexts, this paper focuses on the 20 individual nations that emitted the most greenhouse gases in 2005 (see Appendix A , Appendix B , and Appendix C ). In 2005, not taking into account emissions implications of land use and forestry, the top 20 represented about 75% of global greenhouse gas emissions—up slightly from about 73% in 1990 (latest available data from CAIT for all six greenhouse gases). In addition, data for the 27-member European Union are included, as the Kyoto Protocol allows the EU to address its greenhouse gas emission obligations collectively. In 2005, the 27-nation EU was the third-largest emitter of greenhouse gases, after China and the United States. A compelling fact to emerge from the database is that a few countries account for most of the emissions. Appendix A , Appendix B , and Appendix C present data concerning the top 20 greenhouse gas-emitting nations in 2005. They accounted for 75.3% of global emissions. Excluding land use data, by CAIT's accounting, China led in emitting greenhouse gases (1,974 million metric tons of carbon equivalent, MMTCE) at 19.1% of the total, followed by the United States (1,892 MMTCE) at 18.3%. No other country reached 6% of total emissions (although the collective 27-member EU accounted for 13.4%); overall, only eight countries emitted 2% or more. These top eight emitters accounted for 58.3% of global emissions and the next 13 top emitters accounted for another 17% of emissions. Thus one implication of these data is that greenhouse gas control in the short term depends mainly on the actions of a relatively few nations; if the top 20 emitters (or even the top eight) all acted effectively, the actions of the remaining 160-plus nations would be of relatively little import, at least for years. A second compelling fact about those top emitters is that they are highly diverse and represent very different situations. The top 20 nations include: Developed (Annex I) nations whose emissions grew between 1990 and 2005: the United States, Japan, Canada, Italy, Australia, France, Spain, and Turkey (ranked 2, 5, 8, 13, 14, 16, 18, and 20, respectively). These eight nations accounted for 30.5% of global greenhouse gas emissions in 2005. Developed (Annex I) nations whose emissions declined between 1990 and 2005, largely as a result of the collapse of the Eastern European and USSR socialist economies during the 1990s: Russian Federation, Germany, and Ukraine, (ranked 3, 7, and 17, respectively). These three nations accounted for 9.0% of global greenhouse gas emissions in 2005. Developed (Annex I) nations with free-market economies whose emissions declined between 1990 and 2005, largely because of a combination of low population growth, modest economic growth, and the displacement of high-emitting fuels (coal) with alternatives: the United Kingdom (ranked 9), is the only member of this category. It accounted for 1.7% of global greenhouse gas emissions in 2005. Developing (non-Annex I) nations, all of whose emissions rose during the period: China, India, Brazil, Mexico, Indonesia, South Korea, Iran, and South Africa (ranked 1, 4, 6, 10, 11, 12, 15, and 19, respectively). These eight nations accounted for 34.1% of global greenhouse gas emissions in 2000. For the year 2005, then, 12 of the top 20 countries were Annex I countries, including 6 of the top 10 emitters. In 2005, the top 20 Annex I countries accounted for about 55% of the top 20 group's greenhouse emissions, compared with 45% for the developing, non-Annex I countries; in 1990, the relative shares were 69% and 31%, respectively, so the developing countries have been proportionately increasing their share. Highlighting the tension between Annex I and non-Annex I perspectives, the number-one emitters of each group were the top two emitters overall: At the top were the leading developing, non-Annex I country, China; and the leading developed, free-market economy, the United States. Combined, these two countries alone accounted for 37.4% of total global emissions. The impact of emissions on climate change is believed to be cumulative over decades and even centuries. Thus a longer-term examination of data provides an important perspective, and is one reason for the differing treatments of the Annex I and non-Annex I nations. Available data give emissions estimates of energy-related CO 2 emissions back from1850 to 2006 (see Appendix A and Appendix C ). This longer-term view of emissions underscores the contribution of the Annex I nations: For all nations, excluding land use changes and forestry practices, Annex I countries' share of energy-related CO 2 emissions over the period 1850-2005 is 74%; non-Annex I countries' share is 24% (see also Table 1 ). The relative rankings of several developing countries, including Brazil, South Korea, Indonesia, and Iran, drop substantially using a longer historical baseline for emissions: from the 2005 rank to the 1850-2005 cumulative rank for CO 2 , from 6 th to 21 st , 15 th to 20 th , 11 th to 25 th , and 12 th to 23 rd , respectively. Greenhouse gas emissions, particularly energy-related emissions, are closely tied to industrialization. As "developed" is considered by many to be synonymous with "industrialized," it is not surprising that the developed countries dominate cumulative emissions, while developing ones are increasing their current annual share. Changes in land use can significantly affect net levels of emissions. In general, deforestation increases CO 2 emissions and afforestation decreases them. Certain agricultural practices can increase emissions of methane or nitrous oxide; other agricultural processes can sequester carbon. However, data on the effects on emissions of land use changes and forestry practices, and their conversion into equivalent units of greenhouse gas emissions, are both less available and less robust than data on emissions. Therefore, this discussion is at best illustrative (see Appendix A and Appendix C ; note that numerous countries lack data on land use and forestry). Including land use in the calculations for 2005 focuses discussion on certain developing countries. Land use changes and forestry practices in certain developing countries, notably Brazil and Indonesia, are having the effect of substantially upping their relative emissions ranks. Counting land use, Brazil's emissions in 2005 rise from 276 MMTCE to 776 MMTCE (+181%), and Indonesia's rise from 159 to 557 (+250%). This ups their rankings of total emissions in 2005 from 6 th to 3 rd , and 11 th to 4 th , respectively. Compared to Brazil and Indonesia, the impact of accounting for land use on other top 20 emitters is much less. The next biggest adjustment is for Mexico, whose emissions rise 6% when land use is accounted for. For the United States, net emissions drop by 32 MMTCE (-1.7%); its relative rank (as number 2 in 2005) does not change when land use is taken into account. Historic land use and forestry data are not available. Evaluating the impact of land use and forestry at any one time directs attention to those few countries undergoing particular points in the development cycle. For many countries, land-clearing and agricultural development occurred long ago: the Western developed nations and China and India, for example, have long-established agricultural practices; in contrast, Brazil and Indonesia have over the past few decades been clearing large regions of forest and jungle for timber and/or conversion to agriculture, releasing greenhouse gases (or removing sinks). In terms of the UNFCCC and the Kyoto Protocol, and potentially the Copenhagen Accord, including land use in the equation for controlling emissions disadvantages certain countries whose exploitation of resources and development of agriculture are occurring at a particular moment in history, while for other countries the effects of past changes in land use and forestry practices are embedded in their baseline emissions. The data on greenhouse gas emissions highlight issues of both effectiveness and fairness in the effort to address global climate change. Differentiating responsibilities between Annex I and non-Annex I nations, as the UNFCCC has, does not focus efforts on all of the largest emitters. As Table 1 shows, the emissions dominance of Annex I nations that existed in 1990 has ended: in 2005 non-Annex I nations' global greenhouse gas emissions definitively surpass those of Annex I nations, by a margin of 15% when taking land use and forestry into account. On the other hand, on the basis of energy-related CO 2 emissions, cumulative from 1850-2006, Annex I nations still dominate by margin of 3 to 1. Moreover, contradictory issues of fairness arise. For Annex I countries, the present scheme of controlling greenhouse gases requires them to bear essentially all the direct economic costs. For non-Annex I countries, to the extent that development is linked to increasing greenhouse gas emissions, imposing controls on them could slow their development and hold down their standards of living vis-a-vis the developed nations. Finally, the focus on emissions levels at specific times (e.g., a baseline of 1990) has differential and arbitrary impacts on individual nations. Looking at the industrialization process, to the extent that fossil fuel use is a necessary ingredient of economic development, as acknowledged by the UNFCCC, the emergence of the global climate change issue at this time effectively determines the distinction between the developed, Annex I nations and the developing, non-Annex I nations. For Annex I nations, that energy exploitation has been incorporated into their economies and is part of their baseline for considering any controls on greenhouse gases. For developing, non-Annex I nations, however, economic development will require expanded energy use, of which fossil fuels can be the least costly. Thus imposing limits on fossil energy use at this time could result in developing countries being relegated to a lower standard of living than those nations that developed earlier. Similarly, certain land-use activities, such as clearing land for agriculture and exploiting timber, affect net greenhouse gas emissions. Nations that are currently exploiting their resource endowments, such as Brazil and Indonesia, could find themselves singled out as targets for controls. Yet developed nations, like the United States and most European countries, which exploited such resources in the past, have those greenhouse gas implications embedded in their baselines. Also, the focus on 1990 as a baseline means that the Eastern European and former Soviet Union nations have the advantage of reductions in emissions from their subsequent economic contractions, which will allow them room for growth. Likewise, the discovery and exploitation of North Sea gas has allowed Great Britain to back out coal and thereby reduce emissions since the baseline. In all these cases, the time frame adopted for defining the climate change issue and for taking actions to address greenhouse gas emissions has differential impacts on individual nations, as a result of their individual resource endowments and stage of economic development. The differential impacts give rise to perceived inequities. Thus the effort to find a metric for addressing greenhouse gas emissions baselines and targets that will be perceived as equitable is challenging. The problems raised above prompt the question: What alternatives to controls derived from historically based emissions levels are available? Alternative metrics for taking into account greenhouse gas emissions and economic development include per capita emissions and economic intensity of emissions. The socioeconomic differences between the developed, Annex I nations and the developing nations lead to considerations about emissions other than simply their absolute amounts. One alternative is to consider per capita emissions: All else equal, populous nations would emit more greenhouse gases than less populated ones. On this basis, the difference between developed, Annex I countries and non-Annex I ones is apparent. Appendix A and Appendix B show that of the top 20 emitters in 2005, the highest ranked by per capita greenhouse gas emissions are developed countries (Australia, United States, and Canada, ranked 6, 9, and 10, respectively). Their per capita emissions (7.5, 6.4, and 6.2 tons per person, respectively) are nearly double the emissions of the highest-ranked developing country in the top 20 (South Korea, at 3.2), and over four times that of China (1.5). The rankings for the non-Annex I countries in the top 20 emitters range from 29 (South Korea) to 148 (India), with China ranked 81. In contrast, Annex I countries range from 6 (Australia) to 51 (France), with the United States at 9. Reasons the United States, Australia, and Canada are so high on this measure include their dependence on energy-intensive transport to move people and goods around countries of large size and relatively low population density, the use of coal for power generation, and the energy requirements for resource extraction industries. Thus, if one were considering how to control greenhouse gas emissions, one way of trying to bridge the different interests of the developed, Annex I nations and the developing ones would be to focus on per capita emissions as a way of giving each nation an equitable share of energy use. For the United States compared to the developing world, this metric could imply constraints, depending on the compliance time frame and future technological advancements. Likewise, this approach could permit most less-developed countries to increase their emissions to accommodate expanding economies. Another alternative for evaluating a nation's contribution to greenhouse gas emissions is to consider how efficiently that nation uses energy (and conducts other greenhouse gas-emitting activities) in producing goods and services. This concept is captured by greenhouse gas intensity—or carbon intensity —measured as the amount of greenhouse gases emitted per million dollars of gross domestic product, measured in international dollars (parity purchasing power) (see Appendix A and Appendix C ). Carbon intensity as a greenhouse gas indicator has received considerable attention since President Bush decided to use it as a benchmark for his voluntary climate change program. Also, the World Resources Institute has advocated its use as an appropriate index for developing, non-Annex I nations. A nation's greenhouse gas intensity reflects both its resource endowment and the energy-intensiveness of its economy. In terms of energy resources, countries with rich resources in coal would tend to be higher emitters, while countries with rich resources in hydropower or natural gas would tend to be lower emitters. In terms of economic activity, countries with major heavy industry, major extractive industries, and extensive transportation systems tend to be higher emitters, while countries without these and/or dominated by service industries would tend to be lower emitters. As noted in terms of emissions, taking into account land use sharply increases the greenhouse gas intensity of Brazil and Indonesia. The top 20 emitters in 2005 (see Appendix A and Appendix C ) range widely in greenhouse gas intensity: from 512 tons per million international $GDP (Ukraine, which relies heavily on coal) to 80 tons/million international $GDP (France, which relies heavily on nuclear power for generating electricity). (The larger the intensity number, the more GHGs emitted per dollar of GDP: from a climate change perspective, the lower the intensity the better.) These are both Annex I nations; non-Annex I nations have a narrower range, from the 136 tons/million international $GDP (Mexico) to 372 tons/million international $GDP (China). Taking into account land use, however, would dramatically raise the intensity of Brazil and Indonesia: in 2005 it jumped Brazil by 182%, to 490 tons/million international $GDP and Indonesia by 250%, to 790 tons/million international $GDP; the next largest increase from land use change was Mexico at 6%. As a metric for considering how to control greenhouse gas emissions, intensity has an inherent political appeal: for most nations, intensity is declining. For the world, greenhouse gas intensity declined at a rate of -1.6% annually from 1990 to 2005. Causes of this decline in intensity are cost efficiencies that focus attention on the efficient use of energy, policies promoting the use of alternatives to fossil fuels generally and to coal in particular, and substitutions for perfluoro- and hydrofluorocarbons. A consequence of focusing on intensity, however, is that even with declining intensity, actual emissions can rise as a result of population growth and economic growth. For greenhouse gas intensity, in 2005 the United States ranked number 122 in the world, making this a more favorable metric than absolute emissions (the United States ranked number 2 in the world) and per capita emissions (the United States ranked number 9). Of the indicators examined here, the United States gets the most favorable results from this one. Nevertheless, in absolute terms, the United States is relatively less efficient with respect to intensity compared with Western European countries (the EU-27 would have ranked 154) and Japan ranked 166. In addition, the United States is less efficient than non-Annex I emitters South Korea and Mexico, but it is more efficient than China, India, Brazil, South Africa, Indonesia, and Iran. In its positioning for the Copenhagen meeting, China pledged that it would cut its carbon intensity 40-45% by 2020 from a 2005 baseline. China's greenhouse gas intensity in 2005 ranked 34, indicating that its economy was comparatively GHG-inefficient, and suggesting that intensity reductions should be relatively easy to achieve. But in fact, based on CAIT data, this commitment simply reflects China's historical trend for intensity: for the 15-year period 1990 to 2005, China's carbon intensity, based on CO 2 emissions only, declined by 43% (its carbon-equivalent intensity, based on all six greenhouse gases, declined by 53%). As stated above, the data on greenhouse gas emissions highlight issues of both effectiveness and fairness with respect to current efforts to address global climate change. Differentiating responsibilities between Annex I and non-Annex I countries fails to focus efforts on all the largest emitters. In addition, contradictory issues of fairness arise, as Annex I countries bear essentially all the direct economic costs of reducing emissions, and non-Annex I countries are granted the right to increase emissions to meet developmental needs. Finally, the focus on historical emissions as a baseline for regulation has differential and arbitrary impacts on individual nations. The result of the UNFCCC and Kyoto Protocol's setting emissions targets for only developed nations and focusing on returning their emissions to a specific baseline is twofold: (1) the current regime has had little effect on global emissions, and will have little effect in the near future; and (2) the largest emitters, the United States and China, have not found it in their interests to join in the international effort to a significant degree. Indeed, the United States pulled completely out of the Kyoto process under the George W. Bush administration. This process has continued to be difficult, as the recent Copenhagen meetings illustrate. This history of the UNFCCC and the Kyoto Protocol raises serious questions about how to develop greenhouse gas targets, time frames, and implementation strategies. With respect to targets, the UNFCCC recognized the right of developing countries to develop and the responsibility of all countries to protect the global climate. These goals of the UNFCCC suggest that if there is to be any permanent response to climate change that involves controlling greenhouse gases, then a regime that combines some measure reflecting the right of developing countries to develop, such as per capita emissions, and some measure reflecting the need to be efficient, such as carbon intensity, may be necessary to move the world toward a workable and effective climate change framework. As shown above a global target focused on per capita emissions generally rewards developing nations, providing them room for economic growth; the target's balance between limiting emissions and permitting growth determines the individual winners and losers. For example, based on Appendix B , a target of 3 tons carbon per person would allow all the developing nations in the top 20 emitters except South Korea growth room (South Korea is at 3.1 tons per capita), while five developed nations (United States, Russian Federation, Germany, Canada, and Australia) would have to make cuts. In contrast, a target focused on greenhouse gas intensity would have more diverse implications for developing nations. Several major developing nations produce considerably higher greenhouse gas emissions per million dollars of GDP than some developed nations. For example, in 2005 China's carbon intensity (372 tons/million international $GDP) was about four times that of the United Kingdom's (91) and Italy's (93). Thus a greenhouse gas intensity goal could be a counterforce to the economic development process for some countries, meaning that the winners and losers of a regime combining per capita and carbon intensity measures could be highly dynamic and contentious. Adding land-use implications would further complicate the regime, and selectively affect certain nations, especially those just now at the point of exploiting forests (notably Indonesia and Brazil). For the United States, a regime containing some mix of per capita and greenhouse gas intensity measures would likely imply a need to constrain emissions over some time frame. The U.S. greenhouse gas intensity is declining, as is the case with most nations, but the decrease currently does not completely offset increased emissions resulting from the growth of population and of the economy. The extent to which targets could translate into economic costs would depend on the other two features of the regulatory scheme: (1) time frame (specifically, whether it would accommodate technological advances in less-carbon-intensive technology or accelerated commercialization of existing low-carbon technologies such as nuclear power); (2) implementation strategy (specifically, whether it encourages least-cost solutions and development of advanced technologies). With respect to time frame, the data indicate two things: (1) most countries that achieved a significant reduction during the 1990s did so as a result of either an economic downturn or a substantial realignment in energy policy; (2) many countries have not been able to stabilize their emissions despite the UNFCCC's voluntary goal, much less reduce them. That failure was the impetus for the Kyoto Agreement's prescribed reductions and of the Copenhagen meeting. Using economic contraction as an emission reduction strategy can scarcely be considered an option. Instead, the substantial development and/or deployment of less-carbon-intensive technology, improved land-management strategies, and other actions would be necessary to achieve stabilized emissions. As noted above, greenhouse gas emissions are closely tied to industrialization—a synonym for "developed." With few exceptions, improvement in efficiency has been gradual. A permanent transformation of the global economy necessary to ensure a long-term stabilization of greenhouse gas emissions may involve a multi-stage, long-term time frame. The difficulty in implementing the UNFCCC suggests implementation and compliance are still an open issue. The United States submitted climate action plans during the 1990s indicating it would achieve the UNFCCC goal of returning emissions to 1990 levels. It did not. There were no sanctions. Likewise, some Kyoto signatories may not achieve their reduction targets in 2008-2012. The sanctions are unclear. Now, for the Copenhagen Accord, nations are asked to voluntarily commit to reductions. Given the wide range of situations illustrated by the data, a flexible strategy that permits each country to play to its strengths may make it easier for diverse countries like the United States and China to reach some acceptable agreement. The extent of flexibility would depend on the balance between emission reductions and economic cost designed into the targets, time frame, and implementation strategy. Market-based mechanisms to reduce emissions focus on specifying either the acceptable emissions level (quantity), or compliance costs (price), and allowing the marketplace to determine the economically efficient solution for the other variable. For example, a tradeable permit program sets the amount of emissions allowable under the program (i.e., the number of permits available caps allowable emissions), while permitting the marketplace to determine what each permit will be worth. Conversely, a carbon tax sets the maximum unit (per ton of CO 2 ) cost that one should pay for reducing emissions, while the marketplace determines how much actually gets reduced. Hence, a major implementation question is whether one is more concerned about the possible economic cost of the program and therefore willing to accept some uncertainty about the amount of reduction received (i.e., carbon taxes), or one is more concerned about achieving a specific emission reduction level with costs handled efficiently, but not capped (i.e., tradeable permits). Of course, combinations of these approaches are possible, depending on the flexibility desired. The data presented here portray a very wide range of situations and conditions among the 20 top countries that represent over 70% of total emissions. Significant flexibility may not only be desirable but necessary for them to reach any significant agreement. Appendix A. Relative Ranking of 20 Top Emitters (Plus EU-27) of Greenhouse Gases Based on 2005 Greenhouse Gas Emissions Appendix B. Greenhouse Gas Emissions and Other Climate Change-Related Indicators for 2005 Top 20 Emitting Countries (Excludes Land Use Change & Forestry) Appendix C. Additional Emissions and Other Climate Change-Related Indicators for 2005 Top 20 Emitters
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Using the World Resources Institute (WRI) database on greenhouse gas emissions and related data, this report examines two issues. The first issue is the separate treatment of developed and developing nations under the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, and the Copenhagen Accord. This distinction has been a pivotal issue affecting U.S. climate change policy. The second issue is the difficulty of addressing climate change through limiting greenhouse gas emissions to a specified percentage of baseline emissions (typically 1990). The data permit examination of alternative approaches, such as focusing on per capita emissions or the greenhouse gas emission intensity (measured as emissions per unit of economic activity). Key findings include: A few countries account for most greenhouse gas emissions: in 2005, China led by emitting 19% of the world total, followed closely by the United States with 18%; no other country reached 6%; the top eight emitters (those emitting 2% or more of total emissions) accounted for 58% of the 185 nations' emissions. Land-use effects (e.g., deforestation) on emissions are negligible for most nations, but they cause emissions to rise sharply for certain developing nations, most notably Brazil and Indonesia. While countries whose economies are dominated by oil and gas production have the highest per capita greenhouse gas emissions, in general developed nations rank high in per capita emissions (in 2005, Australia, the United States, and Canada ranked 6, 9, and 10, respectively, in the world), while developing nations tend to rank low (China, Brazil, Indonesia, and India ranked 81, 84, 117, and 148, respectively). The greenhouse intensity of the economy—the metric by which the George W. Bush Administration addressed climate change, and by which China has proposed to set its objectives under the Copenhagen Accord—varies substantially among developed countries (in 2005, not accounting for land use, Ukraine emitted 512 tons/million international $GDP, while France emitted 80 tons/million $GDP, with the United States at 153 tons/million $GDP; developing nations range from the 136 (Mexico) to 372 (China). The time frame adopted for defining the climate change issue and for taking actions to address greenhouse gas emissions has differential impacts on individual nations, as a result of individual resource endowments (e.g., coal versus natural gas and hydropower) and stage of economic development (e.g., conversion of forest land to agriculture occurring before or after the baseline). Differentiating responsibilities between developed and developing nations—as the UNFCCC does—has failed to engage some of the largest emitters effectively. Moreover, many developed countries have not achieved stabilization of their emissions despite the UNFCCC. Given the wide range of situations illustrated by the data, a flexible strategy that allows each country to play to its strengths may be necessary if diverse countries like the United States and China are ever to reach agreement. The difficulty in finding a common strategy was evidenced by the outcome of the Copenhagen meeting, which set a climate change objective of holding global warming to less than 2 degrees C but then left up to each country the choice of how to address emissions.
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This is an outline of the Electronic Communications Privacy Act (ECPA). ECPA consists of three parts. The first, sometimes referred to as Title III, outlaws the unauthorized interception of wire, oral, or electronic communications. It also establishes a judicial supervised procedure to permit such interceptions for law enforcement purposes. The second, the Stored Communications Act, focuses on the privacy of, and government access to, stored electronic communications. The third creates a procedure for governmental installation and use of pen registers as well as trap and trace devices. It also outlaws such installation or use except for law enforcement and foreign intelligence investigations. At common law, "eavesdroppers, or such as listen under walls or windows, or the eaves of a house, to hearken after discourse, and thereupon to frame slanderous and mischievous tales, are a common nuisance and presentable at the court-leet; or are indictable at the sessions, and punishable by fine and finding of sureties for [their] good behavior." Although early American law proscribed common law eavesdropping, the crime was little prosecuted and by the late nineteenth century had "nearly faded from the legal horizon." With the invention of the telegraph and telephone, however, state laws outlawing wiretapping or indiscretion by telephone and telegraph operators preserved the spirit of the common law prohibition in this country. Congress enacted the first federal wiretap statute as a temporary measure to prevent disclosure of government secrets during World War I. Later, it proscribed intercepting and divulging private radio messages in the Radio Act of 1927, but did not immediately reestablish a federal wiretap prohibition. By the time of the landmark Supreme Court decision in Olmstead , however, at least forty-one of the forty-eight states had banned wiretapping or forbidden telephone and telegraph employees and officers from disclosing the content of telephone or telegraph messages or both. Olmstead was a Seattle bootlegger whose Prohibition Act conviction was the product of a federal wiretap. He challenged his conviction on three grounds, arguing unsuccessfully that the wiretap evidence should have been suppressed as a violation of either his Fourth Amendment rights, his Fifth Amendment privilege against self-incrimination, or the rights implicit in the Washington state statute that outlawed wiretapping. For a majority of the Court, writing through Chief Justice Taft, Olmstead's Fourth Amendment challenge was doomed by the absence of "an official search and seizure of his person, or such a seizure of his papers or his tangible material effects, or an actual physical invasion of his house or curtilage for the purposes of making a seizure." Chief Justice Taft pointed out that Congress was free to provide protection which the Constitution did not. Congress did so in the 1934 Communications Act by expanding the Radio Act's proscription against intercepting and divulging radio communications so as to include intercepting and divulging radio or wire communications. The Federal Communications Act outlawed wiretapping, but it said nothing about the use of machines to surreptitiously record and transmit face to face conversations. In the absence of a statutory ban the number of surreptitious recording cases decided on Fourth Amendment grounds surged and the results began to erode Olmstead 's underpinnings. Erosion, however, came slowly. Initially the Court applied Olmstead 's principles to the electronic eavesdropping cases. Thus, the use of a dictaphone to secretly overhear a private conversation in an adjacent office offended no Fourth Amendment precepts because no physical trespass into the office in which the conversation took place had occurred. Similarly, the absence of a physical trespass precluded Fourth Amendment coverage of the situation where a federal agent secretly recorded his conversation with a defendant held in a commercial laundry in an area open to the public. On the other hand, the Fourth Amendment did reach the government's physical intrusion upon private property during an investigation, as for example when they drove a "spike mike" into the common wall of a row house until it made contact with a heating duct for the home in which the conversation occurred. The spike mike case presented something of a technical problem, because there was some question whether the spike mike had actually crossed the property line of the defendant's town house when it made contact with the heating duct. The Court declined to rest its decision on the technicalities of local property law, and instead found that the government's conduct had intruded upon privacy of home and hearth in a manner condemned by the Fourth Amendment. Each of these cases focused upon whether a warrantless trespass onto private property had occurred, that is, whether the means of conducting a search and seizure had been so unreasonable as to offend the Fourth Amendment. Yet in each case, the object of the search and seizure had been not those tangible papers or effects for which the Fourth Amendment's protection had been traditionally claimed, but an intangible, a conversation. This enlarged view of the Fourth Amendment could hardly be ignored, for "[i]t follows from ... Silverman ... that the Fourth Amendment may protect against the overhearing of verbal statements as well as against the more traditional seizure of papers and effects." Soon thereafter the Court repudiated the notion that the Fourth Amendment's protection was contingent upon some trespass to real property in Katz v. United States . Katz was a bookie convicted on the basis of evidence gathered by an electronic listening and recording device set up outside the public telephone booth that Katz used to take and place bets. The Court held that the gateway for Fourth Amendment purposes stood at that point where an individual should to able to expect that his or her privacy would not be subjected to unwarranted governmental intrusion. One obvious consequence of Fourth Amendment coverage of wiretapping and other forms of electronic eavesdropping is the usual attachment of the Amendment's warrant requirement. To avoid constitutional problems and at the same time preserve wiretapping and other forms of electronic eavesdropping as a law enforcement tool, some of the states established a statutory system under which law enforcement officials could obtain a warrant, or equivalent court order, authorizing wiretapping or electronic eavesdropping. The Court rejected the constitutional adequacy of one of the more detailed of these state statutory schemes in Berger v. New York . The statute was found deficient because of its failure to require: a particularized description of the place to be searched; a particularized description of the crime to which the search and seizure related; a particularized description of the conversation to be seized; limitations to prevent general searches; termination of the interception when the conversation sought had been seized; prompt execution of the order; return to the issuing court detailing the items seized; and any showing of exigent circumstances to overcome the want of prior notice. Berger helped persuade Congress to enact Title III of the Omnibus Crime Control and Safe Streets Act of 1968, a comprehensive wiretapping and electronic eavesdropping statute that not only outlawed both activities in general terms but that also permitted federal and state law enforcement officers to use them under strict limitations designed to meet the objections in Berger . A decade later another Supreme Court case persuaded Congress to supplement Title III with a judicially supervised procedure for the use of wiretapping and electronic eavesdropping in foreign intelligence gathering situations. When Congress passed Title III there was some question over the extent of the President's inherent powers to authorize wiretaps—without judicial approval—in national security cases. As a consequence, the issue was simply removed from the Title III scheme. After the Court held that the President's inherent powers were insufficient to excuse warrantless electronic eavesdropping on purely domestic threats to national security, Congress considered it prudent to augment the foreign intelligence gathering authority of the United States with the Foreign Intelligence Security Act of 1978 (FISA). The FISA provides a procedure for judicial review and authorization of electronic surveillance and other forms of information gathering for foreign intelligence purposes. Two other Supreme Court cases influenced the development of federal law in the area. In United States v. Miller , the Court held that a customer had no Fourth Amendment protected expectation of privacy in the records his bank created concerning his transactions with them. These third party records were therefore available to the government under a subpoena duces tecum rather than a more narrowly circumscribed warrant. In Smith v. Maryland , it held that no warrant was required for the state's use of a pen register or trap and trace device, if the device merely identified the telephone numbers for calls made and received from a particular telephone. No Fourth Amendment search or seizure occurred, the Court held, since the customer had no justifiable expectation of privacy in information which he knew or should have known the telephone company might ordinarily capture for billing or service purposes. In 1986, Congress enacted the Electronic Communications Privacy Act (ECPA). ECPA consists of three parts: a revised Title III; the Stored Communications Act (SCA); and provisions governing the installation and use of pen registers as well as trap and trace devices. Congress has adjusted the components of ECPA and FISA, over the years. It has done so sometimes in the interests of greater privacy; sometimes in the interest of more effective law enforcement or foreign intelligence gathering; often with an eye to some combination of those interests. Prominent among its enactments are: the USA PATRIOT Act; the Intelligence Authorization Act for Fiscal Year 2002; the 21 st Century Department of Justice Appropriations Authorization Act; the Department of Homeland Security Act; the USA PATRIOT Improvement and Reauthorization Act; and the Foreign Intelligence Surveillance Act of 1978 Amendments Act of 2008 (2008 FISA Amendments Act). In Title III, ECPA begins the proposition that unless provided otherwise, it is a federal crime to engage in wiretapping or electronic eavesdropping; to possess wiretapping or electronic eavesdropping equipment; to use or disclose information obtained through illegal wiretapping or electronic eavesdropping; or to disclose information secured through court-ordered wiretapping or electronic eavesdropping, in order to obstruct justice. First among these is the ban on illegal wiretapping and electronic eavesdropping that covers: any person who intentionally intercepts, or endeavors to intercept, wire, oral, or electronic communications by using an electronic, mechanical, or other device unless the conduct is specifically authorized or expressly not covered, e.g . one of the parties to the conversation has consented to the interception, the interception occurs in compliance with a statutorily authorized (and ordinarily judicially supervised) law enforcement or foreign intelligence gathering interception, the interception occurs as part of providing or regulating communication services, certain radio broadcasts, and in some places, spousal wiretappers. The prohibition applies to "any employee, or agent of the United States or any State or political subdivision thereof, and any individual, partnership, association, joint stock company, trust, or corporation." Conduct can only violate Title III if it is done "intentionally," inadvertent conduct is no crime; the offender must have done on purpose those things which are outlawed. He need not be shown to have known, however, that his conduct was unlawful. Subsection 2511(1) contains two interception bars—one, 2511(1)(a), simply outlaws intentional interception; the other, 2511(1)(b), outlaws intentional interception when committed under any of five jurisdictional circumstances with either an implicit or explicit nexus to interstate or foreign commerce. Congress adopted the approach because of concern that its constitutional authority might not be sufficient to ban instances of electronic surveillance that bore no discernable connection to interstate commerce or any other of Congress's enumerated constitutional powers. So it enacted a general prohibition, and as a safety precaution, a second provision more tightly tethered to specific jurisdictional factors. The Justice Department has honored that caution by employing subparagraph (b) to prosecute the interception of oral communications, while using subparagraph (a) to prosecute other forms of electronic eavesdropping. Interception "means the aural or other acquisition of the contents" of various kinds of communications by means of "electronic, mechanical or other devices." Although logic might suggest that interception occurs only in the place where the communication is captured, the cases indicate that interception occurs as well where the communication begins, is transmitted, or is received. Yet, it does not include instances when an individual simply reads or listens to a previously intercepted communication, regardless of whether additional conduct may implicate the prohibitions on use or disclosure. Once limited to aural acquisitions, ECPA enlarged the definition of "interception" by adding the words "or other acquisition" so that it is no longer limited to interceptions of communications that can be heard. The change complicates the question of whether the wiretap, stored communications, or trap and trace portions of the ECPA govern the legality of various means of capturing information relating to a communication. The analysis might seem to favor wiretap coverage when it begins with an examination of whether an "interception" has occurred. Yet, there is little consensus over when an interception occurs; that is, whether "interception" as used in section 2511 contemplates surreptitious acquisition, either contemporaneous with transmission, or whether such acquisition may occur anytime before the initial cognitive receipt of the contents by the intended recipient, or under some other conditions. The USA PATRIOT Act resolved some of the statutory uncertainty concerning voice mail when it removed voice mail from the wiretap coverage of Title III (striking the phrase "and such term includes any electronic storage of such communication" from the definition of "wire communications" in Title III (18 U.S.C. 2510(1)) and added stored wire communications to the stored communications coverage of 18 U.S.C. 2703. The interceptions proscribed in Title III are confined to those that capture a communication's "content," that is, "information concerning [its] substance, purport, or meaning." Trap and trace devices and pen registers once captured only information relating to the source and addressee of a communication, not its content. That is no longer the case. The "post-cut-through dialed digit features" of contemporary telephone communications now transmit communications in such a manner that the use of ordinary pen register or trap and trace devices will capture both non-content and content. As a consequence, a few courts have held, either as a matter of statutory construction or constitutional necessity, that the authorities must rely on a Title III wiretap order rather than a pen register/trap and trace order if such information will be captured. The statute does not cover common law "eavesdropping," but only interceptions "by electronic, mechanical or other device." The term includes computers, but it is defined so as not to include hearing aids or extension telephones in normal use (use in the "ordinary course of business"). Whether an extension phone has been installed and is being used in the ordinary course of business or in the ordinary course of law enforcement duties, so that it no longer constitutes an interception device for purposes of Title III and comparable state laws has proven a somewhat vexing question. Although often intertwined with the consent exception discussed below, the question generally turns on the facts in a given case. When the exemption is claimed as a practice in the ordinary course of business, the interception must be for a legitimate business reason, it must be routinely conducted, and at least in some circuits employees must be notified that their conversations are being monitored. Similarly, "Congress most likely carved out an exception for law enforcement officials to make clear that the routine and almost universal recording of phone lines by police departments and prisons, as well as other law enforcement institutions, is exempt from the statute." The exception contemplates administrative rather than investigative monitoring, which must nevertheless be justified by a lawful, valid law enforcement concern. An interception is only a violation of Title III if the conversation or other form of captured communication is among those kinds which the statute protects, in oversimplified terms—if it is a telephone (wire), face to face (oral), or computer (electronic) communication. Thus, Title III does cover silent video surveillance. Title III does not cover all wire, oral or electronic communications. "Oral communications," by definition, includes only those face to face conversations for which the speakers have a justifiable expectation of privacy. "Wire communications" are limited to those that are at some point involve voice communications (i.e., only aural transfers). The term "electronic communications" encompasses radio and data transmissions generally, but excludes certain radio transmissions which can be innocently captured without great difficulty. Even when a radio transmission meets the definition, Title III's general exemption may render its capture innocent. Although the statute condemns attempted wiretapping and electronic eavesdropping ("endeavoring to intercept"), the provisions appear to have escaped use, interest, or comment heretofore, perhaps because the conduct most likely to constitute preparation for an interception—possession of wiretapping equipment—is already a separate crime. Consent interceptions are common, controversial and have a history all their own. The early bans on divulging telegraph or telephone messages had a consent exception. The Supreme Court upheld consent interceptions against Fourth Amendment challenge both before and after the enactment of Title III. The argument in favor of consent interceptions has always been essentially that a speaker risks the indiscretion of his listeners and holds no superior legal position simply because a listener elects to record or transmit his statements rather than subsequently memorializing or repeating them. Wiretapping or electronic eavesdropping by either the police or anyone else with the consent of at least one party to the conversation is not unlawful under the federal statute. These provisions do no more than shield consent interceptions from the sanctions of federal law; they afford no protection from the sanctions of state law. Many of the states recognize comparable exceptions, but some only permit interception with the consent of all parties to a communication. Under federal law, consent may be either explicitly or implicitly given. For instance, someone, who uses a telephone other than his or her own and has been told by the subscriber that conversations over the instrument are recorded, has been held to have implicitly consented to interception when using the instrument. This is not to say that subscriber consent alone is sufficient, for it is the parties to the conversation whose privacy is protected. Although consent may be given in the hopes of leniency from law enforcement officials or as an election between unpalatable alternatives, it must be freely given and not secured coercively. Private consent interceptions may not be conducted for a criminal or tortious purpose. Some state wiretap laws do not recognize a one party consent exception. There, interception with the consent of but one party to the conversation is a violation of state law. But the federal exception is available as long as the purpose of the interception was neither criminal nor tortious—though the means may have been. At one time, the limitation encompassed interceptions for criminal, tortious, or otherwise injurious purposes, but ECPA dropped the reference to injurious purposes for fear that First Amendment values might be threatened should the clause be read to outlaw consent interceptions conducted to embarrass. Radio communications which can be inadvertently heard or are intended to be heard by the public are likewise exempt. These include not only commercial broadcasts, but ship and aircraft distress signals, tone-only pagers, marine radio and citizen band radio transmissions, and interceptions necessary to identify the source of any transmission, radio or otherwise, disrupting communications satellite broadcasts. Government officials have the benefit of an exemption when executing a Title III eavesdropping order; acting in an emergency situation pending issuance of a court order; acting under the authority of Title III in the case of communications of an intruder in a communications system acting with the approval of the system provider; acting under the authority of the Foreign Intelligence Surveillance Act, or acting pursuant to the authority according them the use of pen registers and trap and trace devices. A further exemption applies to those who supply communications services: the telephone company, switchboard operators, and the like. The exemption permits interception in the name of improved service; to allow a service provider to itself against fraud; to assist federal and state officials operating under a judicially supervised interception order, and for the regulatory activities of the Federal Communications Commission. A few courts recognize a "vicarious consent" exception under which a custodial parent may secretly record the conversations of his or her minor child in the interest of protecting the child. Although rejected by most, a handful of federal courts have held that Title III does not preclude one spouse from wiretapping or electronically eavesdropping upon the other, a result other courts have sometimes reached through the telephone extension exception discussed above. Title III has three disclosure offenses. The first is a general prohibition focused on the products of an unlawful interception: any person [who] intentionally discloses or endeavors to disclose to another person the contents of any wire, oral, or electronic communication having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of 18 U.S.C. 2511(1) is subject to the same sanctions and remedies as the wiretapper or electronic eavesdropper. This is true of the wiretapper or electronic eavesdropper and of all those who, aware of the information's illicit origins, disclose it. The defendant must be shown to have known that the interception occurred and that the interception was unlawful. There are exceptions. When the illegally secured information relates to a matter of usual public concern, the First Amendment precludes a prosecution for disclosure under §2511(c). Moreover, the legislative history indicates that Congress did not intend to punish the disclosure of intercepted information that is public knowledge. Less clear is whether the limitation is confined to information commonly known at the time of capture, or more likely, information of which the public was generally aware at the time of disclosure. Finally, the results of electronic eavesdropping authorized under Title III may be disclosed and used for law enforcement purposes and for testimonial purposes. Title III makes it a federal crime to disclose intercepted communications under two other circumstances. It is a federal crime to disclose, with an intent to obstruct criminal justice, any information derived from lawful police wiretapping or electronic eavesdropping, i.e .: any person [who] intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication intercepted by means authorized by sections: 2511(2)(a)(ii) (communication service providers, landlords, etc. who assist police setting up wiretaps or electronic eavesdropping devices) 2511(2)(b) (FCC regulatory activity) 2511(2)(c) (police one party consent) 2511(2)(e) (Foreign Intelligence Surveillance Act) 2516 (court-ordered, police wiretapping or electronic surveillance) 2518 (emergency wiretaps or electronic surveillance) knowing or having reason to know that the information was obtained through the interception of such a communication in connection with a criminal investigation having obtained or received the information in connection with a criminal investigation with intent to improperly obstruct, impede, or interfere with a duly authorized criminal investigation is subject to the same sanctions and remedies as one who illegally wiretaps. Offenders face the criminal and civil liability as those who wiretap. This second disclosure proscription applies to efforts to obstruct justice by revealing information gleaned from either federal wiretaps. It may also apply to state wiretaps. It covers information generated from a court-ordered wiretap authorized under §2516. Section 2516 authorizes both federal and state court-ordered wiretaps. On the other hand, strictly speaking, §2516 permits state wiretapping when "authorized" by state law. The courts might conclude that Congress would have spoken more clearly, if it intended to make it a federal crime to obstruct state criminal prosecutions by the disclosing of information derived from a state wiretap. A third disclosure proscription applies only to electronic communications service providers "who intentionally divulge the contents of the communication while in transmission" to anyone other than sender and intended recipient. The prohibition comes with its own exemptions for divulgence—when one of the parties to the communications consents, when Title III authorizes disclosure of a court approved interception, when necessary for transmission of the communication, or when it involves inadvertent discovery of information relating to the commission of a crime. Although subsection 2511(3) provides no specific sanctions, violators would presumably be exposed to criminal liability under the general disclosure proscription, 18 U.S.C. 2511(1)(c), and to civil liability under 18 U.S.C. 2520. The prohibition on the use of information secured from illegal wiretapping or electronic eavesdropping mirrors its disclosure counterpart: any person [who] intentionally uses or endeavors to use to another person the contents of any wire, oral, or electronic communication having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of 18 U.S.C. 2511(1) is subject to the same sanctions and remedies as the wiretapper or electronic eavesdropper. The available case law under the use prohibition of paragraph 2511(1)(d) is scant, and the section has rarely been invoked except in conjunction with the disclosure prohibition of paragraph 2511(1)(c). The wording of the two is clearly parallel, the legislative history describes them in the same breath, and they are treated alike for law enforcement purposes. A few courts had recognized an exception to the disclosure-use bans of subsection 2511(1) when law enforcement officials disclose or use the results of an illegal interception in which they had played no role. The criminal and civil liability that attend unlawful use of intercepted communications in violation of paragraph 2511(1)(d) are the same as for unlawful disclosure in violation of paragraphs 2511(1)(c) or 2511(1)(e), or for unlawful interception under paragraphs 2511(1)(a) or 2511(1)(b). The proscriptions for possession and trafficking in wiretapping and eavesdropping devices are even more demanding than those that apply to the predicate offense itself. There are exemptions for service providers, government officials and those under contract with the government, but there is no exemption for equipment designed to be used by private individuals, lawfully but surreptitiously. Nevertheless, inoperable equipment, though designed to intercept, may not be considered equipment "which can be used to intercept" and consequently may not serve as the basis for a conviction under §2512. Section 2512's three prohibitions feature several common elements, declaring that: any person who intentionally either (a) sends through the mail or sends or carries in interstate or foreign commerce any electronic, mechanical, or other device knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications; or (b) manufactures, assembles, possesses, or sells any electronic, mechanical, or other device knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications, and that such device or any component thereof has been or will be sent through the mail or transported in interstate or foreign commerce; or (c) places in any newspaper, magazine, handbill, or other publication or disseminates electronically any advertisement of— any electronic, mechanical, or other device knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications; or any other electronic, mechanical, or other device where such advertisement promotes the use of such device for the purpose of the surreptitious interception of wire, oral, or electronic communications knowing the content of the advertisement and knowing or having reason to know that such advertisement will be sent through the mail or transported in interstate or foreign commerce shall be imprisoned for not more than five years and/or fined not more than $250,000 (not more than $500,000 for organizations). The legislative history lists among the items Congress considered "primarily useful for the purpose of the surreptitious interception of communications: the martini olive transmitter, the spike mike, the infinity transmitter, and the microphone disguised as a wristwatch, picture frame, cuff link, tie clip, fountain pen, stapler, or cigarette pack." Questions once raised over whether §2512 covers equipment designed to permit unauthorized reception of scrambled satellite television signals have been resolved. Each of the circuits to consider the question has now concluded that §2512 outlaws such devices, but simple possession does not give rise to a private cause of action. The prohibitions in each of ECPA's three parts—chapter 119 (Title III), chapter 121 (Stored Communications Act), and chapter 206 (pen registers and trap and trace devices)—yield to the need for government access, usually under judicial supervision. Title III exempts federal and state law enforcement officials from its prohibitions on the interception of wire, oral, and electronic communications under three circumstances: (1) pursuant to or in anticipation of a court order, (2) with the consent of one of the parties to the communication; and (3) with respect to the communications of an intruder within an electronic communications system. To secure a Title III interception order as part of a federal criminal investigation, a senior Justice Department official must approve the application for the court order authorizing the interception of wire or oral communications. The procedure is only available where there is probable cause to believe that the wiretap or electronic eavesdropping will produce evidence of one of a long, but not exhaustive, list of federal crimes, or of the whereabouts of a "fugitive from justice" fleeing from prosecution of one of the offenses on the predicate offense list. Any federal prosecutor may approve an application for a court order under section 2518 authorizing the interception of email or other electronic communications and the authority extends to any federal felony rather than more limited list of federal felonies upon which a wiretap or bug must be predicated. At the state level, the principal prosecuting attorney of a state or any of its political subdivisions may approve an application for an order authorizing wiretapping or electronic eavesdropping based upon probable cause to believe that it will produce evidence of a felony under the state laws covering murder, kidnaping, gambling, robbery, bribery, extortion, drug trafficking, or any other crime dangerous to life, limb or property. State applications, court orders and other procedures must at a minimum be as demanding as federal requirements. Applications for a court order authorizing wiretapping and electronic surveillance include: the identity of the applicant and the official who authorized the application; a full and complete statement of the facts including details of the crime, a particular description of the nature, location and place where the interception is to occur, a particular description of the communications to be intercepted, and the identities (if known) of the person committing the offense and of the persons whose communications are to be intercepted; a full and complete statement of the alternative investigative techniques used or an explanation of why they would be futile or dangerous; a statement of the period of time for which the interception is to be maintained and if it will not terminate upon seizure of the communications sought, a probable cause demonstration that further similar communications are likely to occur; a full and complete history of previous interception applications or efforts involving the same parties or places; in the case of an extension, the results to date or explanation for the want of results; and any additional information the judge may require. Before issuing an order authorizing interception, the court must find: probable cause to believe that an individual is, has or is about to commit one or more of the predicate offenses; probable cause to believe that the particular communications concerning the crime will be seized as a result of the interception requested; probable cause to believe that "the facilities from which, or the place where, the wire, oral, or electronic communications are to be intercepted are being used, or are about to be used, in connection with the commission of such offense, or are leased to, listed in the name of, or commonly used by such person"; and that normal investigative procedures have been or are likely to be futile or too dangerous." Subsections 2518(4) and (5) demand that any interception order include: the identity (if known) of the persons whose conversations are to be intercepted; the nature and location of facilities and place covered by the order; a particular description of the type of communication to be intercepted and an indication of the crime to which it relates; the individual approving the application and the agency executing the order; the period of time during which the interception may be conducted and an indication of whether it may continue after the communication sought has been seized; an instruction that the order shall be executed as soon as practicable, and so as to minimize the extent of innocent communication seized; and upon request, a direction for the cooperation of communications providers and others necessary or useful for the execution of the order. Compliance with these procedures may be postponed briefly until after the interception effort has begun, upon the approval of senior Justice Department officials in emergency cases involving organized crime or national security threatening conspiracies or involving the risk of death or serious injury. The court orders remain in effect only as long as required but not more than 30 days. After 30 days, the court may grant 30 day extensions subject to the procedures required for issuance of the original order. During that time the court may require progress reports at such intervals as it considers appropriate. Intercepted communications are to be recorded and the evidence secured and placed under seal (with the possibility of copies for authorized law enforcement disclosure and use) along with the application and the court's order. Within 90 days of the expiration of the order those whose communications have been intercepted are entitled to notice, and evidence secured through the intercept may be introduced into evidence with 10 days' advance notice to the parties. Title III also describes conditions under which information derived from a court ordered interception may be disclosed or otherwise used. It permits disclosure and use for official purposes by: other law enforcement officials including foreign officials; federal intelligence officers to the extent that it involves foreign intelligence information; other American or foreign government officials to the extent that it involves the threat of hostile acts by foreign powers, their agents, or international terrorists. It also allows witnesses testifying in federal or state proceedings to reveal the results of a Title III tap, provided the intercepted conversation or other communication is not privileged. Without a Title III order and without offending Title III, authorities may intercept the wire, oral, or electronic communications, it they have the consent of one of the parties to the communication. As noted earlier, consent may be either explicitly or implicitly given. For instance, someone who uses a telephone other than his or her own and has been told by the subscriber that conversations over the instrument are recorded has been held to have implicitly consented to interception when using the instrument. This is not to say that subscriber consent alone is sufficient, for it is the parties to the conversation whose privacy is designed to be protected. Although consent may be given in the hopes of leniency from law enforcement officials or as an election between unpalatable alternatives, it must be freely given and not secured coercively. Little judicial or academic commentary accompanies the narrow "computer trespasser" justification for governmental interception of electronic communications in paragraph 2511(2)(i). The paragraph originated as a temporary provision in the USA PATRIOT Act, and seems designed to enable authorities to track intruders who would surreptitiously use the computer systems of others to cover their trail. Interception, use, or disclosure in violation of Title III is generally punishable by imprisonment for not more than five years and/or a fine of not more than $250,000 for individuals and not more than $500,000 for organizations. The same penalties apply to the unlawful capture of cell phone and cordless phone conversations, since the Homeland Security Act repealed the reduced penalty provisions that at one time applied to the unlawful interceptions using radio scanners and the like. There is a reduced penalty, however, for filching satellite communications as long as the interception is not conducted for criminal, tortious, nor mercenary purposes: unauthorized interceptions are broadly proscribed subject to an exception for unscrambled transmissions and are subject to the general five-year penalty, but interceptions for neither criminal, tortious, nor mercenary purposes subject offenders to only civil punishment. Equipment used to wiretap or eavesdrop in violation of Title III is subject to confiscation by the United States, either in a separate civil proceeding or a part of the prosecution of the offender. In addition to exemptions previously mentioned, Title III provides a defense to criminal liability based on good faith. Victims of a violation of Title III may be entitled to equitable relief, damages (equal to the greater of actual damages, $100 per day of violation, or $10,000), punitive damages, reasonable attorney's fees and reasonable litigation costs. A majority of federal courts hold that a court may decline to award damages, attorneys' fees and costs, but a few still consider such awards mandatory. In addition, a majority hold that governmental entities other than the United States may be liable for violations of section 2520 and that law enforcement officers enjoy a qualified immunity from suit under section 2520. The cause of action created in section 2520 is subject to a good faith defense. Efforts to claim the defense by anyone other than government officials or someone working at their direction have been largely unsuccessful. Moreover, as addressed more extensively below, the 2008 Foreign Intelligence Surveillance Amendments Act, under some circumstances, bars any state or federal cause of action against anyone who assists the government with the installation or use of a means of electronic eavesdropping or electronic surveillance. The USA PATRIOT Act authorizes a cause of action against the United States for willful violations of Title III, the Foreign Intelligence Surveillance Act or the provisions governing stored communications in 18 U.S.C. 2701-2712. Successful plaintiffs are entitled to the greater of $10,000 or actual damages, and reasonable litigation costs. Upon a judicial or administrative finding of a Title III violation suggesting possible intentional or willful misconduct on the part of a federal officer or employee, the federal agency or department involved may institute disciplinary action. It is required to explain to its Inspector General's office if it declines to do so. At one time, the American Bar Association (ABA) considered it ethical misconduct for an attorney to intercept or record a conversation without the consent of all of the parties to the conversation, ABA Formal Op. 337 (1974). The reaction of state regulatory authorities with the power to discipline professional misconduct was mixed. Some agreed with the ABA. Some agreed with the ABA, but expanded the circumstances under which recording could be conducted within ethical bounds. Some disagreed with the ABA view. The ABA has since repudiated its earlier position, ABA Formal Op. 01-422 (2001). Attorneys who engage in unlawful wiretapping or electronic eavesdropping will remain subject to professional discipline in every jurisdiction. In light of the ABA's change of position, courts and bar associations have had varied reactions to lawful wiretapping or electronic eavesdropping by members of the bar. When the federal wiretap statute prohibits disclosure, the information is inadmissible as evidence before any federal, state, or local tribunal or authority. Individuals whose conversations have been intercepted or against whom the interception was directed have standing to claim the benefits of the section 2515 exclusionary rule through a motion to suppress under 18 U.S.C. 2518(10)(a). Paragraph 2518(10)(a) bars admission as long as the evidence is the product of (1) an unlawful interception, (2) an interception authorized by a facially insufficient court order, or (3) an interception executed in manner substantially contrary to the order authorizing the interception. Mere technical noncompliance is not enough; the defect must be of a nature that substantially undermines the regime of court-supervised interception for law enforcement purposes. Although the Supreme Court has held that section 2515 may require suppression in instances where the Fourth Amendment exclusionary rule would not, some of the lower courts have recognized the applicability of the good faith exception to the Fourth Amendment exclusionary rule in section 2515 cases. Other courts have held, moreover, that the fruits of an unlawful wiretapping or electronic eavesdropping may be used for impeachment purposes. The admissibility of tapes or transcripts of tapes of intercepted conversations raise a number of questions quite apart from the legality of the interception. As a consequence of the prerequisites required for admission, privately recorded conversations are more likely to be found inadmissible than those recorded by government officials. Admissibility will require the party moving for admission to show that the tapes or transcripts are accurate, authentic and trustworthy. For some courts this demands a showing that, "(1) the recording device was capable of recording the events offered in evidence; (2) the operator was competent to operate the device; (3) the recording is authentic and correct; (4) changes, additions, or deletions have not been made in the recording; (5) the recording has been preserved in a manner that is shown to the court; (6) the speakers on the tape are identified; and (7) the conversation elicited was made voluntarily and in good faith, without any kind of inducement." In its original form Title III was ill-suited to ensure the privacy of those varieties of modern communications which are equally vulnerable to intrusion when they are at rest as when they are in transmission. Surreptitious "access" is as least as great a threat as surreptitious "interception" to the patrons of electronic mail (email), electronic bulletin boards, voice mail, pagers, and remote computer storage. Accordingly, ECPA, in the Stored Communications Act (SCA), bans surreptitious access to communications at rest, although it does so beyond the confines that apply to interception, 18 U.S.C. 2701 - 2711. These separate provisions afford protection for email, voice mail, and other electronic communications only somewhat akin to that available for telephone and face to face conversations under 18 U.S.C. 2510-2522. The SCA has two sets of proscriptions: a general prohibition and a second applicable to only certain communications providers. The general proscription makes it a federal crime to: intentionally either access without authorization or exceed an authorization to access a facility through which an electronic communication service is provided and thereby obtain, alter, or prevent authorized access to a wire or electronic communication while it is in electronic storage in such system, 18 U.S.C. 2701(a). The prohibition extends only to "intentional" violations, that is, violations where the defendant had as a conscious objective the forbidden conduct and proscribed result. The offense has three essential components: access, to a facility through which service is supplied, and consequences (obtain, alter, prevent access to a wire or electronic communication). The first requires either unauthorized access or access in excess of authorization. The third requires either acquisition or alteration of an electronic communication or denial of access to it. The courts have encountered little difficulty in determining whether a defendant's conduct constitutes obtaining, altering, or preventing access to a communication. They have divided, however, over cases in which the defendant was granted access to a communication but used access for the purposes other than that for which it was authorized. The question is less divisive when the grant of access is expressly limited or when an individual with authorized access provides an outsider with his user name and password. The "facility through which an electronic communication service is provided" need not be one made available to the public; but includes as well facilities through which a private employer provides electronic communication services to his employees. The section only protects communications while "in electronic storage" in a facility through which electronic communications service is provided. "Electronic storage" is defined to encompass temporary, intermediate storage incidental to transmission as well as backup storage. The definition is not always easily applied. Section 2701's prohibitions yield to several exceptions and defenses. First, the section itself declares that: Subsection (a) of this section does not apply with respect to conduct authorized— (1) by the person or entity providing a wire or electronic communications service; (2) by a user of that service with respect to a communication of or intended for that user; or (3) in section 2703 [requirements for government access], 2704 [backup preservation] or 2518 [court ordered wiretapping or electronic eavesdropping] of this title. Second, there are the good faith defenses provided by section 2707: A good faith reliance on— (1) a court warrant or order, a grand jury subpoena, a legislative authorization, or a statutory authorization (including a request of a governmental entity under section 2703(f) of this title) [relating to an official request for a service provider preserve evidence]; (2) a request of an investigative or law enforcement officer under section 2518(7) of this title [relating to emergency wiretapping and electronic eavesdropping]; or (3) a good faith determination that section 2511(3) of this title [relating to the circumstances under which an electronic communications provider may divulge the contents of communication] permitted the conduct complained of is a complete defense to any civil or criminal action brought under this chapter or any other law. 18 U.S.C. 2707(e). Third, there is the general immunity from civil liability afforded providers under subsection 2703(e): [N]o cause of action shall lie in any court against any provider of wire or electronic communication service, its officers, employees, agents, or other specified persons for providing information, facilities, or assistance in accordance with the terms of a court order, warrant, subpoena , statutory authorization , or certification under this chapter. A second set of prohibitions appears in section 2702 and supplements those in section 2701. Section 2702 bans the disclosure of the content of electronic communications and records relating to them by those who provide the public with electronic communication service or remote computing service. The section forbids providers to disclose the content of certain communications to anyone or to disclose related records to governmental entities. Public electronic communication service (ECS) providers to the public must keep confidential the content of any "communication while in electronic storage by that service." Public remote computer service (RCS) providers must keep confidential the content of "any communication which is carried or maintained on that service—(A) on behalf of, and received by means of electronic transmission from (or created by means of computer processing of communications received by means of electronic transmission from), a subscriber or customer of such service; (B) solely for the purpose of providing storage or computer processing services to such subscriber or customer, if the provider is not authorized to access the contents of any such communications for purposes of providing any services other than storage or computer processing." Both sets of providers must keep confidential any "record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications covered by paragraph (1) or (2)) to any government entity." Section 2702 comes with its own set of exceptions which permit disclosure of the contents of a communication: (1) to an addressee or intended recipient of such communication or an agent of such addressee or intended recipient; (2) as otherwise authorized in section 2517 [relating to disclosures permitted under Title III], 2511(2)(a)[relating to provider disclosures permitted under Title III for protection of provider property or incidental to service], or 2703 [relating to required provider disclosures pursuant to governmental authority] of this title; (3) with the lawful consent of the originator or an addressee or intended recipient of such communication, or the subscriber in the case of remote computing service ; (4) to a person employed or authorized or whose facilities are used to forward such communication to its destination; (5) as may be necessarily incident to the rendition of the service or to the protection of the rights or property of the provider of that service; (6) to the National Center for Missing and Exploited Children, in connection with a report submitted thereto under section 227 of the Victims of Child Abuse Act of 1990; (7) to a law enforcement agency—(A) if the contents—(i) were inadvertently obtained by the service provider; and (ii) appear to pertain to the commission of a crime; (8) to a Federal, State, or local government entity, if the provider, in good faith, believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without delay of communications relating to the emergency. The record disclosure exceptions are similar. The Ninth Circuit in Quon noted that the exception in paragraph 2702(b)(3)(disclosure "with the lawful consent of the originator or an addressee or intended recipient of such communication, or the subscriber in the case of remote computing service ) permits RCS providers to disclose the contents of otherwise protected communications does not afford ECS providers the same exception. Thus, the service provider violated the SCA when it supplied the Ontario Police Department (the subscriber) with the text of Sergeant Quon's pager messages. The circumstances and procedural requirements for law enforcement access to stored wire or electronic communications and transactional records are less demanding than those under Title III. They deal with two kinds of information—often in the custody of the communications service provider rather than of any of the parties to the communication—communications records and the content of electronic or wire communications. The Stored Communications Act provides two primary avenues for law enforcement access: permissible provider disclosure (section 2702) and required provided access (section 2703). As noted earlier in the general discussion of section 2702, a public electronic communication service (ECS) provider or a public remote computing service (RCS) provider may disclose the content of a customer's communication without the consent of a communicating party to a law enforcement agency in the case of inadvertent discovery of information relating to commission of a crime, or to any government entity in an emergency situation. ECS and RCS providers may also disclose communications records to any governmental entity in an emergency situation. Federal, state, and local agencies, regardless of the nature of their missions, all qualify as governmental entities for purposes of section 2702. Section 2702 authorizes voluntary disclosure. Section 2703 speaks to the circumstances under which ECS and RCS providers may be required to disclose communications content and related records. Section 2703 distinguishes between recent communications and those that have been in electronic storage for more than 180 days. The section insists that government entities resort to a search warrant to compel providers to supply the content of wire or electronic communications held in electronic storage for less than 180 days. It permits them to use a warrant, subpoena, or a court order authorized in subsection 2703(d) to force content disclosure with respect to communications held for more than 180 days. A subsection 2703(d) court order may be issued by a federal magistrate or by a judge qualified to issue an order under Title III. It need not be issued in the district in which the provider is located. The person whose communication is disclosed is entitled to notice, unless the court authorizes delayed notification because contemporaneous notice might have an adverse impact. Government supervisory officials may certify the need for delayed notification in the case of a subpoena. Traditional exigent circumstances and a final general inconvenience justification form the grounds for delayed notification in either case: endangering the life or physical safety of an individual; flight from prosecution; destruction of or tampering with evidence; intimidation of potential witnesses; or otherwise seriously jeopardizing an investigation or unduly delaying a trial. Subsection 2703(d) authorizes issuance of an order when the governmental entity has presented specific and articulable facts sufficient to establish reasonable grounds to believe that the contents are relevant and material to an ongoing criminal investigation. Some courts have held that this "reasonable grounds" standard is a Terry standard, a less demanding standard than "probable cause," and that under some circumstances this standard may be constitutionally insufficient to justify government access to provider held email. A Sixth Circuit panel has held that the Fourth Amendment precludes government access to the content of stored communications (email) held by service providers in the absence of a warrant, subscriber consent, or some other indication that the subscriber has waived his or her expectation of privacy. Where the government instead secures access through a subpoena or court order as section 2703 permits, the evidence may be subject to both the Fourth Amendment exclusionary rule and the exceptions to the rule. The SCA has two provisions which require providers to save customer communications at the government's request. One is found in subsection 2703(f). It requires ECS and RCS providers to preserve "records and other evidence in its possession," at the request of a governmental entity pending receipt of a warrant, court order, or subpoena. Whether providers are bound to preserve emails and other communications that come into their possession both before and after receipt of the request is unclear. The second preservation provision is more detailed. It permits a governmental entity to insist that providers preserve backup copies of the communications covered by a subpoena or subsection 2703(d) court order. It gives subscribers the right to challenge the relevancy of the information sought. It might also be read to require the preservation of the content of communications received by the provider both before and after receipt of the order, but the requirement that copies be made within two days of receipt of the order seems to preclude such an interpretation. Section 2703 provides greater protection to communication content than to provider records relating to those communications. Under subsection 2703(c), a governmental entity may require a ECS or RCS provider to disclose records or information pertaining to a customer or subscriber—other than the content of a communication—under a warrant, a court order under subsection 2703(d), or with the consent of the subject of the information. An administrative, grand jury or trial subpoena is sufficient, however, for a limited range of customer or subscriber related information. The customer or subscriber need not be notified of the record disclosure in either case. The district courts have been divided for some time over the question of what standard applies when the government seeks cell phone location information from a provider, either current or historical. The Third Circuit has held that while issuance of an order under subsection 2703(d) does not require a showing of probable cause as a general rule, the circumstances of a given case may require it. In United States v. J ones , five members of the Supreme Court seemed to suggest that a driver has a reasonable expectation that authorities must comply with the demands of the Fourth Amendment before acquiring access to information that discloses the travel patterns of his car over an extended period of time. There, the Court unanimously agreed that the agents' attachment of a tracking device to Jones' car and long-term capture of the resulting information constituted a Fourth Amendment search. For four Justices, placement of the device constituted a physical intrusion upon a constitutionally protected area. For four others, long-term tracking constituted a breach of Jones' reasonable expectation of privacy. For the ninth Justice, the activity constituted a Fourth Amendment search under either rationale. It remains to be seen whether the Supreme Court's decision in Jones will contribute to resolution of the issue. Breaches of the unauthorized access prohibitions of section 2701 expose offenders to possible criminal, civil, and administrative sanctions. Violations committed for malicious, mercenary, tortious or criminal purposes are punishable by imprisonment for not more than five years (not more than 10 years for a subsequent conviction) and/or a fine of not more than $250,000 (not more than $500,000 for organizations); lesser transgressions, by imprisonment for not more than one year (not more than five years for a subsequent conviction) and/or a fine of not more than $100,000. Victims of a violation of subsection 2701(a) have a cause of action for equitable relief, reasonable attorneys' fees and costs, and damages equal to the amount of any offender profits added to the total of the victim's losses (but not less than $1,000 in any event). Violations by the United States may give rise to a cause of action and may result in disciplinary action against offending officials or employees under the same provisions that apply to U.S. violations of Title III, Unlike violations of Title III, however, there is no statutory prohibition on disclosure or use of the information through a violation of section 2701; nor is there a statutory rule for the exclusion of evidence as a consequence of a violation. Yet, violations of SCA, which also constitute violations of the Fourth Amendment, will trigger both the Fourth Amendment exclusionary rule and the exceptions to that rule. No criminal penalties attend a violation of voluntary provider disclosure prohibitions of section 2702. Yet, ECS and RCS providers—unable to claim the benefit of one of the section's exceptions, of the good faith defense under subsection 2707(e), or of the immunity available under subsection 2703(e)—may be liable for civil damages, costs and attorneys' fees under section 2707 for any violation of section 2702. A trap and trace device identifies the source of incoming calls, and a pen register indicates the numbers called from a particular instrument. Since they did not allowed the user to overhear the "contents" of the phone conversation or to otherwise capture the content of a communication, they were not considered interceptions within the reach of Title III prior to the enactment of ECPA. Although Congress elected to expand the definition of interception, it chose to regulate these devices beyond the boundaries of Title III for most purposes. Nevertheless, the Title III wiretap provisions apply when, due to the nature of advances in telecommunications technology, pen registers and trap and trace devices are able to capture wire communication "content." The USA PATRIOT Act enlarged the coverage of sections 3121-3127 to include sender/addressee information relating to email and other forms of electronic communications. Subsection 3121(a) outlaws installation or use of a pen register or trap and trace device, except under one of seven circumstances: pursuant to a court order issued under sections 3121-3127; pursuant to a Foreign Intelligence Surveillance Act (FISA) court order; with the consent of the user; when incidental to service; when necessary to protect users from abuse of service; when necessary to protect providers from abuse of service; or in an emergency situation. Federal government attorneys and state and local police officers may apply for a court order authorizing the installation and use of a pen register and/or a trap and trace device upon certification that the information that it will provide is relevant to a pending criminal investigation. An order authorizing installation and use of a pen register or trap and trace device must: specify the person (if known) upon whose telephone line the device is to be installed, the person (if known) who is the subject of the criminal investigation, the telephone number, (if known) the location of the line to which the device is to be attached, and geographical range of the device, a description of the crime to which the investigation relates; upon request, direct carrier assistance pursuant to section 3124; terminate within 60 days, unless extended; involve a report of particulars of the order's execution in Internet cases; and impose necessary nondisclosure requirements. The order may be issued by a judge of "competent jurisdiction" over the offense under investigation, including a federal magistrate judge. Senior Justice Department or state prosecutors may approve the installation and use of a pen register or trap and trace device prior to the issuance of court authorization in emergency cases that involve either an organized crime conspiracy, an immediate danger of death or serious injury, a threat to national security, or a serious attack on a "protected computer." Emergency use must end within 48 hours, or sooner if an application for court approval is denied. Federal authorities have applied for court orders, under the Stored Communications Act (18 U.S.C. 2701-2712) and the trap and trace authority of 18 U.S.C. 3121-3127, seeking to direct communications providers to supply them with the information necessary to track cell phone users in conjunction with an ongoing criminal investigation. Thus far, their efforts have met with mixed success. The use or installation of pen registers or trap and trace devices by anyone other than the telephone company, service provider, or those acting under judicial authority is a federal crime, punishable by imprisonment for not more than a year and/or a fine of not more than $100,000 ($200,000 for an organization). Subsection 3124(e) creates a good faith defense for reliance upon a court order under subsection 3123(b), an emergency request under subsection 3125(a), "a legislative authorization, or a statutory authorization." There is no accompanying exclusionary rule, and consequently a violation of section 3121 will not serve as a basis to suppress any resulting evidence. Moreover, unlike violations of Title III, there is no requirement that the target of an order be notified upon the expiration of the order; nor is there a separate federal private cause of action for victims of a pen register or trap and trace device violation. One court, in order to avoid First Amendment concerns, has held that the statute precludes imposing permanent gag orders upon providers. Nevertheless permitting providers to disclose the existence of an order to a target does not require them to do so. Some of the states have established a separate criminal offense for unlawful use of a pen register or trap and trace device, yet most of these seem to follow the federal lead and have not established a separate private cause of action for unlawful installation or use of the devices. As used in this chapter— (1 ) "wire communication" means any aural transfer made in whole or in part through the use of facilities for the transmission of communications by the aid of wire, cable, or other like connection between the point of origin and the point of reception (including the use of such connection in a switching station) furnished or operated by any person engaged in providing or operating such facilities for the transmission of interstate or foreign communications or communications affecting interstate or foreign commerce; (2) "oral communication" means any oral communication uttered by a person exhibiting an expectation that such communication is not subject to interception under circumstances justifying such expectation, but such term does not include any electronic communication; (3) "State" means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States; (4) "intercept" means the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device; (5) "electronic, mechanical, or other device" means any device or apparatus which can be used to intercept a wire, oral, or electronic communication other than— (a) any telephone or telegraph instrument, equipment or facility, or any component thereof, (i) furnished to the subscriber or user by a provider of wire or electronic communication service in the ordinary course of its business and being used by the subscriber or user in the ordinary course of its business or furnished by such subscriber or user for connection to the facilities of such service and used in the ordinary course of its business; or (ii) being used by a provider of wire or electronic communication service in the ordinary course of its business, or by an investigative or law enforcement officer in the ordinary course of his duties; (b) a hearing aid or similar device being used to correct subnormal hearing to not better than normal; (6) "person" means any employee, or agent of the United States or any State or political subdivision thereof, and any individual, partnership, association, joint stock company, trust, or corporation; (7) "Investigative or law enforcement officer" means any officer of the United States or of a State or political subdivision thereof, who is empowered by law to conduct investigations of or to make arrests for offenses enumerated in this chapter, and any attorney authorized by law to prosecute or participate in the prosecution of such offenses; (8) "contents," when used with respect to any wire, oral, or electronic communication, includes any information concerning the substance, purport, or meaning of that communication; (9) "Judge of competent jurisdiction" means— (a) a judge of a United States district court or a United States court of appeals; and (b) a judge of any court of general criminal jurisdiction of a State who is authorized by a statute of that State to enter orders authorizing interceptions of wire, oral, or electronic communications; (10) "communication common carrier" has the meaning given the term in section 3 of the Communications Act of 1934; (11) "aggrieved person" means a person who was a party to any intercepted wire, oral, or electronic communication or a person against whom the interception was directed; (12) "electronic communication" means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include— (A) any wire or oral communication; (B) any communication made through a tone-only paging device; (C) any communication from a tracking device (as defined in section 3117 of this title); or (D) electronic funds transfer information stored by a financial institution in a communications system used for the electronic storage and transfer of funds; (13) "user" means any person or entity who— (A) uses an electronic communication service; and (B) is duly authorized by the provider of such service to engage in such use; (14) "electronic communications system" means any wire, radio, electromagnetic, photooptical or photoelectronic facilities for the transmission of wire or electronic communications, and any computer facilities or related electronic equipment for the electronic storage of such communications; (15) "electronic communication service" means any service which provides to users thereof the ability to send or receive wire or electronic communications; (16) "readily accessible to the general public" means, with respect to a radio communication, that such communication is not— (A) scrambled or encrypted; (B) transmitted using modulation techniques whose essential parameters have been withheld from the public with the intention of preserving the privacy of such communication; (C) carried on a subcarrier or other signal subsidiary to a radio transmission; (D) transmitted over a communication system provided by a common carrier, unless the communication is a tone only paging system communication; or (E) transmitted on frequencies allocated under part 25, subpart D, E, or F of part 74, or part 94 of the Rules of the Federal Communications Commission, unless, in the case of a communication transmitted on a frequency allocated under part 74 that is not exclusively allocated to broadcast auxiliary services, the communication is a two-way voice communication by radio; (17) "electronic storage" means— (A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and (B) any storage of such communication by an electronic communication service for purposes of backup protection of such communication; (18) "aural transfer" means a transfer containing the human voice at any point between and including the point of origin and the point of reception. (19) "foreign intelligence information", for purposes of section 2517(6) of this title, means— (A) information, whether or not concerning a United States person, that relates to the ability of the United States to protect against— (i) actual or potential attack or other grave hostile acts of a foreign power or an agent of a foreign power; (ii) sabotage or intentional terrorism by a foreign power or an agent of a foreign power; or (iii) clandestine intelligence activities by and intelligence service or network of a foreign power or by an agent of a foreign power; or (B) information, whether or not concerning a United States person, with respect to a foreign power or foreign territory that relates to— (i) the national defense or the security of the United States; or (ii) the conduct of the foreign affairs of the United States. (20) "protected computer" has the meaning set forth in section 1030; and (21) "computer trespasser"— (A) means a person who accesses a protected computer without authorization and thus has no reasonable expectation of privacy in any communication transmitted to, through, or from the protected computer; and (B) does not include a person known by the owner or operator of the protected computer to have an existing contractual relationship with the owner or operator of the protected computer for access to all or part of the protected computer. (1) Except as otherwise specifically provided in this chapter any person who— (a) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication; (b) intentionally uses, endeavors to use, or procures any other person to use or endeavor to use any electronic, mechanical, or other device to intercept any oral communication when— (i) such device is affixed to, or otherwise transmits a signal through, a wire, cable, or other like connection used in wire communication; or (ii) such device transmits communications by radio, or interferes with the transmission of such communication; or (iii) such person knows, or has reason to know, that such device or any component thereof has been sent through the mail or transported in interstate or foreign commerce; or (iv) such use or endeavor to use (A) takes place on the premises of any business or other commercial establishment the operations of which affect interstate or foreign commerce; or (B) obtains or is for the purpose of obtaining information relating to the operations of any business or other commercial establishment the operations of which affect interstate or foreign commerce; or (v) such person acts in the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States; (c) intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication, knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of this subsection; (d) intentionally uses, or endeavors to use, the contents of any wire, oral, or electronic communication, knowing or having reason to know that the information was obtained through the interception of a wire, oral, or electronic communication in violation of this subsection; or (e) (i) intentionally discloses, or endeavors to disclose, to any other person the contents of any wire, oral, or electronic communication, intercepted by means authorized by sections 2511(2)(a)(ii), 2511(2)(b)-(c), 2511(2)(e), 2516, and 2518 of this chapter, (ii) knowing or having reason to know that the information was obtained through the interception of such a communication in connection with a criminal investigation, (iii) having obtained or received the information in connection with a criminal investigation, and (iv) with intent to improperly obstruct, impede, or interfere with a duly authorized criminal investigation, shall be punished as provided in subsection (4) or shall be subject to suit as provided in subsection (5). (2 ) (a)(i) It shall not be unlawful under this chapter for an operator of a switchboard, or an officer, employee, or agent of a provider of wire or electronic communication service, whose facilities are used in the transmission of a wire or electronic communication, to intercept, disclose, or use that communication in the normal course of his employment while engaged in any activity which is a necessary incident to the rendition of his service or to the protection of the rights or property of the provider of that service, except that a provider of wire communication service to the public shall not utilize service observing or random monitoring except for mechanical or service quality control checks. (ii) Notwithstanding any other law, providers of wire or electronic communication service, their officers, employees, and agents, landlords, custodians, or other persons, are authorized to provide information, facilities, or technical assistance to persons authorized by law to intercept wire, oral, or electronic communications or to conduct electronic surveillance, as defined in section 101 of the Foreign Intelligence Surveillance Act of 1978, if such provider, its officers, employees, or agents, landlord, custodian, or other specified person, has been provided with— [ P.L. 110-261, Sec. 101(c)(1) ] (A) a court order directing such assistance or a court order pursuant to section 704 of the Foreign Intelligence Surveillance Act of 1978 signed by the authorizing judge, [ P.L. 110-261, Sec. 403(b)(2)(C) ] Effective December 31, 2012 ... (C) except as provided in section 404, section 2511(2)(A)(ii)(A) of title 18, United States Code, is amended by striking "or a court order pursuant to section 704 of the Foreign Intelligence Surveillance Act of 1978 . " [ P.L. 110-261, Sec. 404(b)(3) ] Challenge of directives; protection from liability; use of informatio n— Notwithstanding any other provision of this Act or of the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 et seq.) ... (E) section 2511(2)(a)(ii)(A) of title 18, United States Code, as amended by section 101(c)(1), shall continue to apply to an order issued pursuant to section 704 of the Foreign Intelligence Surveillance Act of 1978, as added by section 101(a)[50 U.S.C. 1881c]; or (B) a certification in writing by a person specified in section 2518(7) of this title or the Attorney General of the United States that no warrant or court order is required by law, that all statutory requirements have been met, and that the specified assistance is required, setting forth the period of time during which the provision of the information, facilities, or technical assistance is authorized and specifying the information, facilities, or technical assistance required. No provider of wire or electronic communication service, officer, employee, or agent thereof, or landlord, custodian, or other specified person shall disclose the existence of any interception or surveillance or the device used to accomplish the interception or surveillance with respect to which the person has been furnished a court order or certification under this chapter, except as may otherwise be required by legal process and then only after prior notification to the Attorney General or to the principal prosecuting attorney of a State or any political subdivision of a State, as may be appropriate. Any such disclosure, shall render such person liable for the civil damages provided for in section 2520. No cause of action shall lie in any court against any provider of wire or electronic communication service, its officers, employees, or agents, landlord, custodian, or other specified person for providing information, facilities, or assistance in accordance with the terms of a court order, statutory authorization, or certification under this chapter. (iii) If a certification under subparagraph (ii)(B) for assistance to obtain foreign intelligence information is based on statutory authority, the certification shall identify the specific statutory provision and shall certify that the statutory requirements have been met . (b) It shall not be unlawful under this chapter for an officer, employee, or agent of the Federal Communications Commission, in the normal course of his employment and in discharge of the monitoring responsibilities exercised by the Commission in the enforcement of chapter 5 of title 47 of the United States Code, to intercept a wire or electronic communication, or oral communication transmitted by radio, or to disclose or use the information thereby obtained. (c) It shall not be unlawful under this chapter for a person acting under color of law to intercept a wire, oral, or electronic communication, where such person is a party to the communication or one of the parties to the communication has given prior consent to such interception. (d) It shall not be unlawful under this chapter for a person not acting under color of law to intercept a wire, oral, or electronic communication where such person is a party to the communication or where one of the parties to the communication has given prior consent to such interception unless such communication is intercepted for the purpose of committing any criminal or tortious act in violation of the Constitution or laws of the United States or of any State. (e) Notwithstanding any other provision of this title or section 705 or 706 of the Communications Act of 1934, it shall not be unlawful for an officer, employee, or agent of the United States in the normal course of his official duty to conduct electronic surveillance, as defined in section 101 of the Foreign Intelligence Surveillance Act of 1978, as authorized by that Act. (f) Nothing contained in this chapter or chapter 121 or 206 of this title, or section 705 of the Communications Act of 1934, shall be deemed to affect the acquisition by the United States Government of foreign intelligence information from international or foreign communications, or foreign intelligence activities conducted in accordance with otherwise applicable Federal law involving a foreign electronic communications system, utilizing a means other than electronic surveillance as defined in section 101 of the Foreign Intelligence Surveillance Act of 1978, and procedures in this chapter or chapter 121 and the Foreign Intelligence Surveillance Act of 1978 shall be the exclusive means by which electronic surveillance, as defined in section 101 of such Act, and the interception of domestic wire, oral, and electronic communications may be conducted. (g) It shall not be unlawful under this chapter or chapter 121 of this title for any person— (i) to intercept or access an electronic communication made through an electronic communication system that is configured so that such electronic communication is readily accessible to the general public; (ii) to intercept any radio communication which is transmitted— (I) by any station for the use of the general public, or that relates to ships, aircraft, vehicles, or persons in distress; (II) by any governmental, law enforcement, civil defense, private land mobile, or public safety communications system, including police and fire, readily accessible to the general public; (III) by a station operating on an authorized frequency within the bands allocated to the amateur, citizens band, or general mobile radio services; or (IV) by any marine or aeronautical communications system; (iii) to engage in any conduct which— (I) is prohibited by section 633 of the Communications Act of 1934; or (II) is excepted from the application of section 705(a) of the Communications Act of 1934 by section 705(b) of that Act; (iv) to intercept any wire or electronic communication the transmission of which is causing harmful interference to any lawfully operating station or consumer electronic equipment, to the extent necessary to identify the source of such interference; or (v) for other users of the same frequency to intercept any radio communication made through a system that utilizes frequencies monitored by individuals engaged in the provision or the use of such system, if such communication is not scrambled or encrypted. (h) It shall not be unlawful under this chapter— (i) to use a pen register or a trap and trace device (as those terms are defined for the purposes of chapter 206 (relating to pen registers and trap and trace devices) of this title); or (ii) for a provider of electronic communication service to record the fact that a wire or electronic communication was initiated or completed in order to protect such provider, another provider furnishing service toward the completion of the wire or electronic communication, or a user of that service, from fraudulent, unlawful or abusive use of such service. (i) It shall not be unlawful under this chapter for a person acting under color of law to intercept the wire or electronic communications of a computer trespasser transmitted to, through, or from the protected computer, if— (I) the owner or operator of the protected computer authorizes the interception of the computer trespasser's communications on the protected computer; (II) the person acting under color of law is lawfully engaged in an investigation; (III) the person acting under color of law has reasonable grounds to believe that the contents of the computer trespasser's communications will be relevant to the investigation; and (IV) such interception does not acquire communications other than those transmitted to or from the computer trespasser. (3)(a) Except as provided in paragraph (b) of this subsection, a person or entity providing an electronic communication service to the public shall not intentionally divulge the contents of any communication (other than one to such person or entity, or an agent thereof) while in transmission on that service to any person or entity other than an addressee or intended recipient of such communication or an agent of such addressee or intended recipient. (b) A person or entity providing electronic communication service to the public may divulge the contents of any such communication— (i) as otherwise authorized in section 2511(2)(a) or 2517 of this title; (ii) with the lawful consent of the originator or any addressee or intended recipient of such communication; (iii) to a person employed or authorized, or whose facilities are used, to forward such communication to its destination; or (iv) which were inadvertently obtained by the service provider and which appear to pertain to the commission of a crime, if such divulgence is made to a law enforcement agency. (4)(a) Except as provided in paragraph (b) of this subsection or in subsection (5), whoever violates subsection (1) of this section shall be fined under this title or imprisoned not more than five years, or both. (b) Conduct otherwise an offense under this subsection that consists of or relates to the interception of a satellite transmission that is not encrypted or scrambled and that is transmitted— (i) to a broadcasting station for purposes of retransmission to the general public; or (ii) as an audio subcarrier intended for redistribution to facilities open to the public, but not including data transmissions or telephone calls, is not an offense under this subsection unless the conduct is for the purposes of direct or indirect commercial advantage or private financial gain. (c)[Redesignated (b)] (5)(a)(i) If the communication is— (A) a private satellite video communication that is not scrambled or encrypted and the conduct in violation of this chapter is the private viewing of that communication and is not for a tortious or illegal purpose or for purposes of direct or indirect commercial advantage or private commercial gain; or (B) a radio communication that is transmitted on frequencies allocated under subpart D of part 74 of the rules of the Federal Communications Commission that is not scrambled or encrypted and the conduct in violation of this chapter is not for a tortious or illegal purpose or for purposes of direct or indirect commercial advantage or private commercial gain, then the person who engages in such conduct shall be subject to suit by the Federal Government in a court of competent jurisdiction. (ii) In an action under this subsection— (A) if the violation of this chapter is a first offense for the person under paragraph (a) of subsection (4) and such person has not been found liable in a civil action under section 2520 of this title, the Federal Government shall be entitled to appropriate injunctive relief; and (B) if the violation of this chapter is a second or subsequent offense under paragraph (a) of subsection (4) or such person has been found liable in any prior civil action under section 2520, the person shall be subject to a mandatory $500 civil fine. (b) The court may use any means within its authority to enforce an injunction issued under paragraph (ii)(A), and shall impose a civil fine of not less than $500 for each violation of such an injunction. (1)Except as otherwise specifically provided in this chapter, any person who intentionally— (a) sends through the mail, or sends or carries in interstate or foreign commerce, any electronic, mechanical, or other device, knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications; (b) manufactures, assembles, possesses, or sells any electronic, mechanical, or other device, knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications, and that such device or any component thereof has been or will be sent through the mail or transported in interstate or foreign commerce; or (c) places in any newspaper, magazine, handbill, or other publication or disseminates by electronic means any advertisement of— (i) any electronic, mechanical, or other device knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications; or (ii) any other electronic, mechanical, or other device, where such advertisement promotes the use of such device for the purpose of the surreptitious interception of wire, oral, or electronic communications, knowing the content of the advertisement and knowing or having reason to know that such advertisement will be sent through the mail or transported in interstate or foreign commerce, shall be fined under this title or imprisoned not more than five years, or both. (2)It shall not be unlawful under this section for— (a) a provider of wire or electronic communication service or an officer, agent, or employee of, or a person under contract with, such a provider, in the normal course of the business of providing that wire or electronic communication service, or (b) an officer, agent, or employee of, or a person under contract with, the United States, a State, or a political subdivision thereof, in the normal course of the activities of the United States, a State, or a political subdivision thereof, to send through the mail, send or carry in interstate or foreign commerce, or manufacture, assemble, possess, or sell any electronic, mechanical, or other device knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications. (3)It shall not be unlawful under this section to advertise for sale a device described in subsection (1) of this section if the advertisement is mailed, sent, or carried in interstate or foreign commerce solely to a domestic provider of wire or electronic communication service or to an agency of the United States, a State, or a political subdivision thereof which is duly authorized to use such device. Any electronic, mechanical, or other device used, sent, carried, manufactured, assembled, possessed, sold, or advertised in violation of section 2511 or section 2512 of this chapter may be seized and forfeited to the United States. All provisions of law relating to (1) the seizure, summary and judicial forfeiture, and condemnation of vessels, vehicles, merchandise, and baggage for violations of the customs laws contained in title 19 of the United States Code, (2) the disposition of such vessels, vehicles, merchandise, and baggage or the proceeds from the sale thereof, (3) the remission or mitigation of such forfeiture, (4) the compromise of claims, and (5) the award of compensation to informers in respect of such forfeitures, shall apply to seizures and forfeitures incurred, or alleged to have been incurred, under the provisions of this section, insofar as applicable and not inconsistent with the provisions of this section; except that such duties as are imposed upon the collector of customs or any other person with respect to the seizure and forfeiture of vessels, vehicles, merchandise, and baggage under the provisions of the customs laws contained in title 19 of the United States Code shall be performed with respect to seizure and forfeiture of electronic, mechanical, or other intercepting devices under this section by such officers, agents, or other persons as may be authorized or designated for that purpose by the Attorney General. Whenever any wire or oral communication has been intercepted, no part of the contents of such communication and no evidence derived therefrom may be received in evidence in any trial, hearing, or other proceeding in or before any court, grand jury, department, officer, agency, regulatory body, legislative committee, or other authority of the United States, a State, or a political subdivision thereof if the disclosure of that information would be in violation of this chapter. (1) The Attorney General, Deputy Attorney General, Associate Attorney General, or any Assistant Attorney General, any acting Assistant Attorney General, or any Deputy Assistant Attorney General or acting Deputy Assistant Attorney General in the Criminal Division or National Security Division specially designated by the Attorney General, may authorize an application to a Federal judge of competent jurisdiction for, and such judge may grant in conformity with section 2518 of this chapter an order authorizing or approving the interception of wire or oral communications by the Federal Bureau of Investigation, or a Federal agency having responsibility for the investigation of the offense as to which the application is made, when such interception may provide or has provided evidence of— (a) any offense punishable by death or by imprisonment for more than one year under sections 2122 and 2274 through 2277 of title 42 of the United States Code (relating to the enforcement of the Atomic Energy Act of 1954), section 2284 of title 42 of the United States Code (relating to sabotage of nuclear facilities or fuel), or under the following chapters of this title: chapter 10 (relating to biological weapons) chapter 37 (relating to espionage), chapter 55 (relating to kidnapping), chapter 90 (relating to protection of trade secrets), chapter 105 (relating to sabotage), chapter 115 (relating to treason), chapter 102 (relating to riots), chapter 65 (relating to malicious mischief), chapter 111 (relating to destruction of vessels), or chapter 81 (relating to piracy); (b) a violation of section 186 or section 501(c) of title 29, United States Code (dealing with restrictions on payments and loans to labor organizations), or any offense which involves murder, kidnapping, robbery, or extortion, and which is punishable under this title; (c) any offense which is punishable under the following sections of this title: section 37 (relating to violence at international airports), section 43 (relating to animal enterprise terrorism), section 81 (arson within special maritime and territorial jurisdiction), section 201 (bribery of public officials and witnesses), section 215 (relating to bribery of bank officials), section 224 (bribery in sporting contests), subsection (d), (e), (f), (g), (h), or (i) of section 844 (unlawful use of explosives), section 1032 (relating to concealment of assets), section 1084 (transmission of wagering information), section 751 (relating to escape), section 832 (relating to nuclear and weapons of mass destruction threats), section 842 (relating to explosive materials), section 930 (relating to possession of weapons in Federal facilities), section 1014 (relating to loans and credit applications generally; renewals and discounts), section 1114 (relating to officers and employees of the United States), section 1116 (relating to protection of foreign officials), sections 1503, 1512, and 1513 (influencing or injuring an officer, juror, or witness generally), section 1510 (obstruction of criminal investigations), section 1511 (obstruction of State or local law enforcement), section 1591 (sex trafficking of children by force, fraud, or coercion), section 1751 (Presidential and Presidential staff assassination, kidnapping, and assault), section 1951 (interference with commerce by threats or violence), section 1952 (interstate and foreign travel or transportation in aid of racketeering enterprises), section 1958 (relating to use of interstate commerce facilities in the commission of murder for hire), section 1959 (relating to violent crimes in aid of racketeering activity), section 1954 (offer, acceptance, or solicitation to influence operations of employee benefit plan), section 1955 (prohibition of business enterprises of gambling), section 1956 (laundering of monetary instruments), section 1957 (relating to engaging in monetary transactions in property derived from specified unlawful activity), section 659 (theft from interstate shipment), section 664 (embezzlement from pension and welfare funds), section 1343 (fraud by wire, radio, or television), section 1344 (relating to bank fraud), section 1992 (relating to terrorist attacks against mass transportation), sections 2251 and 2252 (sexual exploitation of children), section 2251A (selling or buying of children), section 2252A (relating to material constituting or containing child pornography), section 1466A (relating to child obscenity), section 2260 (production of sexually explicit depictions of a minor for importation into the United States), sections 2421, 2422, 2423, and 2425 (relating to transportation for illegal sexual activity and related crimes), sections 2312, 2313, 2314, and 2315 (interstate transportation of stolen property), section 2321 (relating to trafficking in certain motor vehicles or motor vehicle parts), section 2340A (relating to torture), section 1203 (relating to hostage taking), section 1029 (relating to fraud and related activity in connection with access devices), section 3146 (relating to penalty for failure to appear), section 3521(b)(3) (relating to witness relocation and assistance), section 32 (relating to destruction of aircraft or aircraft facilities), section 38 (relating to aircraft parts fraud), section 1963 (violations with respect to racketeer influenced and corrupt organizations), section 115 (relating to threatening or retaliating against a Federal official), section 1341 (relating to mail fraud), a felony violation of section 1030 (relating to computer fraud and abuse), section 351 (violations with respect to congressional, Cabinet, or Supreme Court assassinations, kidnapping, and assault), section 831 (relating to prohibited transactions involving nuclear materials), section 33 (relating to destruction of motor vehicles or motor vehicle facilities), section 175 (relating to biological weapons), section 175c (relating to variola virus), section 956 (conspiracy to harm persons or property overseas), section a felony violation of section 1028 (relating to production of false identification documentation), section 1425 (relating to the procurement of citizenship or nationalization unlawfully), section 1426 (relating to the reproduction of naturalization or citizenship papers), section 1427 (relating to the sale of naturalization or citizenship papers), section 1541 (relating to passport issuance without authority), section 1542 (relating to false statements in passport applications), section 1543 (relating to forgery or false use of passports), section 1544 (relating to misuse of passports), or section 1546 (relating to fraud and misuse of visas, permits, and other documents); section 555 (relating to construction or use of international border tunnels); (d) any offense involving counterfeiting punishable under section 471, 472, or 473 of this title; (e) any offense involving fraud connected with a case under title 11 or the manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in narcotic drugs, marihuana, or other dangerous drugs, punishable under any law of the United States; (f) any offense including extortionate credit transactions under sections 892, 893, or 894 of this title; (g) a violation of section 5322 of title 31, United States Code (dealing with the reporting of currency transactions), or section 5324 of title 31, United States Code (relating to structuring transactions to evade reporting requirement prohibited); (h) any felony violation of sections 2511 and 2512 (relating to interception and disclosure of certain communications and to certain intercepting devices) of this title; (i) any felony violation of chapter 71 (relating to obscenity) of this title; (j) any violation of section 60123(b) (relating to destruction of a natural gas pipeline), section 46502 (relating to aircraft piracy), the second sentence of section 46504 (relating to assault on a flight crew with dangerous weapon), or section 46505(b)(3) or (c) (relating to explosive or incendiary devices, or endangerment of human life, by means of weapons on aircraft) of title 49; (k) any criminal violation of section 2778 of title 22 (relating to the Arms Export Control Act); (l) the location of any fugitive from justice from an offense described in this section; (m) a violation of section 274, 277, or 278 of the Immigration and Nationality Act (8 U.S.C. 1324, 1327, or 1328) (relating to the smuggling of aliens); (n) any felony violation of sections 922 and 924 of title 18, United States Code (relating to firearms); (o) any violation of section 5861 of the Internal Revenue Code of 1986 (relating to firearms); (p) a felony violation of section 1028 (relating to production of false identification documents), section 1542 (relating to false statements in passport applications), section 1546 (relating to fraud and misuse of visas, permits, and other documents, section 1028A (relating to aggravated identity theft)) of this title or a violation of section 274, 277, or 278 of the Immigration and Nationality Act (relating to the smuggling of aliens); or (q) any criminal violation of section 229 (relating to chemical weapons): or sections 2332, 2332a, 2332b, 2332d, 2332f, 2332g, 2332h 2339, 2339A, 2339B, 2339C, or 2339D of this title (relating to terrorism); (r) any criminal violation of section 1 (relating to illegal restraints of trade or commerce), 2 (relating to illegal monopolizing of trade or commerce), or 3 (relating to illegal restraints of trade or commerce in territories or the District of Columbia) of the Sherman Act (15 U.S.C. 1, 2, 3); or (s) any conspiracy to commit any offense described in any subparagraph of this paragraph. (2) The principal prosecuting attorney of any State, or the principal prosecuting attorney of any political subdivision thereof, if such attorney is authorized by a statute of that State to make application to a State court judge of competent jurisdiction for an order authorizing or approving the interception of wire, oral, or electronic communications, may apply to such judge for, and such judge may grant in conformity with section 2518 of this chapter and with the applicable State statute an order authorizing, or approving the interception of wire, oral, or electronic communications by investigative or law enforcement officers having responsibility for the investigation of the offense as to which the application is made, when such interception may provide or has provided evidence of the commission of the offense of murder, kidnapping, gambling, robbery, bribery, extortion, or dealing in narcotic drugs, marihuana or other dangerous drugs, or other crime dangerous to life, limb, or property, and punishable by imprisonment for more than one year, designated in any applicable State statute authorizing such interception, or any conspiracy to commit any of the foregoing offenses. (3) Any attorney for the Government (as such term is defined for the purposes of the Federal Rules of Criminal Procedure) may authorize an application to a Federal judge of competent jurisdiction for, and such judge may grant, in conformity with section 2518 of this title, an order authorizing or approving the interception of electronic communications by an investigative or law enforcement officer having responsibility for the investigation of the offense as to which the application is made, when such interception may provide or has provided evidence of any Federal felony. (1) Any investigative or law enforcement officer who, by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication, or evidence derived therefrom, may disclose such contents to another investigative or law enforcement officer to the extent that such disclosure is appropriate to the proper performance of the official duties of the officer making or receiving the disclosure. (2) Any investigative or law enforcement officer who, by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication or evidence derived therefrom may use such contents to the extent such use is appropriate to the proper performance of his official duties. (3) Any person who has received, by any means authorized by this chapter, any information concerning a wire, oral, or electronic communication, or evidence derived therefrom intercepted in accordance with the provisions of this chapter may disclose the contents of that communication or such derivative evidence while giving testimony under oath or affirmation in any proceeding held under the authority of the United States or of any State or political subdivision thereof. (4) No otherwise privileged wire, oral, or electronic communication intercepted in accordance with, or in violation of, the provisions of this chapter shall lose its privileged character. (5) When an investigative or law enforcement officer, while engaged in intercepting wire, oral, or electronic communications in the manner authorized herein, intercepts wire, oral, or electronic communications relating to offenses other than those specified in the order of authorization or approval, the contents thereof, and evidence derived therefrom, may be disclosed or used as provided in subsections (1) and (2) of this section. Such contents and any evidence derived therefrom may be used under subsection (3) of this section when authorized or approved by a judge of competent jurisdiction where such judge finds on subsequent application that the contents were otherwise intercepted in accordance with the provisions of this chapter. Such application shall be made as soon as practicable. (6) Any investigative or law enforcement officer, or attorney for the Government, who by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication, or evidence derived therefrom, may disclose such contents to any Federal law enforcement, intelligence, protective, immigration, national defense, or national security official to the extent that such contents include foreign intelligence or counterintelligence (as defined in section 3 of the National Security act of 1947 (50 U.S.C. 401a), or foreign intelligence information (as defined in subsection (19) of section 2510 of this title), to assist the official who is to receive that information in the performance of his official duties. Any Federal official who receives information pursuant to this provision may use that information only as necessary in the conduct of that person's official duties subject to any limitations on the unauthorized disclosure of such information. (7) Any investigative or law enforcement officer, or other Federal official in carrying out official duties as such Federal official, who by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication, or evidence derived therefrom, may disclose such contents or derivative evidence to a foreign investigative or law enforcement officer to the extent that such disclosure is appropriate to the proper performance of the official duties of the officer making or receiving the disclosure, and foreign investigative or law enforcement officers may use or disclose such contents or derivative evidence to the extent such use or disclosure is appropriate to the proper performance of their official duties. (8) Any investigative or law enforcement officer, or other Federal official in carrying out official duties as such Federal official, who by any means authorized by this chapter, has obtained knowledge of the contents of any wire, oral, or electronic communication, or evidence derived therefrom, may disclose such contents or derivative evidence to any appropriate Federal, State, local, or foreign government official to the extent that such contents or derivative evidence reveals a threat of actual or potential attack or other grave hostile acts of a foreign power of an agent of as foreign power, domestic or international sabotage, domestic or international terrorism, or clandestine intelligence gathering activities by an intelligence service or network of a foreign power or by an agent of a foreign power, within the United States or elsewhere, for the purpose of preventing or responding to such a threat. Any official who receives information pursuant to this provision may use that information only as necessary in the conduct of that person's official duties subject to any limitations on the unauthorized disclosure of such information, and any State, local, or foreign official who receives information pursuant to this provision may use that information only consistent with such guidelines as the Attorney General and Director of Central Intelligence shall jointly issue. (1) Each application for an order authorizing or approving the interception of a wire, oral, or electronic communication under this chapter shall be made in writing upon oath or affirmation to a judge of competent jurisdiction and shall state the applicant's authority to make such application. Each application shall include the following information: (a) the identity of the investigative or law enforcement officer making the application, and the officer authorizing the application; (b) a full and complete statement of the facts and circumstances relied upon by the applicant, to justify his belief that an order should be issued, including (i) details as to the particular offense that has been, is being, or is about to be committed, (ii) except as provided in subsection (11), a particular description of the nature and location of the facilities from which or the place where the communication is to be intercepted, (iii) a particular description of the type of communications sought to be intercepted, (iv) the identity of the person, if known, committing the offense and whose communications are to be intercepted; (c) a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous; (d) a statement of the period of time for which the interception is required to be maintained. If the nature of the investigation is such that the authorization for interception should not automatically terminate when the described type of communication has been first obtained, a particular description of facts establishing probable cause to believe that additional communications of the same type will occur thereafter; (e) a full and complete statement of the facts concerning all previous applications known to the individual authorizing and making the application, made to any judge for authorization to intercept, or for approval of interceptions of, wire, oral, or electronic communications involving any of the same persons, facilities or places specified in the application, and the action taken by the judge on each such application; and (f) where the application is for the extension of an order, a statement setting forth the results thus far obtained from the interception, or a reasonable explanation of the failure to obtain such results. (2) The judge may require the applicant to furnish additional testimony or documentary evidence in support of the application. (3) Upon such application the judge may enter an ex parte order, as requested or as modified, authorizing or approving interception of wire, oral, or electronic communications within the territorial jurisdiction of the court in which the judge is sitting (and outside that jurisdiction but within the United States in the case of a mobile interception device authorized by a Federal court within such jurisdiction), if the judge determines on the basis of the facts submitted by the applicant that— (a) there is probable cause for belief that an individual is committing, has committed, or is about to commit a particular offense enumerated in section 2516 of this chapter; (b) there is probable cause for belief that particular communications concerning that offense will be obtained through such interception; (c) normal investigative procedures have been tried and have failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous; (d) except as provided in subsection (11), there is probable cause for belief that the facilities from which, or the place where, the wire, oral, or electronic communications are to be intercepted are being used, or are about to be used, in connection with the commission of such offense, or are leased to, listed in the name of, or commonly used by such person. (4) Each order authorizing or approving the interception of any wire, oral, or electronic communication under this chapter shall specify— (a) the identity of the person, if known, whose communications are to be intercepted; (b) the nature and location of the communications facilities as to which, or the place where, authority to intercept is granted; (c) a particular description of the type of communication sought to be intercepted, and a statement of the particular offense to which it relates; (d) the identity of the agency authorized to intercept the communications, and of the person authorizing the application; and (e) the period of time during which such interception is authorized, including a statement as to whether or not the interception shall automatically terminate when the described communication has been first obtained. An order authorizing the interception of a wire, oral, or electronic communication under this chapter shall, upon request of the applicant, direct that a provider of wire or electronic communication service, landlord, custodian or other person shall furnish the applicant forthwith all information, facilities, and technical assistance necessary to accomplish the interception unobtrusively and with a minimum of interference with the services that such service provider, landlord, custodian, or person is according the person whose communications are to be intercepted. Any provider of wire or electronic communication service, landlord, custodian or other person furnishing such facilities or technical assistance shall be compensated therefor by the applicant for reasonable expenses incurred in providing such facilities or assistance. Pursuant to section 2522 of this chapter, an order may also be issued to enforce the assistance capability and capacity requirements under the Communications Assistance for Law Enforcement Act. (5) No order entered under this section may authorize or approve the interception of any wire, oral, or electronic communication for any period longer than is necessary to achieve the objective of the authorization, nor in any event longer than thirty days. Such thirty-day period begins on the earlier of the day on which the investigative or law enforcement officer first begins to conduct an interception under the order or ten days after the order is entered. Extensions of an order may be granted, but only upon application for an extension made in accordance with subsection (1) of this section and the court making the findings required by subsection (3) of this section. The period of extension shall be no longer than the authorizing judge deems necessary to achieve the purposes for which it was granted and in no event for longer than thirty days. Every order and extension thereof shall contain a provision that the authorization to intercept shall be executed as soon as practicable, shall be conducted in such a way as to minimize the interception of communications not otherwise subject to interception under this chapter, and must terminate upon attainment of the authorized objective, or in any event in thirty days. In the event the intercepted communication is in a code or foreign language, and an expert in that foreign language or code is not reasonably available during the interception period, minimization may be accomplished as soon as practicable after such interception. An interception under this chapter may be conducted in whole or in part by Government personnel, or by an individual operating under a contract with the Government, acting under the supervision of an investigative or law enforcement officer authorized to conduct the interception. (6) Whenever an order authorizing interception is entered pursuant to this chapter, the order may require reports to be made to the judge who issued the order showing what progress has been made toward achievement of the authorized objective and the need for continued interception. Such reports shall be made at such intervals as the judge may require. (7) Notwithstanding any other provision of this chapter, any investigative or law enforcement officer, specially designated by the Attorney General, the Deputy Attorney General, the Associate Attorney General, or by the principal prosecuting attorney of any State or subdivision thereof acting pursuant to a statute of that State, who reasonably determines that— (a) an emergency situation exists that involves— (i) immediate danger of death or serious physical injury to any person, (ii) conspiratorial activities threatening the national security interest, or (iii) conspiratorial activities characteristic of organized crime, that requires a wire, oral, or electronic communication to be intercepted before an order authorizing such interception can, with due diligence, be obtained, and (b) there are grounds upon which an order could be entered under this chapter to authorize such interception, may intercept such wire, oral, or electronic communication if an application for an order approving the interception is made in accordance with this section within forty-eight hours after the interception has occurred, or begins to occur. In the absence of an order, such interception shall immediately terminate when the communication sought is obtained or when the application for the order is denied, whichever is earlier. In the event such application for approval is denied, or in any other case where the interception is terminated without an order having been issued, the contents of any wire, oral, or electronic communication intercepted shall be treated as having been obtained in violation of this chapter, and an inventory shall be served as provided for in subsection (d) of this section on the person named in the application. (8) (a) The contents of any wire, oral, or electronic communication intercepted by any means authorized by this chapter shall, if possible, be recorded on tape or wire or other comparable device. The recording of the contents of any wire, oral, or electronic communication under this subsection shall be done in such way as will protect the recording from editing or other alterations. Immediately upon the expiration of the period of the order, or extensions thereof, such recordings shall be made available to the judge issuing such order and sealed under his directions. Custody of the recordings shall be wherever the judge orders. They shall not be destroyed except upon an order of the issuing or denying judge and in any event shall be kept for ten years. Duplicate recordings may be made for use or disclosure pursuant to the provisions of subsections (1) and (2) of section 2517 of this chapter for investigations. The presence of the seal provided for by this subsection, or a satisfactory explanation for the absence thereof, shall be a prerequisite for the use or disclosure of the contents of any wire, oral, or electronic communication or evidence derived therefrom under subsection (3) of section 2517. (b) Applications made and orders granted under this chapter shall be sealed by the judge. Custody of the applications and orders shall be wherever the judge directs. Such applications and orders shall be disclosed only upon a showing of good cause before a judge of competent jurisdiction and shall not be destroyed except on order of the issuing or denying judge, and in any event shall be kept for ten years. (c) Any violation of the provisions of this subsection may be punished as contempt of the issuing or denying judge. (d) Within a reasonable time but not later than ninety days after the filing of an application for an order of approval under section 2518(7)(b) which is denied or the termination of the period of an order or extensions thereof, the issuing or denying judge shall cause to be served, on the persons named in the order or the application, and such other parties to intercepted communications as the judge may determine in his discretion that is in the interest of justice, an inventory which shall include notice of— (1) the fact of the entry of the order or the application; (2) the date of the entry and the period of authorized, approved or disapproved interception, or the denial of the application; and (3) the fact that during the period wire, oral, or electronic communications were or were not intercepted. The judge, upon the filing of a motion, may in his discretion make available to such person or his counsel for inspection such portions of the intercepted communications, applications and orders as the judge determines to be in the interest of justice. On an ex parte showing of good cause to a judge of competent jurisdiction the serving of the inventory required by this subsection may be postponed. (9) The contents of any wire, oral, or electronic communication intercepted pursuant to this chapter or evidence derived therefrom shall not be received in evidence or otherwise disclosed in any trial, hearing, or other proceeding in a Federal or State court unless each party, not less than ten days before the trial, hearing, or proceeding, has been furnished with a copy of the court order, and accompanying application, under which the interception was authorized or approved. This ten-day period may be waived by the judge if he finds that it was not possible to furnish the party with the above information ten days before the trial, hearing, or proceeding and that the party will not be prejudiced by the delay in receiving such information. (10)(a) Any aggrieved person in any trial, hearing, or proceeding in or before any court, department, officer, agency, regulatory body, or other authority of the United States, a State, or a political subdivision thereof, may move to suppress the contents of any wire or oral communication intercepted pursuant to this chapter, or evidence derived therefrom, on the grounds that (i) the communication was unlawfully intercepted; (ii) the order of authorization or approval under which it was intercepted is insufficient on its face; or (iii) the interception was not made in conformity with the order of authorization or approval. Such motion shall be made before the trial, hearing, or proceeding unless there was no opportunity to make such motion or the person was not aware of the grounds of the motion. If the motion is granted, the contents of the intercepted wire or oral communication, or evidence derived therefrom, shall be treated as having been obtained in violation of this chapter. The judge, upon the filing of such motion by the aggrieved person, may in his discretion make available to the aggrieved person or his counsel for inspection such portions of the intercepted communication or evidence derived therefrom as the judge determines to be in the interests of justice. (b) In addition to any other right to appeal, the United States shall have the right to appeal from an order granting a motion to suppress made under paragraph (a) of this subsection, or the denial of an application for an order of approval, if the United States attorney shall certify to the judge or other official granting such motion or denying such application that the appeal is not taken for purposes of delay. Such appeal shall be taken within thirty days after the date the order was entered and shall be diligently prosecuted. (c) The remedies and sanctions described in this chapter with respect to the interception of electronic communications are the only judicial remedies and sanctions for nonconstitutional violations of this chapter involving such communications. (11) The requirements of subsections (1)(b)(ii) and (3)(d) of this section relating to the specification of the facilities from which, or the place where, the communication is to be intercepted do not apply if— (a) in the case of an application with respect to the interception of an oral communication— (i) the application is by a Federal investigative or law enforcement officer and is approved by the Attorney General, the Deputy Attorney General, the Associate Attorney General, an Assistant Attorney General, or an acting Assistant Attorney General; (ii) the application contains a full and complete statement as to why such specification is not practical and identifies the person committing the offense and whose communications are to be intercepted; and (iii) the judge finds that such specification is not practical; and (b) in the case of an application with respect to a wire or electronic communication— (i) the application is by a Federal investigative or law enforcement officer and is approved by the Attorney General, the Deputy Attorney General, the Associate Attorney General, an Assistant Attorney General, or an acting Assistant Attorney General; (ii) the application identifies the person believed to be committing the offense and whose communications are to be intercepted and the applicant makes a showing that there is probable cause to believe that the person's actions could have the effect of thwarting interception from a specified facility; (iii) the judge finds that such showing has been adequately made; and (iv) the order authorizing or approving the interception is limited to interception only for such time as it is reasonable to presume that the person identified in the application is or was reasonably proximate to the instrument through which such communication will be or was transmitted. (12) An interception of a communication under an order with respect to which the requirements of subsections (1)(b)(ii) and (3)(d) of this section do not apply by reason of subsection (11)(a) shall not begin until the place where the communication is to be intercepted is ascertained by the person implementing the interception order. A provider of wire or electronic communications service that has received an order as provided for in subsection (11)(b) may move the court to modify or quash the order on the ground that its assistance with respect to the interception cannot be performed in a timely or reasonable fashion. The court, upon notice to the government, shall decide such a motion expeditiously. (1) In January of each year, any judge who has issued an order (or an extension thereof) under section 2518 that expired during the preceding year, or who has denied approval of an interception during that year, shall report to the Administrative Office of the United States Courts— (a) the fact that an order or extension was applied for; (b) the kind of order or extension applied for (including whether or not the order was an order with respect to which the requirements of sections 2518(1)(b)(ii) and 2518(3)(d) of this title did not apply by reason of section 2518(11) of this title); (c) the fact that the order or extension was granted as applied for, was modified, or was denied; (d) the period of interceptions authorized by the order, and the number and duration of any extensions of the order; (e) the offense specified in the order or application, or extension of an order; (f) the identity of the applying investigative or law enforcement officer and agency making the application and the person authorizing the application; and (g) the nature of the facilities from which or the place where communications were to be intercepted. (2) In March of each year the Attorney General, an Assistant Attorney General specially designated by the Attorney General, or the principal prosecuting attorney of a State, or the principal prosecuting attorney for any political subdivision of a State, shall report to the Administrative Office of the United States Courts— (a) the information required by paragraphs (a) through (g) of subsection (1) of this section with respect to each application for an order or extension made during the preceding calendar year; (b) a general description of the interceptions made under such order or extension, including (i) the approximate nature and frequency of incriminating communications intercepted, (ii) the approximate nature and frequency of other communications intercepted, (iii) the approximate number of persons whose communications were intercepted, (iv) the number of orders in which encryption was encountered and whether such encryption prevented law enforcement from obtaining the plain text of communications intercepted pursuant to such order, and (v) the approximate nature, amount, and cost of the manpower and other resources used in the interceptions; (c) the number of arrests resulting from interceptions made under such order or extension, and the offenses for which arrests were made; (d) the number of trials resulting from such interceptions; (e) the number of motions to suppress made with respect to such interceptions, and the number granted or denied; (f) the number of convictions resulting from such interceptions and the offenses for which the convictions were obtained and a general assessment of the importance of the interceptions; and (g) the information required by paragraphs (b) through (f) of this subsection with respect to orders or extensions obtained in a preceding calendar year. (3) In June of each year the Director of the Administrative Office of the United States Courts shall transmit to the Congress a full and complete report concerning the number of applications for orders authorizing or approving the interception of wire, oral, or electronic communications pursuant to this chapter and the number of orders and extensions granted or denied pursuant to this chapter during the preceding calendar year. Such report shall include a summary and analysis of the data required to be filed with the Administrative Office by subsections (1) and (2) of this section. The Director of the Administrative Office of the United States Courts is authorized to issue binding regulations dealing with the content and form of the reports required to be filed by subsections (1) and (2) of this section. (a) In general.—Except as provided in section 2511(2)(a)(ii), any person whose wire, oral, or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter may in a civil action recover from the person or entity other than the United States which engaged in that violation such relief as may be appropriate. (b) Relief.—In an action under this section, appropriate relief includes— (1) such preliminary and other equitable or declaratory relief as may be appropriate; (2) damages under subsection (c) and punitive damages in appropriate cases; and (3) a reasonable attorney's fee and other litigation costs reasonably incurred. (c) Computation of damages.—(1) In an action under this section, if the conduct in violation of this chapter is the private viewing of a private satellite video communication that is not scrambled or encrypted or if the communication is a radio communication that is transmitted on frequencies allocated under subpart D of part 74 of the rules of the Federal Communications Commission that is not scrambled or encrypted and the conduct is not for a tortious or illegal purpose or for purposes of direct or indirect commercial advantage or private commercial gain, then the court shall assess damages as follows: (A) If the person who engaged in that conduct has not previously been enjoined under section 2511(5) and has not been found liable in a prior civil action under this section, the court shall assess the greater of the sum of actual damages suffered by the plaintiff, or statutory damages of not less than $50 and not more than $500. (B) If, on one prior occasion, the person who engaged in that conduct has been enjoined under section 2511(5) or has been found liable in a civil action under this section, the court shall assess the greater of the sum of actual damages suffered by the plaintiff, or statutory damages of not less than $100 and not more than $1000. (2) In any other action under this section, the court may assess as damages whichever is the greater of— (A) the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation; or (B) statutory damages of whichever is the greater of $100 a day for each day of violation or $10,000. (d) Defense.—A good faith reliance on— (1) a court warrant or order, a grand jury subpoena, a legislative authorization, or a statutory authorization; (2) a request of an investigative or law enforcement officer under section 2518(7) of this title; or (3) a good faith determination that section 2511(3) or 2511(2)(i) of this title permitted the conduct complained of; is a complete defense against any civil or criminal action brought under this chapter or any other law. (e) Limitation.—A civil action under this section may not be commenced later than two years after the date upon which the claimant first has a reasonable opportunity to discover the violation. (f) Administrative Discipline.—If a court or appropriate department or agency determines that the United States or any of its departments or agencies has violated any provision of this chapter, and the court finds that the circumstances surrounding the violation raise serious questions about whether or not an officer or employee of the United States acted willfully or intentionally with respect to the possible violation, the department or agency shall, upon receipt of a true and correct copy of the decision and findings of the court or appropriate department or agency promptly initiate a proceeding to determine whether disciplinary action against the officer or employee is warranted. If the head of the department or agency involved determines that disciplinary action is not warranted, he or she shall notify the Inspector General with jurisdiction over the department or agency concerned and shall provide the Inspector General with the reasons for such determination. (g) Improper Disclosure Is Violation.—Any willful disclosure or use by an investigative or law enforcement officer or governmental entity of information beyond the extent permitted by section 2517 is a violation of this chapter for purposes of section 2510(a). Whenever it shall appear that any person is engaged or is about to engage in any act which constitutes or will constitute a felony violation of this chapter, the Attorney General may initiate a civil action in a district court of the United States to enjoin such violation. The court shall proceed as soon as practicable to the hearing and determination of such an action, and may, at any time before final determination, enter such a restraining order or prohibition, or take such other action, as is warranted to prevent a continuing and substantial injury to the United States or to any person or class of persons for whose protection the action is brought. A proceeding under this section is governed by the Federal Rules of Civil Procedure, except that, if an indictment has been returned against the respondent, discovery is governed by the Federal Rules of Criminal Procedure. (a) Enforcement by court issuing surveillance order.—If a court authorizing an interception under this chapter, a State statute, or the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 et seq.) or authorizing use of a pen register or a trap and trace device under chapter 206 or a State statute finds that a telecommunications carrier has failed to comply with the requirements of the Communications Assistance for Law Enforcement Act, the court may, in accordance with section 108 of such Act, direct that the carrier comply forthwith and may direct that a provider of support services to the carrier or the manufacturer of the carrier's transmission or switching equipment furnish forthwith modifications necessary for the carrier to comply. (b) Enforcement upon application by Attorney General.—The Attorney General may, in a civil action in the appropriate United States district court, obtain an order, in accordance with section 108 of the Communications Assistance for Law Enforcement Act, directing that a telecommunications carrier, a manufacturer of telecommunications transmission or switching equipment, or a provider of telecommunications support services comply with such Act. (c) Civil penalty.— (1) In general.—A court issuing an order under this section against a telecommunications carrier, a manufacturer of telecommunications transmission or switching equipment, or a provider of telecommunications support services may impose a civil penalty of up to $10,000 per day for each day in violation after the issuance of the order or after such future date as the court may specify. (2) Considerations.—In determining whether to impose a civil penalty and in determining its amount, the court shall take into account— (A) the nature, circumstances, and extent of the violation; (B) the violator's ability to pay, the violator's good faith efforts to comply in a timely manner, any effect on the violator's ability to continue to do business, the degree of culpability, and the length of any delay in undertaking efforts to comply; and (c) such other matters as justice may require. (d) Definitions.—As used in this section, the terms defined in section 102 of the Communications Assistance for Law Enforcement Act have the meanings provided, respectively, in such section. (a) Offense.—Except as provided in subsection (c) of this section whoever— (1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or (2) intentionally exceeds an authorization to access that facility; and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished as provided in subsection (b) of this section. (b) Punishment.—The punishment for an offense under subsection (a) of this section is— (1) if the offense is committed for purposes of commercial advantage, malicious destruction or damage, or private commercial gain, or in furtherance of any criminal or tortious act in violation of the constitution and laws of the United States or any state— (A) a fine under this title or imprisonment for not more than 5 years, or both, in the case of a first offense under this subparagraph; and (B) a fine under this title or imprisonment for not more than 10 years, or both, for any subsequent offense under this subparagraph; and (2) (A) a fine under this title or imprisonment for not more than 1 year or both, in the case of a first offense under this paragraph; and (B) a fine under this title or imprisonment for not more than 5 years, or both, in the case of an offense under this subparagraph that occurs after a conviction of another offense under this section. (c) Exceptions . —Subsection (a) of this section does not apply with respect to conduct authorized— (1) by the person or entity providing a wire or electronic communications service; (2) by a user of that service with respect to a communication of or intended for that user; or (3) in section 2703, 2704 or 2518 of this title. (a) Prohibitions . —Except as provided in subsection (b) or (c)— (1) a person or entity providing an electronic communication service to the public shall not knowingly divulge to any person or entity the contents of a communication while in electronic storage by that service; and (2) a person or entity providing remote computing service to the public shall not knowingly divulge to any person or entity the contents of any communication which is carried or maintained on that service— (A) on behalf of, and received by means of electronic transmission from (or created by means of computer processing of communications received by means of electronic transmission from), a subscriber or customer of such service; (B) solely for the purpose of providing storage or computer processing services to such subscriber or customer, if the provider is not authorized to access the contents of any such communications for purposes of providing any services other than storage or computer processing; and (3) a provider of remote computing service or electronic communication service to the public shall not knowingly divulge a record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications covered by paragraph (1) or (2)) to any governmental entity. (b) Exceptions for disclosure of communications.—A provider described in subsection (a) may divulge the contents of a communication— (1) to an addressee or intended recipient of such communication or an agent of such addressee or intended recipient; (2) as otherwise authorized in section 2517, 2511(2)(a), or 2703 of this title; (3) with the lawful consent of the originator or an addressee or intended recipient of such communication, or the subscriber in the case of remote computing service; (4) to a person employed or authorized or whose facilities are used to forward such communication to its destination; (5) as may be necessarily incident to the rendition of the service or to the protection of the rights or property of the provider of that service; (6) to the National Center for Missing and Exploited Children, in connection with a report submitted thereto under section 2258A; (7) to a law enforcement agency— (A) if the contents— (i)were inadvertently obtained by the service provider; and (ii) appear to pertain to the commission of a crime; or [(B) Repealed. P.L. 108-21 , Title V, §508(b)(1)(A), April 30, 2003, 117 Stat. 684] [(C) Repealed. P.L. 107-296 , Title II, §225(d)(1)(C), November 25, 2002, 116 Stat. 2157] (8) to a governmental entity, if the provider, in good faith, believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without delay of communications relating to the emergency. (c) Exceptions for disclosure of customer records . —A provider described in subsection (a) may divulge a record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications covered by subsection (a)(1) or (a)(2))— (1) as otherwise authorized in section 2703; (2) with the lawful consent of the customer or subscriber; (3) as may be necessarily incident to the rendition of the service or to the protection of the rights or property of the provider of that service; (4) to a governmental entity, if the provider, in good faith, believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without delay of information relating to the emergency; (5) to the National Center for Missing and Exploited Children, in connection with a report submitted thereto under section 2258A7; or (6) to any person other than a governmental entity. (d) Reporting of emergency disclosures.—On an annual basis, the Attorney General shall submit to the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate a report containing— (1) the number of accounts from which the Department of Justice has received voluntary disclosures under subsection (b)(8); and (2) a summary of the basis for disclosure in those instances where— (A) voluntary disclosures under subsection (b)(8) were made to the Department of Justice; and (B) the investigation pertaining to those disclosures was closed without the filing of criminal charges. (a) Contents of wire or electronic communications in electronic storage.—A governmental entity may require the disclosure by a provider of electronic communication service of the contents of a wire or electronic communication, that is in electronic storage in a wire or electronic communications system for one hundred and eighty days or less, only pursuant to a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant procedures) by a court of competent jurisdiction. A governmental entity may require the disclosure by a provider of electronic communications services of the contents of a wire or electronic communication that has been in electronic storage in an electronic communications system for more than one hundred and eighty days by the means available under subsection (b) of this section. (b)(1) Contents of electronic communications in a remote computing service.—(1) A governmental entity may require a provider of remote computing service to disclose the contents of any wire or electronic communication to which this paragraph is made applicable by paragraph (2) of this subsection— (A) without required notice to the subscriber or customer, if the governmental entity obtains a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant procedures) by a court of competent jurisdiction by a court with jurisdiction; or (B) with prior notice from the governmental entity to the subscriber or customer if the governmental entity— (i) uses an administrative subpoena authorized by a Federal or State statute or a Federal or State grand jury or trial subpoena; or (ii) obtains a court order for such disclosure under subsection (d) of this section; except that delayed notice may be given pursuant to section 2705 of this title. (2) Paragraph (1) is applicable with respect to any wire or electronic communication that is held or maintained on that service— (A) on behalf of, and received by means of electronic transmission from (or created by means of computer processing of communications received by means of electronic transmission from), a subscriber or customer of such remote computing service; and (B) solely for the purpose of providing storage or computer processing services to such subscriber or customer, if the provider is not authorized to access the contents of any such communications for purposes of providing any services other than storage or computer processing. (c) Records concerning electronic communication service or remote computing service.—(1)(A) A government entity may require a provider of electronic communication service or remote computing service to disclose a record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications). (B) A provider of electronic communication service or remote computing service shall disclose a record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications covered by subsection (a) or (b) of this section) to a governmental entity only when the governmental entity— (A) obtains a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant procedures) by a court of competent jurisdiction by a court with jurisdiction; (B) obtains a court order for such disclosure under subsection (d) of this section; (C) has the consent of the subscriber or customer to such disclosure; or (D) submits a formal written request relevant to a law enforcement investigation concerning telemarketing fraud for the name, address, and place of business of a subscriber or customer of such provider, which subscriber or customer is engaged in telemarketing (as such term is defined in section 2325 of this title); or (E) seeks information under paragraph (2). (2) A provider of electronic communication service or remote computing service shall disclose to a governmental entity the (A) name; (B) address; (C) local and long distance telephone connection records, or records of session times and durations; (D) length of service (including start date) and types of service utilized; (E) telephone or instrument number or other subscriber number or identity, including any temporarily assigned network address; and (F) means and source of payment (including any credit car or bank account number), of a subscriber to or customer of such service, when the governmental entity uses an administrative subpoena authorized by a Federal or State statute or a Federal or State grand jury or trial subpoena or any means available under paragraph (1). (3) A governmental entity receiving records or information under this subsection is not required to provide notice to a subscriber or customer. (d) Requirements for court order . —A court order for disclosure under subsection (b) or (c) may be issued by any court that is a court of competent jurisdiction and shall issue only if the governmental entity offers specific and articulable facts showing that there are reasonable grounds to believe that the contents of a wire or electronic communication, or the records or other information sought, are relevant and material to an ongoing criminal investigation. In the case of a State governmental authority, such a court order shall not issue if prohibited by the law of such State. A court issuing an order pursuant to this section, on a motion made promptly by the service provider, may quash or modify such order, if the information or records requested are unusually voluminous in nature or compliance with such order otherwise would cause an undue burden on such provider. (e) No cause of action against a provider disclosing information under this chapter.—No cause of action shall lie in any court against any provider of wire or electronic communication service, its officers, employees, agents, or other specified persons for providing information, facilities, or assistance in accordance with the terms of a court order, warrant, subpoena , statutory authorization , or certification under this chapter. (f) Requirement to preserve evidence.—(1) In general.—A provider of wire or electronic communication services or a remote computing service, upon the request of a governmental entity, shall take all necessary steps to preserve records and other evidence in its possession pending the issuance of a court order or other process. (2) Period of retention.—Records referred to in paragraph (1) shall be retained for a period of 90 days, which shall be extended for an additional 90-day period upon a renewed request by the governmental entity. (g) Presence of Officer not Required.—Notwithstanding section 3105 of this title, the presence of an officer shall not be required for service or execution of a search warrant issued in accordance with this chapter requiring disclosure by a provider of electronic communications service or remote computing service of the contents of communications or records or other information pertaining to a subscriber to or customer of such service. (a) Backup preservation.—(1) A governmental entity acting under section 2703(b)(2) may include in its subpoena or court order a requirement that the service provider to whom the request is directed create a backup copy of the contents of the electronic communications sought in order to preserve those communications. Without notifying the subscriber or customer of such subpoena or court order, such service provider shall create such backup copy as soon as practicable consistent with its regular business practices and shall confirm to the governmental entity that such backup copy has been made. Such backup copy shall be created within two business days after receipt by the service provider of the subpoena or court order. (2) Notice to the subscriber or customer shall be made by the governmental entity within three days after receipt of such confirmation, unless such notice is delayed pursuant to section 2705(a). (3) The service provider shall not destroy such backup copy until the later of— (A) the delivery of the information; or (B) the resolution of any proceedings (including appeals of any proceeding) concerning the government's subpoena or court order. (4) The service provider shall release such backup copy to the requesting governmental entity no sooner than fourteen days after the governmental entity's notice to the subscriber or customer if such service provider— (A) has not received notice from the subscriber or customer that the subscriber or customer has challenged the governmental entity's request; and (B) has not initiated proceedings to challenge the request of the governmental entity. (5) A governmental entity may seek to require the creation of a backup copy under subsection (a)(1) of this section if in its sole discretion such entity determines that there is reason to believe that notification under section 2703 of this title of the existence of the subpoena or court order may result in destruction of or tampering with evidence. This determination is not subject to challenge by the subscriber or customer or service provider. (b) Customer challenges. —(1) Within fourteen days after notice by the governmental entity to the subscriber or customer under subsection (a)(2) of this section, such subscriber or customer may file a motion to quash such subpoena or vacate such court order, with copies served upon the governmental entity and with written notice of such challenge to the service provider. A motion to vacate a court order shall be filed in the court which issued such order. A motion to quash a subpoena shall be filed in the appropriate United States district court or State court. Such motion or application shall contain an affidavit or sworn statement— (A) stating that the applicant is a customer or subscriber to the service from which the contents of electronic communications maintained for him have been sought; and (B) stating the applicant's reasons for believing that the records sought are not relevant to a legitimate law enforcement inquiry or that there has not been substantial compliance with the provisions of this chapter in some other respect. (2) Service shall be made under this section upon a governmental entity by delivering or mailing by registered or certified mail a copy of the papers to the person, office, or department specified in the notice which the customer has received pursuant to this chapter. For the purposes of this section, the term "delivery" has the meaning given that term in the Federal Rules of Civil Procedure. (3) If the court finds that the customer has complied with paragraphs (1) and (2) of this subsection, the court shall order the governmental entity to file a sworn response, which may be filed in camera if the governmental entity includes in its response the reasons which make in camera review appropriate. If the court is unable to determine the motion or application on the basis of the parties' initial allegations and response, the court may conduct such additional proceedings as it deems appropriate. All such proceedings shall be completed and the motion or application decided as soon as practicable after the filing of the governmental entity's response. (4) If the court finds that the applicant is not the subscriber or customer for whom the communications sought by the governmental entity are maintained, or that there is a reason to believe that the law enforcement inquiry is legitimate and that the communications sought are relevant to that inquiry, it shall deny the motion or application and order such process enforced. If the court finds that the applicant is the subscriber or customer for whom the communications sought by the governmental entity are maintained, and that there is not a reason to believe that the communications sought are relevant to a legitimate law enforcement inquiry, or that there has not been substantial compliance with the provisions of this chapter, it shall order the process quashed. (5) A court order denying a motion or application under this section shall not be deemed a final order and no interlocutory appeal may be taken therefrom by the customer. (a) Delay of notification.—(1) A governmental entity acting under section 2703(b) of this title may— (A) where a court order is sought, include in the application a request, which the court shall grant, for an order delaying the notification required under section 2703(b) of this title for a period not to exceed ninety days, if the court determines that there is reason to believe that notification of the existence of the court order may have an adverse result described in paragraph (2) of this subsection; or (B) where an administrative subpoena authorized by a Federal or State statute or a Federal or State grand jury subpoena is obtained, delay the notification required under section 2703(b) of this title for a period not to exceed ninety days upon the execution of a written certification of a supervisory official that there is reason to believe that notification of the existence of the subpoena may have an adverse result described in paragraph (2) of this subsection. (2) An adverse result for the purposes of paragraph (1) of this subsection is— (A) endangering the life or physical safety of an individual; (B) flight from prosecution; (C) destruction of or tampering with evidence; (D) intimidation of potential witnesses; or (E) otherwise seriously jeopardizing an investigation or unduly delaying a trial. (3) The governmental entity shall maintain a true copy of certification under paragraph (1)(B). (4) Extensions of the delay of notification provided in section 2703 of up to ninety days each may be granted by the court upon application, or by certification by a governmental entity, but only in accordance with subsection (b) of this section. (5) Upon expiration of the period of delay of notification under paragraph (1) or (4) of this subsection, the governmental entity shall serve upon, or deliver by registered or first-class mail to, the customer or subscriber a copy of the process or request together with notice that— (A) states with reasonable specificity the nature of the law enforcement inquiry; and (B) informs such customer or subscriber— (i) that information maintained for such customer or subscriber by the service provider named in such process or request was supplied to or requested by that governmental authority and the date on which the supplying or request took place; (ii) that notification of such customer or subscriber was delayed; (iii) what governmental entity or court made the certification or determination pursuant to which that delay was made; and (iv) which provision of this chapter allowed such delay. (6) As used in this subsection, the term "supervisory official" means the investigative agent in charge or assistant investigative agent in charge or an equivalent of an investigating agency's headquarters or regional office, or the chief prosecuting attorney or the first assistant prosecuting attorney or an equivalent of a prosecuting attorney's headquarters or regional office. (b) Preclusion of notice to subject of governmental access.—A governmental entity acting under section 2703, when it is not required to notify the subscriber or customer under section 2703(b)(1), or to the extent that it may delay such notice pursuant to subsection (a) of this section, may apply to a court for an order commanding a provider of electronic communications service or remote computing service to whom a warrant, subpoena, or court order is directed, for such period as the court deems appropriate, not to notify any other person of the existence of the warrant, subpoena, or court order. The court shall enter such an order if it determines that there is reason to believe that notification of the existence of the warrant, subpoena, or court order will result in— (1) endangering the life or physical safety of an individual; (2) flight from prosecution; (3) destruction of or tampering with evidence; (4) intimidation of potential witnesses; or (5) otherwise seriously jeopardizing an investigation or unduly delaying a trial. (a) Payment.—Except as otherwise provided in subsection (c), a governmental entity obtaining the contents of communications, records, or other information under section 2702, 2703, or 2704 of this title shall pay to the person or entity assembling or providing such information a fee for reimbursement for such costs as are reasonably necessary and which have been directly incurred in searching for, assembling, reproducing, or otherwise providing such information. Such reimbursable costs shall include any costs due to necessary disruption of normal operations of any electronic communication service or remote computing service in which such information may be stored. (b) Amount.—The amount of the fee provided by subsection (a) shall be as mutually agreed by the governmental entity and the person or entity providing the information, or, in the absence of agreement, shall be as determined by the court which issued the order for production of such information (or the court before which a criminal prosecution relating to such information would be brought, if no court order was issued for production of the information). (c) Exception.—The requirement of subsection (a) of this section does not apply with respect to records or other information maintained by a communications common carrier that relate to telephone toll records and telephone listings obtained under section 2703 of this title. The court may, however, order a payment as described in subsection (a) if the court determines the information required is unusually voluminous in nature or otherwise caused an undue burden on the provider. (a) Cause of action.—Except as provided in section 2703(e), any provider of electronic communication service, subscriber, or other person aggrieved by any violation of this chapter in which the conduct constituting the violation is engaged in with a knowing or intentional state of mind may, in a civil action, recover from the person or entity other than the United States which engaged in that violation such relief as may be appropriate. (b) Relief.—In a civil action under this section, appropriate relief includes— (1) such preliminary and other equitable or declaratory relief as may be appropriate; (2) damages under subsection (c); and (3) a reasonable attorney's fee and other litigation costs reasonably incurred. (c) Damages.—The court may assess as damages in a civil action under this section the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation, but in no case shall a person entitled to recover receive less than the sum of $1,000. If the violation is willful or intentional, the court may assess punitive damages. In the case of a successful action to enforce liability under this section, the court may assess the costs of the action, together with reasonable attorney fees determined by the court. (d) Administrative Discipline.—If a court or appropriate department or agency determines that the United States or any of its departments or agencies has violated any provision of this chapter, and the court or appropriate department or agency finds that the circumstances surrounding the violation raise serious questions about whether or not an officer or employee of the United States acted willfully or intentionally with respect to the possible violation, the department or agency shall, upon receipt of a true and correct copy of the decision and findings of the court or appropriate department or agency promptly initiate a proceeding to determine whether disciplinary action against the officer or employee is warranted. If the head of the department or agency involved determines that disciplinary action is not warranted, he or she shall notify the Inspector General with jurisdiction over the department or agency concerned and shall provide the Inspector General with the reasons for such determination. (e) Defense.—A good faith reliance on— (1) a court warrant or order, a grand jury subpoena, a legislative authorization, or a statutory authorization (including a request of a governmental entity under section 2703(f) of this title); (2) a request of an investigative or law enforcement officer under section 2518(7) of this title; or (3) a good faith determination that section 2511(3) of this title permitted the conduct complained of; is a complete defense to any civil or criminal action brought under this chapter or any other law. (f) Limitation.—A civil action under this section may not be commenced later than two years after the date upon which the claimant first discovered or had a reasonable opportunity to discover the violation. (g) Improper Disclosure Is Violation.—Any willful disclosure of a "record", as that term is defined in section 552a(a) of title 5, United States Code, obtained by an investigative or law enforcement officer, or governmental entity, pursuant to section 2703 of this title, or from a device installed pursuant to section 3123 or 3125 of this title, that is not a disclosure made in the proper performance of the official duties of the officer or governmental entity making the disclosure, is a violation of this chapter. This provision shall not apply to information previously lawfully disclosed (prior to the commencement of any civil or administrative proceeding under this chapter) to the public by a Federal, State, or local governmental entity or by the plaintiff in a civil action under this chapter. The remedies and sanctions described in this chapter are the only judicial remedies and sanctions for nonconstitutional violations of this chapter. (a) Duty to provide—A wire or electronic communication service provider shall comply with a request for subscriber information and toll billing records information, or electronic communication transactional records in its custody or possession made by the Director of the Federal Bureau of Investigation under subsection (b) of this section. (b) Required certification—The Director of the Federal Bureau of Investigation, or his designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge in a Bureau field office designated by the Director, may— (1) request the name, address, length of service, and local and long distance toll billing records of a person or entity if the Director (or his designee) certifies in writing to the wire or electronic communication service provider to which the request is made that the name, address, length of service, and toll billing records sought are relevant to an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely on the basis of activities protected by the first amendment to the Constitution of the United States; and (2) request the name, address, and length of service of a person or entity if the Director (or his designee) certifies in writing to the wire or electronic communication service provider to which the request is made that the information sought is relevant to an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States. (c) Prohibition of certain disclosure—(1) If the Director of the Federal Bureau of Investigation, or his designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge in a Bureau field office designated by the Director, certifies that otherwise there may result a danger to the national security of the United States, interference with a criminal, counter terrorism, or counterintelligence investigation, interference with diplomatic relations, or danger to the life or physical safety of any person, no wire or electronic communications service provider, or officer, employee, or agent thereof, shall disclose to any person (other than those to whom such disclosure is necessary to comply with the request or an attorney to obtain legal advice or legal assistance with respect to the request) that the Federal Bureau of Investigation has sought or obtained access to information or records under this section. (2) The request shall notify the person or entity to whom the request is directed of the nondisclosure requirement under paragraph (1). (3) Any recipient disclosing to those persons necessary to comply with the request or to an attorney to obtain legal advice or legal assistance with respect to the request shall inform such person of any applicable nondisclosure requirement. Any person who receives a disclosure under this subsection shall be subject to the same prohibitions on disclosure under paragraph (1). (4) At the request of the Director of the Federal Bureau of Investigation or the designee of the Director, any person making or intending to make a disclosure under this section shall identify to the Director or such designee the person to whom such disclosure will be made or to whom such disclosure was made prior to the request, except that nothing in this section shall require a person to inform the Director or such designee of the identity of an attorney to whom disclosure was made or will be made to obtain legal advice or legal assistance with respect to the request under subsection (a). (d) Dissemination by bureau—The Federal Bureau of Investigation may disseminate information and records obtained under this section only as provided in guidelines approved by the Attorney General for foreign intelligence collection and foreign counterintelligence investigations conducted by the Federal Bureau of Investigation, and, with respect to dissemination to an agency of the United States, only if such information is clearly relevant to the authorized responsibilities of such agency. (e) Requirement that certain congressional bodies be informed—On a semiannual basis the Director of the Federal Bureau of Investigation shall fully inform the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate, and the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate, concerning all requests made under subsection (b) of this section. (f) Libraries—A library (as that term is defined in section 213(1) of the Library Services and Technology Act (20 U.S.C. 9122(1)), the services of which include access to the Internet, books, journals, magazines, newspapers, or other similar forms of communication in print or digitally by patrons for their use, review, examination, or circulation, is not a wire or electronic communication service provider for purposes of this section, unless the library is providing the services defined in section 2510(15) ("electronic communication service") of this title. As used in this chapter— (1) the terms defined in section 2510 of this title have, respectively, the definitions given such terms in that section; (2) the term "remote computing service" means the provision to the public of computer storage or processing services by means of an electronic communications system; (3) the term "court of competent jurisdiction" includes - (A) any district court of the United States (including a magistrate judge of such a court) or any United States court of appeals that - (i) has jurisdiction over the offense being investigated; (ii) is in or for a district in which the provider of a wire or electronic communication service is located or in which the wire or electronic communications, records, or other information are stored; or (iii) is acting on a request for foreign assistance pursuant to section 3512 of this title; or (B) a court of general criminal jurisdiction of a State authorized by the law of that State to issue search warrants; and (4) the term "governmental entity" means a department or agency of the United States or State or political subdivision thereof. (a) In General.— Any person who is aggrieved by any willful violation of this chapter or of chapter 119 of this title or of sections 106(a), 305(a), or 405(a) of the Foreign Intelligence Surveillance Act (50 U.S.C. 1801 et seq.) may commence an action in United States District Court against the United States to recover money damages. In any such action, if a person who is aggrieved successfully establishes a violation of this chapter or of chapter 119 of this title or of the above special provisions of title 50, the Court may assess as damages— (1) actual damages, but not less than $10,000, whichever amount is greater; and (2) litigation costs, reasonably incurred. (b) Procedures . —(1) Any action against the United States under this section may be commenced only after a claim is presented to the appropriate department or agency under the procedures of the Federal Tort Claims Act, as set forth in title 28, United States Code. (2) Any action against the United States under this section shall be forever barred unless it is presented in writing to the appropriate Federal agency within 2 years after such claim accrues or unless action is begun within 6 months after the date of mailing, by certified or registered mail, of notice of final denial of the claim by the agency to which it was presented. The claim shall accrue on the date upon which the claimant first has a reasonable opportunity to discover the violation. (3) Any action under this section shall be tried in the court without a jury. (4) Notwithstanding any other provision of law, the procedures set forth in section 106(f), 305(g), or 405(f) of the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 et seq.) shall be the exclusive means by which materials governed by those sections may be reviewed. (5) An amount equal to any award against the United States under this section shall be reimbursed by the department or agency concerned to the fund described in section 1304 of title 31, United States Code, out of any appropriation, fund, or other account (excluding any part of such appropriation, fund, or account that is available for the enforcement of any Federal law) that is available for the operating expenses of the department or agency concerned. (c) Administrative Discipline.—If a court or appropriate department or agency determines that the United States or any of the departments or agencies has violated any provision of this chapter, and the court or appropriate department or agency finds that the circumstances surrounding the violation raise serious questions about whether or not an officer or employee of the United States acted willfully or intentionally with respect to the possible violation, the department or agency shall, upon receipt of a true and correct copy of the decision and findings of the court or appropriate department or agency promptly initiate a proceeding to determine whether disciplinary action against the officer or employee is warranted. If the head of the department or agency involved determines that disciplinary action is not warranted, he or she shall notify the Inspector General with jurisdiction over the department or agency concerned and shall provide the Inspector General with the reasons for such determination. (d) Exclusive Remedy.—Any action against the United States under this subsection shall be the exclusive remedy against the United States for any claims within the purview of this section. (e) Stay of Proceedings.—(1) Upon the motion of the united States, the curt shall stay any action commenced under this section f the court determines that civil discovery will adversely affect the ability of the Government to conduct a related investigation or the prosecution of a related criminal case. Such a stay shall toll the limitations periods of paragraph (2) of subsection (b). (2) In this subsection, the terms "related criminal case" and "related investigation" means an actual prosecution or investigation in progress at the time at which the request for the stay or any subsequent motion to lift the stay is made. In determining whether any investigation or a criminal case is related to an action commenced under this section, the court shall consider the degree of similarity between the parties, witnesses, facts, and circumstances involved in the 2 proceedings, without requiring that nay one or more factors be identical. (3) In requesting a stay under paragraph (1), the Government may, in appropriate cases submit evidence ex parte in order to avoid disclosing any matter that may adversely affect a related investigation or a related criminal case. If the Government makes such an ex parte submission, the plaintiff shall be given an opportunity to make a submission to the court, not ex parte, and the court may, in its discretion, request further information from either party. (a) In general—Except as provided in this section, no person may install or use a pen register or a trap and trace device without first obtaining a court order under section 3123 of this title or under the Foreign Intelligence Surveillance Act of 1978 (50 U.S.C. 1801 et seq.). (b) Exception—The prohibition of subsection (a) does not apply with respect to the use of a pen register or a trap and trace device by a provider of electronic or wire communication service— (1) relating to the operation, maintenance, and testing of a wire or electronic communication service or to the protection of the rights or property of such provider, or to the protection of users of that service from abuse of service or unlawful use of service; or (2) to record the fact that a wire or electronic communication was initiated or completed in order to protect such provider, another provider furnishing service toward the completion of the wire communication, or a user of that service, from fraudulent, unlawful or abusive use of service; or (3) where the consent of the user of that service has been obtained. (c) Limitation—A government agency authorized to install and use a pen register or trap and trace device under this chapter or under State law shall use technology reasonably available to it that restricts the recording or decoding of electronic or other impulses to the dialing, routing, addressing, and signaling information utilized in identifying the origination or destination of wire or electronic communications. (d) Penalty—Whoever knowingly violates subsection (a) shall be fined under this title or imprisoned not more than one year, or both. (a)Application.(1) An attorney for the Government may make application for an order or an extension of an order under section 3123 of this title authorizing or approving the installation and use of a pen register or a trap and trace device under this chapter, in writing under oath or equivalent affirmation, to a court of competent jurisdiction. (2) Unless prohibited by State law, a State investigative or law enforcement officer may make application for an order or an extension of an order under section 3123 of this title authorizing or approving the installation and use of a pen register or a trap and trace device under this chapter, in writing under oath or equivalent affirmation, to a court of competent jurisdiction of such State. (b)Contents of application—An application under subsection (a) of this section shall include— (1) the identity of the attorney for the Government or the State law enforcement or investigative officer making the application and the identity of the law enforcement agency conducting the investigation; and (2) a certification by the applicant that the information likely to be obtained is relevant to an ongoing criminal investigation being conducted by that agency. (a) In general. (1) Upon an application made under section 3122(a)(1) of this title, the court shall enter an ex parte order authorizing the installation and use of a pen register or a trap and trace device if the court finds, based on facts contained in the application, that the information likely to be obtained by such installation and use is relevant to an ongoing criminal investigation. Such order shall, upon service of such order, apply to any entity providing wire or electronic communication service in the United States whose assistance may facilitate the execution of the order. (2) Upon an application made under section 3122(a)(2) of this title, the court shall enter an ex parte order authorizing the installation and use of a pen register or a trap and trace device within the jurisdiction of the court if the court finds, based on facts contained in the application, that the information likely to be obtained by such installation and use is relevant to an ongoing criminal investigation. (3)(A) Where the law enforcement agency implementing an ex part order under this subsection seeks to do so by installing and using its own pen register or trap and trace device on a packet-switched data network of a provider of electronic communication service to the public the agency shall ensure that a record will be maintained which will identify— (i) any officer or officers who installed the device and any officer or officers who accessed the device to obtain information from the network; (ii) the date and time the device was installed, the date and time the device was uninstalled, and the date, time, and duration of each time the device is accessed to obtain information; (iii) the configuration of the device at the time of its installation and any subsequent modification thereof; and (iv) any information which has been collected by the device. To the extent that the pen register or trap and trace device can be set automatically to record this information electronically, the record shall be maintained electronically throughout the installation and use of the such device. (B) The record maintained under subparagraph (A) shall be provided ex parte and under seal to the court which entered the ex parte order authorizing the installation and use of the device within 30 days after termination of the order (including any extensions thereof). (b) Contents of order—An order issued under this section— (1) shall specify— (A) the identity, if known, of the person to whom is leased or in whose name is listed the telephone line or other facility to which the pen register or trap and trace device is to be attached or applied; (B) the identity, if known, of the person who is the subject of the criminal investigation; (C) the attributes of the communications to which the order applies, including the number or other identifier and, if known, the location of the telephone line or other facility to which the pen register or trap and trace device is to be attached or applied, and, in the case of an order authorizing installation and use of a trap and trace device under subsection (a)(2), the geographic limits of the order; and (D) a statement of the offense to which the information likely to be obtained by the pen register or trap and trace device relates; and (2) shall direct, upon the request of the applicant, the furnishing of information, facilities, and technical assistance necessary to accomplish the installation of the pen register or trap and trace device under section 3124 of this title. (c) Time period and extensions— (1) An order issued under this section shall authorize the installation and use of a pen register or a trap and trace device for a period not to exceed sixty days. (2) Extensions of such an order may be granted, but only upon an application for an order under section 3122 of this title and upon the judicial finding required by subsection (a) of this section. The period of extension shall be for a period not to exceed sixty days. (d) Nondisclosure of existence of pen register or a trap and trace device—An order authorizing or approving the installation and use of a pen register or a trap and trace device shall direct that— (1) the order be sealed until otherwise ordered by the court; and (2) the person owning or leasing the line or other facility to which the pen register or a trap and trace device is attached, or applied, or who is obligated by the order to provide assistance to the applicant, not disclose the existence of the pen register or trap and trace device or the existence of the investigation to the listed subscriber, or to any other person, unless or until otherwise ordered by the court. (a) Pen registers—Upon the request of an attorney for the Government or an officer of a law enforcement agency authorized to install and use a pen register under this chapter, a provider of wire or electronic communication service, landlord, custodian, or other person shall furnish such investigative or law enforcement officer forthwith all information, facilities, and technical assistance necessary to accomplish the installation of the pen register unobtrusively and with a minimum of interference with the services that the person so ordered by the court accords the party with respect to whom the installation and use is to take place, if such assistance is directed by a court order as provided in section 3123(b)(2) of this title. (b) Trap and trace device—Upon the request of an attorney for the Government or an officer of a law enforcement agency authorized to receive the results of a trap and trace device under this chapter, a provider of a wire or electronic communication service, landlord, custodian, or other person shall install such device forthwith on the appropriate line or other facility and shall furnish such investigative or law enforcement officer all additional information, facilities and technical assistance including installation and operation of the device unobtrusively and with a minimum of interference with the services that the person so ordered by the court accords the party with respect to whom the installation and use is to take place, if such installation and assistance is directed by a court order as provided in section 3123(b)(2) of this title. Unless otherwise ordered by the court, the results of the trap and trace device shall be furnished, pursuant to section 3123(b) or section 3125 of this title, to the officer of a law enforcement agency, designated in the court order, at reasonable intervals during regular business hours for the duration of the order. (c) Compensation—A provider of a wire or electronic communication service, landlord, custodian, or other person who furnishes facilities or technical assistance pursuant to this section shall be reasonably compensated for such reasonable expenses incurred in providing such facilities and assistance. (d) No cause of action against a provider disclosing information under this chapter—No cause of action shall lie in any court against any provider of a wire or electronic communication service, its officers, employees, agents, or other specified persons for providing information, facilities, or assistance in accordance with a court order under this chapter or request pursuant to section 3125 of this title. (e) Defense—A good faith reliance on a court order under this chapter, a request pursuant to section 3125 of this title, a legislative authorization, or a statutory authorization is a complete defense against any civil or criminal action brought under this chapter or any other law. (f) Communications assistance enforcement orders—Pursuant to section 2522, an order may be issued to enforce the assistance capability and capacity requirements under the Communications Assistance for Law Enforcement Act. (a) Notwithstanding any other provision of this chapter, any investigative or law enforcement officer, specially designated by the Attorney General, the Deputy Attorney General, the Associate Attorney General, any Assistant Attorney General, any acting Assistant Attorney General, or any Deputy Assistant Attorney General, or by the principal prosecuting attorney of any State or subdivision thereof acting pursuant to a statute of that State, who reasonably determines that— (1) an emergency situation exists that involves— (A) immediate danger of death or serious bodily injury to any person; or (B) conspiratorial activities characteristic of organized crime; (C) an immediate threat to a national security interest; or (D) an ongoing attack on a protected computer (as defined in section 1030) that constitutes a crime punishable by a term of imprisonment greater than one year; that requires the installation and use of a pen register or a trap and trace device before an order authorizing such installation and use can, with due diligence, be obtained, and (2) there are grounds upon which an order could be entered under this chapter to authorize such installation and use; may have installed and use a pen register or trap and trace device if, within forty-eight hours after the installation has occurred, or begins to occur, an order approving the installation or use is issued in accordance with section 3123 of this title. (b) In the absence of an authorizing order, such use shall immediately terminate when the information sought is obtained, when the application for the order is denied or when forty-eight hours have lapsed since the installation of the pen register or trap and trace device, whichever is earlier. (c) The knowing installation or use by any investigative or law enforcement officer of a pen register or trap and trace device pursuant to subsection (a) without application for the authorizing order within forty-eight hours of the installation shall constitute a violation of this chapter. (d) A provider of a wire or electronic service, landlord, custodian, or other person who furnished facilities or technical assistance pursuant to this section shall be reasonably compensated for such reasonable expenses incurred in providing such facilities and assistance. The Attorney General shall annually report to Congress on the number of pen register orders and orders for trap and trace devices applied for by law enforcement agencies of the Department of Justice, which report shall include information concerning— (1) the period of interceptions authorized by the order, and the number and duration of any extensions of the order; (2) the offense specified in the order or application, or extension of an order; (3) the number of investigations involved; (4) the number and nature of the facilities affected; and (5) the identity, including district, of the applying investigative or law enforcement agency making the application and the person authorizing the order. As used in this chapter— (1) the terms "wire communication", "electronic communication", "electronic communication service" and "contents" have the meanings set forth for such terms in section 2510 of this title; (2) the term "court of competent jurisdiction" means— (A) any district court of the United States (including a magistrate judge of such a court) or any United States court of appeals that - (i) has jurisdiction over the offense being investigated; (ii) is in or for a district in which the provider of a wire or electronic communication service is located; (iii) is in or for a district in which a landlord, custodian, or other person subject to subsections (a) or (b) of section 3124 of this title is located; or (iv) is acting on a request for foreign assistance pursuant to section 3512 of this title; or (B) a court of general criminal jurisdiction of a State authorized by the law of that State to enter orders authorizing the use of a pen register or a trap and trace device; (3) the term "pen register" means a device or process which records or decodes or other dialing, routing, addressing, and signaling information reasonably likely to identify the source of a wire or electronic communication, provided, however, that such information shall not include the contents of any communication, but such term does not include any device or process used by a provider or customer of a wire or electronic communication service for billing, or recording as an incident to billing, for communications services provided by such provider or any device or process used by a provider or customer of a wire communication service for cost accounting or other like purposes in the ordinary course of its business; (4) the term "trap and trace device" means a device or process which captures the incoming electronic or other impulses which identify the originating number or other dialing, routing, addressing, and signaling information reasonably likely to identify the source of a wire or electronic communication, provided, however, that such information shall not include the contents of any communication; (5) the term "attorney for the Government" has the meaning given such term for the purposes of the Federal Rules of Criminal Procedure; and (6) the term "State" means a State, the District of Columbia, Puerto Rico, and any other possession or territory of the United States. Appendix A. State Statutes Outlawing the Interception of Wire(w), Oral(o) and Electronic Communications(e) Appendix B. Consent Interceptions Under State Law Appendix C. Statutory Civil Liability for Interceptions Under State Law Appendix D. Court Authorized Interception Under State Law Appendix E. State Statutes Regulating Stored Electronic Communications (SE), Pen Registers (PR) and Trap and Trace Devices (T) Appendix F. State Computer Crime Statutes
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This report provides an overview of federal law governing wiretapping and electronic eavesdropping under the Electronic Communications Privacy Act (ECPA). It also appends citations to state law in the area and the text of ECPA. It is a federal crime to wiretap or to use a machine to capture the communications of others without court approval, unless one of the parties has given his prior consent. It is likewise a federal crime to use or disclose any information acquired by illegal wiretapping or electronic eavesdropping. Violations can result in imprisonment for not more than five years; fines up to $250,000 (up to $500,000 for organizations); civil liability for damages, attorneys' fees and possibly punitive damages; disciplinary action against any attorneys involved; and suppression of any derivative evidence. Congress has created separate, but comparable, protective schemes for electronic communications (e.g., email) and against the surreptitious use of telephone call monitoring practices such as pen registers and trap and trace devices. Each of these protective schemes comes with a procedural mechanism to afford limited law enforcement access to private communications and communications records under conditions consistent with the dictates of the Fourth Amendment. The government has been given narrowly confined authority to engage in electronic surveillance, conduct physical searches, and install and use pen registers and trap and trace devices for law enforcement purposes under ECPA and for purposes of foreign intelligence gathering under the Foreign Intelligence Surveillance Act. This report appears as a part of a larger piece, which includes a discussion of the Foreign Intelligence Surveillance Act and is entitled CRS Report 98-326, Privacy: An Overview of Federal Statutes Governing Wiretapping and Electronic Eavesdropping, by [author name scrubbed] and [author name scrubbed]. Each of the two is available in an abridged form without footnotes, quotations, attributions of authority, or appendices, i.e., CRS Report R41734, Privacy: An Abridged Overview of the Electronic Communications Privacy Act, by [author name scrubbed], and CRS Report 98-327, Privacy: An Abbreviated Outline of Federal Statutes Governing Wiretapping and Electronic Eavesdropping, by [author name scrubbed] and [author name scrubbed].
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Livestock grazing on federal lands primarily occurs on public lands managed by the Bureau of Land Management (BLM, in the Department of the Interior) and on National Forest System lands managed by the Forest Service (FS, in the Department of Agriculture). Both agencies operate under statutory principles of multiple use and sustained yield, with livestock grazing among generally authorized uses. Both agencies also charge fees for grazing on agency lands under a fee formula established in the Public Rangelands Improvement Act of 1978 and continued administratively. However, the agencies administer livestock grazing on their lands through somewhat different processes. The other two major federal land management agencies, the National Park Service and the Fish and Wildlife Service, have limited authorities allowing livestock grazing on their lands. Accordingly, this report provides information for BLM and FS only. The extent to which BLM and FS lands are protected and available for various land uses and activities is of perennial interest to Congress. Current congressional issues related to livestock grazing pertain to the fee level, terms and conditions of permits, and amount of grazing authorized, among other topics. This report provides data on the extent of livestock grazing in recent years to assist with congressional deliberations on uses of federal lands generally and availability of lands for livestock grazing in particular. It identifies factors that may have contributed to changes in the amount of livestock grazing over the past 15 years. However, it does not discuss the relative likelihood of any one of these factors to affect grazing trends at national, regional, or local levels. This report generally provides data on livestock grazing for BLM and FS from FY2002 to FY2016. It reflects four livestock data categories that can indicate the amount of grazing on federal land. However, for two of the four categories, data for FS are provided only for FY2006-FY2016 because the accuracy of available data for FY2002-FY2005 for those two categories could not be confirmed. The four categories roughly correspond with the number of livestock operators, the number of grazing permits and leases held by these operators, how much grazing could have been authorized for use, and how much grazing was actually used. The four categories are somewhat similar between the agencies, but the categories and terminology are not identical. For instance, whereas FS administers grazing through permits only, BLM authorizes grazing through both permits and leases. Also, both agencies authorize and bill for grazing in terms of livestock use and occupancy of the range for one month, under similar though not identical processes. The BLM measurement is referred to as animal unit months (AUMs), whereas FS uses the term head months (HD-MOs). As another example, those authorized to conduct grazing on BLM land—including individuals, groups, associations, or corporations—are referred to as livestock operators ; on FS lands, they are referred to as permittees . Such differences are reflected in the titles of the data categories presented. The four categories presented here do not reflect all potential indicators of livestock grazing that might be helpful in assessing changes over the specified time range, such as annual acreage of land available and used for livestock grazing. Although acreage statistics over time are not readily available, in recent years BLM has had more land available and used for livestock grazing than FS. For instance, in FY2015, BLM managed a total of 248.3 million acres, of which 154.8 million (62.3%) were available for livestock grazing and 138.8 million (55.9%) were used for grazing. By comparison, in FY2015, FS managed a total of 192.9 million acres, of which more than 95.0 million (49.2%) were available for grazing and 77.3 million (40.1%) were used for grazing. Table 1 , Figure 1 , and Figure 2 provide data for BLM. In Table 1 , the first column essentially reflects the number of individuals or entities authorized to graze livestock on BLM lands. However, operators with multiple permits or leases for the same kind of livestock may be counted multiple times, thus overrepresenting the number of operators. The second column shows the number of grazing permits and leases held by these operators; some operators hold more than one permit or lease. The third column, on AUMs in force, reflects the number of AUMs that could have been authorized for use. The fourth column, AUMs authorized, reflects the number of AUMs actually used and billed for. Table 2 , Figure 3 , and Figure 4 provide data for FS. In Table 2 , the first column reflects the number of individuals or entities that had active grazing permits and could have been authorized to graze. The second column reflects the number of permits held by these permittees. The third column shows the permitted HD-MOs of grazing that could have been authorized for use. The fourth column reflects the number of HD-MOs authorized to graze and billed for. For both agencies, the tables and figures show increases in grazing used over the period examined, as measured by the amount of time livestock spent on the range. For the other three categories of data, livestock grazing on BLM land was the same or somewhat less in FY2016 than in FY2002. FS had relatively larger declines over the years examined for the other three categories of livestock grazing. BLM livestock grazing data across all four categories examined remained relatively constant between FY2002 and FY2016. As shown in Table 1 , column 1, the number of operators authorized to graze livestock on BLM land was nearly identical in FY2002 and FY2016, the first and last years of the period examined. The average number of operators annually was 15,755. During the 15-year period, the highest number of operators was 16,416 in FY2006, the only year in which the figure exceeded 16,000. There was a difference of 954 between this high year and the lowest level of 15,462 in FY2005. As shown in Table 1 , column 2, the number of permits and leases held by livestock operators was 1.7% lower in FY2016 than in FY2002. During the 15-year period, the greatest number of permits and leases was 18,142 in FY2002. There was a difference of 448 between that high year and the lowest year during the period—FY2011—when there were 17,694 permits and leases. The average number of permits and leases was 17,852 annually. Figure 1 illustrates the changes in the numbers of BLM livestock operators and grazing permits and leases from FY2002 to FY2016. During the first 10 years (FY2002-FY2011), permits and leases declined fairly steadily and by 2.5% overall, as noted. They rose by 0.6% during the last five years (FY2012-FY2016). BLM authorizes grazing permits and leases in terms of AUMs, as noted above. Columns 3 and 4 of Table 1 provide data on AUMs. Figure 2 illustrates the changes in the numbers of AUMs in force and AUMs authorized for BLM lands. As shown in column 3 of the table, AUMs of grazing in force—reflecting AUMs that could have been authorized for use—have gradually decreased and were 2.6% less in FY2016 than in FY2002. The highest level of AUMs in force was 12.7 million in FY2005, for a difference of 337,475 between this year and the low of 12.4 million in FY2016. The average AUMS in force over the 15 years was 12.5 million. In each of the first seven years (FY2002-FY2008), AUMs in force ranged between approximately 12.5 million and 12.7 million annually. Since then, the annual totals have dropped to between 12.3 million and 12.5 million. As shown in column 4 of Table 1 , the number of AUMs that were actually authorized and billed for has varied over time and was 5.2% higher in FY2016 than in FY2002. This was the largest percentage difference of all four BLM data categories examined. AUMs authorized reached a high of nearly 9.0 million in FY2011. There was a difference of 1.5 million between this high and the period low of 7.5 million in FY2003. Over the 15 years, the average AUMs authorized each year was 8.4 million. As shown in Figure 2 , authorized AUMs were lowest during the first four years (FY2002-FY2006), when they were below 8.3 million each year. Since then, the figures have fluctuated between 8.3 million and 9.0 million annually. As noted above, FS data are provided for 15 years for two categories of livestock data but for 11 years for two other categories due to uncertainty about the reliability of earlier data. As shown in Table 2 , column 1, the number of livestock permit holders allowed to graze commercial livestock on FS land was 12.4% lower in FY2016 than in FY2006. In fact, in FY2006, the most permittees were allowed to graze—6,598—whereas in FY2016 the fewest were allowed to graze—5,779. There was a difference of 819 between these high and low years. The average number of permittees throughout the 11 years was 6,146 annually. Figure 3 illustrates the changes in the numbers of FS livestock permittees and active permits from FY2006 to FY2016. As shown in Figure 3 , the number of permittees declined steadily throughout the 11-year period. From FY2006 to FY2016, the number of active permits showed trends similar to those for the number of permit holders (see Table 2 , column 2). For instance, the number of active permits was 12.5% lower in FY2016 than in FY2006. In addition, the highest level was reached in FY2006, when there were 7,095 active permits, and the lowest level occurred in FY2016, when there were 6,211. There was a difference of 884 between these high and low years. The number of active permits averaged 6,601. As with the number of permittees, the number of active permits decreased steadily over the 11-year period, as shown in Figure 3 . As noted above, FS administers grazing in terms of HD-MOs, defined as the time in months that livestock spend on FS land. Columns 3 and 4 of Table 2 provide data on HD-MOs. Figure 4 illustrates the changes in the numbers of HD-MOs under permit and HD-MOs authorized from FY2002 to FY2016. As shown in column 3 of Table 2 , the number of HD-MOs under permit—the maximum number that could have been authorized for use—was 18.4% less in FY2016 than in FY2002. This was the largest change in the FS data categories examined. There was a high of 10.1 million HD-MOs under permit in FY2002 and a low of 8.2 million in FY2006, a difference of nearly 1.9 million. The average number of HD-MOs under permit was 8.7 million annually. There was significant annual variation in the data, particularly during the first four years of the 15-year period, as shown in Figure 4 . The number of HD-MOs that were actually authorized and billed for was 1.1% higher in FY2016 than in FY2002 (see column 4 of Table 2 ). Over the 15 years, HD-MOs ranged from a high of 7.3 million in FY2010 to a low of 5.1 million in FY2009, a difference of 2.2 million. Although the average was 6.5 million per year, the number of HD-MOs authorized varied widely over the period, as shown in Figure 4 . During the first several years (FY2002-FY2009), the figures averaged 6.1 million annually. Since FY2010, the average has increased to 6.9 million annually. There are similarities in the BLM and FS livestock data over the 15-year period examined. For instance, both agencies had more grazing permits than livestock operators or permittees, because some operators and permittees held more than one permit. Also, both agencies had considerably higher levels of grazing that could have been authorized for use than were actually used. The AUMs and HD-MOs actually used for grazing were likely less than the potential maximum due to voluntary nonuse for economic and other reasons, resource-protection needs, and forage depletion caused by drought and fire, among other reasons. In other ways, BLM and FS livestock grazing differed. As an example, BLM had higher levels of livestock grazing than FS in all four data categories. This difference is in part because BLM manages more acres of land generally and more acres of land for livestock grazing specifically than FS, as noted above. During the period of analysis, the agencies also experienced different patterns and amounts of change in the four categories of data. The amount of grazing used increased for both agencies from FY2002 to FY2016, but the increase was higher for BLM (5.2%) than for FS (1.1%). Grazing use was based on the amount of time livestock spent on the range, as measured in AUMs or HD-MOs. For the other three categories of data, there were either no changes or relatively small declines for BLM, whereas FS saw relatively larger decreases. With regard to the number of livestock operators, BLM started and ended the FY2002-FY2016 period with nearly the same level, with some fluctuation in between; by contrast, FS livestock permittees decreased steadily from FY2006 to FY2016 and ended the period down 12.4%. With regard to BLM permits and leases, there was a decrease over several years followed by a slight increase, with a 1.7% overall decline over the 15-year period. By contrast, FS active permits decreased steadily from FY2006 to FY2016 and by a larger amount—12.5% overall. With regard to the amount of grazing that could have been used, the BLM's AUMs declined between FY2002 and FY2016 by 2.6%, whereas FS's HD-MOs ended the same period down by 18.4%. The size of the change in livestock grazing on BLM and FS lands depends in part on the length of the period examined. For example, although AUMs used on BLM lands increased by 5.2% over the last 15 years, over the past several decades they declined significantly—about 52.2% from the 1954 level of 18.2 million AUMs. The size of the change also depends on the particular start and end years chosen. For instance, since FY2002, the HD-MOs that could have been authorized on FS lands have declined by 18.4%. However, since FY2006, they have increased by 0.5%. Changes in grazing on BLM and FS land nationally reflect a variety of different conditions on rangelands in diverse locations. No analysis was made for this report as to the extent of variation on particular rangelands in specific states or regions. Similarly, no examination was made of the effect of change in particular areas on the national levels reflected in this report. The specific factors that influenced each annual change in grazing nationally were not analyzed for this report. However, national grazing changes identified herein can be attributed to a variety of factors, including amendments to agency land use plans to accommodate other land uses, such as increased recreation. Resource protection needs, typically for water and wildlife resources, also can affect the timing and the amount of grazing. Forage depletion caused by drought or fire can reduce the amount of grazing, and significant rainfall can augment the availability of forage. More generally, matching forage production with livestock production for the long-term health of the rangeland is a factor affecting grazing in some areas. Another factor is voluntary nonuse by ranchers for a variety of reasons, including market, lifestyle, conservation, and others, as in the case of ranchers who use or sell their land for other purposes. Development of nearby private land also can influence grazing on federal land, for example, by impacting the free flow of livestock between ownerships.
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Livestock grazing on federal lands primarily occurs on lands of the Bureau of Land Management (BLM, in the Department of the Interior) and the Forest Service (FS, in the Department of Agriculture). Both agencies manage lands under sustained-yield and multiple-use principles, with livestock grazing among generally authorized uses. Congress continues to be interested in the extent to which BLM and FS lands are protected and used for a variety of activities, including livestock grazing. This report provides data on the extent of livestock grazing in recent years to assist with congressional deliberations on uses of federal lands generally and decisionmaking on the availability of lands for livestock grazing in particular. This report generally provides data for 15 years, from FY2002 to FY2016, for four categories of livestock data. The four categories of data are similar but not identical between the agencies. The categories roughly correspond with the number of livestock operators, the number of grazing permits and leases held by these operators, how much grazing could have been authorized for use, and how much grazing was actually used. Both agencies saw increases over the period in the amount of grazing used, based on the time livestock spent on the range. This time is measured in animal unit months (AUMs) for BLM and head months (HD-MOs) for FS. The increase in the amount of grazing was higher for BLM (5.2%) than for FS (1.1%). For the other three categories of data, livestock grazing on BLM land was the same or somewhat less in FY2016 than in FY2002. FS saw relatively larger declines than BLM for these other three categories of livestock grazing. With regard to livestock operators, BLM started and ended the FY2002-FY2016 period with nearly the same number, with some fluctuation in between, whereas the number of FS livestock permittees decreased steadily from FY2006 to FY2016 and ended the period down 12.4%. Regarding the number of BLM permits and leases, there was a relatively small overall decline of 1.7% from FY2002 to FY2016. By contrast, the number of FS active permits decreased steadily from FY2006 to FY2016 and by a larger amount—12.5% overall. As for the amount of grazing that could have been used, BLM's AUMs declined by 2.6% between FY2002 and FY2016, whereas FS's HD-MOs declined by 18.4% over the same period. The size of the change in livestock grazing on BLM and FS lands depends on the length of the period examined and the particular years of analysis. For instance, although AUMs used on BLM lands increased by 5.2% over the last 15 years, since 1954 there has been a 52.2% reduction in the number of AUMs—from 18.2 million to about 8.7 million. Changes in grazing on BLM and FS lands nationally reflect a variety of different conditions on rangelands in diverse locations. The national changes can be attributed to various factors, including amendments to agency land use plans, resource protection needs and the long-term health of rangelands, the effect of weather (e.g., rain/drought) and fire on forage, voluntary nonuse by permit holders for a variety of reasons, and development on nearby private lands. The relative extent to which any one of these factors contributed to any national, regional, or local changes in grazing on federal lands is beyond the scope of this report.
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The Weather Research and Forecasting Innovation Act of 2017 ( P.L. 115-25 ) addresses a broad range of National Oceanic and Atmospheric Administration (NOAA) activities in five titles: Titles I through IV primarily address weather-related programs, policies, and activities, and Title V amends the Tsunami Warning and Education Act (Title VIII of P.L. 109-479 ). This report discusses Titles I through IV; Title V of P.L. 115-25 is addressed in CRS Report R44834, The U.S. Tsunami Program Reauthorization in P.L. 115-25: Section-by-Section Comparison to P.L. 109-479, Title VIII . In P.L. 115-25 , Congress provides direction to NOAA regarding the agency's research and development (R&D) activities, with the broad goal of improving weather forecasting, warnings, and communication to recipients and users of weather information. Congress has held hearings and introduced legislation in the past two Congresses on topics that are incorporated into P.L. 115-25 . Thus the law reflects many of the priorities and issues of interest to Members of Congress regarding improving forecasts, coordination, and communication in the weather enterprise; incorporating commercially available weather data into forecasts and warnings; and enhancing the research-to-operations pathway so that new scientific and technological advances can be incorporated more rapidly into forecasts and warnings, among other topics. In addition to emphasizing the transfer of R&D advances to operations at the National Weather Service (NWS), Title I of P.L. 115-25 includes a sense of Congress that not less than 30% of funding for weather R&D at NOAA's Office of Oceanic and Atmospheric Research (OAR) should be made available to the nonfederal weather research community, which includes academia, private-sector entities, and nongovernmental organizations. Title II of P.L. 115-25 centers on improving NWS forecasts, specifically subseasonal and seasonal forecasts, defined in the law as forecasts of two weeks to three months and forecasts of three months to two years, respectively. Title III focuses on weather satellites, including microsatellite constellations, and future needs of the weather satellite observing systems. Title III also includes direction on the acquisition of commercial weather data; it requires NOAA to evaluate whether commercial weather data from satellites could meet some or all of NOAA's future needs. Title IV directs NOAA to coordinate weather data and observations; improve the exchange of expertise between R&D and operational activities; enhance communication of watches and warnings of hazardous weather events; improve outreach to the weather enterprise; and study gaps in the national NEXRAD coverage, among other topics. This report discusses each title briefly by summarizing selected sections. Furthermore, the report identifies where NOAA is required to report to Congress on its progress in fulfilling the legislation's requirements. The summaries of each title in this report include information on these required studies and reports to Congress as well as on other new activities due prior to the adjournment of the 115 th Congress. Congress may exert its oversight capacity to evaluate NOAA's success in fulfilling congressional direction provided in the legislation. Title I of P.L. 115-25 focuses on authorizing R&D efforts at NOAA, mostly led by the OAR, primarily to improve forecasts and warnings of potentially damaging weather events. Title I addresses a broad array of activities authorized in the legislation that would, if implemented, range from conducting basic R&D on weather to enhancing the observing systems to improve the data used for forecasts and warnings. Title I also requires NOAA to address the issue of how to improve the incorporation of research findings into NWS operations. The research-to-operations challenge also is addressed in other titles of P.L. 115-25 . Section 101 states that the priorities for the R&D efforts shall be the protection of life and property and the enhancement of the national economy. Section 102 authorizes a broad portfolio of R&D activities to address the priorities in Section 101, such as improving the fundamental understanding of weather; enhancing the understanding of how the public receives, interprets and responds to dangerous weather; and facilitating the transfer of knowledge, technologies, and applications to NWS. Sections 103 and 104 focus on tornadoes and hurricanes, respectively. The goal of Section 103 is to reduce loss of life and economic damage from tornadoes by improving tornado forecasts, predictions, and warnings. The act requires NOAA to create a tornado warning improvement and extension program plan to achieve its goal and to submit to Congress a proposed budget for its tornado program plan activities each year. The goal of Section 104 is to improve hurricane forecasting to reduce loss of life, injuries, and economic damage. The section requires NOAA to maintain a project to improve hurricane forecasting, and to develop a plan to implement the hurricane project. The tornado plan and the hurricane plan are due within 180 days and one year of enactment, respectively (i.e., by October 2017 and April 2018). Section 105 requires an R&D and research-to-operations plan within one year of enactment (i.e., by April 2018), with the goal of restoring and maintaining U.S. leadership in numerical weather forecasting and prediction. The section also requires NOAA to consult with the National Science Foundation, the U.S. weather industry, and academic partners to identify research necessary to enhance the integration of social science research into weather forecasts and warnings. Sections 106-109 deal with observation systems; observing system simulation experiments; computer resources; and activities to help operationalize R&D so that it can used by NWS for forecasts and warnings. Title I would authorize $111.52 million per year for FY2017 and FY2018 for OAR R&D and an additional $20 million per year for the technology transfer initiative authorized in Section 102. Section 201 of Title II of P.L. 115-25 amends P.L. 99-198 (15 U.S.C. 313 note) to add eight subsections (c through j) with the primary goal of improving temperature and precipitation forecasts in subseasonal forecasts (forecasts of two weeks to three months) and seasonal forecasts (forecasts of three months to two years). This section of Title II amends the part of the U.S. C ode that declares it is in the public interest that the federal government be involved in providing weather and climate information useful for agriculture and silviculture. Improving forecasts during the time spans defined as subseasonal and seasonal aligns with improving the forecasts needed by agricultural and silvicultural interests. The subsections summarized below expand on functions and requirements for these forecasts more broadly. Subsection 201(c) requires that the Director of NWS collect and use information to make subseasonal and seasonal forecasts; use existing models and research to improve those forecasts; determine how those forecasted conditions will affect severe weather and other weather-related natural hazards; and develop an Internet clearinghouse to share the forecasts and accompanying information. Subsection 201(d) requires the NWS director to provide the forecasts and accompanying information to the public. Subsection 201(e) requires NOAA to designate research and monitoring required for the subseasonal and seasonal forecasts as a priority in one or more of the solicitations of the Cooperative Institutes of Oceanic and Atmospheric Research; to contribute to the interagency Earth System Prediction Capability; and to consult with the Secretary of Defense and the Secretary of Homeland Security to determine the highest priorities for their departments regarding subseasonal and seasonal forecasts. Subsection 201(f) requires NOAA to foster communication, understanding, and use of the forecasts by the intended users. It gives NOAA discretion to provide assistance to states for individuals who would be designated "forecast communication coordinators," who would serve as liaisons among federal agencies and other entities of the weather enterprise and who would receive and disseminate the subseasonal and seasonal forecasts. NOAA support would be limited to $100,000 per year per state and would require a 50% match (from the state, a university, a nongovernmental organization, a trade association, or the private sector). Subsection 201(g) requires other federal agencies to cooperate with NOAA. Subsection 201(h) requires a report to Congress on implementation of the subseasonal and seasonal forecasts, due within 18 months of enactment (October 2018). Subsection 201(i) defines terms used in Section 201. Subsection 201(j) authorizes appropriations of $26.5 million per year to carry out these activities in FY2017 and FY2018. Title III of P.L. 115-25 addresses two main issues: (1) weather satellites and (2) commercial weather data. The topics are interrelated. Title III provides direction for NOAA regarding current and future weather satellite data needs and authorizes NOAA to consider how commercially provided weather satellite data could enhance and improve observations, leading to better forecasts and warnings in the future. Section 301 of Title III of P.L. 115-25 addresses microsatellites, integration of data from the ocean observing system, and a study and report on future satellite data needs. Subsection 301(a) requires NOAA to complete and operationalize the microsatellite project called the Constellation Observing System for Meteorology, Ionosphere, and Climate (COSMIC-1 and COSMIC-2). NOAA is to deploy microsatellites in polar and equatorial orbits, integrate the satellite data into operational and research weather forecast models, and make the data free and available to everyone. The COSMIC satellite system makes use of a technique called radio occultation, using radio signals from global positioning satellites (GPS), which allows high-precision measurements of the global atmosphere. The data from the COSMIC mission, combined with other atmospheric data, likely would improve the precision and accuracy of weather forecasts and warnings. Subsection 301(a) also requires the NWS director to integrate data collected by the Integrated Ocean Observing System into regional weather forecasts and to support the development of real-time data-sharing products and forecast products. It requires NOAA to identify where monitoring and observing systems have degraded and may have reduced the quality of weather forecasts. Subsection 301(a) requires NOAA to follow report recommendations, authorized under Subsection 301(b), on specifications for weather satellite systems. Subsection 301(b) requires NOAA to enter into an agreement with the National Academy of Sciences (NAS) to conduct a study on future weather satellite needs. The resulting report is due within two years of entering into the agreement for the study. If an agreement cannot be achieved with NAS, Subsection 301(b) would allow NOAA to enter into an agreement with another nonfederal government entity with expertise and objectivity comparable to NAS. The legislation authorizes $1 million total for the study and report during FY2018 and FY2019. Subsection 302(a) authorizes NOAA to purchase weather data from commercial sources and to place NOAA weather satellites on government or private-sector payloads for launch into orbit. Subsection 302(b) directs NOAA, within 180 days of enactment (October 2017), to submit to Congress a strategic plan for procuring commercial weather data. Congress has expressed interest in expanding NOAA's use of commercially available weather data for at least the previous two Congresses. Outstanding issues include whether and how commercially available data meet the requirements and specifications for use in NOAA's forecasts and warnings. Subsection 302(c) authorizes NOAA to address some of these issues. The subsection requires NOAA to publish data and metadata standards and specifications for space-based commercial weather data within 30 days of enactment (i.e., due by May 2017). It also requires NOAA to publish standards and specifications for geostationary hyperspectral sounder data as soon as possible. Subsection 302(c) requires NOAA to conduct at least one pilot program by contracting with one or more private-sector data providers that can meet the standards and specifications that NOAA would develop and publish. Within three years of the pilot project contract agreement, Subsection 302(c) requires NOAA to submit a report to Congress on the pilot program's progress toward meeting the criteria developed and published earlier. The law authorizes appropriations of $6 million annually for FY2017 through FY2020. Subsection 302(d) requires NOAA to obtain commercial weather data from the private sector, depending on whether the pilot program is deemed successful. The subsection also requires NOAA to determine whether a government meteorological space system is required, if NOAA finds that commercial data sources can meet any or all of the observational requirements of such a system. This provision implies that if commercial vendors can provide data that meet all the requirements developed by NOAA, then NOAA would determine if a federal government weather satellite system is in the national interest. The legislation requires NOAA to report to Congress on its determination. Subsection 302(e) requires that NOAA continue to meet its existing international meteorological agreements, including practices set forth in World Meteorological Organization Resolution 40. Section 303 requires NOAA to avoid unnecessary duplication between private and public sources of data. Title IV of P.L. 115-25 contains 14 sections that deal with a wide range of NOAA activities, most of which address coordination, communication, and issues related to data sharing and exchanges of personnel to foster better interaction between research scientists and practitioners. Some of the authorized activities focus on improving NWS outreach to user communities, and other sections address specific issues that Congress previously has identified as possible weaknesses in the weather enterprise, namely possible gaps in ground-based radar coverage by NEXRAD systems. Section 401 instructs NOAA to maintain its Environmental Services Working Group to provide advice for prioritizing weather research and for existing and emerging technologies, to identify opportunities to improve communications between all entities within the weather enterprise, and to advise on other issues. Section 401 requires the working group to be composed of at least 15 members, experts in all fields relevant to weather, and requires the working group to submit an annual report on NOAA's progress in implementing working group recommendations. Section 402 requires the director of the White House Office of Science and Technology Policy to establish an Interagency Committee for Advancing Weather Services. The committee is charged with coordinating weather research and innovation activities across the federal government. The Federal Coordinator for Meteorology will serve as co-chair of the committee. Section 403 allows the directors of OAR and NWS to detail up to 10 personnel from one office to the other in an exchange program to allow OAR scientists and NWS operational staff to interact. Section 404 allows the NWS director to host postdoctoral fellows and academic researchers—for up to one year—at any of the NOAA National Centers for Environmental Prediction, to allow forecasters and academic researchers to interact directly and to foster innovation at NWS. Section 405 requires the NWS director to designate at least one warning coordination meteorologist at each weather forecast office to increase impact-based decision support services. The legislation requires that each warning coordination meteorologist (1) provide service to the geographic area covered by the weather forecast office; (2) work with all users of NWS products and services to evaluate their utility; (3) collaborate with state, local, and tribal agencies to improve products and services for those entities; (4) maintain severe weather call lists, severe weather policy and procedures, and severe weather dissemination methodologies and strategies; and (5) work with state, local, and tribal emergency managers to ensure better preparedness and response. The NWS director may assign other responsibilities in addition to the five required above. The NWS director also may place a warning coordination meteorologist with a state or local emergency manager. Section 406 requires NOAA to assess its system for issuing hazardous weather and water event watches and warnings within two years of enactment (i.e., by April 2019) and to submit the resulting report to Congress. The assessment's focus is to include how best to communicate risks that would improve mitigation, enhance broad and rapid communication to the public, preserve benefits of the existing system, and maintain the system's utility for government and commercial users. The legislation requires NOAA to consult with a wide variety of individuals and entities within the weather enterprise and to make use of NAS, if practicable. The legislation also requires NOAA to make recommendations to Congress to improve the system, based on the results of the study. Section 407 authorizes the NWS director to establish the NOAA Weather Ready All Hazards Award Program, which would provide annual awards to individuals or organizations that use or provide NOAA Weather Radio receivers or transmitters to save lives and protect property. Individuals and organizations that employ tools other than NOAA Weather Radios for early warnings also may qualify for the award. Section 408 requires NOAA to submit a report to Congress within 60 days of enactment (i.e., by June 2017) that analyzes the impact of the U.S. Air Force withdrawal from the U.S. Weather Research and Forecasting Model. Section 409 requires NOAA to continue its contract with an external organization to conduct a baseline analysis of NWS operations and workforce. Section 410 requires NOAA to submit a report to Congress within 180 days of enactment (October 2017) on the use of contractors at NWS for the FY2017 fiscal year. The section also requires that NOAA include eight different types of information in this report and make that information publicly available each year within 180 days after the end of the fiscal year. Section 411 requires the NWS director to review the service's research, products, and services regarding modeling and forecasting in the urban environment and to submit a report to Congress on the findings. Section 412 authorizes NOAA to establish outreach mechanisms to the weather enterprise by assessing the agency's forecasts and forecast products and by determining the highest forecast needs of the weather-enterprise community. Section 413 requires NOAA to acquire backup capabilities for its WP-3D Orion and G-IV hurricane hunter aircraft. Section 414 requires the Secretary of Commerce to complete a study within 180 days of enactment (October 2017) on gaps in coverage of NEXRAD. The section requires the Secretary to identify areas that have limited or no NEXRAD coverage for which no or insufficient warnings were given for hazardous weather events or for which degraded forecasts resulted in deaths, injuries, or substantial property damage. It also requires the Secretary to submit a report on the study's findings to Congress and to submit within 90 days of the study's completion (i.e., by January 2018) the Secretary's recommendations for improving hazardous weather detection and forecasting in the areas identified as having limited or no NEXRAD coverage. Congress provides broad and far-ranging direction regarding weather-related activities for NOAA and NWS in the first four titles of P.L. 115-25 . Some might argue that this law may represent the most widely varied set of provisions addressing weather issues at NOAA in a single bill since NOAA was first organized. Throughout P.L. 115-25 , Congress requires reports on progress in meeting its authorizations over time frames from 30 days to several years. The reports will allow Congress to track NOAA's progress in implementing the specific requirements outlined in the law over the short term. The law's long-term goal is to improve weather forecasts and warnings to reduce damage to property and decrease the number of injuries and fatalities from severe weather events. Some of the issues Congress might consider in the short term include whether the level of enacted appropriations for activities authorized in P.L. 115-25 is commensurate with the scale and scope of those activities. Over the long term, Congress may choose to assess whether the law's research-to-operations focus is resulting in improved forecasts and warnings. In addition, congressional interest in the use of commercially provided weather data has spurred NOAA to examine the viability of commercial data sources. The new law aims to give Congress more information to help evaluate the potential for commercial data sources to represent an increasingly greater share of data useful for improving forecasts and warnings. Conversely, the activities authorized under P.L. 115-25 also may indicate the limitations for using commercial data in producing better forecasts and warnings, whether those limitations arise for financial, data-quality, availability, or other reasons. Title IV of P.L. 115-25 addresses more than a dozen different weather-related issues, most of which pertain to improving coordination and communication between NOAA and the weather enterprise. In the future, Congress could conduct hearings and other activities related to its oversight responsibilities, to seek information from stakeholders outside the federal government to help gauge the effectiveness of NOAA's implementation of activities authorized in Title IV. The test of whether congressional direction in P.L. 115-25 is effective ultimately will be gauged by how improvements in forecasts and warnings ameliorate the amount of damage from severe weather and reduce the numbers of injuries and fatalities from dangerous storms.
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Congress provides direction on a broad range of the National Oceanic and Atmospheric Administration's (NOAA's) weather-related activities in Titles I through IV of P.L. 115-25, the Weather Research and Forecasting Innovation Act of 2017, signed into law on April 18, 2017. The legislation aims to improve NOAA's weather forecasts and warnings, both for the protection of lives and property and for the enhancement of the national economy. The act also covers topics such as future weather satellite data needs, gaps in the Next Generation Weather Radar (NEXRAD) coverage, and improvements in the transfer of advances in research and development to National Weather Service (NWS) operations. Title V of P.L. 115-25 covers NOAA's tsunami program activities and is addressed in CRS Report R44834, The U.S. Tsunami Program Reauthorization in P.L. 115-25: Section-by-Section Comparison to P.L. 109-479, Title VIII. Congress began holding hearings on many of the issues addressed in P.L. 115-25 nearly four years ago, and the final law incorporates components of various bills introduced in the House and Senate since the 113th Congress. For example, the issue of improving seasonal forecasts, reflected in Title II of P.L. 115-25, was introduced in S. 1331 in the 114th Congress. Congress also has held hearings on how NOAA could use commercially provided satellite weather data, and NOAA has responded by initiating a preliminary program on the use of commercial data. P.L. 115-25 codifies NOAA's authority to purchase commercial weather data and requires the agency to deliver a strategic plan for commercial data acquisition within 180 days of enactment. Members also have expressed interest in improving coordination and communication throughout the weather enterprise, topics both addressed in Title IV of P.L. 115-25. This report provides an overview of each title in P.L. 115-25. Among other topics, Title I addresses the transfer of research and development (R&D) advances from NOAA's Office of Oceanic and Atmospheric Research (OAR) to operations at NWS. Title I also includes a sense of Congress that not less than 30% of the funding for weather R&D at NOAA should be made available to the nonfederal weather research community; Title II focuses on improving forecasts at NWS; Title III addresses the future of weather satellites and NOAA's use of commercially provided weather data ; and Title IV provides congressional direction to NOAA on coordinating weather data and observations; improving the exchange of expertise among NOAA entities; enhancing communication of watches and warnings of hazardous weather events; and conducting outreach to the nonfederal and federal entities in the broader weather enterprise, among other topics. P.L. 115-25 also includes requirements for various reports to Congress and other goals and deliverables, many of which are due during the 115th Congress. As a result, Congress is expected to have many opportunities to track NOAA's progress in implementing P.L. 115-25. Ongoing questions include if appropriated amounts will be sufficient to meet authorized activities and priorities expressed in the law and to what degree NOAA will implement the activities and priorities provided in P.L. 115-25.
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On October 18, 2005, the FY2006 Department of Homeland Security (DHS) Appropriations Act ( P.L. 109-90 ) was signed into law. The House approved the conference report ( H.Rept. 109-241 ) on October 6, 2005 by a vote of 347-70, and the Senate approved the conference report on October 7, 2005 by voice vote. No amendments to the conference report were made during floor debate in either chamber. P.L. 109-90 provides a net appropriation of $31.9 billion for DHS for FY2006. This amount represents an increase of $1.3 billion or 4% compared to the FY2005 enacted level; and an increase of $1.2 billion or nearly 4% compared to the FY2006 request. On September 29, 2005, the conference committee approved and filed the conference report ( H.Rept. 109-241 ) to H.R. 2360 , the FY2006 Department of Homeland Security (DHS) Appropriations Act. The conferees agreed to recommend a net appropriation of $31.9 billion for DHS for FY2006. This amount represents an increase of $1.3 billion or 4% compared to the FY2005 enacted level; and an increase of $1.2 billion or nearly 4% compared to the FY2006 request. On July 14, the Senate passed H.R. 2360 96-1. The Senate version of H.R. 2360 recommends a net appropriation of $31.9 billion for DHS for FY2006. This amount includes $30.8 billion in discretionary budget authority. This amount represents an increase of $1.3 billion or 4% compared to the FY2005 enacted level; and an increase of $1.2 billion or nearly 4% compared to the FY2006 request. On May 17, 2005, the House passed H.R. 2360 424-1. The bill provides a net appropriation of $31.9 billion for DHS. This amount includes $30.8 billion in discretionary budget authority, which represents an increase of $1.3 billion, or 4%, compared to the baseline FY2005 enacted level (without advance or emergency appropriations); and an increase of $1.2 billion, or nearly 4%, compared to the FY2006 request. The President's budget request for FY2006 was submitted to Congress on February 7, 2005. The Administration requested $41.1 billion in gross budget authority for FY2006 (including mandatories, fees, and funds). The Administration is requesting a net appropriation of $30.6 billion in net budget authority for FY2006, of which $29.6 billion is discretionary budget authority, and $1 billion is mandatory budget authority. The FY2005 enacted net appropriated budget authority for DHS was $40.2 billion, including an advance appropriation of $2.058 billion for Bioshield and $7.145 billion in emergency appropriations; without Bioshield or the emergency appropriations, the FY2005 net appropriated budget authority for DHS was $30.6 billion. Without including Bioshield, the FY2006 request for an appropriation of $30.6 in net budget authority represents no increase over the FY2005 enacted amount. Table 1 summarizes the legislative status of DHS appropriations for FY2006. Data used in this report include data from the President's Budget Documents, the FY2006 DHS Congressional Budget Justifications , the FY2006 DHS Budget in Brief , and the House Appropriations Committee Homeland Security tables of May 20, 2005. Data used in Table 3 and Table 12 are taken from various sections of the FY2006 President's Budget. These amounts do not correspond to amounts presented in Tables 4-11 , which are based on data from tables supplied by the Appropriations Subcommittees and from the FY2006 DHS Congressional Budget Justifications in order to best reflect the amounts that will be used throughout the congressional appropriations process. The most recent update of this report uses amounts contained in: the House-passed version of H.R. 2360 , and the attached report ( H.Rept. 109-79 ); the Senate-passed version of H.R. 2360 , and the attached report ( S.Rept. 109-83 ); the conference-approved version of H.R. 2360 and the attached report ( H.Rept. 109-241 ); and P.L. 109-90 . FY2006 enacted amounts shown in the tables in this final version of the report may not match amounts listed in P.L. 109-90 , as the tables include changes enacted by P.L. 109-148 , the Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico, and Pandemic Influenza Act of 2006 . The tables do not reflect the 1% across-the-board rescission that was also enacted by P.L. 109-148 . At the time of the final update of this paper it was unclear at to how this rescission would be applied across DHS discretionary accounts. This report describes the President's FY2006 request for funding for DHS programs and activities, as submitted to Congress on February 7, 2005. This report compares the enacted FY2005 amounts to the request for FY2006. This report will also track legislative action and congressional issues related to the FY2006 DHS appropriations bill, with particular attention paid to discretionary funding amounts. However, this report does not follow specific funding issues related to mandatory funding—such as retirement pay—nor does the report systematically follow any legislation related to the authorization or amendment of DHS programs. The maximum budget authority for annual appropriations (including DHS) are determined through a two-stage congressional budget process. In the first stage, Congress sets overall spending totals in the annual concurrent resolution on the budget. Subsequently, these amounts are allocated among the various appropriations committees, usually through the statement of managers for the conference report on the budget resolution. These amounts are known as the 302(a) allocations. They include discretionary totals available to the House and Senate Committees on Appropriations for enactment in annual appropriations bills through the subcommittees responsible for the development of the bills. In the second stage of the process, the appropriations committees allocate the 302(a) discretionary funds among their subcommittees for each of the appropriations bills. These amounts are known as the 302(b) allocations. These allocations must add up to no more than the 302(a) discretionary allocation, and form the basis for enforcing budget discipline, since any bill reported with a total above the ceiling is subject to a point of order. 302(b) allocations may be adjusted during the year as the various appropriations bills progress towards final enactment. The Senate budget resolution, S.Con.Res. 18 was introduced on March 11, 2005, and passed the Senate on March 17, 2005. S.Con.Res. 18 provides $848.8 billion in discretionary spending. The House budget resolution, H.Con.Res. 95 , was introduced on March 11, 2005, and passed the House on March 17, 2005. H.Con.Res. 95 proposed $843 billion in discretionary budget authority. On April 28, 2005 the conference committee reported, and both the House and Senate passed, H.Rept. 109-62 providing $843 billion in discretionary budget authority for FY2006. The House Appropriations Committee revised its 302(b) allocations on November 11, 2005, which allocates $30.8 billion in discretionary budget authority for homeland security. The Senate Appropriations Committee revised its 302(b) allocation on November 18, 2005, and reported S.Rept. 109-184 which allocates $30.8 billion in discretionary budget authority for DHS. Federal government spending involves a multi-step process that begins with the enactment of a budget authority by Congress in an appropriations act. Federal agencies then obligate funds from the enacted budget authority to pay for their activities. Finally, payments are made to liquidate those obligations; the actual payment amounts are reflected in the budget as outlays. Budget authority is established through appropriations acts or direct spending legislation and determines the amounts that are available for federal agencies to spend. The Antideficiency Act prohibits federal agencies from obligating more funds than the budget authority that was enacted by Congress. Budget authority may be indefinite, however, when Congress enacts language providing "such sums as may be necessary" to complete a project or purpose. Budget authority may be available on a one-year, multi-year, or no-year basis. One-year budget authority is only available for obligation during a specific fiscal year; any unobligated funds at the end of that year are no longer available for spending. Multi-year budget authority specifies a range of time during which funds can be obligated for spending; no-year budget authority is available for obligation for an indefinite period of time. Obligations are incurred when federal agencies employ personnel, enter into contracts, receive services, and engage in similar transactions in a given fiscal year. Outlays are the funds that are actually spent during the fiscal year. Because multi-year and no-year budget authorities may be obligated over a number of years, outlays do not always match the budget authority enacted in a given year. Additionally, budget authority may be obligated in one fiscal year but spent in a future fiscal year; especially with certain contracts. In sum, budget authority allows federal agencies to incur obligations and authorizes payments, or outlays, to be made from the Treasury. Discretionary agencies and programs, and appropriated entitlement programs, are funded each year in appropriations acts. Gross budget authority, or the total funds available for spending by a federal agency, may be composed of discretionary and mandatory spending. Of the $41 billion gross budget authority requested for DHS in FY2006, 83% is composed of discretionary spending and 17% is composed of mandatory spending. Discretionary spending is not mandated by existing law and is thus appropriated yearly by Congress through appropriations acts. The Budget Enforcement Act of 1990 defines discretionary appropriations as budget authority provided in annual appropriation acts and the outlays derived from that authority, but it excludes appropriations for entitlements. Mandatory spending, also known as direct spending, consists of budget authority and resulting outlays provided in laws other than appropriation acts and is typically not appropriated each year. However, some mandatory entitlement programs must be appropriated each year and are included in the appropriations acts. Within DHS, the Coast Guard retirement pay is an example of appropriated mandatory spending. Offsetting funds are collected by the federal government, either from government accounts or the public, as part of a business-type transaction such as offsets to outlays or collection of a fee. These funds are not counted as revenue. Instead, they are counted as negative outlays. DHS net discretionary budget authority, or the total funds that are appropriated by Congress each year, is composed of discretionary spending minus any fee or fund collections that offset discretionary spending. Some collections offset a portion of an agency's discretionary budget authority. Some of these fees offset spending at the account level and are subtracted from the Appropriations Committee tables directly below the program they offset. An example of this is the Federal Protective Service, which is immediately offset in the appropriations tables by an intergovernmental transfer from the General Services Administration. Other discretionary fees offset spending at the agency level and are thus subtracted from the discretionary budget authority of the agency to arrive at the actual appropriated level. An example of this is the Immigration Inspection fee, which is collected at Ports of Entry by CBP personnel and is used to offset both the CBP and ICE appropriations. Other collections offset an agency's mandatory spending. They are typically entitlement programs under which individuals, businesses, or units of government that meet the requirements or qualifications established by law are entitled to receive certain payments if they establish eligibility. The DHS budget features two mandatory entitlement programs: the Secret Service and Coast Guard retired pay accounts (pensions). Some entitlements are funded by permanent appropriations, others by annual appropriations. The Secret Service retirement pay is a permanent appropriation and as such is not annually appropriated, while the Coast Guard retirement pay is annually appropriated. In addition to these entitlements, the DHS budget contains offsetting Trust and Public Enterprise Funds. These funds are not appropriated by Congress; they are available for obligation and included in the President's budget to calculate the gross budget authority. Table 3 tabulates all of the offsets within the DHS budget as enacted for FY2005 and in the FY2006 request. The Homeland Security Act of 2002 ( P.L. 107-296 ) transferred the functions, relevant funding, and most of the personnel of 22 agencies and offices to the new Department of Homeland Security (DHS) created by the act. DHS is organized into four major directorates : Border and Transportation Security (BTS); Emergency Preparedness and Response (EPR); Science and Technology (S&T); and Information Analysis and Infrastructure Protection (IAIP). BTS, the largest of the four directorates, contains three main agencies: Customs and Border Protection (CBP); Immigration and Customs Enforcement (ICE); and Transportation Security Administration (TSA). EPR is comprised primarily of the former Federal Emergency Management Agency (FEMA), and IAIP houses the Homeland Security Operations Center (HSOC), Information Analysis (IA) and the Infrastructure Protection (IP) offices. S&T is home to the Office of National Laboratories, Homeland Security Laboratories, and the Homeland Security Advanced Research Projects Agency (HSARPA). U.S. Citizenship and Immigration (USCIS), the U.S. Coast Guard, and the U.S. Secret Service are all stand-alone agencies within DHS directly under the Secretary of Homeland Security. Appropriations measures for DHS have been organized into four titles: Title I Departmental Management and Operations; Title II Security, Enforcement, and Investigations; Title III Preparedness and Recovery; and Title IV Research and Development, Training, Assessments, and Services. Title I contains appropriations for the Office of Management, the Office of the Secretary, the Office of the Chief Financial Officer (CFO), the Office of the Chief Information Officer (CIO), and the Office of the Inspector General (OIG). Title II contains appropriations for the Office of the Undersecretary for BTS, CBP, Immigration ICE, TSA, the Coast Guard, the Secret Service, and the newly proposed Office of Screening Operations (SCO). Title III contains appropriations for EPR and the Office of State and Local Government Coordination and Preparedness (SLGCP). Title IV contains appropriations for USCIS, IAIP, S&T, and the Federal Law Enforcement Training Center (FLETC). On July 13, 2005, the Secretary of DHS, Michael Chertoff, announced the results of the months-long Second Stage Review (2SR) that he undertook upon being confirmed as DHS Secretary. The proposed changes affect many aspects of the Department. The Secretary has designed a six-point agenda based upon the results of the 2SR: increase overall preparedness, particularly for catastrophic events; create better transportation security systems to move people and cargo more securely and efficiently; strengthen border security and interior enforcement and reform immigration processes; enhance information sharing with our partners; improve DHS financial management, human resources development, procurement and information technology; and realign the DHS organization to maximize mission performance. On July 22, 2005, the Administration also submitted a revised budget request for DHS to reflect the organizational and policy changes recommended by the 2SR. The Administration submitted its requested amendments to the FY2006 budget request for DHS after both the House and Senate had passed their versions of H.R. 2360 . Therefore, any proposed changes were addressed during the conference on H.R. 2360 . The conferees noted that, for the most part, they have complied with the Administration's request to restructure DHS, and P.L. 109-90 adopts the following changes: abolishes the Office of the Undersecretary for Border and Transportation Security, redistributing its functions to other locations within DHS; splits the Directorate of Information Analysis and Infrastructure Protection into two new operational components: Analysis and Operations, and the Preparedness Directorate; moves all state and local grants within DHS to the Preparedness Directorate; transfers the Federal Air Marshals program from ICE to TSA; and includes and expands the role of Office of Policy. Table 4 is a summary table comparing the enacted appropriations for FY2005 and the requested amounts for FY2006. The Administration requested an appropriation of $30.6 billion in net budget authority for FY2006. The FY2005 enacted net appropriated budget authority for DHS was $40.2 billion, including an advance appropriation of $2.058 billion for Bioshield and $7.145 billion in emergency appropriations; without Bioshield or the emergency appropriations, the FY2005 net appropriated budget authority for DHS was $30.6 billion. Without including Bioshield, the FY2006 request for an appropriation of $30.6 in net budget authority represents no increase over the FY2005 baseline enacted amount. House-passed H.R. 2360 provided a net appropriation of $31.9 billion for DHS for FY2006. This amount represents a $1.3 billion increase over the FY2005 base appropriation, and a $1.2 billion, or nearly 4%, increase compared to the FY2006 request. Senate-passed H.R. 2360 also recommended $31.9 billion ($30.8 billion in discretionary budget authority) for DHS for FY2006. P.L. 109-90 provides $31.9 billion for DHS in FY2006. Title I covers the general administrative expenses of DHS. It includes the Office of the Secretary and Executive Management (OS&EM), which counts the immediate Office of the Secretary and 14 entities that report directly to the Secretary; the Under Secretary for Management (USM) and its components, such as offices of the Chief Procurement Officer, Chief Human Capital Officer, and Chief Administrative Officer; the Office of CIO; the Office of the Chief Financial Officer (OCFO); and OIG. FY2006 requests relative to comparable FY2005 enacted appropriations: OS&EM, $195.8 million, an increase of $110.8 million (+130%); USM, $146.6 million, a decrease of $4.5 million (-3%); OCIO, $303.7 million, an increase of $28.4 million (+10%); OCFO, $18.5 million, an increase of $5.5 million (+42%); and OIG, $83 million, an increase of $700,000 (+1%). Table 4 shows appropriations for FY2005 and congressional action on the requests for FY2006, and Table 5 provides account-level details for Title I. The total FY2006 request for Title I is $748 million. This represents a 28% increase over the FY2005 enacted level. Unhappy and otherwise frustrated with "the Department's inability to respond quickly, or at all, to items of Congressional interest or direction," "extremely concerned by the Department's inability to submit reports on a timely basis," and "very concerned about the results of the 2004 financial audit," among other complaints, House appropriators slashed $62.6 million from the OS&EM request, recommending $133.2 million, which was $48.2 million above the amount provided in FY2005. Among the entities bearing the brunt of this cut were the Office of Security (-$10 million), which was criticized for not assuring that unclassified information was clearly marked and distinguished from classified and other security sensitive information within DHS documents; the Operation Integration Staff (-$1.9 million), which was left to continue to rely upon a half staff of detailees from other components within DHS; and Regions (-$49.8 million), which, with regional structure still under internal DHS review, was considered to be "premature" for any funding at the time. The amount was reduced to $113 million as a result of qualifying conditions specified in Title I. Approving the recommendations of appropriators, the Senate chopped $71.2 million from the OS&EM request, approving $124.6 million. Among the entities hardest hit by this cut were the Office of Security (-$6 million); the Executive Secretary (-$1.3 million); the new Office of Policy, Planning, and International Affairs (OPPIA) (-$1.5 million); the Office of Public Affairs (-$1 million); the Operation Integration Staff (-$9.4 million), due to its integration and coordination functions being assumed by OPPIA; and the Regions Initiative (-$49.8 million), due to the lack of a required consolidation and collocation plan. In brief, no funding was approved for the latter two accounts. P.L. 109-90 provides $79 million for OS&EM instead of the $113 million approved by the House and the $125 million approved by the Senate. Compared with the President's budget request, the OS&EM account receiving major reduction was the unfunded Regions area (-$50 million), followed by the Office of Policy (-$4 million), the Executive Secretary (-$1 million), Office of Public Affairs (-$1 million), and Office of Legislative and Intergovernmental Affairs (-$1 million). The Office of Policy is a modified version of OPPIA. It is one of several new or modified entities resulting from the Secretary's 2SR reorganization of DHS. Acting on a July 21, 2005, DHS budget amendment requesting the department's appropriations structure be modified for FY2006, appropriations conferees endorsed much of the 2SR reorganization plan. Within the OS&EM account, the House approved $8.7 million for the new OPPIA, which had been proposed in the DHS budget justification. Immediately assisting the Secretary, OPPIA was to be headed by an Assistant Secretary for Policy and Planning and was to include other related staff located within the Office of the Under Secretary for BTS, as well as such existing entities as the Office of International Affairs, the Deputy Chief of Staff for Policy, the Homeland Security Advisory Council, and USM. Senate appropriators reduced the OPPIA allotment and indicated an expectation that it would assume the role of the Operation Integration Staff. A similar DHS restructuring had been discussed at a January 26, 2005, oversight hearing conducted by the Senate Committee on Homeland Security and Governmental Affairs. Participating was one of the authors of a December 2004 Heritage Foundation report, DHS 2.0: Rethinking the Department of Homeland Security, which had recommended (1) eliminating the DHS management directorate and USM, but relocating the chief management officers to the office of the Deputy Secretary; and (2) establishing an Under Secretary for Policy, who would be assisted by a unified policy planning staff. It was thought that the first reform would eliminate an unnecessary layer of bureaucracy and otherwise strengthen the roles of the chief management officers, and that the second reform would bring unity to DHS through the development of proactive, strategic homeland security policy and plans. Indications were that these reforms, among others, would be considered for inclusion in subsequent legislation reauthorizing DHS programs within the jurisdiction of the Senate committee. A DHS authorization bill ( H.R. 1817 ) later reported from the House Committee on Homeland Security ( H.Rept. 109-71 ), however, made no mention of these particular suggested reforms. The House also approved a new general provision to ensure that the DHS Privacy Officer would report privacy abuses to Congress and have access to all documents and information necessary to carry out statutory responsibilities. The provision was added in committee because it was thought that the Privacy Officer "should provide Congress, and thus the public, an unfettered view into the operations of the Department and its impact on personal privacy." In addition to the policy and planning issues, and the reorganization issues, several personnel issues may be of interest to Congress during the current appropriations cycle. This Office (also referred to in the budget justification as the Office of Human Resources) establishes policy and procedures and provides oversight, guidance, and leadership for human resources management (HRM) functions within the DHS. It is organized into three major components as follows. Human Capital Innovation is responsible for designing and implementing the department's new HRM system, referred to as Max-HR, including human capital strategic planning efforts and HR information technology components, including payroll modernization. The activities associated with the new system's regulatory process and the design and contract management processes also are part of the Innovation component. Human Capital Policy and Programs is responsible for establishing corporate human resources policy, including training and development programs, in support of headquarters and department-wide initiatives. This component manages program and policy development and execution for HRM at DHS, including workforce planning, corporate talent, executive resources, recruitment and branding, benefits, and work life programs. Human Capital Operational Services, newly established in FY2005, provides comprehensive human resources services for all headquarters organizations and manages the process of optimizing shared human capital services within DHS. The principal human capital officers from each component of the department comprise a Human Resources Council which coordinates activities across DHS. The Office of the CHCO reports to the Undersecretary for Management and its appropriation is included in that of the Undersecretary. For FY2005, the Office of the CHCO received an appropriation of $43.2 million and a staffing level of 49 full-time equivalent employees (FTEs). Of this total, $7.2 million funded HR operations and $36 million (non-recurring) funded the development and implementation of Max-HR. Twelve of the FTEs were attached to Max-HR. The President's FY2006 budget proposed an appropriation of $61.996 million and 50 FTEs for the Office of the CHCO. The request represents an increase of $18.796 million and one FTE over the FY2005 appropriation. Especially noteworthy in the budget proposal were the funding requests of $593,000 for the Office of the CHCO and $53 million for Max-HR as discussed below. The proposed increase of $593,000 was allocated as follows. For workforce strategies, $180,000 for one new FTE is requested. The additional FTE would "analyze the impact of current and/or potential occupational or skill gaps, and develop various human capital strategies and plans related to recruiting, retention, learning and development interventions needed to close these gaps." The National Defense Authorization Act for FY2004 mandates an annual assessment of employees and the organization. To fund the employee survey and analysis of the results, $413,000 was requested. An appropriation of $53 million is requested for the department's new HRM system, an increase of $17 million over the FY2005 funding. The Office of the CHCO serves as the "command center" for Max-HR. Twelve FTEs continue to staff Max-HR. The Appropriations Committee tables that accompanied the House-passed bill show an appropriation of $61.951 million for the Office of the CHCO. This amount would have been allocated as $8.951 million for salaries and expenses ($45,000 below the President's request of $8.996 million) and $53 million for Max-HR (the same amount as the President's request). According to the committee, however, amendments agreed to by the House would have reduced the funding for the Office of the Under Secretary for Management by $96.1 million, thereby resulting in reductions, unspecified, in the Under Secretary accounts. Full year funding would have been denied for the one new FTE in the Office of the CHCO requested by the President. The committee assumed that the "new staff will be on board beginning in the second quarter of FY2006." Opposition to any change in the funding for Max-HR was stated by the Office of Management and Budget, DHS itself, and Senator George Voinovich, with particular emphasis on the adverse impact on managerial and supervisory training. The National Treasury Employees Union supported the reduction, saying that $18 million would have funded contractors working on the design of the performance management component and $6 million would have funded the establishment of internal labor relations boards at DHS. Section 516 of the House-passed bill would have continued to authorize transfer from the Office of Personnel Management (OPM) to DHS the authority to conduct personnel security and suitability background investigations, update investigations, and periodically re-investigate applicants for, or appointees in certain DHS positions. Concurring with the Appropriations Committee, the Senate-passed bill provided the Office of the CHCO with the appropriation requested by the President, including $53 million for Max-HR. DHS is directed to report to the committee by February 18, 2006, on implementation progress, improved mission effectiveness, and projected costs for each fiscal year over the life of the new personnel system. The general provision on background security investigations was not included in the Senate-passed bill. P.L. 109-90 provides funding of $38.9 million for the Office of the CHCO, some $23 million less than the President's budget proposal. The amount would be allocated as $8.9 million for salaries and expenses ($96,000 below the President's request) and $30 million for Max-HR ($23 million below the President's request). As proposed by the House, a general provision at Section 516 on background investigations is included in the conference agreement. The conference report directs that background investigations be conducted expeditiously for DHS employees, particularly those in the Office of the Secretary and Executive Management; Office of the Under Secretary for Management, Analysis, and Operations; Immigration and Customs Enforcement; the Directorate of Science and Technology; and the Directorate for Preparedness. The conferees, pursuant to the Secretary Chertoff's organizational restructuring program that was provided to the Congress on July 13, 2005, propose to disband the Information Analysis and Infrastructure Protection (IAIP) Directorate. The conferees propose transferring the functions that existed within the erstwhile IAIP Directorate to, among other entities, the newly established Preparedness Directorate within Title III and two new Offices within Title I—the Office of Intelligence and Analysis and the Office of Operations Coordination. As such, the activities of Information Analysis (IA) and Infrastructure Protection (IP), formerly under Title IV, Research and Development, Training, Assessments and Services of the DHS appropriations bills, would be separated. The information analysis and operations coordination activities would be funded through a new Analysis and Operations bureau under which the new Operating Expenses account appears in the Conference agreement. Within the H.R. 2360 , as approved by conferees, the information analysis functions would fall within Title I - Departmental Management Operations. Organizationally, under Secretary Chertoff's restructuring plan, DHS proposed that the former Assistant Secretary for Intelligence Analysis position be replaced with a Chief Intelligence Officer position, which would report directly to the Secretary. The proposed Office of Intelligence and Analysis will be "... comprised of analysts within the former Information Analysis Directorate and draw upon the expertise of other DHS components with intelligence collection and analysis operations." P.L. 109-90 adopts these proposals. As previous iterations of this report have outlined, prior to Secretary Chertoff's proposed restructuring program, the IAIP Directorate had two accounts—(1) Management and Administration (M&A), which included the budgets for the Office of the Under Secretary for IAIP and Other Salaries and Expenses—and (2) Assessments and Evaluations (A&E), which covered intelligence analysis and infrastructure protection/vulnerability assessments. The President's request for FY2006 for M&A for FY2006 was $204 million, and for A&E it was $669.2 million, for a total IAIP requested budget amount of $872.2 million. On July 22, 2005, based on Secretary Chertoff's organizational restructuring plan, the President proposed a number of budget amendments for FY2006 for the Department of Homeland Security. According to a presidential communication, the overall discretionary budget authority for FY2006 for the department would not be increased. In short, under the president's proposed budget amendments, $311.2 million was requested for the new Analysis and Operations bureau, Operating Expenses account. Table 6 outlines the changes germane to the IA function made pursuant to this communication. According to the conference report, $255.5 million would remain available until September 30, 2007, for "... necessary expenses for information analysis and operations coordination activities authorized by Title II of the Homeland Security Act of 2002 (6 U.S.C. et. seq.)." Under the budget structure as agreed to by the conferees, these funds would fall within Title I of the appropriations bill, under the Analysis and Operations bureau, operating expenses account. This represents a reduction of $55.7 million or 17.9% from the requested amount of $311.2 million. Of the amount transferred into Analysis and Operations from the erstwhile IAIP, M&A account, the conferees, reduced the amount based: ... on a continuing large number of vacancies. The Secretary shall submit to the Committees on Appropriations no later than February 10, 2006, a report that identifies staffing and other resource requirements that reconciles the Department's intelligence mission responsibilities under the various Acts and executive orders. Title II funds Security, Enforcement, and Investigations. The largest component of Title II was the Directorate of Border and Transportation Security (BTS). BTS was comprised of the Office of the Under Secretary for BTS, CBP, ICE, and TSA. For FY2006, the Administration proposed the creation of SCO within BTS (now located in the Office of Policy under P.L. 109-90 ), that would coordinate the passenger (and to some extent the cargo) screening operations of BTS. Also included in Title II (though they were not operationally a part of the BTS Directorate) are the U.S. Coast Guard, and the U.S. Secret Service. With the passage of P.L. 109-90 the Office of the Undersecretary for BTS is eliminated, and the agencies (CBP, ICE, and TSA) that were a part of BTS report directly to the Office of the Secretary. Table 7 shows the FY2005 enacted and FY2006 requested appropriations for Title II. The Administration requested an appropriation of $20.6 billion in net discretionary budget authority for Title II for FY2006. This amount represented a decrease of $13 million or less than 1% decrease compared to the FY2005 enacted total of $20.7 billion. While almost every account in Title II is up, the requested gross increase of $2,138 million from FY2005 to FY2006 is more than offset by the total increase in offsetting collections of $2,202 million in Title II; $1,780 million of which would be the result of the proposed fee increase within TSA. For the FY2006 request, the BTS Directorate accounts for 67% of total appropriated DHS budget authority, while Title II accounts for 69% of total appropriated DHS budget authority. House-passed H.R. 2360 recommended a net appropriation of nearly $22 billion for activities and agencies of Title II. This amount represented a $1.4 billion or nearly 7% increase over the President's requested level for FY2006, and a $728 million or 3% increase over the FY2005 enacted level (including supplemental appropriations). H.Rept. 109-79 did not approve the TSA security fee increase requested by the Administration. House-passed H.R. 2360 therefore shows an increased appropriation, as compared to the Administration's request. House-passed H.R. 2360 provided $22 billion for Title II, which accounts for 69% of total DHS budget authority. Senate-passed H.R. 2360 provided $22.2 billion for the activities of Title II. This amount represented an increase of $1,625 million or 7% as compared to the President's request, an increase of $203 million or 1% as compared to the House-passed amount; and an increase of $931 million or 4% as compared to the FY2005 enacted amount. The $22.2 billion that would have been provided by the Senate-passed version of H.R. 2360 would have accounted for 70% of total DHS budget authority in FY2006. P.L. 109-90 provides $22.4 billion for the activities of Title II, representing and increase of $141 million or less than 1% as compared to FY2005, an increase of $1,835 million or 9% as compared to the request for FY2006, an increase of $403 million or 2% as compared to the House-passed version of H.R. 2360 , and an increase of $208 million or 1% as compared to the Senate-passed version of H.R. 2360 . As a part of the FY2006 request, the Administration proposed the creation of a new SCO to coordinate DHS' efforts to screen people (and to some extent cargo) as they enter and move throughout the country. Programs proposed for transfer to this office included the US Visitor and Immigrant Status Indicator Project (US-VISIT); Free and Secure Trade (FAST) and NEXUS/SENTRI, from CBP; Secure Flight, Transportation Worker Identification Credential (TWIC), Registered Traveler, Hazardous Materials (HAZMAT) background checks, and the Alien Flight School background checks program from TSA. The Administration requested $846 million in gross budget authority for SCO for FY2006. The request included $390 million for the US-VISIT program (an increase of $50 million over the enacted FY2005 amount), $94 million for Secure Flight (an increase of $49 million over the enacted FY2005 amount), $7 million for the driver registration component of FAST, $14 million for NEXUS/SENTRI, and $20 million for the stand up of the Credentialing Coordination Office. In addition to appropriated activities, SCO would have overseen several fee funded activities including $245 million for TWIC and other TSA credentialing activities; $23 million for the Registered Traveler program; $44 million for HAZMAT checks; and $10 million for Alien Flight School background checks. The net requested appropriation for SCO is $525 million. The Committee noted that while the SCO office "may have merit," a broader justification is required for it than what was given by the Department. The Committee therefore denied this consolidation and recommended no funds for SCO. Instead, the Committee recommended establishing a new Office of Transportation Vetting and Credentialing within TSA to oversee the Secure Flight, Crew Vetting, Registered Traveler, TWIC, HAZMAT, and Alien Flight School programs. US-VISIT, FAST, and NEXUS/SENTRI would have been funded within a new BTS Automation Modernization office. The Senate-passed version of H.R. 2360 denied the creation of the SCO. In contrast to the House-passed version of H.R. 2360 , the Senate-passed version left funding for the FAST and NEXUS/SENTRI programs within CBP rather than placing them within a new BTS Automation Modernization office. Both the House and Senate-passed versions of the bill left funding for the TSA programs proposed for transfer to the SCO within TSA. P.L. 109-90 provides $4 million in Title I, under the Departmental Operations and Management for an Office of Screening Coordination and Management. However, the P.L. 109-90 does not transfer any of the programs requested for transfer by the President to this office. CBP is responsible for security at and between ports-of-entry along the border. Since 9/11, CBP's primary mission is to prevent the entry of terrorists and the instruments of terrorism. CBP's on-going responsibilities include inspecting people and goods to determine if they are authorized to enter the United States; interdicting terrorists and instruments of terrorism; intercepting illegal narcotics, firearms, and other types of contraband; interdicting unauthorized travelers and immigrants; and enforcing more than 400 laws and regulations at the border on behalf of more than 60 government agencies. CBP is comprised of the inspection functions of the legacy Customs Service, Immigration and Naturalization Service (INS), and the Animal and Plant Health Inspection Service (APHIS); the Office of Air and Marine Interdiction; and the Border Patrol. The Administration requested an appropriation of $6,717 million in gross budget authority for CBP in FY2006, amounting to a 4% increase over the enacted FY2005 level (including supplemental appropriations) of $6,450 million. The Administration requested an appropriation of $5,575 million in net budget authority for CBP, representing a 4% increase over the FY2005 enacted level of $5,371 million. The request included the following program increases (which are discussed later in this report): $125 million for weapons of mass destruction (WMD) detection technology; $37 million for Border Patrol staff; $31.7 million for long range radar for Air and Marine Operations; $20 million for Border Patrol aircraft replacement; $19.8 million for the America Shield Initiative; $8.2 million for the Customs-Trade Partnership Against Terrorism (C-TPAT); $5.4 million for the Container Security Initiative (CSI); $5.4 million for enhancements to the Automated Targeting System (ATS); $3.2 million for the Homeland Security Data Network; $3 million for IDENT/IAFIS; $2 million for the Immigration Advisory Program (IAP); and $1 million for the Arizona Border Control Initiative (ABCI). The House Appropriators added $210 million to both the gross and net budget authorities for CBP in order to cover a range of programs. The House-passed H.R. 2360 recommended a net appropriation for CBP is $5.785 billion, an 8% increase over the FY2005 enacted level and a 4% increase over the President's FY2006 request. House-passed H.R. 2360 recommended fully funding all of the above listed requested increases, and providing an additional $150 million above the request for Border Patrol staffing. However, the House recommended making unavailable the $1 million requested increase for the IAP until CBP submits the report on the program that has been overdue since January 1. The Senate-passed version of H.R. 2360 recommended a net appropriation of $ 5,998 million for CBP, representing an increase of $213 million or nearly 4% compared to the amount provided by the House in H.R. 2360 ; an increase of $423 million or nearly 8% as compared to the FY2006 request; and an increase of $627 million or nearly 12% as compared to the FY2005 enacted level. The Senate-passed version of H.R. 2360 would have funded the $125 million requested increase for radiation portal monitors (RPMs) under the S&T Directorate, rather than under CBP; and would have provided an additional $241 million for Border Patrol staffing. Amounts provided for CBP in Senate-passed H.R. 2360 include $21 million in FAST and NEXUS/SENTRI funding that had been requested for transfer to the Administration proposed SCO (the House-passed version of H.R. 2360 placed this funding in a new BTS-level Automation Modernization Account). P.L. 109-90 provides a net appropriation of $5,952 million for CBP, which is $46 million or approximately 1% less than provided in the Senate-passed version of H.R. 2360 , $167 or nearly 3% more than provided by the House-passed version of H.R. 2360 , $377 million or nearly 7% more than requested for CBP in FY2006, and $581 million or nearly 11% more than enacted in FY2005. P.L. 109-90 provides no funding for radiation portal monitors under this account, and adopts the House recommendation that these be funded under S&T. P.L. 109-90 does not transfer the FAST and NEXUS/SENTRI programs to the proposed SCO, and instead fully funds FAST at $7 million, and NEXUS/SENTRI at $14 million for FY2006. P.L. 109-90 , concurring with both the House and the Senate, also provides an additional $241 million above the request to fund an additional 1,500 Border Patrol agents. P.L. 109-90 also agreed to makes $10 million unavailable for obligation until CBP submits a detailed five-year plan on CBP's air and marine operations to the Appropriation Committees. Potential CBP issues for Congress include cargo and container security; targeting and risk assessments; cargo inspection technology; air and marine operations; the number of border patrol agents; IDENT/IAFIS integration; ABCI; and the America Shield Initiative. CBP's cargo security strategy includes two significant programs: the CSI, and C-TPAT. CSI is a CBP program that stations CBP officers in foreign sea ports to target marine containers for inspection before they are loaded onto U.S.-bound vessels. The FY2006 request included an additional $5.4 million for CSI to support the expansion of CSI activities in seven new ports in seven countries. House-passed H.R. 2360 recommended fully funding the requested increase, a total of nearly $139 million for CSI in FY2006. However, the House Committee also noted that it has not yet received a report detailing the spending and planning projections for CSI for FY2005-2009, and directs CBP to submit the report as soon as possible. The Committee also included a provision in H.R. 2360 withholding $70 million until this report is submitted as directed by H.Rept. 108-541 . The Senate Committee recommended fully funding the request for CSI, but notes its concern about CSI host-country cooperation and directs CBP to submit a report to the Committee no later than February 18, 2006, detailing specific steps the Department is taking to address any reluctance on the part of foreign countries to fully cooperate. P.L. 109-90 fully funds the requested $139 million for CSI in FY2006, and concurs with the reporting requirements on CSI outlined in both the House and Senate reports, and direct CBP to submit both reports no later than February 10, 2006. Further, the conferees also direct DHS, in conjunction with the Department of Energy (DOE), to submit a report by February 10, 2006, on the progress made on various radiation technology efforts, and (among other things) the coordination between CBP's CSI and DOE's Megaports Initiative. C-TPAT is a public-private partnership aimed at securing the supply chain from point of origin through entry into the United States. The FY2006 request included an increase of $8.2 million for C-TPAT to be used for travel and the purchase of equipment and supplies for Supply Chain Specialists to conduct an increased number of C-TPAT security profile validations. House-passed H.R. 2360 recommended fully funding the request for C-TPAT. The Senate-passed version of H.R. 2360 also recommended fully funding the request for C-TPAT, and S.Rept. 109-83 directs CBP to submit a report by February 18, 2006, providing detailed performance measures, human capital plans, and any plans or actions taken that would address the recommendations made by GAO's recent report on the program. P.L. 109-90 fully funds the $54 million request for C-TPAT for FY2006. The FY2006 Administration request for CBP includes an increase of $125 million for technology to detect WMD. This request included $77 million for the purchase of additional radiation portal monitors (RPMs), and the purchase of next generation RPMs. House-passed H.R. 2360 recommended fully funding the $188 million request for cargo inspection technology. H.Rept. 109-79 directs CBP to submit two reports no later than January 16, 2006: (1) detailing the current status and investment plan for RPMs through FY2010; and (2) detailing the projected spending, maintenance and replacement of large-scale non-intrusive inspection (NII) equipment (for example, truck x-ray machines, and vehicle and cargo inspection systems) for FY2006-2010. Senate-passed H.R. 2360 recommended fully funding the requested increase of $125 million for RPMs, but would have funded the request under the S&T Directorate rather than under CBP, as the Committee believes that S&T is the appropriate organization to test, pilot, and direct procurement of RPMs. P.L. 109-90 fully funds the $125 million request for RPMs, and concurs with the Senate by placing the funding within the S&T Directorate, rather than under CBP. With the FY2005 Appropriation, AMO was transferred to CBP, where it is now located. The FY2006 request included an increase of $31.7 million for long range radar (LRR) coverage for AMO. This increase was requested to finance a 50% share of the cost (the other 50% share to be covered by the Department of Defense) of a primary Federal Aviation Administration (FAA) LRR feed that FAA intends to discontinue using. House-passed H.R. 2360 recommended fully funding the request for AMO, and providing an additional $60 million above the request for AMO: $14 million for the acquisition of manned covert surveillance aircraft, $15 million for the acquisition and deployment of palletized sensor packages for the P-3 Slick aircraft, $16 million for the P-3 service-life extension program, and $5 million for additional staff and equipment. The Senate-passed version of H.R. 2360 would have fully funded the requested increase for AMO, and provided an additional $33 million in total for AMO: $5 million for staff for the fourth Northern Border airwing base in Great Falls, Montana; $13 million for the operations of the fourth Northern Border airwing base; and $15 million for the P-3 Slick palletized sensor packages. The conferees agreed to provide $400 million for AMO operations, maintenance and procurement for FY2006. This amount, adopted in P.L. 109-90 includes $15 million for the P-3 palletized sensor systems; $16 million for the P-3 service-life extension; $14 million for manned, covert surveillance aircraft; nearly $13 million for the fourth Northern Border airwing base in Montana; $20 million for the replacement of BP helicopters; $10 million for unmanned aerial vehicles; $19 million for the operation and maintenance of legacy BP aircraft and vessels; and $2 million to begin work on an airwing in North Dakota. The conferees also agreed to withhold $10 million from CBP's salaries and expenses account until the Department submits a five-year strategic plan for CBP's Air program. The FY2006 request for CBP proposed adding 210 agents to the USBP workforce in FY2006 to backfill positions vacated along the Southwest border. These vacancies were the result of agents being transferred from the Southwest border in order to fulfill the requirement enacted in the USA PATRIOT Act ( P.L. 107-56 , §402) to triple the number of agents assigned to the Northern border. This requested increase was well below the 2,000 additional agents authorized by the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 , §5202). The House Appropriators addressed this issue by adding $150 million to the President's request, which, combined with the $124 million available in the FY2005 supplemental appropriation ( P.L. 109-13 ), will allow the Border Patrol to add 1,500 agents to its workforce by the end of FY2006. The Senate Appropriations Committee concurred with the House in adding 1,500 agents to the USBP in FY2006 and increases the President's request by $241 million. P.L. 109-90 also includes this increase. According to CBP, the integration of the Border Patrol's Automated Biometric Identification System (IDENT) and the Federal Bureau of Investigation's Integrated Automated Fingerprint Identification System (IAFIS) is progressing and linked IDENT/IAFIS workstations have been deployed to all USBP stations. This would seem to address some of the concerns about the slow pace of the integration project raised by House Appropriators in FY2005. The president's request included an increase of $3 million for the system and noted that BTS has assumed ownership for the integration project. While the integration of the two biometric databases has given USBP agents access to the FBI's criminal records, leading to an 8.5% increase in the identification of criminal aliens, a possible issue for Congress may be the USBP's apparent lack of access to the name-based Terrorist Watchlist at their stations. This may be of concern due to recent Congressional testimony by DHS acting Secretary Admiral James Loy that Al-Qaeda is considering infiltrating the Southwest border due to a belief that "illegal entry is more advantageous than legal entry for operational security reasons." House Appropriators expressed frustration with CBP that the report they requested in the FY2005 appropriation bill on the IDENT/IAFIS integration project has not been delivered yet. They directed DHS to submit the report by July 1, 2005. The Senate Appropriation Committee also funded the President's request and directed DHS to submit the report on the project that was requested in FY2005 which continues to be outstanding. In response to the continuing high levels of apprehensions in the Tucson sector, the Arizona Border Control (ABC) initiative was launched on March 16, 2004. ABC is a multi-disciplinary initiative that seeks to coordinate federal, state, and local authorities to control the Arizona border. ABC is specifically aimed at stopping cross-border smuggling operations by detecting, arresting, and deterring all groups seeking to bring people, drugs, weapons, and other merchandise into the country illegally. 200 additional permanent border patrol agents and 60 special operations agents trained for search and rescue operations were assigned to the Tucson sector over the summer of 2004, bringing the total number of agents there to approximately 2,000. According to DHS, in the first six months of the ABC, apprehension of unauthorized aliens increased 56% from apprehension during the same period of the previous year. From March 16, 2004 to September 7, 2004, 351,700 unauthorized aliens were apprehended compared to 225,108 unauthorized aliens during the same period in 2003. CBP proposed an increase of $1 million to continue this multi-disciplinary program in FY2006, though most funding for the program will come from ICE. House Appropriators supported this multi-agency approach to protecting the border and fund the President's request and direct CBP to work closely with the Tohono O'odham Nation along the Arizona border to ensure that the Nation is fully aware of CBP's actions on their territory. The Senate Appropriations Committee fully funded the President's request. CBP proposed an increase of $19.8 million for the America Shield Initiative (ASI), formerly known as the Integrated Surveillance Intelligence System (ISIS). ASI integrates Remote Video Surveillance camera systems, sensors, and the Integrated Computer Assisted Detection (ICAD) database into a multi-faceted network capable of detecting illegal entries in a wide range of climate conditions. The requested FY2006 funding will be used to deploy surveillance assets to high-priority areas such as Tucson, Yuma, and El Paso on the southwest border, and Blaine, Spokane, Buffalo, and Swanton (Vermont) on the northern border. House Appropriators fully funded the President's request and, citing concerns with the contracting problems identified in the ISIS program by the General Services Administration Inspector General, requested a report by January 16, 2006 on these problems and the specific measures taken by CBP to address them. A report on the specific performance metrics used by the ASI program was also requested by January 16, 2006. The Senate Appropriations Committee fully funded the President's request and encouraged program managers to explore off-the-shelf solutions as they develop the program. The conferees did not fund the President's request for a $19.8 million increase, noting that DHS is currently reviewing the entire planning process for this program and may suspend all major procurement action until this review is completed. The President requested $93 million for this account, which covers the construction of the tactical infrastructure that provides physical impediments to illegal entry. Construction under this account includes the erection of lights, fences, and vehicle barriers, as well as the creation of access roads. The House Appropriations Committee fully funded the President's request. The Senate Appropriations Committee increased the President's request by $218 million, to $311 million. Included in this increase was $82 million for the construction of facilities to accommodate the 1,500 additional USBP agents, as well as $55 million to complete the fence in the San Diego Sector and $55 million to expand the USBP tactical infrastructure in the Tucson Sector. The conferees provided $270 million for the Construction account, including $35 million each for the San Diego fence and the Tucson Sector tactical infrastructure expansion. ICE focuses on enforcement of immigration and customs laws within the United States. ICE develops intelligence to reduce illegal entry into the United States, and is responsible for investigating and enforcing violations of the immigration laws (e.g., alien smuggling, hiring unauthorized alien workers). ICE is also responsible for locating and removing aliens who have overstayed their visas, entered illegally, or have become deportable by committing a crime. In addition, ICE develops intelligence to combat terrorist financing and money laundering, and to enforce export laws against smuggling, fraud, forced labor, trade agreement noncompliance, and vehicle and cargo theft. Furthermore, this bureau oversees the building security activities of the Federal Protective Service, formerly of the General Services Administration. The Federal Air Marshals Service (FAMS) was returned from ICE to TSA pursuant to the reorganization proposal of July 13, 2005. The Office of Air and Marine Interdiction was transferred from ICE to CBP, and therefore the totals for ICE do not include Air and Marine Interdiction funding which is included under CBP. The Administration requested an appropriation of $4,364 million in gross budget authority for ICE in FY2006. This represents a 4% increase over the enacted FY2005 level (including supplemental appropriations) of $4,215 million. The Administration requested an appropriation of $3,648 million in net budget authority for ICE in FY2006, representing a 3% increase over the FY2005 enacted level of $3,537 million. The request included the following program increases: $105 million for the Office of Investigations; $90 million for custody management and detention bedspace; $43.7 million for ICE's Organized Crime and Drug Enforcement Task Force (OCDETF) activities; $25 million for ABCI and Interior Repatriation; $24 million for detention and removal; $18 million for temporary worker worksite enforcement; $11.3 million for the Homeland Security Data Network; $9.9 million for the Federal Air Marshals (FAMS); $8.8 million for Fugitive Operations; $5.6 million for Institutional Removal Program (IRP); $5.4 million for Alternatives to Detention; $5 million for Visa Security; and $3.5 million for legal resources. House-passed H.R. 2360 provided $3,830 million for ICE including $699 million for FAMS, or $3,131 million without funding for FAMS. Of the appropriated amount, $5 million was to be used to implement §287(g) of the INA; and $11.2 million was designated to fund or reimburse other federal agencies for the cost of care, and repatriation of smuggled aliens. House-passed H.R. 2360 also would have withheld $20 million of the money appropriated to DHS' Office of the Secretary and Executive management until the Secretary of DHS submitted a report to the Appropriations Committee outlining an immigration enforcement strategy to reduce the number of unauthorized aliens in the United States by 10% each year. Additionally, H.Rept. 109-79 recommended fully funding the President's requests and recommended an additional: $90 million for 1,920 detention beds; $16 million for 60 fugitive operations team positions; $18 million for 100 Institutional Removal Program agents; $10 million for 49 Alternatives to Detention positions; $19 million for 150 criminal investigators; $18 million for 200 Immigration Enforcement Agents; and $800,000 for the Cyber Crimes Center. Senate-passed H.R. 2360 provided $3,806 million for ICE including $679 million for FAMS, or $3,127 million without funding for FAMS. Of the appropriated amount,$11.2 million was designated to fund or reimburse other federal agencies for the cost of care, and repatriation of smuggled aliens. Additionally, S.Rept. 109-83 recommended an increase of: $77.4 million for 32 positions (16 FTEs) for Custody Management; $4.8 million for the Visa Security Program; $24.9 million for 60 fugitive operations team positions (30 FTEs); $23.4 million for 136 Institutional Removal Program agents (69 FTEs); $15.4 million for 62 Alternatives to Detention positions (31 FTEs); $37 million for 300 investigator positions for immigration investigations (150 FTEs); $18 million for 200 (100 FTEs) Immigration Enforcement Agents; $25 million for the Arizona Border Control Initiative; and $3.5 million for additional attorney personnel. P.L. 109-90 provides $3,175 million for ICE. This total does not include $686 million in funding for FAMS. If funding for FAMS is included in the total funding for ICE, P.L. 109-90 provides $3,861 million for ICE, an increase of $31 million over House-passed H.R. 2360 , and $55 million over Senate-passed H.R. 2360 . In addition, the funding for ICE in P.L. 109-90 provides an increase of $213 million, or 6% more than the President's FY2006 request and $324 million, or 9% above FY2005 enacted. Of the appropriated amount in P.L. 109-90 , not less than $5 million is to be used to implement §287(g) of the Immigration and Nationality Act (INA), which allows the Attorney General to enter into agreements with states and local governments to allow their employees to perform functions of immigration officers; and $11.2 million is designated to fund or reimburse other federal agencies for the cost of care, and repatriation of smuggled aliens. In addition, $5 million of the appropriated funds for ICE salaries and expenses would not be available until the Secretary of DHS submits to the House and Senate Appropriations Committees a national detention management plan. Additionally, P.L. 109-90 recommends an increase of: $90 million to augment bed space capacity including support positions; $42 million for additional criminal investigator positions; $35 million to annualize new positions and programs funded in P.L. 109-13 so that DHS will not divert the $32 million provided for bed space in P.L. 109-13 to annualized personnel costs; $9 million for 100 new Immigration Enforcement Agents; $16 million for new fugitive operations team positions; $18 million to expand the Institutional Removal Program; $10 million to broaden the Alternatives to Detention program including the Intense Supervision Appearance Program (ISAP); $1 million to increase the speed, accuracy and efficiency of immigration enforcement information currently entered into the National Crime Information Center database (NCIC); and $5 million for the Cyber Crimes Center. P.L. 109-90 also recommends an increase of $15.8 million to be offset by a reduction in CBP's salaries and expenses for the enforcement of laws against forced child labor. There are several issues within the ICE appropriation that may be of interest to Congress, including but not limited to: the severe financial management problems at the agency over the past several years; the lack of detention bed-space; and whether the agency has enough investigators to adequately pursue its many varied missions. ICE inherited its financial organization and systems from the former INS. An independent audit of ICE's financial statements concluded that the agency's accounting records were inadequately maintained during FY2004. The report noted that ICE had served as the accounting services provider for several other DHS agencies while simultaneously experiencing significant turnover among its financial management staff. This led the agency to fall "seriously behind in basic accounting functions, such as account reconciliations, analysis of material abnormal balances, and proper budgetary accounting." Additionally, serving as the accounting provider for other agencies led ICE to experience budget shortfalls due to tardy reimbursements for expenses it provided to cover other agencies' costs. This budget shortfall forced the agency into a freeze on hiring and non-mission critical expenditures, including training. The auditors concluded that DHS should immediately address the "void in ICE's financial management infrastructure." ICE recently requested a $500 million reprogramming for FY2005 to cover funding shortfalls within the agency. House Appropriators expressed concern and disappointment over the continuing financial troubles at ICE. The Committee notes that the agency has been forced to employ drastic cost-cutting measures that the Committee believes adversely limited ICE's operations. The Committee directs DHS to provide monthly reports on ICE's financial condition. The Office of Investigations (OI) in ICE focuses on a broad array of criminal and civil violation affecting national security such as illegal arms exports, financial crimes, commercial fraud, human trafficking, narcotics smuggling, child pornography/exploitation, worksite enforcement, and immigration fraud. ICE special agents also conduct investigations aimed at protecting critical infrastructure industries that are vulnerable to sabotage, attack or exploitation. The Homeland Security Act of 2002 ( P.L. 107-296 ) abolished the INS and the United States Customs Service, and transferred most of their investigative functions to ICE effective March 1, 2003. There are investigative advantages to combining the INS and Customs Services as those who violate immigration laws often are engaged in other criminal enterprises (e.g., alien smuggling rings often launder money). Nonetheless, concerns have been raised that not enough resources have been focused on investigating civil violations of immigration law, and that ICE resources have been focused on terrorism and the types of investigations performed by the former Customs Service. The Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 , §5203) authorized for FY2006, subject to appropriations, the addition of at least 800 new investigators to investigate violations of immigration law. The $1,496 million requested in the President's budget for the OI includes increases in the base funding for two groups responsible for immigration enforcement, the Visa Security Unit (VSU) and Temporary Worker Worksite Enforcement, and includes a total of 148 new positions for these units. The President's budget requested an additional $18 million for temporary worker worksite enforcement to add 143 positions responsible for investigating and prosecuting violations under existing immigration law for hiring unauthorized aliens, and supporting and implementing the provisions of possible temporary worker legislation. The President's request also included an increase of $5 million to add five new officers to the VSU, open a new overseas location, and expand training programs. H.Rept. 109-79 recommended $19 million to expand the Visa Security Program, and S. Rept.109-83 recommended an additional $4.8 million for nine positions for an additional VSU. H.Rept. 109-241 does not contain an increase for the VSU. Furthermore, H.Rept. 109-79 recommended an additional $18 million over the President's request for 200 new Immigration Enforcement Agents (IEAs), and $19 million for an additional 150 criminal investigators. S.Rept. 109-83 recommended an additional $37 million for 300 new immigration investigations positions, and $18 million for 200 IEAs. The conference report, H.Rept. 109-241 , recommends an additional $42 million for additional criminal investigator positions, $5 million more than the Senate committee report and $23 million more than House committee report. However, H.Rept. 109-241 provides an increase of $9 million for 100 new IEA's, half of what was provided in the House and Senate committee reports. Like S.Rept. 109-83 , H.Rept. 109-241 does not provide a funding increase for temporary worksite enforcement. Detention and Removal Operations (DRO) in ICE provide custody management of aliens who are in removal proceedings or who have been ordered removed from the United States. DRO is also responsible for ensuring that aliens ordered removed actually depart from the United States. Many contend that DRO does not have enough detention space to house all those who should be detained. A study done by DOJ's Inspector General found that almost 94% of those detained with final orders of removal were deported while only 11% of those not detained who were issued final orders of removal left the country. Concerns have been raised that decisions on which aliens to release and when to release the aliens may be based on the amount of detention space, not on the merits of individual cases, and that the amount of space may vary by area of the country leading to inequities and disparate policies in different geographic areas. The Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 , §5204) authorized, subject to appropriations, an increase in DRO bed space of 8,000 beds for each year, FY2006-FY2010. The President's budget requested an increase for FY2006 of $90 million for 1,920 new beds. H.Rept. 109-79 recommended $90 million for 1,920 new beds, while S.Rept. 109-83 recommended $77.4 million for 32 positions for Custody Management and 2,240 new beds. H.Rept. 109-241 proposes an increase of $90 million for new bedspace and the required support positions. House-passed H.R. 2360 would have withheld $50 million of the appropriated funds for ICE salaries and expenses until the Assistant Secretary of ICE submitted to the Appropriations Committee a national detention management plan. This provision was included in H.Rept. 109-241 , but only $5 million will be withheld until the Secretary of DHS submits the report. Due to the cost of detaining aliens, and the fact that many non-detained aliens with final orders of removal do not leave the country, there has been interest in developing alternatives to detention for certain types of aliens who do not require a secure detention setting. In 2004, ICE began a pilot program, the Intensive Supervision Appearance Program (ISAP), for low-risk, non-violent offenders. H.Rept. 109-79 recommended $10 million for 49 new positions for this program, and S.Rept. 109-83 recommended $15.4 million and 32 new positions. Like, the H.Rept. 109-79 , H.Rept. 109-241 provides an increase of $10 million for alternatives to detention including the ISAP. ICE proposes a $25 million increase for the Interior Repatriation program. On June 9, 2004 the White House announced it had reached agreement with the Mexican government to begin piloting the Interior Repatriation Program, which aims to reduce the number of aliens who immediately try to cross back into the United States by flying them into the interior of Mexico. Due to constitutional constraints in Mexico, the apprehended aliens' return to the interior must be strictly voluntary and the willingness of their participation is certified by Mexican consular officers. In order to continue the program in FY2006, the Administration requested $39.3 million; $25 million for Custody Management and $14.3 for Transportation and Removal. This represented a $25 million increase from the $14 million spent on the pilot program in FY2005. H.Rept. 109-79 directed the Commissioner of CBP to report no later than January 16, 2006 on the performance of the Interior Repatriation Program. As in H.Rept. 109-79 , neither S.Rept. 109-83 nor H.Rept. 109-241 contains funding specifically for the Interior Repatriation Program. Currently the INA provides limited avenues for state enforcement of both its civil and criminal provisions. One of the broadest grants of authority for state and local immigration enforcement activity stems from INA §287(g), which authorizes the Attorney General to enter into a written agreement with a State, or any political subdivision to allow an officer or employee of the State or subdivision, to perform a function of an immigration officer in relation to the investigation, apprehension, or detention of aliens in the United States. The enforcement of immigration by state and local officials has sparked debate among many who question what the proper role of state and local law enforcement officials should be in enforcing federal immigration laws. Many have expressed concern over proper training, finite resources at the local level, possible civil rights violations, and the overall impact on communities. Some localities, for example, even provide "sanctuary" for illegal aliens and will generally promote policies that ensure such aliens will not be turned over to federal authorities. Nonetheless, some observers contend that the federal government has scarce resources to enforce immigration law and that state and local law enforcement entities should be utilized. As in Senate-passed H.R. 2360 and House-passed H.R. 2360 , H.Rept. 109-241 would appropriate $5 million to implement INA §287(g). The TSA was created by the Aviation and Transportation Security Act (ATSA, P.L. 107-71 ), and was charged with protecting U.S. air, land, and rail transportation systems to ensure freedom of movement for people and commerce. In 2002, the TSA was transferred to DHS with the passage of the Homeland Security Act ( P.L. 107-296 ). TSA's responsibilities include protecting the aviation system against terrorist threats, sabotage, and other acts of violence through the deployment of: passenger and baggage screeners; detection systems for explosives, weapons, and other contraband; and other security technologies. TSA also has certain responsibilities for marine and land modes of transportation. TSA is further charged with serving as the primary liaison for transportation security to the law enforcement and intelligence communities, and with conducting research and development to improve security technologies. The President requested an appropriation of $5,562 million in gross budget authority for TSA in FY2006, a net increase of $162 million, or 3%, over the enacted FY2005 level of $5,400 million. However, in comparing the FY2006 budget request to prior year levels, it is important to note that the President requested to transfer a large portion of TSA's research and development functions—totaling $109 million in FY2005 appropriated amounts—to the S&T Directorate, and a transfer of a variety of functions—totaling $142 million in FY2005—to the proposed Office of Screening Coordination and Operations (SCO). Functions that would have been transferred to the SCO under the proposal included Secure Flight ($35 million); Crew Vetting ($10 million); Credentialing Startup Costs ($10 million); Transportation Worker Identification Card (TWIC, $50 million); Registered Traveler ($15 million); HAZMAT Driver Security Threat Assessments ($17 million); and Alien Flight School Applicant Security Threat Assessments ($5 million). Adjusting for these transfers and other miscellaneous factors, the requested increase to the TSA budget totaled $415 million, roughly a 7.7% increase over FY2005 enacted levels (see P.L. 108-334 ). Almost 90% of the TSA's proposed budget is designated for aviation security functions. Key aviation security initiatives proposed included: developing and testing emerging checkpoint explosives technologies; realigning the screener workforce and providing funds needed to maintain an authorized level of 45,000 full-time equivalents (FTEs); deploying high-speed Internet connections at airport screening checkpoints and baggage screening areas; providing mandated training for flight and cabin crews and conducting semiannual requalification for armed pilots; and conducting mandated security inspections of foreign airline repair stations and inspections at domestic repair stations. In an effort to approach full cost recovery from user fees for aviation security screening, the President proposed an increase in passenger security fees. The proposal would have raised the fee from its current level of $2.50 per flight segment, with a maximum fee of $5.00 per one-way trip, to $5.50 per segment, with a maximum of $8.00 per one-way trip. The Administration believed that this proposed fee increase coupled with a return to pre-9/11 passenger volume would result in an increase in fee collections from an estimated $2.652 billion in FY2005 to $4.1 billion in FY2006. This increase was projected to offset roughly 82% of the proposed $4.985 billion budget for aviation security. In contrast, aviation security fees collected in FY2004 offset only 41% of expenditures for aviation security. For surface transportation security, the President requested $32 million, including $8 million for hiring and deploying 100 rail and transit inspectors. These inspectors will be deployed at significant rail and mass transit points across the United States to perform compliance reviews, audits, and enforcement actions pertaining to security measures. House-passed H.R. 2360 would have provided a gross total of $5,683 million (net total of $3,263 million) for the TSA. This total included $264.3 million for Transportation Vetting and Credentialing which the President's request proposed to transfer to the SCO. For aviation security activities, the initial House-passed version of H.R. 2360 would have provided $143.2 million less than the President's request but was $268.1 million more than FY2005 enacted levels. There are several key differences between H.R. 2360 and the President's request regarding aviation security. Funding for private screening contracts at airports was set at $6.5 million less than the requested level. The House Committee on Appropriations found that the full request was not justified because of a lack of interest in the federal screening opt-out program due to lingering concerns over airport liability and other aspects of the program. The committee also found a lack of justification for the proposed increases in aviation regulation and law enforcement recommending that the TSA trim staffing levels in this program element, and the House initially agreed to a funding level $9.8 million below the President's request. Similarly, the committee expressed concerns over staffing levels in airport management, information technology and support, and the House initially agreed to fund this component of the TSA budget at a level $108.2 million below the President's request. The committee also did not agree with the President's request for increased funding for the Federal Flight Deck Officer Program, citing high unobligated balances as evidence that this program does not need additional funds. The House agreed to $25 million for this program, the same as what was appropriated in FY2004 and FY2005. In keeping with previous year trends, the House initially agreed to larger funding amounts for air cargo security, providing $60 million, $20 million more than the President's request. This included an additional $10 million to hire 100 new air cargo inspectors, plus increased funding for travel for inspectors, enhancements to the known-shipper database, and security threat assessments. Additionally, the House passed two general provisions calling for more thorough screening of shipments on all-cargo and passenger aircraft by March 1, 2006 (Sec. 522), and requiring the TSA, to the greatest extent practicable, to use checked baggage equipment and screeners to screen cargo carried on passenger aircraft (Sec. 523). Consistent with the President's request and prior year appropriations language, the House agreed to keep screener staffing at or below the 45,000 full-time-equivalent (FTE) cap. The committee noted that efficiencies gained through new technologies and increased use of in-line explosives detection systems (EDS) can greatly reduce the need for baggage screeners. The House agreed to additional funding of in-line EDS, proposing a total of $75 million for this purpose—$61 million above President's request—in addition to the $250 million mandatory deposit into the Aviation Security Capital Fund. While the committee agreed with the President's request to limit the federal share at the eight existing airports with letters on intent (LOIs) to 75% , rather than the 90% authorized for large airports in Vision 100 ( P.L. 108-176 ), this measure was stricken by a point of order because it sought to modify existing law. H.R. 2360 provides additional funding for the purchase of EDS and explosive trace detection (ETD) equipment, providing $40 million above the $130 million included in the President's request for this purpose. In an effort to further increase the availability of funds for EDS, the House agreed to language directing the TSA to spend any recovered or deobligated funds appropriated for aviation security or TSA administration exclusively on EDS procurement and installation (Sec. 530). For surface transportation security, the House agreed to $36 million, which is $4 million more than the President's request. The House agreed with the President's request that $8 million of this total be designated for federal rail security inspectors. The House also provided $4 million for a hazardous materials truck tracking program. The Senate initially agreed to a gross total of $5,055 million (net total of $3,065 million) for the TSA, not including the $250 million in direct funding to the Aviation Security Capital Fund. This total includes $255 million for Transportation Vetting and Credentialing which the President's request proposed to transfer to the SCO. For aviation security, the Senate initially agreed to $4,452 million, $129 million more than the FY2005 appropriation, but $283 million less than the budget request and $139 million less than the House-passed bill. Unlike the budget request and the House-passed bill, the Senate language contained no specific cap on the number of screeners but, like the House bill, sought to increase funding for screening technologies in a move to rapidly shift away from a workforce-intensive use of resources. The Senate bill endeavored to do this, in part, by increasing the TSA's flexibility to transfer monies from screener workforce accounts to accounts for procuring screening equipment. The Senate bill provided $180 million for EDS and ETD procurement with the stipulation that at least $50 million be used for acquiring next-generation EDS equipment. The Senate-passed bill made more modest reductions in the budget request for airport management, staff, information technology, and support, recommending $748 million for this function, $10 million less than the budget request but $103 million above the House-passed amount. In contrast to the fiscal concerns expressed by the House committee, Senate report language noted that increased funding for information technology is imperative for maintaining real-time intelligence and operational effectiveness and efficiency. The Senate provision of $50 million for air cargo security fell directly between the budget request of $40 million and the House-passed level of $60 million. The additional $10 million above the request offered in the Senate-passed bill included $7 million for hiring additional inspectors and $3 million for increased inspections of both international flights and domestic passenger flights. The Senate bill also directed the TSA to continue coordination of "known-shipper" and Customs-Trade Partnership Against Terrorism (C-TPAT) programs and move toward the goal of screening 100 percent of cargo carried on passenger airplanes. With regard to surface transportation security, the Senate bill was in full agreement with the House-passed amount and use of funds. Also, the Senate bill was in concordance with the House-passed plan to keep transportation vetting and credentialing functions within the TSA but set direct funding for credentialing activities at a level $9 million less than the House-passed amount. Senate floor debate on the appropriations bill occurred shortly after the terrorist bombings of London's transit system. Three amendments that would have substantially increased security funding for U.S. transit and intercity rail systems were defeated during Senate floor debate. P.L. 109-90 provides $5,334 million for the operations of the TSA plus an additional $686 million for the Federal Air Marshals, which rejoined the TSA under the DHS restructuring plan, termed the Second Stage Review (2SR), that was released in June, 2005. This set the total discretionary appropriation for TSA at $6,094 million. To this, $250 million in mandatory funding for the Aviation Security Capital Fund is added to bring the total TSA appropriation to $6,344 million. For aviation security, P.L. 109-90 provides $4,607 million, $15 million above the House-passed amount and $155 above the Senate-passed amount, but $128 million below the President's request. The Act provides $283 million more that the FY2005 enacted level for aviation security but keeps the longstanding cap on the number of full-time equivalent screeners in place at 45,000. Funding for privatized screening is set at $139 million, consistent with the House-passed amount, with the option for TSA to adjust funding between TSA screening operations and the private set aside as new contracts are awarded or as airports leave the private screening program after notifying the appropriations committees. A general provision (Sec. 547) of the Act added in conference provides long-sought liability protections for airports that elect to opt-out of TSA federal screening and implement private screening contracts managed by the TSA. San Francisco International Airport, the largest airport with private screeners, had signaled that it would end its private screener pilot program, but reversed this decision based on the inclusion of statutory liability protections. While privatizing airport screening contracts have not yet attracted much interest among airports that currently have federal screeners, in part, due to lingering liability concerns, lawmakers who have advocated a shift toward private screening operations are hopeful that this provision will spur an increase in airports with private screeners. For air cargo security measures, P.L. 109-90 provides $55 million, an even split between the House-passed $60 million and the Senate-passed $50 million. This funding level is $15 million above FY2005 enacted levels and the President's request for FY2006 and includes $10 million for hiring and deploying an additional 100 regulatory inspectors and $5 million for improving databases of freight forwarders and known shippers, performing threat assessments, and carrying out pending rulemaking activities. The conferees agreed to $57 million for Secure Flight—the controversial program for prescreening airline passengers—an amount equal to that passed by the Senate, but $9 million less than the House-passed amount. While the conferees continued to support this additional layer of aviation security, the conference report noted that the TSA has failed to fully justify cost estimates for FY2006 and has failed to commence initial operating capability of the system at two airlines by the scheduled date of August 19, 2005. The conferees also agreed to a general provision prohibiting deployment of the system on other than a test basis until the Government Accountability Office (GAO) certifies that 10 elements related to privacy protections, data security, and redress for aggrieved individuals are adequately addressed. Similar provisions were enacted in appropriations legislation for FY2004 and FY2005. The provision in the FY2006 Act also prevents the TSA from using commercial data in the system. While commercial data is seen as a possible means for authenticating passenger identities, some in Congress have raised concerns over TSA's prior disclosure and handling of personal data obtained from commercial sources during the development and testing of Secure Flight. P.L. 109-90 provides $36 million for surface transportation security. Both the House and Senate had agreed to this amount, which is $12 million less than FY2005 enacted levels but $4 million above the President's request. The President's proposal to increase airline passenger security fees has been a contentious issue that failed to garner sufficient support in either the House or the Senate, and met with considerable criticism during the appropriations debate. Financially strapped airlines—still recovering from the economic impact of the 9/11 attacks and now facing rising fuel costs—argued that they would likely have to absorb some of the proposed fee increases by reducing ticket prices. Some Members of Congress also voiced concern that the proposed fee increase could cut into the revenues of the airlines, and could have a greater impact on rural airline customers who would pay proportionately more in per-segment fees because fewer direct flights are available to these customers. The Administration, on the other hand, argued that increased fees could help reduce a funding deficit by generating additional revenue to offset expenditures for aviation security, or could free up general tax revenues for spending on broader homeland security needs. The Administration maintained that increasing fees to offset costs is in line with long-standing transportation infrastructure policy to fund these services largely through user fees, as well as its assessment of the original intent of these passenger security fees established under ATSA (P.L 107-71). However, some opponents of aviation security fees contend that aviation security, particularly since September 11, 2001, is vital to national security, and therefore, like defense spending, is the responsibility of all taxpayers. The House Committee on Appropriations noted that amending the statutory fee structure falls under the jurisdiction of the Homeland Security Committee and did not include the proposed fee increases in its bill. An amendment to the FY2006 DHS Authorization Act ( H.R. 1817 ) prohibiting an increase in airline ticket taxes for aviation security was agreed to by a large majority in the House, despite opposition by Aviation Subcommittee Chairman John Mica. While the Senate also did not recommend any passenger fee increases, language in S.Rept. 109-83 directed the TSA to use its available authority to collect about $448 million from aviation security infrastructure fees paid directly by the airlines. This is the amount determined by a GAO audit that TSA should be collecting annually. However, the TSA has been collecting only about $318 million in these fees, despite assuming that collections would total $750 million for FY2005, thus creating a projected shortfall of more than $400 million. Another key issue for the TSA during the FY2006 appropriations process was the proposed creation of SCO. The proposed transfer of programs related to credentialing and vetting of passengers and transportation workers raised several issues regarding coordination of effort between the TSA and the proposed SCO. The Administration offered few details regarding how the proposed SCO would interface with the TSA on several high-profile programs such as Secure Flight and the TWIC program. Citing concerns over disrupting work on these key programs, P.L. 109-90 implements a different approach that integrates these various programs, but keeps them within the TSA under a new Office of Transportation Vetting and Credentialing. The Act establishes a FY2006 funding level of $75 million for the newly created Office of Transportation Vetting and Credentialing, an amount consistent with the Senate-passed bill but $9 million less than the House-passed amount. In addition to these sums, it is anticipated that the office will handle an additional $180 million in credentialing accounts that are expected to be fully offset by user fees. Another lingering issue that did not receive much attention during the appropriations process is the coordination between TSA and S&T in light of the transfer of the TSA's research and development activities to the S&T Directorate. One particular oversight issue is how aviation security research needs will be prioritized given that S&T is more broadly focused on all homeland security research and development activities. There may be some concern that aviation security projects could take a back seat to other high-profile initiatives—such as chemical, biological, radiological and nuclear weapons countermeasures—that have been the primary focus of S&T to date. Also, while consolidating research and development on explosives and chemical weapons detection—the primary focus of aviation security-related research and development—may help leverage resources for other DHS components, these projects could potentially lose some of the aviation security-specific focus that they received while under the auspices of the TSA. Consequently, Congress may focus on what coordination and interaction between TSA and S&T will be established to ensure that aviation security research and development needs are adequately addressed. House report language specifies that the S&T Directorate is to carry out air cargo research and development pilot programs initiated by the TSA, but expressed frustration over the lack of progress in this area commenting that "... high unobligated balances give the impression that the TSA does not view air cargo as a serious aviation security vulnerability." Consequently, the report contains language that would require the TSA to develop protocols and standards for emerging new technologies to screen cargo, noting past deployment delays occurred because such coordination was lacking. Appropriations to the TSA for surface transportation modes raise the issue of determining TSA's role, and in a broader context, the federal government's role, in the security of the non-aviation modes of transportation. While ATSA made TSA responsible for the security of all modes of transportation, it did not direct the TSA to take specific actions to address security needs in modes other than aviation. One view is that the federal government, and TSA in particular, should assume a more dominant, or at least a more prominent role, in the security of surface modes. Proponents of this view hold that the federal Treasury should fund most of the security needs of surface modes. Another view is that the federal role in securing surface modes should reflect or parallel its existing role in financing the infrastructure or operations of surface modes. This view holds that federal funding for the security needs of surface modes should be in partnership with state and local governments or the private sector. For instance, because freight railways are predominantly privately owned and financed, some believe that the freight railroad companies should pay for their security needs. Likewise, in the case of mass transit, in which state and local governments have primary responsibility for infrastructure financing and operations, some believe the federal government's role in securing mass transit should be in partnership with state and local governments rather than having a dominant role, as it does in aviation. The Coast Guard is the lead federal agency for the maritime component of homeland security. As such, it is the lead agency responsible for BTS as it applies to U.S. ports, coastal and inland waterways, and territorial waters. The Coast Guard also performs missions that are not related to homeland security, such as maritime search and rescue, marine environmental protection, fisheries enforcement, and aids to navigation. The Coast Guard was transferred from the Department of Transportation to the DHS on March 1, 2003. The law that created the DHS ( P.L. 107-296 ) directed that the Coast Guard be maintained as a distinct entity within DHS and that the Commandant of the Coast Guard report directly to the Secretary of DHS. Accordingly, the Coast Guard exists as a distinct agency within DHS and is not part of DHS's BTS, although it does work closely with that directorate. For FY2006 the President requested an appropriation of $7,961 million in net budget authority for the Coast Guard, which is a 5.21% increase over the enacted FY2005 level of $7,567 million. The Coast Guard's budget is divided into seven categories. The President requested increases in three of these categories and decreases or zero funding in the four remaining categories. Among the categories with increased funding, the largest increase in percentage terms is in acquisition, construction, and improvements (the agency's physical equipment), which would increase by 23.08% to $1,269.2 million. Operating expenses would increase by 4.62% to $5,547.4 million and reserve training would increase by 5.31% to $119.0 million. The President requested zero funds for the Coast Guard's bridge alteration program which funds alterations to the understructure of bridges that are obstructing navigational waterways. Congress provided $15.9 for this program in FY2005. The President also requested zero funds for Coast Guard research and development; transferring and consolidating this account under the DHS S&T Directorate. Congress provided $18.5 million for Coast Guard R&D in FY2005. The two other budget categories that the President would reduce funding for are Coast Guard environmental compliance and restoration, which would decrease by 29.41% to $12 million and retired pay, which would decrease by 6.54% to $1,014.1 million. House-passed H.R. 2360 provided $7,458 million, $503 million or 6% less than the President's request and $109 million or 1% less than FY2005 enacted. H.R. 2360 provided $798 million for acquisitions, construction, and improvements, which is about $471 million less than the President requested. Most of this difference has to do with the Coast Guard's Deepwater program, which is explained further below. For operating expenses, the House bill provided $5,500 million which is $47 million less than the President's request. For alteration of bridges, the House bill provided $15 million versus the President's request of no funds. For environmental compliance and restoration, reserve training, and retired pay, the House bill provided the same amounts that the President requested. The House bill also agreed with the President's request to transfer the Coast Guard's research and development funds to the DHS S&T Directorate. The House Committee on Appropriations' report states that the Committee "is extremely frustrated in the Coast Guard's apparent disregard for Congressional direction" and cites the Deepwater plan and other reprogramming submissions as examples. Senate-passed H.R. 2360 provided $7,780 million, $322 million or 4% more than the House. The Senate provided $1,225 million for acquisitions, construction, and improvements, which is $427 million more than the House. As indicated below, most of the $427 million difference between the House and Senate concerns the Deepwater program. The Senate provided $5,459 million for operating expenses, which is $41 million less than the House. For environmental compliance and restoration, reserve training, and alteration of bridges, the Senate provided the same amount as the House. Senate-passed H.R. 2360 does not agree with the House and the President's request to transfer the Coast Guard's R&D funds to the DHS S&T Directorate; it provides $19 million to the Coast Guard for R&D. P.L. 109-90 provides a total of $7,797 million for the Coast Guard for FY2006, representing a decrease of $165 million or 2% as compared to the request; an increase of $339 million or 5% as compared to the House-passed version of H.R. 2360 ; and an increase of $17 million as compared to the Senate-passed version of H.R. 2360 . P.L. 109-90 provides $5,492 million for operating expenses, which is $55 million less than the President requested. It provides $1,142 for acquisitions, construction, and improvements, which is $127 million less than the President requested. P.L. 109-90 provides the same amount that the President requested for environmental compliance and restoration ($12 million), reserve training ($119 million), and retired pay ($1,014 million). P.L. 109-90 provides $15 million for the alteration of bridges while the President requested no funds for this purpose; and provides $18 million for Coast Guard R&D while the President requested that these funds be transferred to the DHS S&T Directorate. Increased duties in the maritime realm related to homeland security have added to the Coast Guard's obligations and increased the complexity of the issues it faces. Congress is concerned with how the agency is operationally responding to these demands, including its plans to replace many of its aging vessels and aircraft. The Deepwater program is a planned 22-year, multi-billion dollar project to replace or modernize 93 aging Coast Guard ships and 207 aging Coast Guard aircraft. It is the largest and most complex acquisition ever undertaken by the Coast Guard. The Deepwater program is a subset of the agency's acquisition, construction, and improvements budget category. For FY2006, the President requested $966 million for the Deepwater program which is $242 million more than Congress provided in FY2005. The House bill provided $500 million for the Deepwater program, which is $466 million less than the President's request. The House bill would have withheld $50 million of this amount until the Appropriations Committee received a new Deepwater program baseline that reflects revised, post September 11 mission requirements. Senate-passed H.R. 2360 provided $906 million for Deepwater and the Senate Committee's report states that it "is extremely disappointed with the poor congressional justifications accompanying the President's budget request," and directs the Coast Guard to update the Deepwater plan the agency submitted to Congress on May 31, 2005. The conference agreement provides $933 million for the Deepwater program, which is $33 million less than the President requested. The conference agreement also specifies information about the Deepwater plan as well as the Coast Guard's overall capital plan that Congress wants the agency to submit in conjunction with future budget submissions. The Deepwater program will help the Coast Guard achieve its many missions, including maritime security, which is another Coast Guard issue of keen interest to Congress. The President's FY2006 request includes $2,219.4 million for port waterways and coastal security, an increase of $127.9 million from FY2005. Maritime Domain Awareness (MDA) is a central element of the Coast Guard's security mission. MDA can be described as the Coast Guard's ability to know all that is happening in the maritime environment—to understand normal activity, in order to spot suspicious activity. One objective of MDA is to increase the transparency of ship movements in U.S. coastal areas. Using Automatic Identification Systems (AIS) technology, the Coast Guard expects to be able to track ships in coastal waters. For FY2006, the President requested $29.1 million for AIS which is $5.1 million more than Congress provided in FY2005. In FY2005, Congress expressed disappointment that only nine seaports would be able to receive AIS signals and therefore increased funding from the requested $5 million to $24 million to achieve nationwide coverage. The President's FY2006 request indicates that nationwide implementation of AIS is the Administration's objective. Another area of maritime security that Congress has expressed particular interest in is the security of LNG (liquefied natural gas) tankers. The President's FY2006 request includes $11 million for additional boat crews and screening personnel at U.S. LNG shoreside facilities. Rising natural gas prices are expected to increase the demand for imported natural gas, most of which will be transported by LNG tankers. The United States Secret Service performs two broad missions in homeland security: criminal investigations and protection. Criminal investigations cover financial crimes, identify theft, counterfeiting, computer fraud, and computer-based attacks on the nation's financial, banking, and telecommunications infrastructure, among other areas. The protection mission is most prominent for the President, Vice President, their families, and candidates for those offices, along with the White House and the Vice President's residence. Protection duties also extend to foreign missions in the District of Columbia; other designated individuals, such as the Secretary of DHS and visiting foreign dignitaries; and National Special Security Events (NSSE), which include the political party national nominating conventions as well as various international conferences and other major designated events in the United States. For FY2006, the President's budget requested an appropriation of $1,204 million for the protection and criminal investigation missions of the Secret Service, an increase of $29 million (2%) over the FY2005 total of $1,175 million. Within the FY2006 amount were requests for certain specific matters: $100,000 to assist foreign law enforcement organizations in counterfeit investigations; $2.1 million for forensic and related support for investigations of missing and exploited children; and $5 million for a grant for activities related to the investigations of missing and exploited children. In addition, the budget submission directed that "up to $18 million provided for protective travel shall remain available until September 30, 2007" and that "not less than $5,000,000 solely for the unanticipated costs related to security operations for National Special Security Events." The House Appropriations Committee recommended an appropriation of nearly $1,233 million, an increase of almost $29 million, or 2%, above the President's request and almost $58 million, or 5%, above the FY2005 appropriation. The House-passed version of H.R. 2360 included additional amounts above the President's request of: $5 million for NSSEs; $23 million to support protective operations, investigations, foreign field offices, and technical support functions; and $1 million for support to the National Center for Mission and Exploited Children. The Senate-passed version of H.R. 2360 recommended $1,192 million for the Secret Service, a decrease of $41million, or 3%, compared to the House-passed amounts; a decrease of $12 million, or 1%, as compared to the requested amount; and an increase of $17 million compared to the FY2005 enacted amount. The Senate Committee did not provide the requested $5 million for the NSSE fund, because of unobligated balances remaining in the account. The Senate Committee also did not continue general provision bill language "regarding maintaining the Service as a distinct entity within" DHS. P.L. 109-90 provides $1,212 million for the Secret Service, essentially splitting the difference between the House and Senate versions of H.R. 2360 . This sum represents an increase of $8 million and 1% from the President's request. The conferees, in H.Rept. 109-241 , note their concern with the workloads facing Secret Service Agents and direct the agency to submit a workload rebalancing report by February 10, 2006. Developments in the contemporary era, particularly after the 2001 terrorist attacks, have added to the Secret Service's roles and responsibilities. Even though its two primary missions remain the same as they have for the past 100 years, the actual assignments, activities, duties, and functions have been expanded and have become more complex and sophisticated than before. The resulting issues for Congress (and the executive) range from the sufficiency of USSS resources to meet its new obligations to the adequacy of interagency cooperation. The former involves not just facilities, equipment, and personnel levels but also training, language skills, and protective research. The latter involves coordination not just with entities inside the Department but also with organizations outside it: i.e., in other federal departments and agencies, State and local governments, foreign governments, and the private sector. Along with this are occasional requests from subnational governments for the Secret Service (or DHS) to reimburse them for their expenses associated with specific USSS protective operations within their jurisdictions. Another matter extends to the capability of the Secret Service to maintain its traditional role in the enforcement of certain financial crimes, such as anti-counterfeiting. Such criminal conduct has also become more sophisticated and complex. And combating it may now have to compete with new higher priorities and expanded duties in other fields, most markedly in anti-terrorism. Title III Preparedness and Recovery, provides funding for the Office of State and Local Government Coordination and Preparedness (SLGCP), which includes the Office for Domestic Preparedness. In addition, Title III funds the Emergency Preparedness and Response (EPR) Directorate. Table 8 shows the FY2005 enacted and FY2006 requested appropriations for Title III. The Administration requested an appropriation of $6,710 million in net budget authority for Title III for FY2006. This amount represents an 4% decrease compared to the FY2005 enacted total of $6,963 million (not including $2,508 million for Bioshield). For the FY2006 request, Title III accounts for 22% of requested net appropriated DHS budget authority; 10% for EPR, and 12% for SLCGP. The House-passed version of H.R. 2360 recommended an appropriation of $6,688 million in net budget authority for Title III, represents a $21 million or less than 1% decrease compared to the President's request. The Senate-passed version of H.R. 2360 recommended $6,336 million for the activities of Title III, representing a decrease of $374 million or nearly 6% compared to the FY2006 request; and a decrease of $352 million or 5% as compared to House-passed H.R. 2360 . P.L. 109-90 provides $6,666 million for the activities of Title III. This amount includes $625 million for Infrastructure Protection and Information Security (IPIS) activities that were transferred from the now disbanded IAIP Directorate in Title IV, pursuant to the Secretary's reorganization proposal. The SLGCP is the single point of contact within DHS for facilitating and coordinating departmental state and local programs. SLGCP provides information to states and localities on best practices and federal homeland security activities. Within SLGCP, the Office for Domestic Preparedness (ODP) administers federal homeland security assistance programs for states and localities. To assist state and local homeland security efforts, ODP administers formula and discretionary grants and training, exercise, and technical assistance programs. The FY2006 budget request proposed the following amounts for the SLGCP homeland security assistance programs: Emergency Management Performance Grants (EMPG)—$170 million; Citizen Corps Programs (CCP)—$50 million; State Homeland Security Grant Program (SHSGP)—$1,020 million; Urban Area Security Initiative (UASI)—$1,020 million; Targeted Infrastructure Protection Program (TIPP) (new program)—$600 million; Assistance to Firefighters Program (FIRE)—$500 million. The House passed the following amounts for the SLGCP homeland security assistance programs: Emergency Management Performance Grants—$180 million; Citizen Corps Programs—$40 million; State Homeland Security Grant Program—$750 million; Urban Area Security Initiative—$1,215 million; Assistance to Firefighters Program—$600 million; and Metropolitan Medical Response System—$40 million. The Senate passed the following amounts for the SLGCP homeland security Assistance programs: Emergency Management Performance Grants—$190 million; Citizen Corps Programs—$25 million; State and Local Assistance Grants—$1,538 million; Assistance to Firefighters Program—$665 million; Metropolitan Medical Response System—$10 million; and Law Enforcement Terrorism Prevention—$400 million. P.L. 109-90 provides the following amounts for the SLGCP homeland security Assistance programs: Emergency Management Performance Grants—$185 million; Citizen Corps Programs—$20 million; State Homeland Security Grant Program—$550 million; Urban Area Security Initiative—$1,155 million; Assistance to Firefighters Program—$655 million; and Metropolitan Medical Response System—$30 million. Table 9 provides program level details for SLGCP. The budget request raises policy questions because it proposes to reduce the overall level of funding for assistance to state and local preparedness programs, gives new emphasis to assistance for the protection of port, transit, and other infrastructure; and changes the grant allocation formula for one of the grants administered by ODP. In FY2005, Congress appropriated approximately $3.99 billion for SLGCP and state and local homeland security assistance. In the FY2006 budget request, the Administration proposes a total of $3.57 billion for SLGCP and federal homeland security assistance, a reduction of $420 million from FY2005 funding. Additionally, the FY2006 budget request provides no line item funding for the Law Enforcement Terrorism Prevention Program (LETPP). It proposes, however, to direct states and localities to allocate no less than 20% of SHSGP and UASI funding for LETTP activities. Apparently, this is a reduction in SHSGP and UASI funding for equipment, training, exercises, and planning, which states and localities were authorized to fund with 100% of their allocated amount in FY2005. One could argue that the overall funding reduction of $420 million and the Administration's requirement of states and localities allocating no less than 20% of their SHSGP and UASI funding for LETPP activities represents a further reduction of funding for federal homeland security assistance. The House passed H.R. 2360 proposes a total of $3.67 billion for SLGCP and federal homeland security assistance, a reduction of $320 million from FY2005 funding. This proposed reduction includes $350 million less for SHSGP than was appropriated in FY2005. The Administration's budget proposal requests $500 million for FIRE in FY2006, a cut of 23% from the FY2005 appropriated level. Priority would be given to grant applications enhancing counter-terrorism capabilities. Activities such as prevention, public fire safety education and awareness, and fire code enforcement would be funded under a separate fire prevention and firefighter safety grant program. For FY2006, the Administration is requesting no funding of the SAFER grants, which provide assistance to fire departments for hiring personnel. After House Amendment 134 was adopted during floor debate, House-passed H.R. 2360 included $650 million for firefighter assistance, including $575 million for fire grants and $75 million for SAFER Act grants. The committee does not agree with the Administration's proposal to shift the program's priority to terrorism or to limit the list of eligible activities. On June 16, 2005, the Senate Appropriations Committee approved $615 million for firefighter assistance, including $550 million for fire grants and $65 million for SAFER Act grants. The committee report states that DHS should "continue the present practice of funding applications according to local priorities and those established by the United States Fire Administration." The Senate passed H.R. 2360 proposes $3.49 billion for SLGCP and federal homeland security-assistance, a reduction of $492 million from FY2005 funding. This proposed reduction includes $350 million less for SHSGP than was appropriated in FY2005. The H.R. 2360 conference report proposes $3.346 billion for SLGCP, which is $639 million than appropriated for these programs in FY2005. In FY2005 Congress appropriated $150 million for port security and $150 million for rail security (both part of UASI). The Administration, in the FY2006 budget request, proposes the establishment of a new state and local homeland security assistance program, TIPP, and requests $600 million for the program. TIPP would provide funding to enhance the security of ports, transits systems, and other infrastructure, as determined by the DHS Secretary. The budget request, however, does not specify how much funding would be allocated for port security, or transit systems. Since the Administration proposes TIPP as a discretionary grant program, one could argue that there is no way to determine the amount that would be allocated for port and rail security which have been congressional priorities. The House passed H.R. 2360 proposed $365 million for port, rail, and infrastructure security, however, the committee did not agree with the Administration in establishing a separate grant program for these security activities. The Senate passed H.R. 2360 recommended $365 million for port, rail, and infrastructure security and for the grants to be administered separately from UASI. The H.R. 2360 conference report proposed $390 million (adopted in P.L. 109-90 ) for these port, rail, and infrastructure security grants, which is $75 million more than what was appropriated in FY2005. The Administration proposed changing the formula for ODP's SHSGP. The FY2006 budget request proposed $1.02 billion for SHSGP to be allocated based on risks, threats, vulnerabilities, and unmet first responder capabilities, provided each state and territory is allocated no less than 0.25% of total funds appropriated for this program. There was no proposed formula change for UASI, CCP, EMPG, or FIRE. The Administration did, however, propose that FIRE applications to enhance terrorism response capabilities be given priority. It can be argued that the proposed formula change for SHSGP did not fully support the National Commission on Terrorist Attacks Upon the United States' (9/11 Commission) recommendation of providing federal homeland security assistance strictly based on threat and risk, because of the Administration's proposed state and territory guaranteed minimum of 0.25%. The House report ( H.Rept. 109-79 ) accompanying H.R. 2360 stated that the committee recognizes pending legislation to modify state formula grants and presumes ODP would distribute funds based on any successor legislation to Section 1014 of the USA PATRIOT Act ( P.L. 107-56 ). Provided no succeeding legislation to the USA PATRIOT Act is enacted, the Committee directs ODP to assess each state's threat, risk, and need to determine their minimum essential preparedness capability levels and allocate remaining funds to address those identified gaps in preparedness. Senate passed H.R. 2360 recommended $425 million to be allocated to states in the same manner as amounts distributed to states in FY2005. All remaining funds would be allocated to states at the discretion of the DHS Secretary based on risks, threats, vulnerabilities, unmet essential capabilities, and cooperation of multiple jurisdictions in preparing domestic preparedness plans. The Collins-Lieberman Amendment ( S.Amdt. 1142 ) passed by the Senate on July 12, 2005 to Senate passed H.R. 2360 would allow states, and U.S. possessions and territories to select either of two options that yields the highest funding level. First, funds would be divided among the states, the District of Columbia (DC), and U.S. possessions and territories as follows: states and DC would receive 0.55%, and Puerto Rico and specified U.S. possessions and territories 0.055%; these total 28.62%. Second, states could alternatively choose to receive an amount based on a "sliding scale baseline allocation" calculated by multiplying 0.001 times (1) a state's population ratio and (2) a state's population density ratio. After the "base" funds are distributed, the remainder would be distributed through the risk assessment process, with a maximum of 50% to be distributed to high-threat urban areas, and the remainder to the states. On September 29, 2005, the conference on H.R. 2360 —FY2006 Department of Homeland Security appropriations—issued its report, which recommended a total of $3.34 billion for state and local homeland security grant programs. This is $270 million less than was appropriated for these programs in FY2005 ($3.61billion). The conference report does not propose to alter the funding formula for SHSGP and LETPP, it maintains the current formula in which states, DC, and Puerto Rico are to receive 0.75% of total appropriations, and U.S. insular areas are to receive 0.08% of total appropriations. It does propose, however, that states be required to update their State Homeland Security Strategies in accordance with the Interim National Preparedness Goal to be eligible for federal homeland security assistance. Additionally, it does not specify what risk factors ODP is to consider in determining the remainder of appropriations following the distribution of state base amounts. The conference report requires the GAO to review the threats and risk factors the DHS Secretary used in determining discretionary grant allocations—the Urban Area Security Initiative (UASI) and sub-grants —and report to Congress on the review no later than November 17, 2005. A number of programs in Title III address public health and medical preparedness for and response to disasters. Existing programs include the Metropolitan Medical Response System (MMRS) contracts in SLGCP and the National Disaster Medical System (NDMS) in FEMA. A new position of Chief Medical Officer was proposed by DHS Secretary Chertoff in July 2005, and is slated for initial funding in the Homeland Security appropriations conference report for FY2006. Community EMS services are eligible for funding through a number of state and local grant programs, including MMRS. Finally, certain activities in the Biosurveillance Initiative, previously in the DHS Information Analysis and Infrastructure Protection (IAIP) Directorate, have been transferred to a new Infrastructure Protection and Information Security (IPIS) program in Title III. Proposed FY2006 funding levels for these programs are found in Table 8 . Certain funding issues associated with these programs are discussed below. The Metropolitan Medical Response System (MMRS) is a program of contracts with major cities to coordinate multiple local government agencies in emergency planning. MMRS is slated for elimination in the FY2006 budget proposal, as it has been in each budget proposal since it was transferred to DHS. The Administration proposes that ongoing municipal emergency planning activities be supported at the discretion of states, using funds from the SHSGP and UASI grant programs. The House Appropriations Committee did not agree with the Administration's proposal to eliminate MMRS, and recommended an appropriation of $40 million. The Senate Appropriations Committee recommended an appropriation of $10 million. Conferees recommended an appropriation of $30 million. Emergency Medical Services (EMS) providers are considered first responders but are not given funding priority in any sizeable homeland security grant programs. A few small grant programs are available through the National Highway Traffic Safety Administration (NHTSA), though they are not specifically designed for homeland security activities. EMS providers are also eligible for preparedness funds through DHS first responder grants (SHSGP, UASI and FIRE) and through the hospital preparedness program at the Department of Health and Human Services (HHS). But a recent report found that while EMS providers may represent one-third of traditional first responders, they have received only 4% of the preparedness funds available through DHS, and 5% of funds available through HHS. In its report on homeland security appropriations for FY2006, the House Committee on Appropriations directs that no less than 10% of SHSGP and UASI funds must be provided to EMS responders. The Senate Committee on Appropriations encourages DHS to require that states include EMS representatives in planning efforts. The conferees direct ODP to require state and local governments to include EMS representatives in planning committees. The conferees do not mandate that a specific percentage of grant funds be allocated to EMS providers, but rather they direct ODP to evaluate how much money goes to EMS providers and to require an explanation from any state not providing at least 10% of its grant funding to them. Responding to the devastation caused by Hurricanes Katrina and Rita, Congress enacted two supplemental appropriations to the Disaster Relief Fund (DRF). These appropriations provided EPR with $60 billion in additional funding to administer relief to the affected region and to other areas included in major disaster or emergency declarations. The funding comprises $10 billion in P.L. 109-61 and $50 billion in P.L. 109-62 . DHS uses DRF funds to provide assistance to individuals, families, state and local governments, and certain nonprofit organizations, as authorized by the Stafford Act (42 U.S.C. 5170b). Few substantive changes were proposed in the FY2006 budget justification for the EPR accounts. The disaster relief funding request submitted by the Administration corresponded to the amount requested in previous fiscal years. Funding for two hazard mitigation programs would have increased under the proposal; an increase of $50 million ($100 million appropriated for FY2005) proposed for pre-disaster mitigation grants awarded on a competitive basis, and an increase of $8 million ($20 million authorized to be transferred in each previous year) for flood mitigation assistance. Post-disaster mitigation grants, however, would continue to be funded at a lower level than historically provided. The House approved legislation that differed in certain respects from the Administration request. The version of H.R. 2360 adopted by the House included the following: (1) a reduction of $2 million for the Office of the Under Secretary for Emergency Preparedness and Response in light of a "lack of cooperation received from EP&R, specifically regional and field offices;" (2) increased funding of $10 million to further development of the national preparedness system; (3) completion of a report by EPR (March 15, 2006) on disaster relief overpayments made over the past four years; and (4) mitigation assistance higher than that proposed by the Administration. The Title III provisions approved by the Senate differed from those approved by the House. The Senate-passed version (1) provided the requested funding for the Office of the Under Secretary, (2) did not include $15 million requested for the national preparedness system and rescinded almost $10 million in unobligated funds, (3) did not address disaster relief overpayments, and (4) recommended mitigation funding below that requested and the amount approved by the House. The Senate report included an increase of $23 million to support Urban Search and Rescue teams, along with a requirement for a report on costs of the teams, as well as support for the National Dam Safety Program. Also, while both chambers recommended comparable funding levels ($2 billion) for the disaster relief fund, the Senate approved an amendment that would reduce funding by $10 million in order to increase the funding level for Emergency Management Performance Grants (EMPG). The final version of the FY2006 appropriations statute supported the Second Stage Review (2SR) reorganization plan proposed by Secretary Chertoff on July 13, 2005 by providing a total of $16.079 million for management and administration of the Preparedness Directorate and requiring that the Directorate "work with" FEMA to continue to build "an all-hazard approach for preparation, response and recovery to any type of disaster." P.L. 109-90 also provides roughly $40 million less than the $249.5 million approved by the House for Preparedness, Mitigation, Response and Recovery (PMRR) funding. Of the total, $20 million is to be provided for "catastrophic planning," and $22 million for implementation of the National Incident Management System (NIMS). In addition, $20 million in the same account has been approved by conferees for urban search and rescue teams (the House proposed $7 million, the Senate $30 million), as has $4 million for reusable structures. The statute provides additional funding for the DRF at a level ($1.770 billion) lower than proposed by both the House ($2 billion) and the Senate ($1.920 billion), apparently largely because of the supplemental funding provided after Hurricanes Katrina and Rita. Also of significance, the statute increases funding for disaster mitigation by providing $40 million for activities involving repetitively flooded property (not previously funded) and for the National Flood Mitigation Fund, from the historic level of $20 million to $40 million through transfers from the National Flood Insurance Fund. As enacted, the statute includes funding for the pre-disaster mitigation fund that differs from the amount approved by the two chambers—$50 million compared to $150 million approved by the House and $37 million by the Senate. Two significant developments, not apparent when debate on the FY2006 appropriation began were addressed by Congress during debate on H.R. 2360 . First, funding ($16 million) has been provided for the management and administration of the Preparedness Directorate. Second, in the wake of the destruction caused by Hurricane Katrina increased reporting requirements have been imposed on FEMA to ensure that expenditures of over $50 million is provided to Congress. Congress appropriates money to the Disaster Relief Fund (DRF) to ensure that federal assistance is available to help individuals and communities stricken by severe disasters. Funds appropriated to the DRF remain available until expended. DHS allocates money from the DRF to provide assistance to individuals, families, state and local governments, and certain nonprofit organizations, as authorized by the Stafford Act. Stafford Act aid is available after the President issues a declaration that federal assistance is needed to supplement the resources of states and localities that are overwhelmed by catastrophes. Federal assistance supported by DRF money is used by states, localities, individuals, and certain non-profit organizations for mass care, restoration of damaged or destroyed facilities, clearance of debris, and certain uninsured needs. As shown in Table B -1 in Appendix B , DRF obligations have increased considerably since 1990 in comparison to those recorded in previous decades. The cause of the increase in federal expenditures since 1990 has been the subject of some debate. A report issued by the OIG for FEMA concluded that the increase in federal disaster costs "is due to a greater number and magnitude of disasters, expansion of the law and eligibility for assistance, and interpretation of the law and regulations." Some contend that other factors, notably political considerations, contribute to the costs of disaster relief as well. The author of one study reportedly analyzed data from the insurance industry, climatic study organizations, and DHS, and concluded that "electoral motivations ... had a dramatic effect on which states were granted disaster declarations." More specifically, and less dramatically, the author reports in a published summary of his work: "The best predictor of a disaster declaration, bar none, is actual need. The question arises in these marginal cases, when it's unclear whether to give or not." On the other hand, a study issued by GAO also considered the effects of politics on disaster declarations but arrived at a different conclusion. After examining presidential declaration data from the perspective of the party affiliation of governors and members of state congressional delegations, the authors concluded that there "were no indications that party affiliation affected White House major disaster declaration decisions." In considering a gubernatorial request for disaster relief, the President evaluates a number of factors, including the cause of the catastrophe, damages, needs, certification by state officials that state and local governments will comply with cost sharing and other requirements, and official requests for assistance. Neither the Stafford Act nor implementing regulations provide for a congressional role in the declaration process. The level of expenditures from the DRF fluctuates from year to year primarily as a consequence of three factors—the number of disaster declarations issued, the extent of destruction caused by the disasters, and the amount of uninsured losses that result from declared disasters. Discussions in Congress on the escalating disaster relief costs move between two policy concerns—the need to control federal costs, particularly at a time of significant deficits, and the need of constituents who have suffered devastating losses. During the second session of the 109 th Congress Members may wish to evaluate several options in balancing the needs of disaster stricken areas with budgetary constraints. These options include and are not limited to the following approaches. Amend the Stafford Act to determine whether existing statutory declaration criteria are appropriate. Reducing the categories or narrowing their scope would result in cost savings as fewer disasters would trigger federal assistance. Such changes, however, would result in greater financial burdens for individuals and communities in distress. Modify how Congress and the President budget for emergencies. Currently, Congress provides additional funds during the fiscal year, usually in supplemental appropriations, to respond to specific natural disasters and other emergency, or unanticipated, situations. Congress and the President usually designate the additional spending as an "emergency requirement," effectively exempting it from budget constraints associated with the annual budget resolution. Some believe this practice of budgeting for emergencies might lead to unnecessary or wasteful spending. In addition, some believe that the existing budgetary treatment of emergency spending provides an incentive to designate non-emergency spending as an emergency requirement in order to circumvent the existing budgetary constraints. To address these concerns, some have proposed the following two reforms, establishment of a reserve fund or criteria for the designation of an emergency, as follows. Establish a reserve fund for disaster assistance. Proponents of a reserve fund for disaster assistance argue that the average annual amount of overall emergency spending can be projected based on past experience, even though specific emergencies cannot be predicted. Therefore, they further argue that an expected amount of disaster assistance spending should be incorporated into the overall amount of spending in the President's budget and the budget resolution. Proponents of such a reserve fund generally suggest that an historical average of actual disaster assistance spending would provide sufficient funds to meet specific emergencies as they arise. Legislation pending before Congress ( S. 24 ) would establish such a fund in the Treasury. Establish criteria for emergency spending. Proponents of emergency spending criteria argue that any spending for disasters and other emergencies should meet specific criteria to be considered outside the constraints associated with the budget resolution and outside the regular annual appropriations process. Past budget resolutions have required that spending designated as an "emergency requirement" meet criteria such as the "underlying situation poses a threat to life, property, or national security" and is sudden, urgent, unforeseen, and temporary (for example, see the budget resolution considered by the 108 th Congress, S.Con.Res. 95 , H.Rept. 108-498 ). Proponents, however, suggest that such criteria should be statutory. Activities funded by Title IV include the Bureau of Citizenship and Immigration Services (USCIS), IAIP, FLETC, and the S&T. Table 8 shows the FY2005 enacted and FY2006 requested appropriations for Title IV. The Administration requested an appropriation of $4,320 million in gross budget authority for Title IV in FY2006, representing an 8% increase over the enacted FY2005 level of $4,011 million. The Administration requested an appropriation of $2,546 million in net budget authority for Title IV in FY2006, representing a 6% increase over the FY2005 enacted level of $2,392 million. Of the requested net appropriation for DHS for FY2006: USCIS accounts for less than 1%; IAIP accounts for 3%; S&T accounts for 5%; FLETC accounts for less than 1%; and all Title IV accounts combined account for 8% of requested net appropriated DHS budget authority. House-passed H.R. 2360 recommended a net appropriation of $2,522 million in net budget authority for Title IV in FY2006, representing a $126 million or nearly 5% increase as compared to the FY2005 enacted amount; and a $24 million or 1% decrease as compared to the FY2006 request. The Senate-passed version of H.R. 2360 would have provided $2,686 million for the activities of Title IV, representing an increase of $140 million, or 5%, compared to the FY2006 request; an increase of $164 million, or 7%, compared to the amount provided in the House-passed version of H.R. 2360 ; and an increase of $290 million, or 12%, compared to the FY2005 enacted amount. P.L. 109-90 provides $1,899 million for the activities of Title IV. This does not include funding for IAIP (see tablenote b to Table 10 ). There are three major activities that dominate the work of the U.S. Citizenship and Immigration Services (USCIS): the adjudication of immigration petitions (including nonimmigrant change of status petitions, relative petitions, employment-based petitions, work authorizations, and travel documents); the adjudication of naturalization petitions for legal permanent residents to become citizens; and the consideration of refugee and asylum claims, and related humanitarian and international concerns. USCIS funds the processing and adjudication of immigrant, nonimmigrant, refugee, asylum, and citizenship benefits largely through monies generated by the Examinations Fee Account. Last year, the Administration increased the fees charged to U.S. citizens and legal permanent residents petitioning to bring family or employees into the United States and to foreign nationals in the United States seeking immigration benefits. In FY2004, 86% of USCIS funding came from the Examinations Fee Account. In FY2005, USCIS had budget authority for $1.571 billion from the Examinations Fee Account. Congress provided a direct appropriation of $160 million in FY2005. The House report language emphasized that $160 million should be available to reduce the backlog of applications and to strive for a six-month processing standard for all applications by FY2006. Title IV of P.L. 108-447 , the Consolidated Appropriations Act for FY2005, also required the Secretary of Homeland Security to impose a fraud prevention and detection fee of $500 on H-1B (foreign temporary professional workers) and L (intracompany business personnel) petitioners. The statute requires that the H-1B and L fraud prevention and detection fee be divided equally among DHS, the Department of State (DOS) and Department of Labor (DOL) for use in combating fraud in H-1B and L visa applications with DOS and H-1B and L petitions with USCIS and in carrying out DOL labor attestation enforcement activities. DHS also receives 5% of the H-1B education and training fees in the Nonimmigrant Petitioner Account. For FY2006, the Administration is seeking an increase of $79 million for USCIS. The Administration is requesting a total of $1,854 million for USCIS, (an increase of 4% over the enacted FY2005 level of $1,775 million) the bulk of the funding coming from increased fees paid by individuals and businesses filing petitions ( Table 10 ). For FY2006, USCIS expects to receive a total of $1,774 million from the various fee accounts, most of which ($1,730 million) would be coming from the Examinations Fee Account. According to the USCIS Congressional Justification documents, funds from the Examinations Fee Account alone comprise 93% of the total USCIS FY2006 budget request. The FY2006 Budget also includes $13 million from the H-1B Nonimmigrant Petitioner Account and $31 million from the H-1B and L Fraud Prevention and Detection Account. The Administration proposes to use the $31 million generated from the new fee on H-1B and L petitions to expand its Fraud Detection and National Security Office. In terms of direct appropriations, the Administration is requesting $80 million—a decrease of $80 from FY2005 ( Table 10 ) and a decrease of $155 million from the $235 million Congress appropriated in FY2004. House-passed H.R. 2360 recommended an increase of $40 million above the President's request for a total of $120 million, which is $40 million less than the FY2005 enacted appropriation. Senate-passed H.R. 2360 recommended $80 million for USCIS in direct appropriations fully funding the President's request, but recommending $40 million less than provided in House-passed H.R. 2360 , and $80 million less than enacted in FY2005. P.L. 109-90 provides a total of $1,889 million for USCIS, of which 94% comes from fees. The remaining 6% is a direct appropriation of $115 million, which includes $80 million for backlog reduction initiatives as well as $35 million to support the information technology transformation effort and to convert immigration records into digital format. The FY2006 appropriations amount is a decrease of 28% from the $160 million appropriated in FY2005. As a result of a 10% increase in revenue budgeted from fees, the FY2006 total is 6% greater than the FY2005 total. Many in Congress have expressed concern and frustration about the processing delays and pending caseload. Congress has already enacted statutory requirements for backlog elimination and has earmarked funding backlog elimination for the past several years. The number of pending immigration and naturalization petitions has decreased by 21.5% from 6.0 million at the close of FY2003 to 4.7 million at the close of FY2004. Nonetheless, this figure remains 25.7% greater than the 3.7 million pending cases at the close of FY2000. USCIS hopes to achieve the six-month petition processing time by FY2006. Another matter that may arise in the appropriations debate is the coordination and duplication of efforts between USCIS and ICE in the area of fraud and national security investigations. GAO has reported: "The difficulty between USCIS and ICE investigations regarding benefit fraud is not new ... as a result, some USCIS field officials told us that ICE would not pursue single cases of benefit fraud. ICE field officials who spoke on this issue cited a lack of investigative resources as to why they could not respond in the manner USCIS wanted." USCIS has established the Office of Fraud Detection and National Security to work with the appropriate law enforcement entities to handle national security and criminal "hits" on aliens and to identify systemic fraud in the application process. The Federal Law Enforcement Training Center provides training on all phases of law enforcement instruction, from firearms and high speed vehicle pursuit to legal case instruction and defendant interview techniques, for 81 Federal entities with law enforcement responsibilities, State and Local law enforcement agencies, and international law enforcement agencies. Training policies, programs, and standards are developed by an interagency Board of Directors, and focus on providing training that develops the skills and knowledge needed to perform law enforcement functions safely, effectively, and professionally. FLETC maintains four training sites throughout the United States and has a workforce of over 900 employees. In FY2004, FLETC trained almost 44,781 law enforcement students. The FY2006 request for FLETC was $224 million, an decrease of $3 million, and 1%, from the FY2005 enacted appropriation (including supplemental appropriations). FLETC's FY2006 request included only one program change, an increase of $2.7 million for Simulation Training Technology. This technology will be used to simulate weather, light, urban, and traffic conditions during high-speed pursuits, allowing the agency to increase their students' proficiency at making rapid decisions during critical law enforcement situations. House-passed H.R. 2360 alloted $259 million for FLETC in FY2006, $35 million, or 16%, more than the President's request and $32 million, or 14% more than the agency's FY2005 appropriation. This increase was intended to cover the increased training needs that will be engendered by new Border Patrol agents and ICE investigators added by the House Committee. The Senate Appropriations Committee recommended $282 million for FLETC in FY2006, $58 million more than the President's request and $55 million, or 24% more than the agency's FY2005 appropriation. The bulk of this increase was in the construction account in order to cover the expansion and maintenance of training facilities to accommodate the increase in Border Patrol agents and ICE investigators. P.L. 109-90 provides $282 million for FLETC. This number includes the Senate's recommendation for $88 million in the Construction account in order to cover the increased training needs of DHS as the department hires additional Border Patrol agents and ICE investigators. The historical mission of the DHS IAIP, in short, was to: integrate and analyze terrorist threat information; map threat information against physical and cyber vulnerabilities of the Nation's critical infrastructure and key assets; and implement and/or recommend actions that protect the lives of the American people and ensure the national and economic security of the United States. The IAIP appropriation was divided into two primary accounts: Management and Administration, and Assessments and Evaluations. Management and Administration includes budgets for the Office of the Under Secretary and Other Salaries and Expenses. The latter (Other Salaries and Expenses) includes all the personnel costs of the Directorate. The Assessment and Evaluations budget supports the directorate's activities. These activities have been divided into 12 programs. Each program contains one or more projects. Projects are defined with varying degrees of specificity. The Directorate's budget justification document breaks funding down to the program level. It is beyond the scope of this report to discuss in much detail the specific activities associated with each of these programs. The President's FY2006 IAIP request was $873 million, a decrease of 2.3% from the amounted enacted for FY2005. The House approved $853 million for IAIP, about $20 million below what the Administration requested. The Senate Appropriations Committee recommended $871 million for IAIP. Table 11 summarizes the President's request and congressional action for each account and program. The President's FY2006 request for the M&A account was $204 million, an increase of $72 million, or 55%. Of the $72 million increase requested for the Management and Administration account, $69.1 million are programmatic changes: $11.7 million to increase staffing (146 new positions, funded for half a year), $38 million to upgrade and expand facilities and equipment for the Directorate (including security upgrades), and $19.4 million to construct a Homeland Secure Data Network, to accommodate the automated access and sharing of classified information within the Directorate. Adjustments to the FY2005 base ($2.8 million) account for the balance. The House approved $190.2 million for this account, $13.8 million less than what was requested. The House cut $5.8 million from the amount requested for additional positions. The House report noted that IAIP has still not filled its currently authorized FTE positions and that the committee would like a review of the mission and function of IAIP in light of the Intelligence Reform and Terrorism Prevention Act and the formation of the National Counter Terrorism Center and the Terrorist Screening Center. The House also approved a floor amendment to reduce the M&A account by another $8 million (in undisclosed reductions). The Senate also approved less funding for the M&A account ($168.7 million). It denied all of the requested funds for extra FTE positions and included a base reduction due to continued hiring difficulties. Like the House, the Senate called for a review of IAIP staffing requirements. The Senate also recommended that no funds be made available for the Homeland Secure Data Network through the M&A account. The Senate recommended funding this program through the Chief Information Officer's budget, located elsewhere in the DHS budget. The Senate did allow increases for pay and non-pay inflationary costs and other efficiencies. The President's request for FY2006 in the A&E account was $669 million, a decrease of $92.4 million, or 12% from FY2005. The reduction is the net result of a number of programmatic increases, decreases, and transfers. The IAIP Directorate proposes transferring two activities to other DHS components. One proposal is to transfer support for state and local assistance to help create Buffer Zone Protection Plans around critical assets to the SLGCP, as part of the latter's new $600 million initiative (TIPP). The other proposal is to transfer support for the National Control Systems Test Center (a test bed for analyzing and fixing vulnerabilities in computer control systems) to the S&T Directorate. The Cyber Security program has been supporting the center. These adjustments to the enacted FY2005 A&E account bring the FY2006 base to $624 million. Requested program enhancements for the A&E account total $49 million. Of the $49 million, the A&E program with the largest increase ($26 million, or 53%) is the Homeland Security Operations Center (HSOC). Major programmatic increases within HSOC include $13.4 million for hardware, software, and support for extending the Homeland Security Information Network to localities and relevant private sector entities; and $12.9 million to purchase, upgrade, and support additional information and communications hardware and software to improve the HSOC capabilities to acquire, manipulate, store and disseminate greater amounts of information. Other programmatic increases in the A&E account include $5 million to support expanded capabilities and operations of the United States Computer Emergency Response Team within the Cyber Security program; $5.5 million to primarily provide for additional contractor support of the Protected Critical Infrastructure Information project (within the Critical Infrastructure Outreach and Partnerships program); $3.0 million within the Critical Infrastructure Outreach and Partnerships program to support implementation and oversight of the National IP Plan; and $5.5 million to hire contractors to better define policy, procedures and processes governing information sharing between DHS and its partners, to draft technical and operational needs statements, and to analyze new requirements. The IAIP budget justification provides less detail about the programmatic decreases in FY2006, totaling approximately $146 million (including the transfer of the National Control Systems Test Center). The Critical Infrastructure Outreach and Partnerships program decrease includes a $35 million reduction associated with no longer hosting some departmental applications as directed by the department's CIO. Some of the increases and decreases within specific programs are the result of the transfer of projects between programs. For example, some Threat Determination and Assessment activities were transferred to the Infrastructure Vulnerability and Risk Assessment program. The budget request also estimates approximately $3.0 million in savings due to management and technology efficiencies. The A&E program with the highest ($100 million) adjustment to its base is the Protective Actions program. This program assists federal, state, local, tribal, and private sector organizations in identifying vulnerabilities, and devising protection strategies and local protective programs to surround select infrastructure assets. Of the $100 million adjustment, the Buffer Zone Protection Plans (BZPP) project was reduced by $53 million associated with the transfer of assistance to the new TIPP, administered by SLGCP. Another $42 million of the $100 million adjustment was a decrease for Emerging Pilot Projects and Technology Application Pilots. This effort will now be funded within the DHS S&T. The House approved $663 million for the A&E account, making a few modifications to specific programs, as noted in Table 11 . It reduced the Critical Infrastructure and Outreach program request by $5 million because it did not receive a report on Information Sharing and Analysis Centers, which it said it needed to assess funding levels for them. The House reduced the Homeland Security Operations Center request by $5 million because it did not receive a five-year implementation plan for the center. The House reduced the Biosurveillance request by $1 million because it did not receive a classified report on the program's scope, costs, schedules, and key milestones. The House increased the Critical Infrastructure Identification and Evaluation program by $5 million to expand IAIP Comprehensive Reviews of selected infrastructure sectors. The House commended IAIP on its Review of the nuclear reactor and fuel storage facilities and would like to see similar Reviews of the chemical and liquified natural gas sectors. The Senate approved $702 million for the A&E account, making different modifications to specific programs from those approved by the House. The Senate nearly doubled the Critical Infrastructure Outreach and Partnerships program request to $126.6 million, maintaining that program at FY2005 levels plus increasing funds for the National Center for Critical Information Processing and Storage by $20 million. The Senate also increased the request for the National Infrastructure Simulation and Analysis Center by $5 million ($1 million above its FY2005 appropriation), and increased the Biosurveillance program request by $7 million, for a total of $18 million. The Senate recommended reducing the Critical Infrastructure Identification and Evaluation program request by $12.3 million. It also recommended reducing the Homeland Security Operations Center request by $21.1 million and denied funding for the new Information Sharing and Collaboration program. The Senate Appropriations Committee's report language, however, stated that its recommendation for the Operations Center included funding for the 10 additional FTEs requested for that program. This is at odds with its earlier language denying all additional FTE increases. The Chertoff reorganization essentially split the IA/IP Directorate, with the IA part forming part of the Analysis and Operations group, funded under the Departmental Operations account, and the IP part being merged with elements from the Emergency Preparedness and Response Directorate (including the Office of Domestic Preparedness and its multitude of grant programs, and FEMA) to form a new Preparedness Directorate. Conferees agreed to this reorganization, if not quite the level of funding to be provided. The conferees funded the Analysis and Operations account at $255.5 million. The amended request was $311 million. The reduction was due in part to reductions made to those funds being transferred from the old IA/IP Management and Administration account. The number of vacant positions was given as the reason for those reductions. The amended request asked for $577 million for Preparedness Operations, which included funding for the Office of the Undersecretary for Preparedness, the Office of the Chief Medical Officer, the Office of the National Capital Region Coordinator, and for Infrastructure Protection and Information Security programs (i.e., those IP programs that comprised the old Evaluations and Assessment account). The conferees provided a total of $642 million: $16 million for Management and Administration which includes funding (but $4.8 million less than what was requested) for those offices mentioned above and $625 million for Infrastructure Protection and Information Security programs ($69 million more than was requested). Table 11 shows the FY2005 funding and FY2006 proposals for IAIP. The Conference Report, H.Rept. 109-241 , split IAIP into Infrastructure Protection and Information Security within Title III, and Analysis and Operations in Title I. Where possible, Table 11 follows tracks the accounts that were moved back to the FY2005 enacted level. Where such information was not available or not readily identifiable, we insert N/A. Lastly, we include the total funding provided to the new entities, IPIS and Analysis and Operations, in order to make comparisons possible between the overall request and the House and Senate recommendations for IAIP and for the new agencies. The requested FY2006 budget for Science and Technology (S&T) was $1,368 million. (For details see Table 10 .) For the first time, all R&D funding for the department was included in this request. Compared with the enacted FY2005 funding for the S&T Directorate alone ($1,115 million) the FY2006 request was a 23% increase. However, if one included the enacted FY2005 funding for R&D programs formerly funded elsewhere in the department, the requested increase in DHS-wide R&D funding was 4%. The House provided $1,290 million, a reduction of $78 million from the request. The Senate committee recommended $1,453 million, or $85 million more than the request. P.L. 109-90 provides $1,502.1 million. R&D programs formerly in the TSA and Coast Guard, together with some other smaller programs, would all have been consolidated into the S&T Directorate under the proposed FY2006 budget. This move reflected direction originally given in the FY2004 appropriations conference report ( H.Rept. 108-280 ). Consolidating the Coast Guard R&D program was proposed in the FY2005 budget request as well, but the change was controversial, and Congress did not approve it. For FY2006, the House accepted the Coast Guard move, but the Senate again rejected it, and the conference agreement again followed the Senate. The House, Senate, and conference agreement all accepted the other proposed FY2006 consolidations as requested. The FY2006 budget was the first to propose consolidation for the TSA R&D program because the Homeland Security Act, which established DHS, required that TSA be maintained as a single distinct entity until November 2004 ( P.L. 107-296 , §424). The request for the newly created Domestic Nuclear Detection Office (DNDO) was $227 million. Although funded under S&T, DNDO has been made a freestanding office that reports directly to the Secretary. Noting this fact, the House report provided $100 million less than was requested and stated that "DHS still needs to clarify its role in regard to other federal agencies ... that have similar and more mature programs." The Senate committee, stating that it was "troubled by the manner in which this initiative has been handled," also recommended $100 million less than requested for DNDO, and recommended restricting the obligation of all but $15 million until further details are provided to the appropriations committees. Some DNDO activities were formerly funded by the S&T Directorate's radiological and nuclear countermeasures program, whose FY2006 request was $19 million, down from $123 million. The House provided the requested amount for radiological and nuclear countermeasures, while the Senate provided an increase to $226 million, including $125 million requested under CBP for testing, development, and deployment of radiation portal monitors at ports of entry. The conference agreement provided $318 for DNDO, including $135 million for radiation portal monitors and with restrictions on the obligation of another $145 million pending approval of an expenditure plan by the appropriations committees. The conference agreement provided $19 million for radiological and nuclear countermeasures and concurred with the plan to transfer most funding for this activity into DNDO. Although the proposed total R&D budget for DHS would have changed from the previous year by less than in any other year since the department's creation, the FY2006 request made substantial changes in several existing programs, as well as the new DNDO. Chemical countermeasures, support for other department components, and efforts to counter the threat from MANPADs (portable ground-to-air missiles) were all roughly doubled. Meanwhile, funding for rapid prototyping (to accelerate the adaptation or development of technologies that can be deployed in the near term) was dropped from $76 million to $21 million, and the consolidated R&D activities currently conducted by TSA were dropped from $178 million to $109 million. The House and the Senate committees and the conference agreement all broadly accepted these proposals, with some modifications, and made various other changes to the request, such as increasing funding for explosives countermeasures. See Table 12 for details. The FY2006 budget justification for the S&T Directorate presented program-level data on the directorate's actual FY2004 expenditures, as compared with the program allocations specified in the FY2004 appropriations conference report. These data showed substantial reprogramming. For example, actual expenditures on biological countermeasures in FY2004 were $455 million, versus the enacted level of $197 million. Actual funding for construction of the National Biodefense Analysis and Countermeasure Center was $4 million, versus $88 million enacted. University centers and efforts to counter MANPADs, two items that were of particular congressional interest and received more FY2004 funding than had been requested, had actual expenditures of $22 million and $17 million respectively, versus $69 million and $60 million enacted. As Congress considered appropriations for FY2006, these FY2004 data raised questions about how the S&T Directorate establishes priorities among its programs and how it handles changes in those priorities after funding decisions have been made. Section 546 of P.L. 109-90 rescinds $20 million in unobligated funding for the S&T Directorate from previous fiscal years. P.L. 109-148 contains a number of provisions that impact DHS budget accounts. Division A of P.L. 109-148 contains the Department of Defense (DoD) Appropriations Act for FY2006. Division B of P.L. 109-148 contains Emergency Supplemental Appropriations to Address Hurricanes in the Gulf of Mexico and the Pandemic Influenza in 2006. Division B also contains a number of rescissions that affect DHS accounts, including an across-the-board rescission of 1%. Division A, Title IX of the DoD Appropriations Act ( P.L. 109-148 ) contains a provision that transfers up to $100 million to the Coast Guard's Operating Expenses account from the Iraq Freedom Fund. These funds are available for transfer until September 30, 2007, and are to be used only to support operations in Iraq or Afghanistan and classified activities. Division B, Title III, Chapter 8, of P.L. 109-148 contains a 1% across-the-board (ATB) rescission that is to be applied to all discretionary FY2006 appropriations. Specifically, Sec. 3801 rescinds 1% of: the budget authority provided (or obligation limit imposed) for FY2006 for any discretionary account in any prior and in any other FY2006 appropriations act; the budget authority provided in any advance appropriation for FY2006 for any discretionary account in any prior fiscal year appropriation; and the contract authority provided in FY2006 for any program subject to limitation contained in any FY2006 appropriation act. The ATB rescission does not apply to emergency appropriations (as defined by Sec. 402 of H.Con.Res. 95 , the FY2006 Budget Resolution), nor does it apply to the discretionary budget authority made available to the Department of Veterans Affairs. At the time of the final update of this report, it was unclear how the rescission would be applied across DHS discretionary accounts. Division B, Title I, Chapter 4, of P.L. 109-148 provides emergency supplemental appropriations to various DHS accounts to address the impacts of Hurricane Katrina. On October 28, 2005, the President submitted a request to Congress to reallocate $17.1 billion of the $60 billion previously appropriated by Congress to FEMA's Disaster Relief Fund (DRF) to respond to Hurricanes Katrina, Rita, Wilma, and other disasters. The Congressional response to this request was included in Title I of Division B of P.L. 109-148 ; the rescissions (from DHS accounts) funding this request were included in Title III of Division B of P.L. 109-148 . Most of the additional funding provided to DHS accounts is to be used to repair and/or replace DHS equipment and facilities lost or damage by the Hurricanes. These include: $24.1 million for CBP's Salaries and Expenses account; $10.4 million for CBP's Construction account; $13 million for ICE's Salaries and Expenses account; $132 million for the Coast Guard's Operating Expenses account; $74.5 million for the Coast Guard's Acquisition, Construction, and Improvements account; $3.6 million for the Secret Service's Salaries and Expenses account; $10.3 million for ODP's State and Local Programs account; and 17.2 million for FEMA's Administrative and Regional Operations account. This section of P.L. 109-148 also transfers $1.5 million (of the funds previously appropriated to this account by P.L. 109-62 , see Supplemental funds for Hurricane Katrina below) from FEMA's Disaster Relief Account to the "Disaster Assistance Direct Loan Program Account" to carry out the direct loan program. All of the funds provided to DHS accounts under this section of P.L. 109-148 are designated as emergency funds. Title III, Chapter 4, of Division B of P.L. 109-148 contains rescissions affecting DHS accounts. These include: $23.4 billion in funds previously appropriated by P.L. 109-62 , from FEMA's Disaster Relief account; and $260.5 million in funds previously appropriated by P.L. 109-90 , from the Coast Guard's Operating Expenses account. Division B, Title II, Chapter 4 of P.L. 109-148 provides an additional $47.3 million for the DHS Office of the Secretary and Executive Management account. These funds are for "necessary expenses to train, plan, and prepare for a potential outbreak of highly pathogenic influenza." These funds are designated as emergency funds. During the conference consideration of H.R. 2863 , two other Divisions, C and D were inserted into the conference report ( H.Rept. 109-359 ) attached to the bill. Division C, the American Energy Independence and Security Act of 2005, would have allowed oil well drilling in Alaska's National Wildlife Refuge (ANWR). Division D, contained provisions that would have distributed the revenues from the ANWR drilling. Among the items that would have been funded with these revenues was more than $1 billion in additional border security funding for DHS. After a contentious floor debate concerning the attachment of the ANWR provisions to the Defense Appropriations Bill, both Divisions C and D were removed from the bill by S.Con.Res. 74 , the enrollment correction measure, and are not included in P.L. 109-148 . In response to the widespread destruction brought to the Gulf Coast by Hurricane Katrina, the 109 th Congress has completed action on two separate emergency supplemental bills ( P.L. 109-61 / H.R. 3645 and P.L. 109-62 / H.R. 3673 ) which together provide an additional $62.3 billion for emergency response and recovery needs. Of the combined amount provided in the two measures, $60 billion is for the ongoing efforts of FEMA to provide emergency food, shelter, and medical care to areas stricken by the hurricane and other disasters. In addition, $1.9 billion is for the Department of Defense to defray the cost of deploying military personnel to the region for rescue, relief, and for other response costs, and $400 million is for the Army Corps of Engineers to restore navigation waterways and repair damaged flood control projects in affected Gulf states. Additional requests for supplemental funding may be forthcoming in the weeks and months ahead as loss and recovery statements, and assessments of the damage caused by Hurricane Rita become available. The annual concurrent resolution on the budget sets forth the congressional budget. The Senate budget resolution, S.Con.Res. 18 was introduced on March 11, 2005, and passed the Senate on March 17, 2005. S.Con.Res. 18 provides $848.8 billion in discretionary spending. The House budget resolution, H.Con.Res. 95 , was introduced on March 11, 2005, and passed the House on March 17, 2005. H.Con.Res. 95 proposes $843 billion in discretionary budget authority. On April 28, 2005 the conference committee reported, and both the House and Senate passed, H.Rept. 109-62 providing $843 billion in discretionary budget authority for FY2006. On February 14, 2005, the President submitted an $81.9 billion request for supplemental FY2005 funding for military operations, international affairs, intelligence, and homeland security activities. The request includes an additional $161 million for the Coast Guard to offset the costs of operations in Iraq. The request for Coast Guard includes $111 million for operations in support of Operation Iraqi Freedom and Operation Enduring Freedom, including port security and law enforcement capabilities; strategic waterside security teams; and funding of active duty and mobilized reserve personnel. The request further includes $49 million for the retrofit, renovation and subsystem replacement of Coast Guard 110-foot patrol boats. The supplemental request also includes $110 million for the Department of Energy's Megaports Initiative. This initiative provides for the deployment of radiation detection technology and law enforcement personnel to foreign ports (in this case the funding would be for four specific ports) to detect, deter, and interdict nuclear and other radioactive material. Though this request is for the DOE, the Megaports Initiative supports CBP's CSI program. H.R. 1268 was introduced on March 11, 2005, and passed the House March 16, 2005. The bill passed the Senate on April 21, 2005. The conference committee reported the conference report ( H.Rept. 109-72 ) was filed on May 3, 2005. H.Rept. 109-72 was agreed to in the House on May 5, 2005; and was agreed to in the Senate on May 10, 2005. The President signed H.R. 1268 on May 11, 2005, and the bill became P.L. 109-13 . Within DHS, P.L. 109-13 provides CBP with an additional $125 million for 500 new Border Patrol agents above the FY2005 enacted level, and with $52 million in additional construction funding; ICE with an additional $454 million for additional investigators, enforcement agents, detention officers and detention bedspace; Coast Guard with an additional $161 million as requested (see above); and FLETC with an additional $4 million. As enacted, P.L. 109-13 also includes the REAL ID Act of 2005. Appendix A. DHS Appropriations in Context DHS Appropriations and Federal Homeland Security Spending Since the terrorist attacks of September 11, 2001, there has been an increasing interest in the levels of funding available for homeland security efforts. The Office of Management and Budget, as originally directed by the FY1998 National Defense Authorization Act, has published an annual report to Congress on combating terrorism. Beginning with the June 24, 2002 edition of this report, homeland security was included as a part of the analysis. In subsequent years, this homeland security funding analysis has become more refined, as distinctions (and account lines) between homeland and non-homeland security activities have become more precise. This means that while Table A -1 is presented in such a way as to allow year to year comparisons, they may in fact not be strictly comparable due to the increasing specificity of the analysis, as outlined above. With regard to DHS funding, it is important to note that DHS funding does not comprise all federal spending on homeland security efforts. In fact, while the largest component of federal spending on homeland security is contained within DHS, the DHS homeland security request for FY2006 accounts for approximately 54% of total federal funding for homeland security. The Department of Defense comprises the next highest proportion at 19% of all federal spending on homeland security. The Department of Health and Human Services at 8.8%, the Department of Justice at 6.2% and the Department of Energy at 3.3% round out the top five agencies in spending on homeland security. These five agencies collectively account for nearly 95% of all federal spending on homeland security. It is also important to note that not all DHS funding is classified as pertaining to homeland security activities. The legacy agencies that became a part of DHS also conduct activities that are not homeland security related. Therefore, while the FY2006 requests a total homeland security budget authority of $27.3 billion for DHS, the requested gross budget authority is reported as $41.1 billion. The same is true of the other agencies listed in the table. Appendix B. Disaster Relief Fund
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This report describes the FY2006 appropriations for the Department of Homeland Security (DHS). The Administration requested a net appropriation of $30.6 billion in net budget authority for FY2006, of which $29.6 billion is discretionary budget authority, and $1 billion is mandatory budget authority. P.L. 109-90 was signed into law on October 18, 2005, and provides a net appropriation of $31.9 billion for DHS and $30.8 billion in discretionary budget authority. The President's request for appropriations includes the following break out of net budget authority for the four Titles of the DHS appropriation bill: (I) Departmental Management and Operations, $748 million; (II) Security, Enforcement and Investigations, $20,566 million; (III) Preparedness and Response, $6,710 million; and (IV) Research and Development, Training, Assessments, and Services, $2,546 million. The House-passed version of H.R. 2360 would provide the following amounts for each title: (I) $561 million; (II) $21,988 million; (III) $6,688 million; and (IV) $2,522 million. The Senate-passed version of H.R. 2360 would provide the following amounts for each title: (I) $647 million; (II) $22,193 million; (III) $6,334 million; and (IV) $2,686 million. P.L. 109-90 reflects Secretary Chertoff's proposed reorganization and provides the following amounts for each title: (I) $907 million; (II) $22,401 million; (III) $6,666 million; and (IV) $1,899 million. P.L. 109-90 concurs with much of Secretary Chertoff's reorganization of DHS, including moving the Federal Air Marshals from ICE to TSA and splitting the Directorate for Information Analysis and Infrastructure Protection into two different agencies, Analysis and Operations within Title I, and Infrastructure Protection and Information Security, within Title III. The requested net appropriation, amounts in House-passed H.R. 2360 (in parentheses), amounts in Senate-passed H.R. 2360 [in brackets], and amounts in the conference report {in ellipses} for major components of the department include the following: $5,575 ($5,785) [$5,998] {$5,993} million for Customs and Border Protection (CBP); $3,648 ($3,830) [$3,808] {$3,175} million for Immigration and Customs Enforcement (ICE); $1,641 ($3,263) [$3,065] {$3,925} million for the Transportation Security Administration (TSA); $7,962 ($7,458) [$7,780] {$7,797} million for the U.S. Coast Guard; $1,204 ($1,232) [$1,192] {$1,212} million for the Secret Service; $3,565 ($3,665) [$3,573] {$3,346} million for the Office of State and Local Government Preparedness (SLGCP); $3,135 ($3,013) [$2,758] {$2,633} million for the Emergency Preparedness and Response Directorate (EPR); $80 ($120) [$80] {$115} million for Citizenship and Immigration Services (USCIS); and $1,368 ($1,290) [$1,453] {$1,502} million for the Science and Technology Directorate. Responding to the devastation caused by Hurricane Katrina, Congress enacted two supplemental appropriation laws totaling $60 billion in FY2005 for EPR. This report will not be updated.
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In January 2016, Senator Orrin Hatch, chairman of the Senate Finance Committee, announced plans for a tax reform that would explore corporate integration. Corporate integration involves the elimination or reduction of additional taxes on corporate equity investment that arise because corporate income is taxed twice. The corporation pays corporate tax (at 35% for large corporations) on its taxable income. Individuals pay individual income taxes on dividends and capital gains (which arise from corporate retained earnings) when realized. This system produces differential tax burdens, potentially discouraging the realization of gains on the sale of corporate stock and favoring noncorporate equity investment over corporate investment, debt finance over equity finance, and retained earnings over dividends. One goal of corporate integration is to reduce or eliminate these distortions. The focus on corporate tax integration differs from the approach in some recent tax reform plans that have proposed broadening the base of the corporate tax, reducing the corporate tax rate, and revising the tax treatment of foreign source income. This report provides an overview of CRS Report R44638, Corporate Tax Integration and Tax Reform , by [author name scrubbed], which contains a detailed analysis of corporate tax integration issues, data sources, and documentation. Corporate tax integration was the focus of a 1992 Treasury study, which recommended approaches to integration that reduced or eliminated taxes at the shareholder level while retaining taxes at the corporate level, including an exclusion of dividends for shareholders. Over the years, taxes on shareholders have been reduced. Dividends and capital gains are typically taxed at rates of 15% or 20% (whereas the top ordinary income tax rate is 39.6%), plus, for some high-income taxpayers, an additional 3.8% tax that applies to passive investment income in general. Several important factors in considering proposals have changed since 1992, aside from the lower shareholder taxes. One is the increased importance of a global economy and multinational firms with investments and activities in many countries. These firms' choices about the location of investment and profits are affected by firm-level rather than shareholder-level taxes. A second is that the fraction of shareholders who are not subject to U.S. shareholder taxes has increased. Currently only about a quarter of the corporate stock of U.S. firms is estimated to be owned by shareholders subject to U.S. individual tax (compared with about half in 1992). Inflation has declined, affecting tax rates. Tax-favored intangible assets, which are more important in the corporate sector, have also grown in importance. The United States has a "classical" corporate tax system, modified by lower taxes on dividends and capital gains. Corporate taxable profits are subject to a 35% rate for large corporations. Firms distribute after-tax profits as dividends or retain earnings for investment; the latter increases the firm's value, creating capital gains. If all profits were taxed at the statutory rate, distributed as a dividend, and then taxed at ordinary rates to a shareholder in the 35% bracket, the total tax on a corporate investment would be 58% (a 35% corporate tax and an additional 35% on the remaining 65% of profit) compared with a tax rate of 35% on noncorporate investment, for a 23 percentage point difference. Those effects, however, are smaller because of favorable treatment of dividends and capital gains (the top rate is 23.8%); options to invest stock through tax-exempt accounts, such as retirement plans, that pay no shareholder-level tax; and tax preferences that lower the effective corporate tax rate more than the effective noncorporate rate. Tax treatment at the shareholder level depends on the type of shareholder. As noted above, most stock is held in forms not subject to U.S. individual income tax. Shareholders are treated differently if they are (1) U.S. individuals (a 25% share), paying an estimated tax rate of 13.7%; (2) U.S. tax-exempt entities and tax deferred entities (a 50% share) paying no tax, or (3) foreign shareholders (a 25% share) paying a 3.2% estimated U.S. tax rate. The tax rates at the shareholder level are paid on income net of the corporate effective tax rate (estimated to be about 20% overall for new investment). The data on shareholder distribution do not include U.S. subsidiaries of foreign firms, whose holdings are estimated at 79% of the holdings of foreign shareholders in U.S. parented firms. Income of pass-through (referred to as noncorporate) businesses is subject only to the individual tax, with income allocated to each owner. These firms include sole proprietorships, partnerships (including limited liability corporations), and Subchapter S firms that are corporations but elect to be taxed as pass-throughs. The overall statutory tax rate is estimated to be 28% (although the effective rate is lower). In determining the effect of the business tax system and in designing integration proposals, an important issue is that of tax preferences: provisions that cause the effective tax rate to be less than the statutory rate. The most important tax preference that affects burdens on domestic investment is accelerated depreciation, which allows deductions for costs to be recovered faster than is justified by the economic decline in the value of the asset (including an immediate deduction for investment in intangibles). Other preferences are the production activities deduction, which allows a deduction for domestic production in certain industries, and the tax credit for intangible investment in research. Foreign source income is also taxed at a lower rate. If firms borrow to finance investments, the interest is deducted. The deduction of interest goes beyond eliminating the corporate tax on profits attributable to debt finance, because the rate at which profit is effectively taxed is lower than the rate at which interest is deducted due to tax preferences and inflation. Interest income, including the inflation portion of the nominal interest rate, is subject to tax by creditors, but the tax rates are lower than the corporate rate (estimated at 24%). In addition, only a small fraction of that interest, 19%, is estimated to be subject to tax. Interest paid to foreign persons is subject to a negligible withholding tax. The growth in the importance of foreign source income has changed the way corporate integration is viewed, compared with the focus in 1992. The U.S. corporate level tax is largely imposed on a source basis, reflecting the taxes in the jurisdiction where the activity takes place. Thus, a lower corporate tax generally encourages more equity (although not necessarily debt-financed) investment in the United States as compared with foreign countries. The shareholder and creditor taxes are imposed on a residence basis and apply regardless of investment location. The corporate tax is technically imposed on worldwide income, but tax is not paid on the earnings of foreign subsidiaries in most cases until and if income is repatriated (or paid as a dividend to the U.S. parent). Because a fraction of profits is reinvested permanently (as plant and equipment), some share of this income is never taxed. In addition, foreign source income is eligible for credits against U.S. tax liability for taxes paid to foreign governments. Because excess credits from higher-tax countries can be used to offset U.S. tax liability from low-tax countries, the U.S. effective tax rate is small. Overall, the average tax rate paid on foreign source income is estimated at 17.4%, 14.1% paid in foreign taxes and a residual tax of 3.3% paid to the United States. One objective of corporate tax integration is to reduce the distortions caused by the current tax treatment. The estimated magnitude of the distortions arising from the corporate tax and other elements of the tax system can be shown through effective tax rates on the returns to new investment at the margin. Estimates presented are the effective corporate tax alone (the firm-level tax), an effective total corporate tax including shareholder or creditor taxes, and an effective tax rate on unincorporated businesses including all taxes. Table 1 shows the effective tax rates using the basic assumptions about shareholder and noncorporate average statutory tax rates and the Congressional Budget Office's (CBO's) alternative set of assumptions of these statutory tax rates. For domestic equity investments, the overall effective tax rate at the firm level is estimated at 19.7%, or only 56% of the statutory rate of 35%. Across groups of assets, tax rates range from -63.3% for intangible investments in research to 30.8% for nonresidential structures. These rates compare to estimated marginal rates on foreign investment of 13%. Additional shareholder taxes add less than three percentage points. The total corporate tax rate is estimated at 22.4%, only slightly above the rate on unincorporated business of 21.1%. Returns on debt-financed investment in the corporate sector are subject to firm level negative effective tax rates of -53.5%; shareholder tax rates lower the negative tax (or subsidy) to -44%. The return on investment by unincorporated business is estimated to have a negative tax rate of -20.6%. A weighted average of debt and equity has a firm-level tax of 5.7%, an overall corporate tax rate of 7.8% and a rate on unincorporated business of 11.8%. These estimated rates show a small difference in tax burden overall between equity invested in the corporate versus the noncorporate sector, but show large differences across assets and large differences between debt and equity. Under current law, the incentive to retain earnings because part of capital gains (estimated at half) generated by those earnings escapes tax is small, both because of the low rates and the significant share of stock held by nontaxable entities. For individuals subject to the income tax, the estimated tax rate is 17% and half of that rate is 8.5%. For foreign shareholders, dividends are taxed at 5.9% on average and capital gains are not taxed, so the differential is 5.9%. Weighted for all taxpayers the difference between the tax on dividends and capital gains is 3.6%. Similarly, the incentive not to realize gain on stocks is likely small because of the low rate of 17% is paid by only a quarter of shareholders, for a weighted average of 4.25%. A number of approaches to integration are possible. These approaches can be divided into three basic types: (1) full integration; (2) partial integration, which addresses only dividends; and (3) proposals that also address the treatment of interest. They also depend on many other features, including the pass-through of preferences, which are addressed in more detail in CRS Report R44638, Corporate Tax Integration and Tax Reform . Full integration would eliminate one of the levels of taxation and apply both to dividends and retained earnings. Some approaches include taxing only at the shareholder level, some include taxing only at the corporate level, and some include a combination of both. A modified partnership treatment would impute corporate taxable income to shareholders based on who receives dividends. The income would be taxed at ordinary rates. Tax preferences would be passed through to shareholders. The corporation would collect a withholding tax that could then be credited to shareholders. The tax could be made refundable, so that tax-exempt investors would pay no tax, or it would be nonrefundable, so that foreigners and tax-exempt shareholders would pay the corporate level tax, and taxable individuals would pay tax at the individual rate. For administrative reasons, and because shareholders may face taxes larger than their distributions, a standard partnership treatment is not generally believed to be feasible. Mark to Market would repeal the corporate tax for publicly traded firms, tax dividends and capital gains at ordinary rates, and mark the value of stock to market—that is, tax capital gains on the stock regardless of whether it was sold. This approach would eliminate preferences. Privately traded firms would receive pass-through treatment. Mark-to-market would impose a tax on tax-exempt shareholders at any level (although a tax could be imposed on them directly). One issue with this approach is that shareholders would be taxed on income not received. An alternative to taxing shareholders and eliminating the corporate level tax is to impose the corporate level tax and eliminate taxes on dividends and on capital gains from corporate stock. This approach would lose some revenue, but would simplify the tax system. Probably the major objection to this approach is that the firm level tax determines the allocation of investment for multinational firms, and this approach would not reduce that tax. The current reduced rates on dividends and capital gains have taken a step in this direction. The final full integration proposal would tax dividends to shareholders by allowing a corporate dividend deduction, while eliminating capital gains tax on corporate stock. This treatment is identical to the partial integration dividend deduction proposals, with the added effect of eliminating capital gains taxes. The second major category of proposals removes the double tax on corporate income only for dividends. As with full integration, the alternative is to tax at the firm level or individual level. One approach would allow a dividend deduction with a withholding tax. Shareholders would pay tax on dividends plus the withholding tax and receive credits for the withholding tax (which could be refundable or nonrefundable). Dividend relief proposals often limit the relief to dividends paid out of taxable income. There are indications that Chairman Hatch is considering this approach. This approach would allow dividends to be excluded from shareholders' income and thus only the corporate tax would apply. As with the dividend deduction, preferences could be dealt with by allowing excluded dividends paid out of taxable income. This approach was proposed in 1992 although currently it may be less attractive because of global concerns. Some integration proposals have also encompassed debt. In 1992, one Treasury proposal was to disallow interest deductions for both corporate firms and unincorporated businesses. Disallowing interest deductions could be combined with integration approaches, except for mark-to-market. Three basic issues that relate to corporate integration policy are the revenue impacts, the administrative concerns, and the economic efficiency effects. Revenue impacts are an important consideration in any tax reform proposal. Table 2 provides estimates for the proposals (in the form of effective average tax rates), which show the cost as a percentage of current corporate tax revenues. These estimates suggest that allowing refundable credits or mark to market do not appear feasible if revenue neutrality is an objective. Although the other proposals lose revenues, offsetting them with restrictions on debt or other base-broadening provisions would be possible. Mark to market could also be feasible if taxes are imposed directly on exempt or largely exempt firms. Some proposals face considerable administrative barriers, especially mark to market, which would require tax payment when income is not realized. Most proposals would add complications for shareholders, but mark to market would simplify at the corporate level. Providing tax credits to creditors if interest is subject to a withholding tax might be difficult because of the tracing of interest payments. Efficiency gains reflecting the traditional goals of integration are limited, with the exception of reducing the debt-equity distortion and potentially eliminating distortion across assets within the corporate sector under mark to market. Similarly, most proposals would not have significant effects on the international allocation of capital, repatriation, profit-shifting and inversions. Disallowing deductions for interest would eliminate some methods of profit shifting and make inversions less attractive. Mark to market would create a residence-based tax, which would provide efficiency gains in all areas: allocation of capital, repatriation, profit-shifting, and inversions.
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In January 2016, Senator Orrin Hatch, chairman of the Senate Finance Committee, announced plans for a tax reform that would explore corporate integration. Corporate integration involves the elimination or reduction of additional taxes on corporate equity investment that arise because corporate income is taxed twice, once at the corporate level and once at the individual level. Traditional concerns are that this system of taxation is inefficient because it (1) favors noncorporate equity investment over corporate investment, (2) favors debt finance over equity finance, (3) favors retained earnings over dividends, and (4) discourages the realization of gains on the sale of corporate stock. Increasingly, international concerns such as allocation of investment across countries, repatriation of profits earned abroad, shifting profits out of the United States and into tax havens, and inversions (U.S. firms using mergers to shift headquarters to a foreign country) have become issues in any tax reform, corporate integration included. This report summarizes findings in CRS Report R44638, Corporate Tax Integration and Tax Reform, by [author name scrubbed]. That report examines the effects of different tax treatment of the corporate and noncorporate sectors, the effect of tax preferences, the treatment of debt finance, and the treatment of foreign source income. Estimates suggest that there is little overall difference between corporate and noncorporate investment. A larger share of corporate assets benefits from tax preferences. Only a quarter of shares in U.S. firms is held by taxable individuals; the remainder is held by tax-exempt and largely tax-exempt pension and retirement accounts, nonprofits, and foreigners. Additionally, tax rates on individual dividends and capital gains are lower than ordinary rates. Effective tax rates across assets differ markedly, with intangible assets most favored and structures least favored. Debt is treated favorably in both the corporate and noncorporate sectors, with large differences and in many cases negative tax rates. Differences in taxes affecting dividend payout choices or realization of capital gains on stock appear to be small because of low tax rates. The report outlines several approaches to integration. Full integration would address both dividends and retained earnings. Tax could be imposed at the shareholder level with allocation of income and withholding (a modified partnership treatment). Credits for withheld taxes would be provided to shareholders, and credits could be made nonrefundable for tax-exempt and foreign shareholders. A different full integration approach would eliminate shareholder taxes and tax only at the firm level. A third would tax at the shareholder level and not the firm by imposing ordinary rates and taxing not only dividends and realized capital gains but also unrealized gains by marking shares to market prices (i.e., mark-to-market). Partial integration focuses on dividends and could provide either a dividend deduction by the firm (with a withholding tax and credits) or a dividend exclusion to the shareholder. Disallowing interest deductions in full or in part could be combined with most proposals. The report compares these proposals with respect to impact on revenue, administrative feasibility, and effects on both traditional and international tax choices. Shareholder allocation or dividend deductions with refundable credits produce relatively large revenue losses, as does mark-to-market. Nonrefundability and making modifications in mark-to-market can substantially reduce these revenue losses. Most proposals would have modest efficiency gains or losses. Mark-to-market would tax economic income and potentially produce a number of efficiency gains but may not be feasible on administrative grounds. Disallowing or restricting deductions for interest would lead to efficiency gains on a number of margins and provide revenue to help achieve revenue-neutral reforms.
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On July 20, 2012, a 24-year-old male entered a theater in Aurora, CO, and perpetrated what has been described as one of the worst mass shootings in modern U.S. history. James Holmes allegedly shot to death 12 people and wounded another 58 people, seven of them critically. He was armed with an M16 variant semiautomatic rifle equipped with a drum magazine, a 12-gauge pump shotgun, and at least one, possibly two .40-caliber handguns. He reportedly bought these firearms legally from federally licensed gun dealers in Colorado. He also reportedly purchased over 6,000 rounds of ammunition through Internet-based transactions. Sixteen days later, on August 5, 2012, a 40-year-old U.S. Army veteran entered a Sikh temple and committed a mass-casualty shooting in the Oak Creek suburb of Milwaukee, WI. In this attack, Wade Michael Page allegedly shot to death six worshipers and critically wounded another three people. One of the wounded victims was a police officer, whom Page allegedly shot numerous times as the officer administered first aid to another victim. Then, Page shot himself to death, after being wounded by a responding police officer. Page was armed with a 9mm semiautomatic pistol that he had acquired legally, when he resided in North Carolina. Press accounts describe Page as a neo-Nazi, white supremacist, and it is widely thought that he mistook the Sikh temple for a Muslim mosque. These and other mass-casualty shootings prompted some Members of the 112 th Congress to reconsider proposals to reinstate a 1994 ban on semiautomatic assault weapons and large capacity ammunition feeding devices, which expired in September 2004. There were similar calls to ban such feeding devices (see H.R. 308 and S. 32 ) following the January 8, 2011, Tucson, AZ, shooting, in which 6 people were killed and 14 wounded, including Representative Gabrielle Giffords, who was grievously wounded. Similarly, the Aurora, CO, shootings led some Members to call for greater regulation of interstate, Internet-based ammunition transfers ( S. 3458 / H.R. 6241 ). Since March 2011, much of the gun control debate in the 112 th Congress has swirled around allegations that the Department of Justice (DOJ) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) mishandled a Phoenix, AZ-based gun trafficking investigation known as "Operation Fast and Furious." In December 2010, two suspect firearms linked to that investigation were found at the murder scene of Border Patrol Agent Brian Terry. In January 2010, ATF whistleblowers contacted Senator Charles Grassley with assertions that suspected gun traffickers had not been arrested in a timely fashion and, as a result, a large number of suspect firearms had not been interdicted and have reportedly passed into the hands of drug traffickers and other criminals. The whistleblowers referred to this investigative tactic as "gun walking." According to one source, 665 of these firearms have been recovered by law enforcement at crime scenes on both sides of the border. Another 1,355 suspect firearms reportedly remain unaccounted for. Senator Grassley, ranking minority Member on the Committee on the Judiciary, and Representative Darrell Issa, chairman of the Committee on Oversight and Government Reform, have issued four joint staff reports on Operation Fast and Furious, and the House committee has held several related hearings. Representative Elijah Cummings, the committee's ranking minority Member, has also issued two reports related to this controversial operation. On November 1, 2011, a high-ranking DOJ official testified before the Senate Committee on the Judiciary's Crime and Terrorism Subcommittee that he had identified "gun walking" as a potentially risk laden investigative technique in April 2010 but failed to inform the Attorney General about the potential risks. On November 8, 2011, the Senate Committee on the Judiciary held a DOJ oversight hearing, and Attorney General Eric Holder fielded questions about Operation Fast and Furious. The Attorney General conceded that a February 4, 2011, letter from DOJ to congressional investigators contained "inaccurate" information regarding the depth of knowledge that departmental officials had of ATF's use of the "gun walking" tactic. On December 8, 2011, the House Committee held a hearing to explore, among other things, whether senior departmental officials knew more about Operation Fast and Furious than what was previously indicated in a May 3, 2011, hearing before that committee. On November 18, 2011, the President signed into law the Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ; P.L. 112-55 ), following House and Senate passage on the previous day. This act provides ATF with $1.152 billion for FY2012. In response to Operation Fast and Furious, Congress included in that act a provision (§219) that reflects a Senate-passed amendment sponsored by Senator John Cornyn to prevent the expenditure of any funding provided under it to be used by a federal law enforcement officer to facilitate the transfer of an operable firearm to a person known to be or suspected of being connected to a drug cartel without that firearm being continuously monitored or controlled. The act, however, does not include an amendment that was sponsored by Representative Denny Rehberg and adopted in House full committee markup that would have prevented ATF from collecting multiple long gun sales reports from federally licensed gun dealers in Southwest Border states. In addition, two ATF funding provisos and one Federal Bureau of Investigation (FBI) funding proviso were made permanent with the inclusion of "futurity" language, as opposed to temporary, annual appropriations restrictions. These provisos essentially prohibit the consolidation or centralization of firearm acquisition and disposition records. In its FY2013 DOJ budget submission, the Administration proposed dropping the Cornyn language prohibiting "gun walking," arguing that the prohibition is unnecessary. The Administration also proposed stripping the futurity language out of the ATF and FBI funding provisions noted above, which were made permanent in the FY2012 appropriations cycle. In addition, the Administration proposed stripping futurity language out of a long-standing but controversial provision known as the Tiahrt amendment, which prohibits ATF from releasing firearms trace data under a range of circumstances. Besides including futurity language, Congress has altered the language of the Tiahrt amendment several times in recent years to clarify under which circumstances and at what level of detail it is proper to release firearms trace data to law enforcement and other governmental officials, as well as to researchers, the media, and the general public. Other legislative developments in the 112 th Congress include the following: On October 29, 2012, Representative Issa and Senator Grassley released Part II of their three-part, final joint staff report entitled Fast and Furious: The Anatomy of a Failed Operation . The second of three parts, Part II examines the interaction of senior DOJ officials in the Criminal Division and the Office of the Deputy Attorney General with ATF headquarters, the Phoenix Field Division, and the Arizona U.S. Attorney's Office. On September 22, 2012, the Senate voted to invoke cloture on the Sportsmen's Act of 2012 ( S. 3525 ), clearing the way for the Senate to consider this bill, possibly, when it reconvenes. Like the Sportsmen's Heritage Act of 2102 ( H.R. 4089 ), the Senate bill includes provisions designed to promote access to federal lands for hunting and other sporting activities. On September 20, 2012, the Committee on Oversight and Government Reform held a hearing on a report by the DOJ Office of Inspector General (OIG) entitled A Review of ATF's Operation Fast and Furious and Related Matters . The OIG testified to the report's findings that high-ranking, supervisory officials within ATF headquarters and the Phoenix Field Division, as well as the U.S. Attorney's Office for the District of Arizona and Main Justice (DOJ headquarters), were responsible for misguided strategies and tactics, errors in judgment, and management failures related to Operation Fast and Furious. On July 31, 2012, Representative Darrell Issa, chairman of the Committee on Oversight and Government Reform, and Senator Charles Grassley, ranking minority Member of the Committee on the Judiciary, released a report entitled Fast and Furious: The Anatomy of a Failed Operation . The first of three, this report essentially chronicles how the ATF Phoenix Division and the U.S. Attorney's Office for the Arizona District ran a gun trafficking investigation from October 2009 through January 2010, during which controversial "gun walking" tactics were employed that—in Representative Issa and Senator Grassley's estimation—seriously compromised public safety and contributed to violent crime and death on both sides of the international border. On June 28, 2012, the House passed a resolution ( H.Res. 711 ) citing Attorney General Eric Holder in contempt of Congress for his failure to produce additional, subpoenaed documents related to Operation Fast and Furious by a roll call vote of 255-67 (Roll no. 441). The Committee on Oversight and Government Reform had previously approved a report ( H.Rept. 112-546 ) that accompanied this resolution by a vote of 23-17. Shortly before the committee took up the resolution, President Barack Obama asserted executive privilege, rather than disclose subpoenaed documents related to ATF's Operation Fast and Furious. The House also passed a related resolution ( H.Res. 706 ) that authorizes the committee to initiate or intervene in judicial proceedings to enforce certain subpoenas. On May 18, 2012, the House passed the National Defense Authorization Act (NDAA) for Fiscal Year 2013 ( H.R. 4310 ). This bill includes a provision that would allow Department of Defense (DOD) mental health professionals and commanding officers to inquire about privately owned firearms that a service member might hold off-base, if he is considered to be a risk of suicide or a danger to others. A provision included in the FY2011 NDAA ( P.L. 111-383 ) prohibits the Secretary of Defense from collecting information on privately owned firearms held by service members, DOD civilian employees, or their families off-base. On May 10, 2012, the House passed a measure ( H.R. 5326 ) that would fund ATF for FY2013 at $1.151 billion. This measure includes the Cornyn anti-gun walking provision, and would make several additional ATF appropriations riders permanent law by including futurity language in those provisions, instead of following the Administration's proposal and stripping futurity language out of the provisions that were made permanent law in the FY2012 appropriations cycle. The House-passed bill also includes a provision that would prohibit ATF from collecting long gun sales reports. This provision reflects a Rehberg amendment that was successfully offered in full committee markup. On May 3, 2012, Representative Issa, chairman of the House Oversight and Government Reform Committee, issued a staff briefing paper to committee Members that included a draft resolution to cite the Attorney General with contempt for not fully complying with committee subpoenas for information about Operation Fast and Furious and other matters. On April 19, 2012, the Senate Committee on Appropriations reported a bill ( S. 2323 ) that would fund ATF for FY2013 at $1.153 billion. This bill includes the Cornyn provision, but it does not include any language similar to the Rehberg amendment. Like the House bill, it does not address the Administration's proposal to strip futurity language out of the provisions that were made permanent law in the FY2012 appropriations cycle, but it would not make any additional provisos permanent law. On April 17, 2012, the House passed the Sportsmen's Heritage Act of 2012 ( H.R. 4089 ), a bill that would require agencies that manage federal public lands to facilitate access to and use of those lands for the purposes of recreational fishing, hunting, and shooting with certain exceptions set out in statute. Language to a similar effect was included in the FY2013 Interior, Environment, and Related Agencies Appropriations bill ( H.R. 6091 ), which the House Committee on Appropriations reported on July 10, 2012. On November 16, 2011, the House passed a bill ( H.R. 822 ) that would establish a greater degree of reciprocity between states that issue concealed carry permits for handguns to civilians than currently exists under state law. The Senate considered a similar amendment, which was narrowly defeated, in the 111 th Congress. On October 11, 2011, the House passed a Veterans' Benefits Act ( H.R. 2349 ). This bill includes a provision that would prohibit the Department of Veterans Affairs from determining a beneficiary to be mentally incompetent for the purposes of gun control, unless such a determination were made by a judge, magistrate, or other judicial authority based upon a finding that the beneficiary posed a danger to himself or others. Similar proposals were considered in either the House or the Senate in the 110 th and 111 th Congresses, in the wake of the enactment of the NICS Improvement Amendments Act of 2007 ( P.L. 110-180 ). During May 2011, firearms-related amendments were offered to bills to extend certain USA PATRIOT Act provisions related to national security investigations ( H.R. 1800 , S. 1038 , and S. 990 ), but those amendments were not passed. On the one hand, Representative Mike Quigley's amendment would have allowed firearms transfers to be denied, if prospective transferees were the subject of a FBI national security investigation. On the other hand, Senator Rand Paul's amendment would have specifically excluded firearms transfer records from the business records that can be collected without a warrant during a national security investigation. The 112 th Congress could also examine issues potentially arising from the tragic shootings in Tucson, AZ, on January 8, 2011, in which 6 people were killed and 13 wounded, including Representative Giffords. Armed with a 9mm Glock 19 semiautomatic pistol loaded with a 33-round extended magazine, the shooter reportedly fired 31 shots before bystanders were able to subdue him while he was attempting to reload with another 33-round extended magazine. He also carried two additional 15-round magazines. As discussed below, these magazines were previously defined under federal law as large capacity ammunition feeding devices (LCAFDs) and were banned for 10 years, from September 13, 1994, through September 13, 2004, as part of the larger semiautomatic assault weapons ban. Legislation has been introduced to reinstate the LCAFD ban ( H.R. 308 and S. 32 ) and to ban firearms within the proximity of certain high-level federal officials ( H.R. 367 and H.R. 496 ). Congressional interest could also focus on the shooter's mental illness and illegal drug use. On November 15, 2011, the Senate Committee on the Judiciary's Subcommittee on Crime and Terrorism held a hearing on the Fix Gun Checks Act of 2011 ( S. 436 / H.R. 1781 ). This proposal would amend P.L. 110-180 to advance certain deadlines and apply deeper cuts to a wider array of federal law enforcement assistance grant programs to incentivize the greater sharing of firearms-related disqualifying records. Congress passed P.L. 110-180 in the wake of the tragic April 16, 2007, Virginia Tech shootings. Through the years, legislative proposals to restrict the availability of firearms to the public have raised the following questions: What restrictions on firearms are permissible under the Constitution? Does gun control constitute crime control? Can the nation's rates of homicide, robbery, and assault be reduced by the stricter regulation of firearms commerce or ownership? Would restrictions stop attacks on public figures or thwart deranged persons and terrorists? Would household, street corner, and schoolyard disputes be less lethal if firearms were more difficult and expensive to acquire? Would more restrictive gun control policies have the unintended effect of impairing citizens' means of self-defense? In recent years, proponents of gun control legislation have often held that only federal laws can be effective in the United States. Otherwise, they say, states with few restrictions will continue to be sources of guns that flow illegally into more-restrictive states. They believe that the Second Amendment to the Constitution, which states that "[a] well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed," is being misread in today's modern society. They argue that the Second Amendment (1) is now obsolete, with the presence of professional police forces; (2) was intended solely to guard against suppression of state militias by the central government and is therefore restricted in scope by that intent; and (3) does not guarantee a right that is absolute, but rather one that can be limited by reasonable requirements. They ask why in today's modern society a private citizen needs any firearm that is not designed primarily for hunting or other recognized sporting purposes. Proponents of firearms restrictions have advocated policy changes on specific types of firearms or components that they believe are useful primarily for criminal purposes or that pose unusual risks to the public. Fully automatic firearms (i.e., machine guns) and short-barreled rifles and shotguns have been subject to strict regulation since 1934. Fully automatic firearms have been banned from private possession since 1986, except for those legally owned and registered with the Secretary of the Treasury as of May 19, 1986. More recently, "Saturday night specials" (loosely defined as inexpensive, small handguns), "assault weapons," ammunition-feeding devices with capacities for more than seven rounds, and certain ammunition have been the focus of control efforts. Opponents of gun control vary in their positions with respect to specific forms of control but generally hold that gun control laws do not accomplish what is intended. They argue that it is as difficult to keep weapons from being acquired by "high-risk" individuals, even under federal laws and enforcement, as it was to stop the sale and use of liquor during Prohibition. In their view, a more-stringent federal firearms regulatory system would only create problems for law-abiding citizens, bring mounting frustration and escalation of bans by gun regulators, and possibly threaten citizens' civil rights or safety. Some argue that the low violent crime rates of other countries have nothing to do with gun control, maintaining instead that multiple cultural differences are responsible. Gun control opponents also reject the assumption that the only legitimate purpose of ownership by a private citizen is recreational (i.e., hunting and target-shooting). They insist on the continuing need of people for effective means to defend themselves and their property, and they point to studies that they believe show that gun possession lowers the incidence of crime. They say that the law enforcement and criminal justice system in the United States has not demonstrated the ability to furnish an adequate measure of public safety in all settings. Some opponents further believe that the Second Amendment includes a right to keep arms as a defense against potential government tyranny, pointing to examples in other countries of the use of firearms restrictions to curb dissent and secure illegitimate government power. The debate has been intense. To gun control advocates, the opposition is out of touch with the times, misinterprets the Second Amendment, and is lacking in concern for the problems of crime and violence. To gun control opponents, advocates are naive in their faith in the power of regulation to solve social problems, bent on disarming the American citizen for ideological or social reasons, and moved by irrational hostility toward firearms and gun enthusiasts. Crime and mortality statistics are often used in the gun control debate. According to a recent study, however, none of the existing sources of statistics provide either comprehensive, timely, or accurate data with which to assess definitively whether there is a causal connection between firearms and violence. For example, existing data do not show whether the number of people shot and killed with semiautomatic assault weapons declined during the 10-year period (1994-2004) that those firearms were banned from further proliferation in the United States. Presented below are data on the following topics: (1) the number of guns in the United States, (2) firearms-related homicides, (3) non-lethal firearms-related victimizations, (4) gun-related mortality rates, (5) use of firearms for personal defense, and (6) recreational use of firearms. In some cases, the data presented are more than a decade old but remain the most recent available. The National Institute of Justice (NIJ) reported in a national survey that in 1994, 44 million people, approximately 35% of households, owned 192 million firearms, 65 million of which were handguns. Seventy-four percent of those individuals were reported to own more than one firearm. According to the ATF, by the end of 1996 approximately 242 million firearms were available for sale to or were possessed by civilians in the United States. That total includes roughly 72 million handguns (mostly pistols, revolvers, and derringers), 76 million rifles, and 64 million shotguns. By 2000, the number of firearms had increased to approximately 259 million: 92 million handguns, 92 million rifles, and 75 million shotguns. By 2007, the number of firearms had increased to approximately 294 million: 106 million handguns, 105 million rifles, and 83 million shotguns. In the past, most guns available for sale were produced domestically. In recent years, 1 million to 2 million handguns were manufactured each year, along with 1 million to 1.5 million rifles and fewer than 1 million shotguns. From 2001 through 2007, however, handgun imports nearly doubled, from 711,000 to nearly 1.4 million. By 2009, nearly 2.2 million handguns were imported into the United States. From 2001 through 2007, rifle imports increased from 228,000 to 632,000, and shotgun imports increased from 428,000 to 726,000. By 2009, rifle imports had increased to 864,000, but shotguns had decreased 559,000. By the same year, 2009, the estimated total number of firearms available to civilians in the United States had increased to approximately 310 million: 114 million handguns, 110 million rifles, and 86 million shotguns. Per capita, the civilian gun stock has roughly doubled since 1968, from one gun per every two persons to one gun per person. Retail prices of guns vary widely, from $75 or less for inexpensive, low-caliber handguns to more than $1,500 for higher-end, standard-production rifles and shotguns. Data are not available on the number of "assault weapons" in private possession or available for sale, but one study estimated that 1.5 million assault weapons were privately owned in 1994. As Table 1 shows, reports submitted by state and local law enforcement agencies to the FBI and published annually in the Uniform Crime Reports indicate that the firearms-related murder and non-negligent manslaughter rate per 100,000 of the population decreased from 6.6 for 1993 to 3.6 for 2000. The rate held steady at 3.6 for 2001 and fluctuated thereafter between a high of 3.9 for 2006 and 2007, and a low of 3.2 for 2010. For 2011, it has remained at 3.2. Figure 1 shows that the estimated murder rate peaked in 1974 at 9.8 victims per 100,000 of the population. It peaked again in 1980 (10.2), in 1991 (9.8), and 1993 (9.5). Correspondingly, the estimated firearms-related murders rates similarly peaked at 6.6 (1974), 6.4 (1980), 6.5 (1991), and 6.6 (1999). After 1993, the murder rate decreased to 5.5 in 2000, and the firearms-related murder rate decreased similarly to 3.5 in that year. The murder rates leveled off somewhat from 2001 to 2006, with slight increases in several of those years. Then, the murder rates decreased and leveled off at 3.2 for 2010 and 2011. Over those years (1968-2011), roughly two out of three murders were committed with a firearm. Although not shown in Figure 1 , roughly one out of two murders was committed with a handgun. By comparison, the non-firearms murder rates peaked in 1975 (3.4), 1980 (3.8), 1986 (3.5), and 1991 (3.4); the corresponding increases and decreases were of a lesser magnitude for non-firearms murder rates than those corresponding with firearms-related murder rates. The source of national data on firearms deaths is the publication Vital Statistics , published each year by the National Center for Health Statistics. Firearms deaths reported by coroners are presented in five categories: homicides, legal interventions, suicides, accidents, and unknown circumstances. For these categories, the data are presented below for 1993 through 2007 in two tables, one for all deaths and the other for juvenile deaths. As Table 2 shows, firearms fatalities decreased continuously from 39,595 in 1993 to 28,664 in 2000, for an overall decrease of nearly 28%. Compared with firearms deaths in 2000, such deaths increased by 3.2% in 2001 to 29,574, and increased again, by 2.3%, in 2002 to 30,243. They decreased by 0.3% in 2003 to 30,137, and decreased again, by 1.9%, in 2004 to 29,570. Firearms fatalities increased by 3.8% in 2005 to 30,694, by 0.7% in 2006 to 30,897, and by 1.1% in 2007 to 31,224. They increased again by 1.1% in 2008, but decreased by 0.7% in 2009. Of the 2009 total, 11,826 were homicides or due to legal intervention, 18,735 were suicides, 554 were unintentional (accidental) shootings, and 232 were of unknown causes. As Table 3 shows, there were 1,520 juvenile (younger than 18 years of age) firearms-related deaths in 2007. Of the juvenile total, 1,047 were homicides or due to legal intervention, 325 were suicides, 112 were unintentional, and 36 were of unknown causes. From 1993 to 2001, juvenile firearms-related deaths decreased by an average rate of 10% annually, for an overall decrease of 56%. From 2001 to 2002, such deaths increased slightly (by less than 1%), but declined by nearly 9% from 2002 to 2003. They increased from 2002 through 2006, by 5% to 7%, but decreased by nearly 5% in 2007. Juvenile firearms-related fatalities decreased again by 3.0% in FY2008 and nearly 6% in 2009. The other principal source of national crime data is the National Crime Victimization Survey (NCVS) conducted by the U.S. Census Bureau and published by the Bureau of Justice Statistics (BJS). The NCVS database provides some information on the weapons used by offenders, based on victims' reports. Based on data provided by survey respondents in calendar year 2009, BJS estimated that, nationwide, there were 4.3 million non-lethal violent crimes (rape or sexual assault, robbery, aggravated assault, and simple assault). Weapons were used in 22% of these incidents, and firearms were used by offenders in 8% of these incidents. The estimated number of firearms-related non-lethal violent crime incidents decreased from 428,670 in 2000 to 326,090 in 2009, and from 2.4 persons to 1.4 per 100,000 of the population ages 12 and older. According to BJS, NCVS data from 1987 to 1992 indicate that in each of those years, roughly 62,200 victims of violent crime (1% of all victims of such crimes) used guns to defend themselves. Another 20,000 persons each year used guns to protect property. Persons in the business of self-protection (police officers, armed security guards) may have been included in the survey. Another source of information on the use of firearms for self-defense is the National Self-Defense Survey conducted by criminology professor Gary Kleck of Florida State University in the spring of 1993. Citing responses from 4,978 households, Dr. Kleck estimated that handguns had been used 2.1 million times per year for self-defense, and that all types of guns had been used approximately 2.5 million times a year for that purpose during the 1988-1993 period. Why do these numbers vary by such a wide margin? Law enforcement agencies do not collect information on the number of times civilians use firearms to defend themselves or their property against attack. Such data have been collected in household surveys. The contradictory nature of the available statistics may be partially explained by methodological factors. That is, these and other criminal justice statistics reflect what is reported to have occurred, not necessarily the actual number of times certain events occur. Victims and offenders are sometimes reluctant to be candid with researchers. So, the number of incidents can only be estimated, making it difficult to state with certainty the accuracy of statistics such as the number of times firearms are used in self-defense. For this and other reasons, criminal justice statistics often vary when different methodologies are applied. Survey research can be limited because it is difficult to produce statistically significant findings from small incident populations. For example, the sample in the National Self-Defense Survey might have been too small, given the likely low incidence rate and the inherent limitations of survey research. According to NIJ, in 1994 recreation was the most common motivation for owning a firearm. There were approximately 15 million hunters, about 35% of gun owners, in the United States, and about the same number and percentage of gun owners engaged in sport shooting in 1994. The U.S. Fish and Wildlife Service (FWS) reported that there were more than 14.7 million persons who were paid license holders in 2003 and, according to the National Shooting Sports Foundation, in that year approximately 15.2 million persons hunted with a firearm and nearly 19.8 million participated in target shooting. The FWS reported that there were 14.4 million paid license holders in 2010. Two major federal statutes regulate the commerce in and possession of firearms: the National Firearms Act of 1934 (26 U.S.C. §5801 et seq.) and the Gun Control Act of 1968, as amended (18 U.S.C. Chapter 44, §921 et seq.). Supplementing federal law, many state firearms laws are stricter than federal law. For example, some states require permits to obtain firearms and impose a waiting period for firearms transfers. Other states are less restrictive, but state law cannot preempt federal law. Federal law serves as the minimum standard in the United States. The NFA was originally designed to make it difficult to obtain types of firearms perceived to be especially lethal or to be the chosen weapons of "gangsters," most notably machine guns and short-barreled long guns. This law also regulates firearms, other than pistols and revolvers, which can be concealed on a person (e.g., pen, cane, and belt buckle guns). It taxes all aspects of the manufacture and distribution of such weapons, and it compels the disclosure (through registration with the Attorney General) of the production and distribution system from manufacturer to buyer. As stated in the GCA, the purpose of federal firearms regulation is to assist federal, state, and local law enforcement in the ongoing effort to reduce crime and violence. In the same act, however, Congress also stated that the intent of the law is not to place any undue or unnecessary burdens on law-abiding citizens in regard to the lawful acquisition, possession, or use of firearms for hunting, trapshooting, target shooting, personal protection, or any other lawful activity. The GCA, as amended, contains the principal federal restrictions on domestic commerce in small arms and ammunition. The statute requires all persons manufacturing, importing, or selling firearms as a business to be federally licensed; prohibits the interstate mail-order sale of all firearms; prohibits interstate sale of handguns generally and sets forth categories of persons to whom firearms or ammunition may not be sold, such as persons under a specified age or with criminal records; authorizes the Attorney General to prohibit the importation of non-sporting firearms; requires that dealers maintain records of all commercial gun sales; and establishes special penalties for the use of a firearm in the perpetration of a federal drug trafficking offense or crime of violence. As amended by the Brady Handgun Violence Prevention Act, 1993 ( P.L. 103-159 ), the GCA requires background checks be completed for all unlicensed persons seeking to obtain firearms from federal firearms licensees. Private transactions between persons "not engaged in the business" are not covered by the recordkeeping or the background check provisions of the GCA. These transactions and other matters such as possession, registration, and the issuance of licenses to firearms owners may be covered by state laws or local ordinances. For a listing of other major firearms and related statutes, see Appendix B . Under current law, there are nine classes of persons prohibited from shipping, transporting, receiving, or possessing firearms or ammunition: persons convicted in any court of a crime punishable by imprisonment for a term exceeding one year; fugitives from justice; unlawful users or addicts of any controlled substance as defined in Section 102 of the Controlled Substances Act (21 U.S.C. §802)); persons adjudicated as "mental defective" or committed to mental institutions; unauthorized immigrants and nonimmigrant visitors (with exceptions in the latter case, which have changed—effective July 9, 2012—as described below); persons dishonorably discharged from the U.S. Armed Forces; persons who have renounced their U.S. citizenship; persons under court-order restraints related to harassing, stalking, or threatening an intimate partner or child of such intimate partner; and persons convicted of a misdemeanor crime of domestic violence. In addition, there is a 10 th class of persons prohibited from shipping, transporting, or receiving firearms or ammunition: persons under indictment in any court of a crime punishable by imprisonment for a term exceeding one year. It also unlawful for any person to sell or otherwise dispose of a firearm or ammunition to any of the prohibited persons enumerated above, if the transferor (seller) has reasonable cause to believe that the transferee (buyer) is prohibited from receiving those items. Federal firearms licensees are prohibited from transferring a long gun or long gun ammunition to anyone less than 18 years of age, or a handgun or handgun ammunition to anyone less than 21 years of age. Since 1994, moreover, it has been a federal offense for any unlicensed person to transfer a handgun or handgun ammunition to anyone less than 18 years-of age. It has also been illegal for anyone under 18 years of age to possess a handgun or handgun ammunition (there are exceptions to this law related to employment, ranching, farming, target practice, and hunting). Regarding immigration status, the GCA does not distinguish between citizens and legal permanent aliens (legal immigrants); both are eligible to ship, transport, receive, and possess firearms and ammunition as long as they are not prohibited persons. By comparison, illegal immigrants and nonimmigrants are prohibited persons, but there are several exceptions described below. One of those exceptions reflects an October 2011 DOJ legal opinion. For nearly 30 years, legal immigrants and nonimmigrants who could establish a 90-day state residency were eligible to purchase, receive, and possess firearms. In 1999, however, Congress prohibited nonimmigrant aliens who are issued a visa from purchasing, receiving, or possessing a firearm, but included several exceptions for nonimmigrants who could establish that they are official representatives of a foreign government who are accredited to the United States government or the nonimmigrant's government mission to an international organization that is headquartered in the United States and possession of a firearm is necessary to their official capacity; officials of foreign governments or distinguished visitors who have been designated by the State Department and possession of a firearm is necessary to their official capacity; foreign law enforcement officers of a friendly foreign government entering the United States on law enforcement business; or visitors admitted to the United States for lawful hunting or sporting purposes or are in possession of a valid hunting license or permit lawfully issued in the United States. When ATF implemented this law, it issued a 2002 rule that prohibited all nonimmigrants from receiving or possessing a firearm, including those nonimmigrants who were legally admitted to the United States without being required to obtain a visa. At that time, ATF observed that about 50% of nonimmigrant aliens admitted to the United States were not required to obtain a visa. As is the case today, those visa-exempt nonimmigrants principally included Canadian visitors or Visa Waiver Program entrants admitted temporarily for business or pleasure. On October 28, 2011, however, the DOJ Office of Legal Counsel (OLC) issued an opinion that found ATF's interpretation of this law to be in error. The OLC found that the "plain text of the statute" only "addressed aliens who had been admitted to the United States under a nonimmigrant visa." On January 30, 2012, the OLC issued a subsequent opinion that found that ATF's 90-day residence requirement for noncitizens was also in error, because there was no statutory basis to promulgate a one-part test for citizens and a two-part test for noncitizens. Any unlicensed prospective buyer of a firearm—citizen or noncitizen—is required to present to an FFL a state-issued identification document to demonstrate that he resides in the state in which the FFL is licensed to conduct business. From December 1969 through July 2012, however, ATF and its predecessor agency required noncitizens to demonstrate that they had actually resided in the state for 90 days by presenting additional documentation (e.g., utility bills or rental leases), which citizens were not required to present. On June 7, 2012, ATF issued a final rule that brought its regulations into compliance with the OLC opinions. Correspondingly, ATF also issued a revised Form 4473 to reflect the changed regulations. As described below, FFLs and their unlicensed customers must fill this form out to document, among other things, that a customer is not a prohibited person. On July 9, 2012, FFLs were required to begin using the revised form. The instructions accompanying the revised form indicate that nonimmigants who are admitted legally to the United States without a visa (visa-exempt) are not prohibited from receiving or possessing firearms or ammunition. As noted above, such visa-exempt aliens would include Canadians who are often admitted to the United States for business or pleasure without being required to obtain a nonimmigrant B1/B2 visa, as well as other aliens admitted for similar purposes under the Visa Waiver Program. Nevertheless, all persons—citizens and noncitizens—must still demonstrate to an FFL their intention of making a home in the state in which they are attempting to acquire a firearm by presenting certain valid government-issued identification documents (e.g., driver's licenses, voter registration cards, tax records, or vehicle registrations). In some cases, such documentation may be difficult for visa-exempt aliens to acquire, because generally they are not authorized to accept paid employment and their stays in the United States are generally limited to 90 days. Furthermore, they would be required to engage the services of an FFL to export firearms they acquired in the United States to their home country, if they wished to take those firearms out of the United States. The International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations (EAR), furthermore, would require that such international transfers be prearranged and made between a federally licensed exporter in the United States and a licensed importer in an individual's home county. Consequently, the nonimmigrant firearms owner would not be authorized to ship or carry those firearms personally out of the United States. Persons who are federally licensed to be engaged in the business of manufacturing, importing, or selling firearms are known as "federal firearms licensees (FFLs)." Under current law, FFLs may ship, transport, and receive firearms that have moved in interstate and foreign commerce. FFLs are currently required to verify with the FBI through a background check that non-licensed persons are eligible to possess a firearm before subsequently transferring a firearm to them. FFLs must also verify the identity of non-licensed transferees by inspecting a government-issued identity document (e.g., a driver's license). FFLs may engage in interstate transfers of firearms among themselves without conducting background checks. Licensees may transfer long guns (rifles and shotguns) to out-of-state residents, as long as the transactions are face-to-face and not knowingly in violation of the laws of the state in which the unlicensed transferees reside. FFLs, however, may not transfer handguns to unlicensed out-of-state residents. Since 1986, there have been no similar restrictions on the interstate transfer of ammunition. Furthermore, a federal firearms license is not required to sell ammunition; however, such a license is required to either manufacture or import ammunition. Also, FFLs are required to submit "multiple sales reports" to the Attorney General if any person purchases two or more handguns within five consecutive business days. As described below, FFLs are required to maintain records on all acquisitions and dispositions of firearms. They are obligated to respond to ATF agents requesting firearms tracing information within 24 hours. Under certain circumstances, ATF agents may inspect, without search warrants, their business premises, inventory, and gun records. Unlicensed persons are generally prohibited from acquiring firearms from out-of-state sources (except for long guns acquired from FFLs under the conditions described above). Unlicensed persons are also prohibited from transferring firearms to anyone who they have reasonable cause to believe are not residents of the state in which the transaction occurs. In addition, since 1986 it has been a federal offense for non-licensees to knowingly transfer a firearm or ammunition to prohibited persons. It is also notable that firearms or ammunition transfers initiated through the Internet are subject to the same federal laws as transfers initiated in any other manner. Criminal "gun trafficking" essentially entails the movement or diversion of firearms from legal to illegal markets. Therefore, it follows that the entire GCA is arguably a statutory framework designed to combat gun trafficking domestically, particularly interstate gun trafficking. ATF has developed a nationwide strategy to reduce firearms trafficking and violent crime by preventing convicted felons, drug traffickers, and juvenile gang members from acquiring firearms from gun traffickers. Gun trafficking cases include, but are not limited to, the following activities: Straw purchasers or straw purchasing rings; Trafficking in firearms by corrupt federally licensed gun dealers; Trafficking in firearms by unlicensed dealers (i.e., persons who deal in firearms illegally as the principal source of their livelihood); Trafficking in secondhand firearms acquired from unlicensed persons at gun shows, flea markets, and other private venues; and Trafficking in stolen firearms. Unlike other forms of contraband, almost all illegal firearms used criminally in the United States were diverted at some point from legal channels of commerce. ATF works to reduce firearms-related crime with two approaches, industry regulation and criminal investigation. ATF regulates the U.S. firearms industry by inspecting FFLs to monitor their compliance with the GCA and NFA, and to prevent the diversion of firearms from legal to illegal channels of commerce. Despite its crime-fighting mission, ATF's business relationships with the firearms industry and larger gun-owning community have been a perennial source of tension, which from time to time has been the subject of congressional oversight. Nevertheless, under current law, ATF Special Agents (SAs) and Industry Operations Investigators (IOIs) are authorized to inspect or examine the inventory and records of an FFL without search warrants under three scenarios: in the course of a reasonable inquiry during the course of a criminal investigation of a person or persons other than the FFL; to ensure compliance with the record keeping requirements of the GCA—not more than once during any 12-month period, or at any time with respect to records relating to a firearm involved in a criminal investigation that is traced to the licensee; or when such an inspection or examination is required for determining the disposition of one or more firearms in the course of a criminal investigation. By inspecting the firearms transfer records that FFLs are required by law to maintain, ATF SAs and IOIs are able to trace crime guns from their domestic manufacturer or importer to the first retail dealer that sold those firearms to persons in the general public, generating vital leads in homicide and other criminal investigations. In addition, by inspecting those records, ATF investigators sometimes discover evidence of corrupt FFLs dealing in firearms "off the books," straw purchases, and other patterns of illegal behavior. A "straw purchase" occurs when an individual poses as the actual transferee, but he is actually acquiring the firearm for another person. In effect, he serves as an illegal middleman. As part of any firearms transfer from an FFL to a private person, the GCA requires them to fill out jointly an ATF Form 4473. In addition, the FFL is required to verify the purchaser's name, address, date of birth, and other information by examining a government-issued piece of identification, most often a driver's license. Among other things, the purchaser attests on the ATF Form 4473 that he is not a prohibited person, and that he is the "actual transferee/buyer." Hence, straw purchases are known as "lying and buying for the other guy." Straw purchases are illegal under two provisions of the GCA. If the purchaser makes any false statement to a FFL with respect to any fact material to the lawfulness of a prospective firearms transfer, it is a federal offense punishable under 18 U.S.C. 922(a)(6). This provision also captures misrepresentations such as presenting false identity documents. Violations are punishable by up to 10 years' imprisonment. It is also illegal for any person knowingly to make any false statement with respect to the records that FFLs are required to maintain under 18 U.S.C. §924(a)(1)(A). This provision, however, also captures misrepresentations related to licensure and other benefits under the GCA. Violations are punishable by up to five years' imprisonment. Straw purchases, however, are not easily detected, because their illegality only becomes apparent when the straw purchaser's true intent is revealed by a subsequent transfer to the actual buyer (third party). In many cases, the actual buyer may be a prohibited person, who would not pass a background check. Under such a scenario, if the straw purchaser knew or had reasonable cause to know the actual transferee was a prohibited person, he would also be in violation of 18 U.S.C. §922(d), for which the penalty is up to 10 years' imprisonment. It would also be a violation for the prohibited person to possess or receive the firearm under 18 U.S.C. §922(g), for which the penalty is also up to 10 years' imprisonment. Alternatively, the actual buyer may not be a prohibited person, but may be seeking to acquire firearms without any paper trail linking him to the acquisition of the firearm. Under such a scenario, however, the straw purchase and subsequent illegal transfer would be even less apparent for several reasons. Under federal law, it is legal for an unlicensed, private person to purchase firearms and then resell them or give them away, as long as the transferees are not prohibited or underage persons; transferors do not deal in firearms in a volume that would require licensing; and transfers are intrastate , as generally only federally licensed gun dealers can legally transfer firearms interstate . Hence, individuals may buy several firearms at a time with the intention of giving those firearms away as presents to anyone, as long as they do not present those firearms to persons who are underage, out-of-state residents, or prohibited persons. They may also buy firearms and, then, sell those firearms at any time, as long as selling firearms is not the principal objective of their livelihood and profit, in which case they would be required to be federally licensed to deal in firearms. Furthermore, no federal background checks are required for recipients of subsequent intrastate firearms transfers. On the other hand, if the suspected straw purchaser were observed departing the licensed gun dealer's place of business and traveling immediately to another locale, where he transferred the firearm(s) to another person, there would be a reasonable suspicion that he was a straw purchaser. However, the actual buyer would not have committed a crime unless it could be proven that he had sponsored the straw purchase. Usually, such illegal arrangements become clear when the straw purchaser is interviewed by agents and admits to having bought the firearms for the third party, non-prohibited person. Moreover, depending on the time that elapses between the initial straw purchases and subsequent transfers to the actual buyer (third party), the illegality of the transfers may not become apparent until the actual buyer's true intent is revealed, when he either transports those firearms across state lines to be sold or bartered, attempts to smuggle them across an international border, or engages in some other illegal act. Sometimes, the behavior of the prospective transferee (straw purchaser) may raise reasonable suspicions. For example, during a controversial ATF Phoenix-based investigation known as "Operation Fast and Furious," several of the individuals under indictment made multiple purchases from the same FFL of multiple semiautomatic firearms. Raising suspicions further, they paid for these firearms with thousands of dollars in cash. Indeed, FFLs contacted ATF about these suspicious transfers, prompting the investigation. They did so, in part, because they realized that these firearms might be traced back to their businesses and they probably wanted to avoid any negative attention that those traces might bring back on them. It is notable that if an FFL believes a firearms transfer to be suspicious, he may choose not to sell those firearms to the individuals in question. If he should proceed with the transfer, however, as long as he had conducted the required criminal background check on the prospective buyer, and he and the prospective buyer had filled out the proper paperwork, his obligations under federal law would have been fulfilled. In summation, with regard to interstate transfers, it is unlawful for any person who is not federally licensed to deal in firearms to transport or receive a firearm into his own state of residence that was obtained in another state. In addition, it is unlawful for any person who is not federally licensed to deal in firearms to deliver a firearm to another unlicensed person who resides in a state other than the transferor's state of residence. Violations of either provision are punishable by a fine and/or not more than five years' imprisonment. It is also unlawful to smuggle firearms, or any other merchandise contrary to U.S. law from the United States. Violations are punishable by a fine and/or not more than 10 years' imprisonment. According to the Government Accountability Office (GAO), the largest percentage of Southwest Border gun trafficking cases is comprised of multiple straw purchases. And, large-scale straw purchasing schemes were at the center of several ATF Phoenix-based gun trafficking investigations, including Operation Fast and Furious. Contributing to the controversy surrounding Operation Fast and Furious, reportedly, the U.S. Attorney's Office in Arizona was reluctant to prosecute straw purchasing cases, even though ATF conducted several investigations involving dozens of firearms and multiple defendants from 2006 through 2010. Some of this reluctance to prosecute referred cases may have stemmed from legal interpretations (and underlying case law) made by the U.S. Attorney's Office in Arizona that "differed substantially from those of other U.S. Attorney's Offices." Other considerations could have included allocation of scarce resources and prosecutorial priorities. Nonetheless, as shown above, federal prosecutions for straw purchasing and related offenses nationally appears to have fallen off significantly in recent years, despite congressional efforts to increase ATF appropriations to combat gun trafficking. In addition, at a hearing on Operation Fast and Furious, an ATF agent testified that the penalties levied under current law are not harsh enough to deter gun trafficking to Mexican drug trafficking organizations. He opined that the "statute doesn't carry significant jail time," and that straw purchases were viewed as "paperwork violations." To explore this assertion, CRS requested criminal caseload data from the U.S. Attorneys Office for 18 U.S.C. §§922(a)(6) and 924(a)(1)(A) for FY2004 through FY2010. It is noteworthy, however, that the criminal cases under these provisions include violations involving false identities and entries, in addition to straw purchases. As Figure 2 shows, nationally, the defendants charged under §922(a)(6) declined from 459 for FY2004 to 218 for FY2010, or by about half (-52.5%). Similarly, defendants convicted under §922(a)(6) declined by more than half (-58.6%) for those years, even though they increased from FY2007 to FY2008 (17.3%). The defendants charged under §924(a)(1)(A) also declined from 290 for FY2004 to 2009 for FY2010, but at a slower rate of change (-27.9%). Convictions under that provision also declined through FY2008 (-22.3%), but increased for FY2009 (18.7%) and FY2010 (2.4%). Under either provision, about two-thirds of defendants were convicted during FY2004 through FY2010 cumulatively. As Figure 3 shows, moreover, over a third of the individuals convicted under either provision received no prison sentence. Over a third received a prison sentence of up to two years. The remainder received prison sentences of greater than two years. Several individuals received life sentences, but those individuals were likely career criminals who were convicted of additional offenses. To provide federal judges and prosecutors with greater leverage, on January 19, 2011, the U.S. Sentencing Commission (Commission) published proposed amendments to the sentencing guidelines that potentially increase penalties under the GCA for cases involving cross-border trafficking in small arms or ammunition, including straw purchases, and similar amendments to the Arms Export Control Act (AECA; 22 U.S.C. §2778 et seq.). While the GCA amendments to the Sentencing Guidelines Manual became effective on November 1, 2011, the Commission did not adopt the AECA amendments. According to an April 6, 2011, press release, the Commission's chair, Judge Patty B. Saris, stated, "Firearms trafficking across our borders is a national security issue. The Commission is aware of the view [shared] by some that firearms trafficking is fueling drug violence along our southwest border." After seven years of extensive public debate, Congress passed the Brady Handgun Violence Prevention Act of 1993 ( P.L. 103-159 , the Brady Act) as an amendment to the Gun Control Act of 1968, requiring background checks for firearms transfers between FFLs and non-licensed persons. The Brady Act included both interim and permanent provisions. Under the interim provisions, which were in effect through November 1998, background checks were required for handgun transfers, and licensed firearms dealers were required to contact local chief law enforcement officers (CLEOs) to determine the eligibility of prospective customers to be transferred a handgun. The CLEOs were given up to five business days to make such eligibility determinations. Under the interim provisions, 12.7 million firearms background checks (for handguns) were completed during that four-year period, resulting in 312,000 denials. On November 30, 1998, the Federal Bureau of Investigation (FBI) activated the National Instant Criminal Background Check System (NICS) to facilitate firearms-related background checks, when the permanent provisions of the Brady Act became effective. Through NICS, FFLs conduct background checks on non-licensee applicants for both handgun and long gun transfers. The objective of a Brady background check is to ensure that an unlicensed transferee is not a prohibited person under the GCA. It is notable that federal firearms laws serve as the minimum standard in the United States. States may choose, and have chosen, to regulate firearms more strictly. For example, some states require set waiting periods and/or licenses for firearms transfers and possession. As part of a Brady background check, an FFL is required to submit a prospective firearm transferee's name, sex, race, date of birth, and state of residence through NICS. Social security numbers and other numeric identifiers are optional, but the submission of such data is likely to increase the timeliness of the background check (and reduce misidentifications). The transferee's information is crosschecked against three computerized databases/systems to determine firearms transfer/possession eligibility. Those systems include the NICS index, Interstate Identification Index (III), and National Crime Information Center (NCIC). If the transferee indicates that he is foreign born, his information is also checked against the immigration and naturalization databases maintained by the Department of Homeland Security, Immigration and Customs Enforcement. According to the FBI, the NICS index contains disqualifying records not found in either the III or NCIC on all the classes of prohibited persons enumerated in the GCA. It also includes records on persons previously denied firearms transfers. As of May 2010, the NICS index included a little over 6 million records. The III, or "Triple I," is a computerized criminal history index pointer system that the FBI maintains so that records on persons arrested and convicted of felonies and serious misdemeanors at either the federal or state level can be shared nationally. All 50 states and the District of Columbia participate in the III, and the system holds indices to nearly 70 million criminal history records. The NCIC includes files on information that is of immediate importance and applicability to law enforcement officials. Several NCIC files include over 4.4 million records on potentially prohibited persons. Hence, those files are pertinent to the Brady background check process. They include files on wanted persons (fugitives), persons subject to domestic abuse restraining orders, deported alien felons, persons in the U.S. Secret Service protective file, foreign fugitives, and known or suspected terrorists. While the FBI handles background checks entirely for some states, other states serve as full or partial points of contact (POCs) for background check purposes. In POC states, FFLs contact a state agency, and the state agency contacts the FBI for such checks. As part of the Brady background check process, NICS will respond to an FFL or state official with a NICS Transaction Number (NTN) and one of three outcomes: (1) "proceed" with transfer or permit/license issuance, because a prohibiting record was not found; (2) "denied," indicating a prohibiting record was found; or (3) "delayed," indicating that the system produced information that suggested there could be a prohibiting record. Under the last outcome, a firearms transfer may be "delayed" for up to three business days while NICS examiners attempt to ascertain whether the person is prohibited. At the end of the three-day period, an FFL may proceed with the transfer at his discretion if he has not heard from the FBI about the matter. The FBI, meanwhile, will continue to work the NICS adjudication for up to 90 days, during which the transaction is considered to be in an "open" status. If the FBI ascertains that the person is not in a prohibited status at any time during the 90 days, then the FBI will contact the FFL through NICS with a proceed response. If the person is subsequently found to be prohibited, the FBI will inform ATF and a firearms retrieval process will be initiated. Under no circumstances is an FFL informed about the prohibiting factor upon which a denial is based. Under the Brady background check process, however, a denied person may challenge the accuracy of the underlying record(s) upon which his denial is based. He would initiate this process by requesting (usually in writing) the reason for the denial from the agency that conducted the NICS check (the FBI or POC). The denying agency has five business days to respond to the request. Upon receipt of the reason and underlying record for the denial, the denied person may challenge the accuracy of that record. If the record is found to be inaccurate, the denying agency is legally obligated to correct that record. As with other screening systems, particularly those that are name-based, false positives occur as a result of Brady background checks, but the frequency of these misidentifications is unreported. Nevertheless, the FBI has taken steps to mitigate false positives. In July 2004, DOJ issued a regulation that established the NICS Voluntary Appeal File (VAF), which is part of the NICS Index (described above). DOJ was prompted to establish the VAF to minimize the inconvenience incurred by some prospective firearms transferees (purchasers) who have names or birth dates similar to those of prohibited persons. So as not to be misidentified in the future, these persons agree to authorize the FBI to maintain personally identifying information about them in the VAF as a means to avoid future delayed transfers. Current law requires that NICS records on approved firearm transfers, particularly information personally identifying the transferee, be destroyed within 24 hours (see heading below, " Background Check Fee and Record Retention "). Under the GCA, there is also a provision that allows the Attorney General (previously, the Secretary of the Treasury) to consider petitions from a prohibited person for "relief from disabilities" and have his firearms transfer and possession eligibility restored. Since FY1993, however, a rider on the ATF annual appropriations for salaries and expenses has prohibited the expenditure of any funding provided under that account on processing such petitions. While a prohibited person arguably could petition the Attorney General, bypassing ATF, such an alternative has never been successfully tested. As a result, the only way a person can reacquire his lost firearms eligibility is to have his civil rights restored or disqualifying criminal record(s) expunged or set aside, or to be pardoned for his crime. As shown in Table 4 , under the permanent provisions of the Brady Act (December 1998 through 2009), more than 95.1 million checks were completed, resulting in more than 1.6 million denials, or nearly a 1.7% denial rate. More than 54.2 million of these checks were completed entirely by the FBI for non-point of contact (non-POC) states, the District of Columbia, and four territories. Those checks resulted in a denial rate of nearly 1.4%. Nearly 40.9 million checks were conducted by full or partial point of contact (POC) states. Those checks resulted in a higher denial rate of 2.1%. Table 5 shows breakouts for NICS denials by reasons and by denying agency. Under the Brady Act, Congress authorized a grant program known as the National Criminal History Improvement Program (NCHIP), the initial goal of which was to improve electronic access to firearms-related disqualifying records, particularly felony conviction records. DOJ's Bureau of Justice Statistics (BJS) administers this program, under which grants are made to states to assist in updating and automating criminal history and other related records so that they are able to participate effectively in key federal criminal justice systems. Besides the NICS Index, III, and NCIC, these systems also include the Integrated Automated Fingerprint Identification System (IAFIS) and the National Sex Offender Registry (NSOR). This grant program is administered by BJS, which is part of the Office of Justice Programs. Table 6 shows that over the last 18 years (FY1995-FY2012), Congress has appropriated nearly $562.8 million for NCHIP, or an annual average of $31.3 million. Nevertheless, in 2007 congressional testimony following the April 16, 2007, Virginia Tech tragedy, DOJ reported that approximately half of the 70 million criminal history records in the Interstate Identification Index (III) were missing final dispositions—a circumstance that often results in delayed background checks and firearms transfers. It was also reported that many states had not forwarded any records on persons adjudicated mentally defective to the FBI. As of April 30, 2007, the FBI reported that 22 states had contributed nearly 168,000 mental defective records to the FBI for inclusion in the NICS index; however, other states had declined to report persons adjudicated mentally defective to the FBI. In many cases, state mental health, patients' rights, and privacy laws prohibited the disclosure of those records. Other states may not have been able to report such persons to the FBI because mental health "databanks" that would include such records are not maintained. Following the Virginia Tech tragedy, the NICS mental defective file increased from 175,000 to 400,000 individual records, with California contributing more than 200,000 of those records. By May 2010, that number had increased to more than 859,000 records, due in large part to NCIS Improvement Amendments Act (described below). However, about half of the states had not contributed any records or had contributed only a handful of such records. For FY2012, the President's budget request included $12.0 million for NCHIP. The House-reported FY2012 Commerce-Justice-Science (CJS) appropriations bill ( H.R. 2596 ) would have provided $6.0 million for NCHIP. The Senate-passed CJS appropriations bill ( S. 1572 ) would have provided $8.0 million for this program. S. 1572 was folded into the Senate-passed FY2012 Minibus appropriations bill ( H.R. 2112 ). The House- and Senate-passed conference report version of H.R. 2112 ( H.Rept. 112-284 ), which the President has signed into law ( P.L. 112-55 ), provides $6.0 million for NCHIP. For FY2013, the Senate-reported CJS appropriations bill ( S. 2323 ) would provide $6 million for NCHIP, the same amount as requested by the Administration. The House Committee on Appropriations ordered reported a similar measure that would provide the same amount for NCHIP. Under the NICS Improvement Amendments Act of 2007, Congress authorized the Attorney General to make additional grants to states to improve further electronic access to records, including court disposition and corrections records, which are necessary to fully facilitate NICS background checks. Under the act, the Attorney General is required to report annually to Congress on federal department and agency compliance with the act's provisions. Because BJS administers this program, the BJS Director is required to report annually on the progress that states are making in providing reasonable estimates of the number of firearms-related disqualifying records that they have jurisdiction over, as well as the number of those records that have been made accessible to the FBI for NICS background check purposes. BJS has designated this grant program the "NICS Act Record Improvement Program (NARIP)," although congressional appropriations documents simply refer to it as "NICS improvement." As shown in Table 7 , Section 103(e) of the act included an authorization for appropriations for FY2009 through FY2013. The act directs that the grants provided under this authorization be made "in a manner consistent" with NCHIP. The act also requires that between 3% and 10% of each grant be allocated for a relief from disabilities program for persons adjudicated mentally defective. Also, as shown in Table 7 , Section 301(e) of the act included an additional authorization for appropriations for the same fiscal to improve state court computer systems to improve timeliness of criminal history dispositions. Under both authorizations, up to 5% of all grants may be set aside to provide assistance to tribal governments. As an additional incentive, Section 102 of P.L. 110-180 also provides that on January 8, 2011, any state that provides at least 90% of disqualifying records is eligible for a waiver of the 10% match requirement under NCHIP for two years. To be eligible for the waiver, as well as Section 103 grants, states are required to provide BJS with a reasonable estimate of the number of NICS-related disqualifying records that they hold within 180 days of enactment (July 6, 2008). To further encourage compliance, Section 104 of P.L. 110-180 includes a schedule of discretionary and mandatory reductions in Byrne Justice Assistance Grants (JAGs) for states that do not provide certain percentages of disqualifying records: for a two-year period (January 8, 2011, through January 8, 2013), the Attorney General may withhold up to 3% of JAG funding from any state that provides less than 50% of disqualifying records; for a five-year period (January 8, 2013, through January 8, 2018), the Attorney General may withhold up to 4% of JAG funding from any state that provides less than 70% of disqualifying records; and after January 8, 2018, the Attorney General is required to withhold 5% of JAG funding from any state that provides less than 90% of disqualifying records. The Attorney General's assessments of a state's progress is to be based upon the reasonable estimates that the state itself is required to provide under the act for the purposes of implementing the Section 103 grants and the Section 102 NCHIP waiver (discussed above). The act also allows the Attorney General to waive the mandatory 5% cuts if a state provides substantial evidence that it is making reasonable compliance efforts. Congress appropriated $10 million for NARIP in FY2009 and $20 million in FY2010. These amounts were well below the authorized levels in P.L. 110-180 . In FY2009, BJS awarded $2.5 million in NARIP grants to the following grantees (individual amounts in parentheses): Nevada Department of Public Safety ($798,000), New York Division of Criminal Justice Services ($937,000), and Oregon State Police ($771,000). In FY2010, BJS awarded $16.9 million in NARIP grants to the following grantees (individual amounts in parentheses): Florida Department of Law Enforcement ($3.159 million), Idaho State Police ($1.950 million), Illinois State Police ($1.210 million), New Jersey Administrative Office of the Courts ($860,000), New York Division of Criminal Justice Services ($5.995 million), Oregon State Police ($2.0 million), Texas Department of Public Safety ($752,000), and Wisconsin Office of Justice Assistance ($981,000). In FY2011, BJS awarded $20.1 million in NARIP grants to the following grantees (individual amounts in parentheses): Arizona Criminal Justice Commission ($582,930); Connecticut Office of Policy and Management, the Judicial Branch, and the Department of Mental Health and Addiction Services ($3.250 million); Florida Department of Law Enforcement ($2.575 million); Idaho State Police and the Idaho courts system ($1.206 million); Kentucky Justice and Public Safety Cabinet ($1.390 million); New Jersey Administrative Office of the Courts ($2.773 million); New York State Division of Criminal Justice Services ($3.199 million); North Dakota Office of Attorney General's Bureau of Criminal Investigation and Information Technology divisions ($205,973); Oregon State Police ($1.131 million); Texas Office of Court Administration ($547,039); Virginia State Police (VSP) and Supreme Court of Virginia ($764,100); and Wisconsin Office of Justice Assistance, Department of Justice, Department of Corrections, and Administrative Office of the Courts ($2.500 million). To be eligible for NARIP grants, states must certify that they have established a relief from disabilities program for persons adjudicated to be mentally defective, whereby they can petition to have their gun rights restored. For FY2009, only 14 states submitted certification applications and only three were certified (Nevada, New York, and Oregon) and awarded grants. DOJ suggested that one factor that might have inhibited states from applying for NARIP grants is opposition at the state level to restoring firearm rights under any circumstance. Another factor that might have influenced a state's choice is that NARIP funding only became available in March 2009, leaving little time to respond to the June 22, 2009, certification deadline. Other factors included budget constraints and the need to pass implementing legislation. As shown above, eight states were awarded grants for FY2010. As of September 30, 2010, nine states had been certified. For FY2012, the President's budget request included $12.0 million for this program. The House-reported FY2012 CJS appropriations bill ( H.R. 2596 ) would have provided $5.0 million for NARIP. The Senate-passed FY2012 CJS appropriations bill ( S. 1572 ) would have provided $10.0 million for this program. S. 1572 was folded into the Senate-passed FY2012 Minibus appropriations bill ( H.R. 2112 ). The House- and Senate-passed conference report version of H.R. 2112 ( H.Rept. 112-284 ), which the President has signed into law ( P.L. 112-55 ), provides $5.0 million for NARIP. For FY2013, the Senate-reported CJS appropriations bill would provide $7.0 million for NARIP, or $2.0 million over the $5.0 million requested by the Administration. The House Committee on Appropriations ordered reported a similar measure that would provide $12.0 million for NARIP. Beginning in FY1999, Congress has prohibited the collection of any fee for firearms-related background checks made through the FBI-administered NICS in DOJ appropriations. Beginning in FY2004, that provision also included language to require the next-day destruction of approved background check records. The issue of approved Brady background check record retention has been contentious since the inception of the FBI-administered NICS, because a provision in the Brady Act (§103(i)) prohibits the establishment of any electronic registry of firearms, firearms owners, or approved firearms transactions and dispositions. Nevertheless, under Attorney General Janet Reno DOJ proposed a rule on October 30, 1998, that would have allowed such records to be maintained for up to six months for audit purposes. The NRA challenged this proposed rule in federal court, arguing that retaining the approved records was tantamount to a temporary registry. On July 11, 2000, the United States Court of Appeals for the District of Columbia found that nothing in the Brady Act prohibited the temporary retention of information about lawful firearms transfers for certain audit purposes. On January 22, 2001, DOJ promulgated a final rule that allowed such records to be maintained for up to 90 days. Attorney General John Ashcroft opposed this rule, however, and DOJ proposed another rule on July 6, 2001, that called for the next-day destruction of those files. In July 2002, meanwhile, GAO reported that under Attorney General Reno, the FBI had conducted "non-routine" searches of the NICS audit log for law enforcement agencies to determine whether a person, whom subsequent information showed was a prohibited person, had been transferred a firearm within the previous 90 days. The FBI informed GAO that such searches were routinely conducted but were a "secondary benefit" given that the audit log was maintained primarily to check for system "accuracy, privacy, and performance." In addition, GAO reported that the next-day destruction of records would "adversely affect" other NICS operations, including firearms-retrieval actions, NICS audit log checks for previous background checks, verifications of NICS determinations for federal firearms licensees, and ATF inspections of federal firearms licensees' record keeping. Despite those adverse effects, opponents of greater federal gun control viewed the non-routine use of NICS records as being beyond the scope of authority given to the Attorney General under the Brady Act. GAO reported that DOJ took steps to minimize the adverse effects of the next-day destruction of those records. In the wake of the September 11, 2001, terrorist attacks, additional issues regarding Brady background checks emerged (see heading below, " Terrorist Watch List Screening and Brady Background Checks "). The Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ), which the President has signed into law ( P.L. 112-55 ), includes "futurity" language in the provision (§511) requiring that NICS approved firearm transfer records be destroyed within 24 hours. This "futurity" language makes the provision permanent law, as opposed to an annual appropriations restriction. Similar language was included in the House-reported FY2012 CJS appropriations bill ( H.R. 2596 ). Senator Orrin Hatch offered several related amendments during Senate consideration of H.R. 2112 , but the Senate ultimately did not vote upon those amendments. During the 111 th Congress, the gun control debate was colored by two key Supreme Court decisions. In District of Columbia v. Heller , the Court found that the District of Columbia (DC) handgun ban, among other regulations, violated an individual's right under the Second Amendment to lawfully possess a firearm in his home for self-defense. In McDonald v. City of Chicago , the Court found that an individual's right to lawfully possess a firearm for the purposes of self-defense under the Second Amendment applied to the states by way of the Fourteenth Amendment. Although the decision arguably limits a state's, city's, or local government's ability to prohibit handguns outright, it does not precisely delineate what would constitute permissible gun control laws under the Second Amendment. Consequently, these delineations will likely be developed in future cases. In the 111 th Congress, Members revisited several gun control issues that were previously considered in the 110 th Congress. For example, some Members in the House of Representatives, who were dissatisfied with the District's response to the Heller decision, passed a bill in the 110 th Congress that would have overturned provisions of the District's revised gun laws. In the 111 th Congress, Members of the Senate amended and passed a DC voting rights bill ( S. 160 ) with similar language. When the House turned its attention to DC voting rights, the leadership attempted to negotiate a compromise but ultimately tabled its version of the DC voting rights bill ( H.R. 157 ) rather than risk amendments to overturn DC guns laws. The DC gun amendments were introduced as stand-alone bills ( H.R. 5162 / S. 3265 ). So far, the 112 th Congress has not revisited this issue. The Senate Veterans' Affairs Committee reported stand-alone legislation that would have revamped procedures by which veterans are adjudicated "mentally incompetent" and, thus, lose their firearms possession and transfer eligibility ( S. 669 ). This reported bill reflected an amendment that Senator Richard Burr had offered and the Senate committee had adopted in the 110 th Congress during consideration of S. 2969 . Also in the 111 th Congress, the House Veterans' Affairs Committee considered a draft veterans' benefits bill and adopted an amendment offered by Representative John Boozman that included similar provisions. However, when the House considered the reported bill ( H.R. 6132 ) under suspension of the rules, it was called to the floor without the Boozman provisions. Nevertheless, as discussed below, this issue has reemerged in the 112 th Congress, when the House passed similar legislation ( H.R. 2349 ). The Senate also considered an amendment offered by Senator John Thune to the FY2010 Defense Authorization Act ( S. 1390 ) that was narrowly defeated and arguably would have provided for national reciprocity between states regarding the concealed carry of firearms. In the 112 th Congress, the House has passed similar legislation ( H.R. 822 ). The Senate Committee on Homeland Security and Governmental Affairs held a hearing on denying firearms to persons watch-listed as known or suspected terrorists ( S. 1317 / H.R. 2159 and S. 2820 ). The 112 th Congress revisited related issues during consideration of legislation to reauthorize the USA PATRIOT Act ( H.R. 1800 , S. 1038 , and S. 990 ). Also, in the 111 th Congress, the House Financial Services Committee reported a bill ( H.R. 3045 ; H.Rept. 111-277 ) that included a provision that would have prohibited public housing authorities from barring tenants from possessing legal firearms as a condition of their lease. This committee approved another housing bill that included a similar provision ( H.R. 4868 ). The House also passed amendments ( H.R. 5827 ) to federal bankruptcy law that would have allowed persons to claim either a single firearm or a collection of firearms of up to $3,000 in value as a federal exemption. And, on at least two occasions, the Senate Committee on the Judiciary scheduled a hearing on a bill to reform federal statutes under which federally licensed firearms dealers are regulated ( S. 941 / H.R. 2296 ). In addition, during the 111 th Congress, Members sponsored several proposals that were enacted. The Senate adopted an amendment offered by Senator Tom Coburn to the Credit CARD Act of 2009 ( H.R. 627 ) to allow people to carry firearms in national parks and wildlife refuges. The House voted on the Coburn amendment as a separate measure and passed it as well ( P.L. 111-24 ). The Senate adopted an amendment offered by Senator Roger Wicker to the FY2010 Transportation-HUD appropriations bill ( H.R. 3288 ) that allows private persons to carry firearms in their checked luggage on Amtrak trains. H.R. 3288 became the vehicle for the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), which included the Wicker provision. Congress reconsidered and passed amendments to the Law Enforcement Officers Safety Act (LEOSA; P.L. 108-277 ) to clarify and widen eligibility for certain qualified police officers to carry concealed firearms across state lines ( S. 1132 ; P.L. 111-272 ). Congress altered, but continued to make permanent, a funding limitation on the release of ATF firearms trace data ( P.L. 111-8 and P.L. 111-117 ), which is known for its original sponsor, Representative Todd Tiahrt. Two firearms-related provisions were included in the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 ( P.L. 111-383 ). One provision (§1062), sponsored by Senator Jim Inhofe, prohibits the Secretary of Defense, and by implication base commanders, from collecting any information on privately owned firearms kept by military personnel, Department of Defense civilian employees, and their family members off-base. Another provision (§346) sponsored by Senators Jon Tester and Max Baucus addresses the demilitarization of small arms ammunition of several types and calibers, which is commonly sold as military surplus. Finally, during the 111 th Congress, gun trafficking across the Southwest border from the United States to Mexico was also an ongoing concern, as it has been for the 112 th Congress. The Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), included increased funding for ATF to investigate additional gun trafficking cases. In addition, Congress provided ATF with an FY2010 supplemental appropriation to combat further Southwest border gun trafficking ( P.L. 111-230 ). For a fuller discussion of legislative action in the 111 th Congress, see Appendix A . In the wake of the Aurora, CO, theater and Oak Creek, WI, Sikh temple mass-casualty shootings, several Members of Congress called for reconsideration of the 1994-2004 ban on semiautomatic assault weapons and the large capacity ammunition feeding devices. There were similar calls to ban such feeding devices (see S. 32 / H.R. 308 ) following the January 8, 2011, Tucson, AZ, mass shooting. The 112 th Congress has also seen considerable attention paid to ATF Southwest border gun trafficking investigation known as "Operation Fast and Furious." At several congressional hearings, the Attorney General was questioned at length about whom among the departmental officials conceived of, knew about, and/or approved this operation. It has led to the resignation of the U.S. Attorney for the District of Arizona. The House Committee on Oversight and Government Reform has held several hearings specifically on matters related to this operation. When the President asserted executive privilege rather than turn over additional, subpoenaed documents to the committee, the House passed a resolution holding the Attorney General in contempt of Congress for his failure to produce subpoenaed documents. The committee has also held a hearing on the DOJ Office Inspector General findings concerning both an earlier, Tucson, AZ-based investigation, known as Operation Wide Receiver, and Operation Fast and Furious. In addition, the Committee has released Parts I and II of its three-part, final report on Operation Fast and Furious. Several other gun control issues have emerged in the 112 th Congress. For example, the House passed a bill ( H.R. 822 ) that would establish greater reciprocity between states with firearms concealed carry statutes. The House also passed a Veterans' Benefits bill ( H.R. 2349 ) that would prohibit the Department of Veterans Affairs from making mentally incompetent determinations about beneficiaries for the purposes of gun control, unless such determinations were made by a judge, magistrate, or other judicial authority. Firearms-related amendments were also offered to bills that extended an expiring USA PATRIOT Act provision related to national security investigations and FBI access to business records. Both chambers have also considered bills to promote access to federal lands for hunting and other sporting activities ( S. 3525 and H.R. 4089 ). On July 20, 2012, a 24-year-old male entered a theater in Aurora, CO, and allegedly shot to death 12 people and wounded another 58 people, 7 of them critically. He was armed with a semiautomatic rifle equipped with a drum magazine, a 12-gauge pump shotgun, and at least one, possibly two, .40-caliber handguns. He reportedly bought these firearms legally from federally licensed gun dealers in Colorado. He also reportedly purchased over 6,000 rounds of ammunition and a 100-round magazine through online, interstate (mail order) transactions. This shooting prompted some Members of the 112 th Congress to support reconsideration of proposals to reinstate a 1994 ban on semiautomatic assault weapons and large capacity ammunition feeding devices, which expired in September 2004. So far, two questions have repeatedly been asked about the Aurora, CO, shooting: (1) Would the shooter's Smith & Wesson AR-15 and drum magazine have been prohibited under the 1994-2004 semiautomatic assault weapons (SAW) ban? and (2) What federal laws speak to the interstate, mail order ammunition sales/transfers (particularly those initiated over the Internet)? In addition, the shooter's mental health could emerge as an issue, but little information has surfaced to date about his state of mind. It is noteworthy that all accounts seem to indicate that the shooter bought his firearms, magazines, and ammunition legally. It is unclear at this time whether the Smith & Wesson AR-15 used by the Aurora, CO, shooter would have been subject to the 1994 SAW ban. Under the ban, a rifle was a SAW if it were semiautomatic and had an ability to accept a detachable (interchangeable) magazine, and had two of the following features: a folding or telescoping stock, a pistol grip that protruded conspicuously beneath the action of the weapon, a bayonet mount, a muzzle flash suppressor or threaded barrel to accommodate one, or a grenade launcher. The SAW ban specifically named the Colt AR-15 as prohibited, but it did not prohibit any Smith & Wesson firearm specifically as a SAW. Immediately following the ban, Colt modified the design of its rifle ("sporterized" it), and the post-ban version of the Colt AR-15 did not meet the features test and was legal, because it did not include two of the five features listed above. However, it definitely included a pistol grip and an ability to accept a detachable magazine—arguably the two hallmarks of a SAW rifle. Under the SAW ban, the further production of high capacity ammunition feeding devices (over 10 rounds) was also banned, but such devices privately or commercially held at home or abroad prior to enactment in 1994 were grandfathered in. (During the 10-year ban, imports of these devices proved problematic, because they were not stamped with either a manufacturing date or serial number. This is still the case today.) So, whether the shooter's drum magazine would have been banned is also unclear. The 1986 Firearms Owners' Protection Act (FOPA) repealed certain restrictions on interstate transfers of ammunition, including mail order transfers. As a result, since 1986, a person can deal in ammunition as long as he is not a prohibited person. As described above, however, a person must be federally licensed to manufacture or import ammunition. Unlike for firearms, moreover, there are no restrictions on the interstate transfer of ammunition by federally licensed gun dealers or unlicensed persons. Therefore, ammunition can be transferred interstate between unlicensed persons. In addition, there are no recordkeeping requirements for either licensed dealers or unlicensed persons with regard to ammunition transfers, except for transfers of "armor piercing ammunition" made by licensed dealers to unlicensed persons. With regard to the Internet-based firearms transfers, a CRS legislative attorney previously concluded in 2001 that "A review of applicable federal law … establishes that internet-based firearm sales are not imbued with a special character by virtue of their medium of transfer, and are in fact subject to the same degree of regulation as any other type of firearm transaction. " The same could be said for Internet-based ammunition sales. In summary, it may be appropriate to think of the Internet as a "means of communication," because it allows individuals to search for, contact, and communicate with others more efficiently than through the mail, want ads, publications, or over the phone. As consequence, it facilitates equally those individuals who would break the law as it does those who would obey the law. By comparison, prior to FOPA, only licensed firearms manufacturers, importers, and dealers were authorized to transfer ammunition to unlicensed persons. There was also a recordkeeping requirement for any handgun ammunition transfers made by a licensed dealer to an unlicensed person. While it was lawful for an unlicensed person to cross state lines and purchase ammunition face-to-face from an out-of-state licensed dealer, if an unlicensed person wanted to acquire ammunition from an out-of-state source, the ammunition had to be transferred from an out-of-state licensee to a licensee in the unlicensed person's state of residence. Then, the ammunition could be lawfully and subsequently transferred to the unlicensed person, who originally sought to acquire it. (Under current law, there is a similar construct for out-of-state, face-to-face transfers of long guns. Interstate handgun transfers are only lawful if they are conducted between licensees.) On July 30, 2012, Senator Frank Lautenberg introduced the Stop Online Ammunition Sales Act ( S. 3458 ), a bill that would require ammunition dealers to be federally licensed and would generally prohibit the sale of ammunition by unlicensed persons. The bill would require unlicensed persons purchasing ammunition from a licensed dealer to do so in person and to present a state-issued identification document at the point of purchase. In addition, the bill would require federally licensed gun dealers to maintain records on ammunition transfers, and to report to the Attorney General and to the area chief law enforcement officer whenever an unlicensed person purchases more than 1,000 rounds of ammunition within five consecutive business days. On August 5, 2012, a 40-year-old U.S. Army veteran entered a Sikh temple in the Oak Creek suburb of Milwaukee, WI, and allegedly shot to death six worshipers and critically wounded another three people. One of the wounded victims was a police officer, whom was shot numerous times as he administered first aid to another victim. The alleged shooter, Wade Michael Page, was armed with a 9mm semiautomatic pistol that he had acquired legally when he resided in North Carolina. After Page was wounded by a responding law enforcement officer, he shot himself to death. Press accounts described Page as a neo-Nazi, white supremacist, and it is widely thought that he mistook the Sikh temple for a Muslim mosque. While press accounts indicated that the FBI initially classified this attack as a domestic terrorism case, the FBI had not previously opened a file on Page. Based upon a preliminary assessment, moreover, the FBI has indicated that it appears that Page did not act in collusion with others, nor did he leave a suicide note, manifesto, or any other statement that would possibly explain his motive. Nevertheless, under Wisconsin state law this attack could possibly be considered a "hate crime" and be reported to the FBI Uniform Crime Reports as such. The 112 th Congress has revisited the issue of concealed carry and national reciprocity. On October 25, 2011, the House Committee on the Judiciary ordered reported the National Right-to-Carry Reciprocity Act of 2011 ( H.R. 822 ) by a vote (19-11) that was nearly split down party lines following several days of contentious markup. On November 10, 2011, the committee reported H.R. 822 ( H.Rept. 112-277 ). On November 16, 2011, the House considered and passed H.R. 822 , amended, by a recorded vote: 272-154 (Roll no. 852). H.R. 822 would establish an increased level of reciprocity among states that have laws that allow civilians to carry handguns in a concealed fashion. Under state law, 38 states, most recently Wisconsin, have enacted "shall issue" concealed carry laws, meaning permits are issued to all eligible applicants. Ten states have enacted more restrictive "may issue" laws, meaning state and/or local authorities have discretion whether to issue permits. In those states, applicants usually must demonstrate a need to carry a concealed handgun to the authorities. At one end of the spectrum, Alaska, Arizona, Wyoming, and Vermont allow concealed carry without a permit. At the other end, Illinois and the District of Columbia allow no concealed carry of firearms by civilians. With regard to interstate reciprocity, a handful of states have "recognition" statutes that recognize any state-issued concealed carry permit. Other states have "open" statutes that allow any resident of the United States, without regard to state residency, to apply for a concealed carry permit. Still other states have "hybrid" statutes that include elements of both the recognition and open statutes. Contiguous "shall issue" states often extend reciprocity to one another. However, some "shall issue" states have opted not to extend reciprocity to other "shall issue" states for a variety of reasons, even though they might have extended reciprocity to arguably more restrictive "may issue" states. The end result is a complicated array of state laws that arguably makes it very challenging for any individual to discern his legal ability to travel interstate with a concealed handgun. Under H.R. 822 , as ordered reported, a permit holder from state A would be able to travel to state B with a concealed handgun as long as state B had a concealed carry law, no matter which type ("shall" or "may" issue). The permit holder from state A would be required to comply with all other laws in state B, with the exception of the laws governing eligibility for and issuance of concealed carry permits. Several issues could arise, however. First, the bill makes no allowance for the difference between more permissive "shall issue" and more restrictive "may issue" state laws. Therefore, the bill could be viewed as an imposition by "shall issue" states over "may issue" states. Depending upon the circumstances, the bill could also be viewed as an imposition by some "shall issue" states over other "shall issue" states, depending upon differences in their respective concealed carry laws. For example, some "shall issue" states have good moral character clauses as part of their eligibility requirements, others do not. Some require "live fire" training prior to permit issuance, others do not. Some require a mental health evaluation, others do not. Several states issue permits to persons 18 years of age, while most states require applicants to be 21 years of age. Another issue that has emerged is "forum shopping," that is, one state's residents going to another state with an "open" statute so that they can return to their own state with a concealed carry permit that they would not have otherwise been able obtain in their own state. While language has been included in the bill, as ordered reported, that would arguably prevent individuals from forum shopping among states, Representative Daniel Lungren offered an amendment that the committee adopted that would require GAO to conduct a study of "open" state concealed carry laws and their implications for public safety. The committee also adopted a substitute amendment offered by Representative Trent Franks at the outset of the markup. Twelve other amendments were offered, but all were defeated. Minority Members offered amendments that would have denied concealed carry permits to categories of persons on terrorist watch lists and several classes of misdemeanants, including sex offenders, stalkers, drug traffickers to minors, and assailants of police officers. Other amendments addressed the need for more secure and verifiable concealed carry documentation and interstate information sharing on permittees for law enforcement and public safety purposes. Representative Louie Gohmert offered an amendment that would have allowed concealed carry in the District of Columbia, but it too was defeated. Proponents argue that establishing reciprocity on such a basis would be similar to the mutual recognition of out-of-state driver licenses. Opponents counter that most state driver license eligibility requirements are remarkably similar, unlike concealed carry eligibility requirements. Furthermore, states have opted to recognize the driver licenses of other states largely on their own accord without congressional intervention. Proponents contend further that criminals are less likely to victimize individuals who could be armed, thus leading to a reduction in crime. To support this view, the chairman of the House Committee on the Judiciary, Representative Lamar Smith, noted during the markup that, according to the National Rifle Association (NRA), concealed carry states on average had lower violent crime rates (22%) than states that did not have such laws. Opponents argue that introducing more firearms into potentially life threatening situations increases the likelihood that a firearm would be misused and innocent persons wounded or killed. To support their view, they have cited data compiled by the Violence Policy Center, which reported that from May 2007 through October 25, 2011, concealed carry permit holders had killed 11 law enforcement officers and 375 private citizens, and had engaged in 20 mass shootings and 29 murder/suicides. Several other concealed carry bills have been introduced in the House and the Senate. In the House, for example, Representative Paul Broun introduced the Secure Access to Firearms Enhancement Act ( H.R. 2900 ), a bill that is similar in effect to the Thune bill ( S. 2213 ) described below. Representative Timothy Johnson has introduced a bill ( H.R. 3543 ) that has the same title as H.R. 822 and reflects that bill as introduced. Senator Barbara Boxer introduced the Common Sense Concealed Firearms Permit Act of 2011 ( S. 176 ), which would facilitate concealed carry reciprocity arguably by establishing minimum federal eligibility requirements. On the other hand, elements of those eligibility requirements could be seen as being more restrictive than many existing state laws—particularly state "shall issue" laws. For example, the bill would require a concealed carry permit applicant to demonstrate (1) good cause for requesting the permit, and (2) that he is worthy of the public trust to carry a concealed firearm in public. Such eligibility requirements are arguably more closely aligned with state "may issue" laws. Senator Mark Begich introduced the National Right-to-Carry Reciprocity Act of 2012 ( S. 2188 ), a companion bill to H.R. 822 . And, Senator John Thune has introduced the Respecting States' Rights and Concealed Carry Reciprocity Act of 2012 ( S. 2213 ). Under S. 2213 , a resident of a state that allows concealed carry without a permit (Alaska, Arizona, Wyoming, and Vermont) would be allowed to do so in another state without a permit of any kind, arguably, as long as the host state issues concealed carry permits. Under H.R. 822 / S. 2188 , a resident of one of those states would have to acquire a permit from either his or another state. The 112 th Congress has revisited the issue of firearms carry and use on public lands. As described above, Senator Coburn sponsored legislation in the 111 th Congress that allows individuals to carry firearms in national parks and wildlife refuges, as long as such firearms carry is in compliance with state and local laws ( P.L. 111-24 ). On April 17, 2012, the House passed the Sportsmen's Heritage Act of 2012 ( H.R. 4089 ) by a vote of 274-146 (Roll no. 164). This bill would require agencies that manage federal public lands to facilitate access to and use of those lands for the purposes of recreational fishing, hunting, and shooting with certain exceptions set out in statute (e.g., national security, public safety, or resource conservation). H.R. 4089 defines federal public lands broadly and, arguably, would promote allowance for fishing, hunting shooting on most federal public lands, with certain exceptions for national parks, national monuments managed by the National Park Service, lands held in trust for Indian tribes, and Outer Continental Shelf lands. (For a related bill, see also H.R. 3440 .) On September 22, 2012, the Senate voted to invoke cloture on a motion to proceed to the Sportsmen's Act of 2012 ( S. 3525 ). The Senate bill addresses some of the same hunting and fishing issues addressed in H.R. 4089 , but the two bills are different in their approach. The Senate recessed before considering S. 3525 further. Similarly, Section 438 of the FY2013 Interior, Environment, and Related Agencies Appropriations bill ( H.R. 6091 ), which the House Committee on Appropriations reported on July 10, 2012, would provide that appropriated funding under the bill could not be used to prohibit the use of or access to federal land for hunting, fishing, or recreational shooting. In addition, H.R. 4089 includes a provision that would prohibit the Environmental Protection Agency (EPA) from promulgating regulations under the Toxic Substances Control Act to restrict the lead content of ammunition and fishing tackle. The EPA was previously petitioned to address this issue on three occasions, but had denied those petitions. The EPA has adopted the position that it has no legal authority to regulate ammunition, and found that additional federal regulation of lead in fishing tackle is not warranted. (See also H.R. 1558 / S. 838 and H.R. 2834 / S. 2066 .) Conversely, Representative Jim McDermott has introduced the Guns-Free National Parks Act of 2012 ( H.R. 4063 ), a bill that would repeal the Coburn provision in P.L. 111-24 noted above. On a related issue concerning firearms on public lands, Representative Bob Gibbs and Senator Jim Webb introduced the Recreational Land Self-Defense Act of 2011 ( H.R. 1865 / S. 1588 ). This bill would prohibit the Secretary of the Army from banning individuals from firearms possession, including an assembled or functional firearm, while traveling through or visiting water resources development projects (e.g., reservoirs at Corps-operated dams and inland waterways) managed by the Army Corps of Engineers. It is noteworthy that although Corps staff is often charged with maintaining order among boaters and other visitors at Corps-managed reservoirs and waterways, and at adjoining campsites, they are not authorized to be armed, unlike National Park Service rangers. Under the bill, however, firearms possession and carrying would still be subject to the state and local laws in effect for the jurisdictions in which the Corps projects are located. In this way, this bill is similar to the 2009 National Parks legislation ( P.L. 111-24 ). Also, in the last session on July 14, 2011, the House passed an amendment ( H.Amdt. 653 ) offered by Representative Paul Gosar to the FY2012 Energy and Water Development and Related Agencies Appropriations bill ( H.R. 2354 ) that would have prohibited the expenditure of any funding under that bill to enforce any regulation to restrict firearms possession on corps projects or lands that exceeded state law. On May 18, 2012, the House passed the National Defense Authorization Act for Fiscal Year 2013 ( H.R. 4310 ). This bill includes a provision that would amend a provision enacted under P.L. 111-383 that prohibits base commanders from collecting information about firearms privately held by military personnel off-base. The amending provision (§1071) in H.R. 4310 would clarify that a military mental health professional or commanding officer may inquire about privately owned firearms if that service member is considered to be a high risk for suicide or causing harm to others. Also, during House consideration of H.R. 4310 , Representative Phil Gingrey successfully offered an amendment ( H.Amdt. 1124 ) that expresses a sense of Congress that active duty military personnel who either live in or are stationed in the District of Columbia (DC) ought to be exempt from DC firearms laws, which generally require the registration of firearms, both long guns and handguns, as well as forbid the carrying of any firearm outside of the home. The amendment was passed by voice vote. Under Project Gunrunner, ATF has increased its efforts to staunch the flow of illegal guns from the United States to Mexico through stepped up enforcement of domestic gun control laws and cooperation with Mexican authorities. For example, in its FY2013 budget submission to Congress, ATF presented the following data to demonstrate its overall efforts in Southwest Border states between FY2005 and FY2011: 1,471 cases involving 3,438 defendants recommended for prosecution; 2,376 defendants arrested; 2,338 indicted; 1,549 convicted; and 1,070 sentenced to an average of 102 months in prison; 442 cases and 1,467 defendants recommended for prosecution involved gang-related offenses; 752 cases involved trafficking of an estimated 26,129 firearms, of which 244 cases and 8,564 firearms were related to gang-related activities; and over 10,500 firearms and 1,407,000 rounds of ammunition were seized as a result of these investigations. To support these efforts, Congress appropriated $1.121 billion for ATF for FY2010. This amount included about $60 million for Project Gunrunner according to both House and Senate report language. For FY2011, ATF was appropriated $1.115 billion, but Congress had also appropriated an additional $37.5 million for ATF in the FY2010/FY2011 Southwest border supplemental appropriation ( P.L. 111-230 ). For FY2012, Congress appropriated $1.152 billion for ATF ( P.L. 112-55 ). The agency reports that approximately $68.9 million in direct funding has been allocated to efforts related to addressing Southwest Border gun trafficking groups. Moreover, ATF has trained Mexican law enforcement officials to use its eTrace program, through which investigators are sometimes able to trace the commercial trail and origin of recovered firearms and, in the process, identify gun trafficking trends and develop investigative leads. As described below, however, the interpretation of trace data has generated considerable debate. On the one hand, several substantive methodological limitations preclude using trace data as a proxy for the larger population of crime guns in Mexico or the United States. On the other hand, in conjunction with investigative experience, trace data show that certain firearms—particularly semi-automatic rifles with the ability to accept a detachable magazine that are greater than .22 caliber—are increasingly being used by the Mexican drug trafficking organizations and other criminals. In November 2010, the DOJ Office of the Inspector General (OIG) released an evaluation of Project Gunrunner. While the OIG was somewhat critical of ATF's eTrace program for yielding little "usable investigative leads," the OIG recommended that ATF work with DOJ to develop a reporting requirement for multiple long gun sales because Mexican DTOs have demonstrated a marked preference for military-style firearms capable of accepting high-capacity magazines. The OIG also recommended that ATF focus its investigative efforts on more complex criminal conspiracies involving high-level traffickers rather than on low-level straw purchasers. In January/February 2011, ATF's Southwest border efforts to deter cross-border gun trafficking became controversial following the murder of a U.S. Border Patrol agent in December 2010. Firearms found at the murder site were linked to a Phoenix, AZ-based Project Gunrunner investigation known as "Operation Fast and Furious." This operation was an attempt by ATF's Phoenix field office to conduct a more complex investigation. However, allegations of misconduct on the part of DOJ's and ATF's upper-levels of management have been the topic of four hearings conducted by the House Committee on Oversight and Government Reform. Those allegations have also dominated the discourse at two DOJ oversight hearings held by the House Committee on the Judiciary, as well as two hearings held by the Senate Committee on the Judiciary and its Subcommittee on Crime and Terrorism. Several Members of Congress, including two House full committee chairs, have written letters to the Attorney General urging him and the Administration to be more forthcoming about possible missteps that were taken in the lead-up to Operation Fast and Furious. Besides the oversight issues, at issue for Congress is how widespread were the gun walking tactics employed? And, what can be done to prevent such gun walking tactics from being misused again, without unduly encumbering federal law enforcement? Another related issue for Congress could be the Administration's arguably selective release of ATF firearms trace data. In the past, ATF periodically released data on firearms traces performed for Mexican authorities. Although substantive methodological limitations preclude using trace data as a proxy for the larger population of "crime guns" in Mexico or the United States, trace data have proven to be a useful indicator of trafficking trends and patterns. In June 2009, GAO recommended to the Attorney General that he should direct ATF to regularly update its reporting on aggregate firearms trace data and trends. For the next two years, nonetheless, only limited and arguably selected amounts of trace data have been released by ATF. On April 26, 2012, ATF released updated but limited data on firearms trace requests that were processed for Mexican authorities. On December 17, 2010, DOJ and ATF published a "60-day emergency notice of information collection" in the Federal Register , in which they requested that the Office of Management and Budget (OMB) review and clear a proposed information collection initiative by January 5, 2011, on an emergency basis under the Paperwork Reduction Act of 1995. While ATF was not granted emergency approval, OMB eventually approved this initiative on July 11, 2011. While opponents responded quickly and passed a provision to block ATF's implementation of this initiative, the blocking provision was not included in ATF's enacted FY2012 appropriation and ATF is currently collecting multiple rifle sales reports in Southwest Border states. Under the initiative, ATF proposed to require federal firearms licensees (FFLs) to report to ATF whenever they make multiple sales or other dispositions of more than one rifle within five consecutive business days to an unlicensed person. Such reporting was to be limited to firearms that are (1) semiautomatic, (2) chambered for ammunition of greater than .22 caliber, and (3) capable of accepting a detachable magazine. While details underlying this initiative were not fully revealed in the Federal Register , on December 20, 2010, acting ATF Director Kenneth Melson later clarified that the proposed multiple rifle sales reporting requirement would be (1) limited to FFLs operating in Southwest border states (Texas, New Mexico, Arizona, and California) and (2) confined initially to a one-year pilot project. On February 4, 2011, OMB informed ATF that it would not grant the emergency approval. Nevertheless, the notice's 60-day comment period ran through February 16, 2011. ATF received 12,680 comments, of which ATF estimated that 8,928 comments (70%) were in support of the program and 3,752 (30%) were opposed. Following DOJ and ATF consideration the initial round of comments, a subsequent 30-day comment period was invoked on April 29, 2010, during an additional 18,800 pages of comments were considered. On July 11, 2011, OMB approved the information collection initiative for a three-year period (ending July 31, 2014). It appears that some of the impetus for the information collection initiative was a recommendation made by the DOJ OIG in November 2010. As described above, in that review the OIG reported that ATF criminal investigations and firearms trace data indicated that Mexican drug trafficking organizations had demonstrated a marked preference for long guns (rifles and shotguns) capable of accepting detachable ammunition feeding devices. As a consequence, the OIG recommended that ATF work with DOJ to explore options for seeking a multiple long sales reporting requirement. In response to the OIG's recommendation, however, then Acting ATF Director Melson initially suggested that such a requirement could be beyond the ATF's and the DOJ's authority under current law, but that ATF would "explore the full range of options to seek information regarding multiple sales of long guns." Notwithstanding this concern about its authority, it appears that DOJ and ATF collectively concluded that there is sufficient authority under current law for ATF to collect reports on multiple sales of certain long guns from FFLs. Additional documentation posted on the OMB website suggested that ATF was proposing the information collection under its authority to issue "demand letters." Since the enactment of the Gun Control Act (GCA) in 1968, the ATF and its predecessor agencies at the Department of the Treasury have had the authority to issue "demand letters" to FFLs in order to obtain information from the records that FFLs are required by law to maintain at their places of business. Such letters have been primarily used to investigate and bring non-compliant FFLs into line and to expedite the acquisition of trace data. ATF's authority to issue demand letters to collect information under certain circumstances has been challenged and upheld in the federal courts. In 2000, for example, ATF issued demand letters to 41 FFLs who were deemed uncooperative because they had failed to comply with trace request responses in a timely manner. In these demand letters, the ATF required the FFLs to submit information concerning their firearm purchases and sales for the past three years and on a monthly basis thereafter until told otherwise. The U.S. Court of Appeals for the Fourth Circuit held that 18 U.S.C. Section 926(a), which prohibits the creation of a national registry of firearms, firearms owners, and transactions, did not directly limit the defendant's authority to issue demand letters and was not violated because the ATF narrowly tailored the request to its tracing needs by issuing the letter to the 0.1% of FFLs nationwide. In 1999, the ATF sent out another demand letter to approximately 450 FFLs who had 10 or more crime guns traced to them with a "time-to-crime" of three years or less. The demand letter required the FFLs to report the acquisition of secondhand firearms, including identification of the firearm but not the identities of the person from whom the secondhand firearm was acquired or the person to whom the firearm was transferred. The U.S. Courts of Appeals for the Fourth and Ninth Circuits generally held that Section 926(a) was not violated and that the appropriations rider that prohibits ATF from spending money in connection with consolidating or centralizing records was also not violated because a demand letter sent to less than 1% of all FFLs for a portion of record information does not constitute consolidating or centralizing record information. Opponents of this initiative argue that (1) ATF does not enjoy sufficient authority to require multiple rifle sales reports from FFLs; (2) such a reporting requirement would be unprecedented; and (3) the data collection that would result would essentially constitute an illegal firearms registry. Although this information collection initiative would require FFLs to provide ATF with additional documentation on firearms transactions involving rifles, which has not previously been required, it is not entirely unprecedented. On the other hand, an argument could be made that ATF's issuance of demand letters and the existing multiple handgun sales reporting requirement are precedents for multiple rifle sales reports. In the past, as described above, ATF had administratively required some FFLs to surrender firearms transaction records temporarily on a much wider scale, when there were indications of noncompliance or illegal firearms trafficking. Several Members of Congress, however, disagree with this decision and sent a letter to President Obama voicing strong opposition to the proposed multiple sales report proposal. Those Members maintain that if Congress authorized multiple handgun sales reporting in statute in 1986, then it is incumbent upon ATF to request that Congress provide it with similar statutory authority for a multiple rifles sales reporting requirement. On February 18, 2011, the House adopted an amendment by a roll call vote of 277-149 (Roll no. 115) offered by Representatives Dan Boren and Denny Rehberg to the Full-Year Continuing Appropriations Act, 2011 ( H.R. 1 ) that would have prohibited ATF from implementing that requirement. While the House passed H.R. 1 , the Senate rejected this bill on March 9, 2011, for budgetary considerations that went well beyond concerns about this policy rider. Meanwhile, the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( H.R. 1473 ; P.L. 112-10 ) does not include a similar rider. Senator Jon Tester introduced a bill ( S. 570 ) that would prohibit DOJ from collecting information on multiple rifle or shotgun sales. Following OMB's approval of this information collection initiative, Representative Rehberg successfully amended the FY2012 Commerce-Justice-Science (CJS) appropriations bill ( H.R. 2596 ) in full committee markup with language that would have prohibited ATF from implementing it by a vote of 25 to 16 on July 12, 2011. Meanwhile, the Senate folded its FY2012 CJS appropriations bill ( S. 1572 ) into a minibus appropriations bill ( H.R. 2112 ). Senator Dean Heller offered an amendment ( S.Amdt. 843 ) to H.R. 2112 that would have also blocked implementation of the reporting requirement, but the Senate did not vote on the Heller amendment. Language reflecting the Rehberg amendment was not included in the House- and Senate-passed conference version of the Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ). Hence, it was not included into the bill that was signed into law ( P.L. 112-55 ) by the President on November 18, 2011. According to ATF, from August 14, 2011, through October 6, 2011, it collected 502 multiple rifle sales reports involving 1,276 firearms from FFLs in Southwest Border states. In addition, complaints were filed in federal district courts challenging ATF's ability to collect such information under its demand letter authority (18 U.S.C. §922(g)(5)(A)). However, in National Shooting Sports Foundation, Inc. v. Jones , the United States District Court for the District of Columbia (DC District Court) held that it was within ATF's demand letter authority to collect information from FFLs on the multiple sales of rifles. The DC District Court found that ATF's demand letter to FFLs on Southwest border was still limited in scope, even though it was "somewhat broader" than past demand letters that have been upheld by the federal courts. Nevertheless, opponents have renewed their efforts to end the multiple rifle sales reporting requirement during the FY2013 appropriations cycle. On April 26, 2012, Representative Rehberg successfully offered an amendment during full committee markup of the CJS appropriations bill ( H.R. 5326 ) with language that would prohibit ATF from collecting multiple long gun sales reports. Representative Justin Amash and Senator Jon Tester have introduced similar proposals ( H.R. 3814 / S. 570 ). According to ATF, in the first nine months of the initiative, ATF has referred over 115 defendants to the U.S. Attorneys for federal prosecution in 29 criminal cases in which leads were generated from multiple rifle sales reports. As part of these cases, ATF has taken about 168 firearms into evidence. As of May 22, 2012, approximately 1,045 FFLs had submitted 3,500 multiple rifle sales reports, encompassing around 8,200 firearms. ATF estimates that the time burden on each FFL was about one hour, seven minutes, costing an estimated $12 per year/per FFL. In January/February 2011, ATF and Project Gunrunner came under congressional scrutiny for a Phoenix, AZ-based investigation known as Operation Fast and Furious. ATF whistleblowers have alleged that suspected straw purchasers were allowed to amass relatively large quantities of firearms as part of long-term gun trafficking investigations. As a consequence, some of these firearms are alleged to have "walked," meaning that they were trafficked to gunrunners and other criminals before ATF moved to arrest the suspects and seize all of their contraband firearms. Some of these firearms were smuggled into Mexico. Two of these firearms—AK-47 variant rifles—were reportedly found at the scene of a shootout near the U.S.-Mexico border where U.S. Border Patrol Agent Brian Terry was shot to death. Press accounts assert that ATF has acknowledged that as many as 195 firearms that were purchased by persons under ATF investigation as part of Operation Fast and Furious were recovered in Mexico. Questions, moreover, have been raised about whether a firearm—an AK-47 variant handgun—that was reportedly used to murder U.S. ICE Special Agent Jamie Zapata and wound Special Agent Victor Avila in Mexico on February 15, 2011, was initially trafficked by a subject of a Houston, TX-based ATF Project Gunrunner investigation. As more information emerged, U.S. and Mexican policymakers expressed their dismay over the circumstances surrounding Operation Fast and Furious. Taking the lead, Senator Charles E. Grassley, the ranking minority Member on the Senate Judiciary Committee, wrote several letters to then ATF Acting Director Kenneth E. Melson and U.S. Attorney General Eric H. Holder voicing his concerns about Operation Fast and Furious and the whistleblower allegations that were brought to him. For example, on January 27, 2011, Senator Grassley wrote Acting Director Melson and requested a briefing on Project Gunrunner. He noted that Members of the Judiciary Committee have received numerous allegations that the ATF sanctioned the sale of hundreds of assault weapons to suspected straw purchasers, who then allegedly transported these weapons through the southwestern border area and into Mexico. On February 4, 2011, Assistant Attorney General Ronald Weich, DOJ Office of Legislative Affairs, responded with a letter that included the following statement: At the outset, the allegation described in your January 27, letter—that ATF "sanctioned" or otherwise knowingly allowed the sale of assault weapons to a straw purchaser who then transported them into Mexico—is false. ATF makes every effort to interdict weapons that have been purchased illegally and prevent their transportation to Mexico. Weich went on to say: We also want to protect investigations and the law enforcement personnel who directly conduct them from inappropriate political influence. For this reason, we respectfully request that Committee staff not contact law enforcement personnel seeking information about pending criminal investigations, including the investigation into the death of Customs and Border Patrol Agent Brian Terry. On February 9, 2011, Senator Grassley wrote Attorney General Holder a letter in which he presented documents that were provided to him by whistleblowers. They purported that a federally licensed gun dealer, who was cooperating with ATF, was encouraged by ATF and the Arizona U.S. Attorney's Office to continue transferring firearms to a suspected straw purchaser, despite misgivings regarding civil and criminal liabilities that could follow from such transfers for whom, he—the gun dealer—could possibly be found liable. As noted above, two of those firearms were found at the murder scene of Agent Terry. Both firearms were AK-47 variants (with serial numbers 1983AH3977 and 1971CZ3755). The accompanying documentation also showed that ATF had entered these firearms into its National Tracing Center's suspect gun database. In response to the previous letter, Senator Grassley observed the following: Unfortunately, the Justice Department's letter suggested that my attempts to seek information about these matters might be politically motivated. I understand the Department needs to "protect … law enforcement personnel … from inappropriate political influence." However, there is a difference between inappropriate political influence and appropriately holding officials accountable to the American people. These whistleblower allegations and related letter exchanges set off a chain of events that culminated in the House approving a resolution that cited the Attorney General with contempt, marking the first instance that Congress has ever thusly cited a sitting officer of a presidential Cabinet. Described below are the major developments that led to this precedent-setting vote. As allegations of gun walking mounted, on March 4, 2011, Attorney General Holder instructed the DOJ OIG to review ATF's gun trafficking investigations. Dissatisfied with DOJ's response to date, on March 8, 2011, Senator Grassley called for an independent review of the related allegations because the DOJ OIG had made recommendations about Southwest border gun trafficking investigations in its November 2011 audit that might possibly influence its future findings. On March 9, 2011, Representative Lamar Smith, chairman of the House Judiciary Committee, wrote the Attorney General and commended him for tasking the OIG with a review of ATF's firearms trafficking investigatory methods. In addition, Representative Smith asked DOJ to respond to the following questions by March 18, 2011: "How many weapons have been allowed to pass to Mexico under the program known as "Fast and Furious"? Is the program still active? Who at ATF Headquarters approved the program? Who in the U.S. Attorney's Office for the District of Arizona approved the program? On what authority did the office approve the program? Did ATF or the U.S. Attorney's Office in Phoenix coordinate the "Fast and Furious" program with the Department of Justice? Did the department approve the strategy? What changes or improvements has ATF made to its eTrace program and its ability to use intelligence to target gun trafficking organizations in general? Does ATF view the "Fast and Furious" program as a success?" DOJ responded to Representative Smith to say that the matter was under investigation. On March 31, 2011, Representative Darrell Issa, chairman of the Committee on Oversight and Government Reform, issued a subpoena, the first of two, to DOJ and ATF for documents related to Project Gunrunner following several unanswered requests for information related to ATF's anti-gun trafficking efforts on the Southwest Border. On May 3, 2011, Representative Issa questioned Attorney General Holder about Operation Fast and Furious at a House Committee on the Judiciary hearing on DOJ oversight. The Attorney General testified that he had only heard about Operation Fast and Furious "over the last few weeks." In turn, on May 4, 2011, Representative Issa released DOJ documents that arguably supported allegations that DOJ officials knew more about Operation Fast and Furious than they had previously admitted. These documents included the following: A January 8, 2010, memorandum from the ATF Phoenix Field Division Office on Operation Fast and Furious noting the involvement of U.S. Attorney for the District of Arizona Dennis Burke, who was in "full agreement with the current investigative strategy." The memo states that "currently our strategy is to allow the transfer of firearms to continue to take place … in order to further the investigation and allow for the identification of additional co-conspirators who would continue to operate and illegally traffic firearms to Mexican [Drug Trafficking Organizations]." A March 10, 2010, memorandum from DOJ Criminal Division Assistant Attorney General Lanny Breuer that authorized a wiretap application and arguably revealed a high level of participation in and knowledge of Operation Fast and Furious. A March 10, 2011, email referencing a directive from the Deputy Attorney General ordering law enforcement agents not to "design or conduct undercover operations which include guns crossing the border." The email clarifies that this includes "cases where we are working with the Mexican government to have them follow the vehicles once they are in Mexico." On June 13, 2011, the Committee on Oversight and Government Reform held a hearing on the department's legal obligation to respond to congressional subpoena. On June 14, 2011, Representative Issa and Senator Grassley issued a joint staff report on Operation Fast and Furious, which chronicled that ATF line supervisors became increasingly concerned when they witnessed hundreds of firearms being illegally transferred during surveillance operations, but they were reportedly directed not to arrest the suspects and interdict those firearms. Those agents contend that this was a questionable departure from past investigative practices. On June 15, 2011, the House Committee on Oversight and Government Reform held a hearing on these matters. Representative Issa expressed his concern that DOJ had not been entirely cooperative with his committee's efforts to investigate how some of those firearms found their way to crime scenes in Mexico and on the Southwest border. Following the hearing, on June 29, 2011, Representative Elijah E. Cummings, the committee's ranking minority Member, issued a report and held a forum during which the minority explored issues raised by some of those same ATF line supervisors, who had suggested during the House hearing that the penalties for firearm straw purchases under current law are arguably not stringent enough. The minority also discussed other gun control proposals related to gun shows, semiautomatic assault weapons, sniper rifles, and additional penalties for gun trafficking offenses. On July 26, 2011, the House Committee on Oversight and Government Reform held a follow-up hearing entitled "Operation Fast and Furious: The Other Side of the Border." As preceded the earlier hearing, a joint staff report was issued. This report found that ATF and DOJ leadership had not informed its own Attaché serving in Mexico City, the U.S. Ambassador to Mexico, nor the Mexican authorities about the investigation. As recovered firearms in Mexico increased, the ATF Attaché in Mexico City became more alarmed and contacted his superiors at ATF headquarters to express his grave concerns about the implications that this increased flow of illegal firearms could have for both Mexican and U.S. law enforcement officers as well as the public on both sides of the border. He and others were told by both ATF and DOJ officials that the investigation was under control and was having positive results. As noted above, however, Border Patrol Agent Terry was killed in a firefight in December 2010, and firearms connected to Operation Fast and Furious were found at the site of that firefight. In July 2011, the Washington Post reported that Operation Fast and Furious ultimately involved 2,020 firearms, of which 227 had been recovered in Mexico and 363 had been recovered in the United States. The investigation resulted in indictments of 20 individuals on multiple counts of straw purchasing and other federal offenses. While ATF officials maintained that the investigation had yet to be concluded and additional arrests of "high-level traffickers" might be forthcoming, no additional arrests have been made. As called for originally by Senator Grassley, the House Committee on Appropriations included report language with the Commerce-Justice-Science (CJS) appropriations bill ( H.R. 2596 ; H.Rept. 112-169 ) that recommended the appointment of "an outside, independent investigator," who would be charged with conducting "a thorough investigation of the allegations against ATF with respect to Operation Fast and Furious and policies guiding this and similar operations." In addition, the House committee called on both DOJ and ATF to cooperate fully with related oversight investigations, whether they were conducted by congressional committees, the DOJ OIG, or an independent investigator. Conversely, the Senate Appropriations Committee included report language with the CJS appropriations bill ( S. 1572 ; S.Rept. 112-78 ) that stated that the OIG would fulfill its oversight duties, and that Operation Fast and Furious was but a small part of ATF's Southwest border operations, which should not detract from the agency's efforts to protect Americans from illegal gun trafficking and other forms of cross-border crime. Conference report language accompanying the Consolidated and Further Appropriations Act, 2012 ( H.R. 2112 ; P.L. 112-55 ) does not call for an independent investigator, but it does call on both DOJ and ATF to cooperate fully with congressional oversight efforts ( H.Rept. 112-284 , p. 240). On August 30, 2011, among the fallout from Operation Fast and Furious, U.S. Attorney for the District of Arizona Dennis K. Burke resigned and ATF Acting Director Melson was reassigned to the DOJ Office of Legal Policy. In Melson's place, U.S. Attorney for the District of Minnesota B. Todd Jones was appointed interim acting ATF Director. However, Jones is not President Obama's nominee for ATF Director. The President's nominee remains Andrew Traver, the ATF Chicago Special Agent in Charge. On September 23, 2011, Representative Smith sent Attorney General Holder a second letter expressing his continuing concerns about Operation Fast and Furious, as well as the appointment of an acting ATF director who would be focused on both his duties as ATF acting director and U.S. Attorney for the District of Minnesota. He noted a provision in the FY2010 Omnibus Appropriations Act ( P.L. 111-117 ) requires each U.S. Attorney to reside in the district in which he serves, and questioned how Jones would be able to serve simultaneously in Minnesota as U.S. Attorney and Washington as ATF acting director. As a follow-up to his March 9 letter, Representative Smith asked DOJ to respond to the following questions by October 21, 2011: "Is the Department considering additional staff changes at ATF in response to Fast and Furious ? How does the Department justify accepting the resignation of the U.S. Attorney while the ATF's managers in charge of Fast and Furious appear to have faced no discipline? What role did the Department play in oversight of Operation Fast and Furious ? Does Todd Jones intend to maintain his residence in Minnesota while serving as acting director of ATF? Is the Department confident that the ATF can fulfill its mission with a part-time director who is based in Minnesota? Have you issued a waiver of the residency requirement for Todd Jones under 28 U.S.C. §545? If so, for what period does the waiver extend?" In addition, Representative Smith reiterated his concern about how the department had responded to congressional inquiries about Operation Fast and Furious. He noted for the record that the department had only answered one out of six questions he submitted in his March 9 letter. He raised concerns about what appeared to be deliberate attempts by the department to obscure the facts about Operation Fast and Furious. As an example, Representative Smith raised the department's description of the ballistic tests on the two semiautomatic rifles found at the site of Border Patrol Agent Terry's murder. The department apparently stated that the tests showed that neither firearm was used to fire the fatal shot; however, Representative Smith countered that the tests were inconclusive one way or another. Furthermore, Representative Smith raised an issue about an audio recording on which a federal agent reportedly mentioned a third firearm linked to Operation Fast and Furious that had been found at Agent Terry's murder scene. On October 12, 2011, the Committee on Oversight and Government Reform issued a second subpoena to DOJ for all departmental communications and documents "referring or related to Operation Fast and Furious, the Jacob Chambers Case, or any Organized Crime Drug Enforcement Task Force (OCDETF) firearms trafficking cases based in Phoenix, Arizona." According to a press release, Representative Issa said, "The documents this subpoena demands will provide answers to questions that Justice officials have tried to avoid [answering] since this investigation began eight months ago." On October 16, 2011, Representative Issa and Sharyl Attkisson—the CBS correspondent who broke the Operation Fast and Furious story nationally —appeared on Face the Nation with Bob Schieffer. Both Representative Issa and Ms. Attkisson discussed the possibility that a third firearm had been found at Agent Terry's murder scene. According to Ms. Attkisson, audio recordings had surfaced on which the ATF supervisory special agent in charge of Operation Fast and Furious made mention of a third firearm, an SKS rifle, that was possibly linked to a confidential informant working for either the FBI or DEA. Representative Cummings has called on the Committee on Oversight and Government Reform to hear testimony again from former ATF Acting Director Melson as a means of determining who is responsible for the conduct of this controversial gun trafficking operation. On October 18, 2011, Senator John Cornyn offered an amendment ( S.Amdt. 775 ) to the FY2012 minibus appropriations bill ( H.R. 2112 ), which included the Senate-reported FY2012 CJS appropriations bill ( S. 1572 ), to prohibit the expenditure of any funding provided under that bill, if enacted, to conduct criminal investigations that allowed firearms to be transferred knowingly to agents of drug cartels and U.S. law enforcement was unable to continuously monitor or control such firearms at all times. This amendment passed 99-0 (Record Vote Number: 167). On November 1, 2011, the Senate passed H.R. 2112 . The conference report version of H.R. 2112 ( H.Rept. 112-284 ), which both the House and Senate passed and the President signed into law ( P.L. 112-55 ), includes a modified version of the Senate-passed Cornyn amendment. The modified provision (§219) prohibits the expenditure of any funding provided under P.L. 112-55 to be used by a federal law enforcement officer to transfer an operable firearm to a person suspected or known to be connected to a drug cartel without that firearm being continuously monitored or controlled. On November 1, 2011, Lanny Breuer, the Assistant Attorney General for DOJ's Criminal Division, testified before the Senate Judiciary's Crime and Terrorism Subcommittee at a hearing on International Organized Crime. During the hearing, Senator Grassley acknowledged a statement made by Breuer on the previous day regarding a 2006-2007 Phoenix-based ATF investigation known as Operation Wide Receiver. With regard to that operation, Breuer said he first became aware of the "gun walking" strategy in April 2010, and it concerned him. However, he did not take his concerns about "gun walking" directly to the Attorney General. Instead, his subordinate spoke to "ATF leadership" about his concerns. Breuer testified that about 350 firearms were allowed to "walk" as part of Operation Wide Receiver, but he failed to make possible connections between Operation Wide Receiver and Operation Fast and Furious with regard to "gun walking." Nevertheless, in his October 31, 2011, statement, Breuer characterized "gun walking" as "unacceptable and misguided." Breuer also testified that over the past nearly five-year period, ATF had processed 94,000 firearm trace requests for Mexican authorities. Of those firearms, 64,000 were "traced" to the United States. In addition, on November 4, 2011, the Huffington Post reported that nearly 700 firearms linked to Operation Fast and Furious had been recovered: 276 in Mexico and 389 in the United States, according to ATF data through October 20, 2011. On November 8, 2011, the Senate Committee on the Judiciary held a DOJ oversight hearing, at which Senators Grassley and Cornyn questioned Attorney General Holder at length about Operation Fast and Furious. The Attorney General conceded that a February 4, 2011, letter from DOJ to congressional investigators contained "inaccurate" information regarding the depth of knowledge that departmental officials had of ATF's use of the "gun walking" tactic. In addition, the Attorney General qualified Breuer's earlier statement about 64,000 firearms recovered in Mexico having been "traced" back to the United States. As described below, only about a quarter of the 94,000 firearms submitted for tracing were probably ever fully traced back to the first U.S. retail owner of record. Consequently, the Attorney General stated that 64,000 of those firearms were "sourced" to the United States, in that they were either originally manufactured in, or imported into, the United States. However, no additional information was given about the 25,000 or so firearms that were eventually fully traced back to the United States, such as time-to-recovery or most frequently traced firearms (by type, make, model, and caliber). On December 2, 2011, Deputy Attorney General James M. Cole wrote both Representative Issa and Senator Grassley and again conceded that the February 4 letter to Senator Grassley from Assistant Attorney General Weich included inaccuracies arguably based upon responses that the department had initially received from the ATF leadership and the U.S. Attorney's Office in Arizona. DOJ formally withdrew that letter. On December 8, 2011, the House Committee on the Judiciary held a hearing on DOJ oversight and heard testimony from Attorney General Holder. However, Operation Fast and Furious was clearly the predominant issue before the committee. More specifically, at issue was who within DOJ management had knowledge of and, by extension, responsibility for the operation. For example, at a May 3, 2011, DOJ oversight hearing, Attorney General Holder testified that he had only heard about Operation Fast and Furious "over the last few weeks." On the other hand, internal DOJ documents obtained by the House Oversight and Government Reform Committee suggest that several high-level managers within the department were aware of, and possibly helped direct, ATF's Operation Fast and Furious. There were also emails between William Newell, the then-ATF Phoenix Special Agent in Charge, and at least one staff member of the National Security Council in which "updates" on Operation Fast and Furious were provided. On January 31, 2012, Chairman Smith sent the Attorney General a third letter, in which he admonished DOJ's stalling tactics and selective releases of materials related to the operation. In the letter, he surmised that "It is past time for the Department to provide a full and honest accounting of Operation Fast and Furious with details about its conception, approval, and who knew what when." On February 2, 2012, the House Oversight and Government Reform Committee held its fourth hearing related to Operation Fast and Furious, during which Attorney General Holder was questioned at length about possible false statements, and other questionable responses to repeated congressional inquiries, that were made with regard to this operation by the department. As a counterpoint, Representative Cummings noted that his staff had prepared a report that documented that "gun walking" operations had been conducted by the ATF and U.S. Attorney's Arizona Office as part of several Southwest border gun trafficking investigations. In addition to Wide Receiver (2006-2007), this report describes two other Phoenix-based ATF investigations that involved gun walking: Hernandez (2007) and Medrano (2008). Representative Cummings also argued that former Attorney General Michael Mukasey ought to be called before the committee to testify, because the gun-walking tactics had originated during the Administration of President George W. Bush. Also of note, during the hearing, Representative Stephen Lynch questioned the Attorney General about DOJ oversight of several sensitive investigative techniques, including gun walking, leading him to observe the following: The problem here is that this tactic actually authorized—it puts law enforcement, Federal law enforcement in a position of authorizing criminal activity. They become complicit in it. That's very troubling, especially when it results in the death of a very brave, courageous agent or to innocent American civilian citizens. And what is especially troubling is that I believe that you didn't know about it. I believe that you didn't know about it. But that's not a comfort to me. It is unbelievable that either the Phoenix field office or the Boston office of the FBI can authorize criminal activity, not just a mere tactic, but a whole strategy of using that outside of the law, and then having innocent civilians killed. So I actually think that one of the solutions might be for Congress to pass a law that says, if there are those limited occasions where we are going to authorize criminal activity to go on in our society under the cover of law enforcement's authority, then either yourself, as the Attorney General, or the director of the FBI or the head of the ATF has to sign off on it because here, everyone escaped responsibility because of plausible deniability. They can say, I didn't know about it. Attorney General Holder responded: I think that's a legitimate question. I think we don't want to go too far in this sense in that law enforcement will engage in illegal activity in an attempt to solve crimes. We engage in illegal activity when we are—when we buy drugs from people who are selling drugs. We engage in illegal activity when we pay corrupt public officials money, when we go into undercover operations. But we have to have that ability. It is an extremely important law enforcement technique. But I think the point that you raise is a good one, and that is, that the approval to do these kinds of activities can't rest at the line level. There has to be supervisory responsibility. And the question is, where do you draw that line? In addition, Representative Gerald Connolly questioned Attorney General Holder about the need for tougher gun laws. The Attorney General responded that the Obama Administration had consistently favored reinstituting the semiautomatic assault weapons ban. Representative Connolly remarked that there had been no congressional hearing held so far on that topic or any other gun control proposal, yet the Attorney General had been questioned about Operation Fast and Furious on at least six previous occasions before various congressional committees. Chairman Issa countered that some of those hearings were appropriations hearings, at which Operation Fast and Furious was not the predominant issue. He also noted that, to date, the Obama Administration had not submitted any gun control-related legislative proposals to Congress. In turn, Representative Connolly asked the Attorney General if that were so. While the Attorney General did not comment upon any Administration-requested legislative proposals, he replied that he would be happy to submit a proposal to Congress for consideration and added that he thought that an anti-gun trafficking bill ( H.R. 2554 ) introduced by Representative Carolyn Maloney would make a good starting point. ( H.R. 2554 is described below under " Gun Trafficking-Related Proposals in the 112 th Congress ") On February 14, 2012, Chairman Issa sent the Attorney General a follow-up letter, in which he conveyed the committee's increasing frustration with the department. He questioned, among other things, why Patrick Cunningham, the former Criminal Chief of the U.S. Attorney's Office in Arizona, asserted his Fifth Amendment privilege against self-incrimination rather than testify before the committee. Regarding outstanding committee requests for documents and other information related to the operation, Representative Issa emphasized that the committee's subpoena is not optional, and that a failure to produce the requested documents was a violation of federal law. He went on to write that "By any measure, the Department has obstructed and slowed our [the committee's] work." On May 3, 2012, Representative Issa, Chairman of the Committee on Oversight and Government Reform, released a staff briefing paper and draft resolution to cite Attorney General Holder in contempt of Congress for not complying with subpoenas issued by the committee for DOJ documents related to Operation Fast and Furious. The staff briefing paper included the following statement, alleging that "For over a year, the Department has issued false denials, given answers intended to misdirect investigators, sought to intimidate witnesses, unlawfully withheld subpoenaed documents, and waited to be confronted with indisputable evidence before acknowledging uncomfortable facts." On May 10, 2012, during House consideration of the FY2013 CJS Appropriations bill ( H.R. 5326 ), two amendments were passed that also addressed Operation Fast and Furious. Representative Trey Gowdy offered an amendment ( H.Amdt. 1049 ) that reduced the DOJ General Administration account by $1.0 million and applied it to the spending reduction account. Representative Gowdy expressed his dissatisfaction with DOJ officials who have not complied with a committee subpoenas for greater information about Operation Fast and Furious. The Gowdy amendment passed by voice vote. Representatives Jason Chaffetz, Paul Gosar, and Blake Farenthold offered an amendment ( H.Amdt. 1068 ) that would prohibit the expenditure of any funding provided under the bill in contravention to a criminal provision related to fraud and false statements (18 U.S.C. §1001(a)). This amendment was passed on a recorded vote: 381-41 (Roll no. 226). On June 7, 1012, the House Committee on the Judiciary held a DOJ oversight hearing, in which Attorney General Holder was questioned by the chairman and other Members about his and other "high-level officials" knowledge about Operation Fast and Furious, and its underlying tactics that allegedly allowed firearms to be transferred to known and suspected associates of Mexican drug trafficking organizations. On June 11, 2012, the Committee on Oversight and Government Reform issued a press release announcing that it would meet to consider a staff briefing paper and draft resolution (described above) holding Attorney General Eric Holder in contempt of Congress for his failure to produce subpoenaed documents related to Operation Fast and Furious. On June 20, 2012, the committee approved a report ( H.Rept. 112-546 ) and accompanying resolution (unnumbered) to hold Attorney General Holder in contempt of Congress for his failure to produce subpoenaed documents related to Operation Fast and Furious, prompted in part by the President's assertion of executive privilege rather than turning over additional documents to the committee. Following consideration of several amendments, the committee approved the report by a vote of 23-17. On June 28, 2012, the House approved a resolution ( H.Res. 711 ) that accompanied the report described above and cited the Attorney General with contempt by a vote of 255 to 67 (Roll call no. 441). While over 100 Democrats boycotted the vote, the votes taken split down party lines, with the exception of 17 Democrats who voted yea and two Republicans who voted nay. Previously, a motion offered by Representative John Dingell to refer the measure back to committee was defeated by a vote of 172-251 (Roll call no. 440). The House approved a related resolution ( H.Res. 706 ) that authorizes the committee to initiate or intervene in judicial proceedings to enforce certain subpoenas by a vote of 258-95 (Roll call no. 442), with 21 Democrats voting yea and no Republicans voting nay. During floor debate, Members who favored the contempt resolution asserted that this measure is about government transparency and accountability and is a good faith effort to help bring closure to the grieving family of slain Border Patrol Agent Brian Terry. They noted that DOJ has provided less than 8,000 of the 140,000 pages of documents that it has handed over to its Inspector General regarding Operation Fast and Furious. Moreover, they underscored that it took 10 months for DOJ to concede that guns had been allowed to "walk" across the border, and that DOJ did so only after being confronted with a mass of internal documents provided to the committee largely by whistleblowers. They argued further that the Administration would not have asserted executive privilege unless there was something to hide. They also argued that mounting evidence supports the argument that high-level Administration officials purposefully embraced this risky and highly inappropriate investigative technique—gun walking—in an ill-fated attempt to build a major gun trafficking case that would net a cartel kingpin, a high-level plaza boss, or his enforcers. Members who opposed the contempt resolution countered that it is nothing more than "election-year political theater" and a "witch hunt," and that Attorney General Holder was being unjustly disparaged. They countered that the Attorney General has been unprecedentedly open with the committee by providing over 7,600 pages of documents and has been questioned at length about Operation Fast and Furious at no less than nine congressional hearings. Furthermore, they asserted that the Committee on Oversight and Government Reform's majority did not honor any requests made by the minority for witnesses or hearings related to "gun walking" and/or "gun trafficking." They submitted that a bipartisan, impartial investigation would have also examined the investigative techniques employed during the previous Administration, which they contend are examples of gun walking that possibly led to Operation Fast and Furious. Opponents also noted for the record that the majority has not considered any proposals to strengthen gun laws and address the criminal appetite for firearms in Mexico—particularly for assault weapons—that have been illegally acquired from U.S. civilian gun markets. They further underscored that the political nature of the contempt vote is borne out by the fact that, in their view, the committee's majority rushed to judgment by not holding a single hearing to examine possible merits of the President's assertion of executive privilege. On July 31, 2012, Representative Issa and Senator Grassley released Part I of their final joint staff report entitled Fast and Furious: The Anatomy of a Failed Operation . The first of three parts, Part I chronicles how the ATF Phoenix Field Division and the U.S. Attorney's Office for the District of Arizona adopted controversial "gun walking" tactics that—in Representative Issa and Senator Grassley's estimation—seriously compromised public safety and likely contributed to violent crime and death on both sides of the international border. Part I, moreover, examines the performance of several ATF supervisory officials in carrying out related responsibilities. It also includes allegations that the Arizona U.S. Attorney's Office misinterpreted 9 th Circuit case law regarding firearms straw purchases and, consequently, failed to indict suspects in a timely manner, when arguably ATF agents had sufficient probable cause to arrest them. While it is clear in hindsight that hundreds of firearms had been trafficked to Mexico long before the death of Border Patrol Agent Terry, no indictments were filed and no arrests were made until after this tragic case. (As described below, Part II of this final report has been released, and Part III is in process.) On September 20, 2012, the Committee on Oversight and Government Reform held a hearing on a report by the DOJ Office of Inspector General (OIG) entitled A Review of ATF's Operation Fast and Furious and Related Matters . In this report, the OIG found that high-ranking, supervisory officials within ATF headquarters and the Phoenix Field Division, as well as the U.S. Attorney's Office for the District of Arizona and Main Justice (DOJ headquarters), were responsible for misguided strategies and tactics, errors in judgment, and management failures related to both Operation Wide Receiver and Operation Fast and Furious. For example, during both operations, ATF supervisory special agents chose not to confront suspected straw purchasers and deliberately deferred enforcement actions, despite sufficient evidence of illegal firearms transfers that would have normally prompted some form of legal intervention (interview, arrest, and gun seizures), as part of a wider strategy to identify and dismantle an entire gun trafficking organization. In so doing, the OIG concluded that those agents had not adequately considered the implications that the deferred enforcement strategy—otherwise known as "gun walking"—had on public safety on either side of the border. The OIG further concluded that ATF headquarters had failed to conduct meaningful oversight, despite the risks to public safety and the sensitive, international implications of both operations. During the investigative phase of Operation Wide Receiver, the OIG found that neither the U.S. Attorney's Office for the District of Arizona nor the DOJ Criminal Division was fully informed of, and, consequently, did not agree to, the shift in the ATF Phoenix field office's strategy that allowed guns to "walk" during the operational phases of that operation. In contrast, during Operation Fast and Furious, the U.S. Attorney's Office was informed of, and agreed to, ATF's shift in strategy that, again, broke with the traditional approach of confronting suspected straw purchasers, when there was sufficient evidence of illegal firearm transfers. In March and April 2010, as Operation Fast and Furious was reaching its investigative zenith, ATF applied for and was granted multiple wiretap orders. Those wiretap applications were reviewed and approved by the DOJ Criminal Division. And, according to the OIG, those wiretap applications included affidavits that should have raised "red flags" for Criminal Division reviewers, because those red flags indicated that guns had walked, a practice that posed significant risks to public safety. However, Criminal Division reviewers—Deputy Assistant Attorney Generals (DAAGs)—failed to pick up on those red flags. According to the OIG, three of the five DAAGs who reviewed Operation Fast and Furious wiretaps indicated that they focused their attention on whether sufficient legal grounds were demonstrated in an application to support a wiretap, as opposed to evaluating the public safety implications of investigative procedures employed in the earlier phases of an operation. As a matter of practice, moreover, they only read the agent's affidavit, when supporting departmental memoranda indicated that there were concerns about the underlying investigation. During the same time frame, March and April 2010, one DAAG also reviewed prosecutorial memoranda prepared by a DOJ trial attorney as part of the process of indicting several Operation Wide Receiver suspects. In both memoranda, the trial attorney noted, "[T]here are things about this case that could be embarrassing to ATF,' including the fact that that guns 'were sold and not accounted for' and likely 'are in Mexico killing people." Based on those memoranda, the DAAG and several others surmised that guns had indeed "walked." In turn, on April 19, 2010, they briefed the Assistant Attorney General of the Criminal Division, informing him of the "gun walking" and that there were public safety consequences that potentially could be a "black eye" for ATF. Nevertheless, connections between gun walking and the two Phoenix-based operations—Operation Wide Receiver and Operation Fast and Furious—were reportedly not made by those officials in the Criminal Division, even though the division was at that very time in the process of reviewing several wiretap applications for the latter operation. Despite the international sensitivity and potential public safety risks, the OIG determined that former Attorney General Mukasey was never made aware of the potential flaws (gun walking) in Operation Wide Receiver by his subordinates, although he was briefed about plans to conduct controlled deliveries with the cooperation of Mexican law enforcement (which ultimately proved unfruitful). Nor was Attorney General Holder made aware of the potential flaws in Operation Fast and Furious by his subordinates during the operational phases of that investigation. On October 29, 2012, Representative Issa and Senator Grassley released Part II of their final joint staff report entitled Fast and Furious: The Anatomy of a Failed Operation . The second of three parts, Part II examines the interaction of senior DOJ officials in the Criminal Division and the Office of the Deputy Attorney General with ATF headquarters, the Phoenix Field Division, and the Arizona U.S. Attorney's Office. To be released later, Part III is to examine alleged obstruction of the Committee on Oversight and Government Reform's investigation of Operation Fast and Furious by senior DOJ officials, including the Attorney General himself. Although the United States does not maintain a registry of firearms or firearm owners (except for machineguns and destructive devices), as described above, ATF and federally licensed gun dealers maintain a decentralized system of transaction records, through which ATF can sometimes trace a firearm from its manufacturer or importer to its first private owner of record. Over the years, successful firearm traces have generated leads in criminal investigations and have generated data that illustrate wider trafficking trends and patterns. To support Project Gunrunner, ATF developed and deployed a Spanish-language version of its eTrace program for Mexican authorities to submit trace requests electronically to the United States. However, it should be underscored that not all firearms seized by Mexican authorities are traced, and trace submissions are more likely to be made for firearms believed to have originated in the United States. Problems persist with regard to the quality, quantity, and timeliness of firearms trace requests made by Mexican authorities and resultant data. Data on some firearms, for example, were submitted several times. If previous tracing trends hold true, about a quarter of trace requests would have failed because the firearm make, model, or serial number was erroneously entered into the system. It is also probable that ATF was only able to identify the first private firearm owner of record or other possible sources in the United States in about a quarter of trace requests. Nonetheless, trace data have proved to be a useful indicator of trafficking trends with regard to the types of firearms being trafficked, their possible sources, and how recently trafficked firearms were diverted from legal to illegal channels of commerce. Along these lines, GAO recommended that the Attorney General should direct ATF to regularly update its reporting on aggregate firearms trace data and trends in its June 2009 Project Gunrunner report. GAO also reported that ATF had traced more than 23,159 firearms from FY2004 through FY2008 for Mexican authorities. Approximately 86.6% of those firearms were determined to have originated in the United States. For the last three years (FY2006 through FY2008) of that study period, over 90% of firearms recovered in Mexico and traced by ATF were found to have originated in the United States. Of those firearms, 68% were manufactured in the United States and 19% were manufactured abroad and imported into the United States. About 70% of traced firearms were found to have come from Texas (39%), California (20%), and Arizona (10%). It is notable, however, that Mexican authorities had submitted only a fraction of the firearms that had been recovered in Mexico. In FY2008, for example, information on only about 7,200 of the nearly 30,000 firearms recovered by the Mexican Attorney General's office was submitted to ATF for tracing. In May 2010, Mexican President Felipe Calderon addressed a joint session of Congress and revealed that Mexican authorities had seized 75,000 firearms, of which 80% had been traced back to the United States. According to ATF, this higher than previously reported number of traces reflected a batch submission of trace requests made by the Mexican Attorney General that changed the trace totals for previous years, which are reported by year of recovery. In April 2011, the U.S. Embassy in Mexico City reported that ATF processed 78,194 trace requests for Mexican authorities from FY2007 through FY2010. Based on previous trace data, a large percentage of these trace requests would have involved firearms that were either manufactured in or imported into the United States for civilian markets, but such a percentage was not released by the Embassy. However, a significantly smaller percentage would have been successfully traced to the first private owner of record. Noticeably absent were any data on firearms with a short "time-to-recovery," that is, the time interval between the initial retail sale of a firearm by a federally licensed gun dealer to a private person and the firearm's recovery by law enforcement. A short time-to-recovery is one possible indicator that the firearm had been trafficked or stolen. Nor did the Embassy press release include any data on type, make, model, and caliber of the most frequently traced firearms. For trend analysis, such data would have been useful for total firearms traced, as well as for different time periods. In June 2011, ATF released limited trace data to the Senate Caucus on International Narcotics Control. The Senate Caucus reported that ATF processed 29,284 trace requests on firearms that were recovered by Mexican authorities in calendar years 2009 and 2010. Of those firearms, 20,504 (70%) were either manufactured in or imported into the United States. ATF did not provide any data on successful traces that resulted in identifying the first private owner of record, the time-to-recovery of traced firearms, or the most frequently traced firearms by type, make, model, and caliber. These omissions, in part, prompted Senator Grassley to write then ATF Acting Director Kenneth Melson with "questions about why ATF provided some select information, but not a more detailed analysis that would help Congress, and the American people, better understand the causes and sources of illegal firearms in Mexico." Senator Grassley expressed his concern that press accounts that focused exclusively on U.S. manufactured or imported firearms as a percentage of total trace requests submitted by Mexican authorities were misleading. Senator Grassley also cited an article that reported that a significant quantity of firearms that had been recovered by or turned over to the Mexican Army, as opposed to the Mexican Attorney General, had not been submitted to ATF for tracing. With the limited release of trace data, it became and probably remains less clear whether the flow of illegal guns consists of an "ant run" that has trickled across the border over the decades as individuals or small, independent organizations have smuggled firearms into Mexico for a variety of purposes, or an "iron river of guns" that has surged in recent years as Mexican DTOs have sought to arm themselves with firearms that are commonly available on the U.S. civilian market. When available, trace data suggest that the majority of firearms submitted for tracing originated in the United States, given that these firearms were either embossed with a U.S. manufacturer or importer's stamp. However, it is probable that a much smaller percentage of these firearms were successfully traced to the first U.S. private owner of record. More importantly, several substantive methodological limitations preclude using trace data as a proxy for the larger population of crime guns in Mexico or the United States. While the United States could be the largest source of crime guns in Mexico, trace data do not conclusively establish that assertion as fact. In addition, another consideration could be the possibility that the 78,000 firearms that were submitted by Mexico's Attorney General for tracing represent a proverbial "pig in the python." Unknown, but possibly significant, percentages of these firearms could have been illegally smuggled into Mexico over decades. Moreover, while there is little evidence to suggest that Mexican DTOs are acquiring military grade firearms directly from sources within the United States, these organizations are arguably capable of acquiring such firearms and other military armaments (e.g., recoilless rifles, rocket launchers, and grenades) from other illicit, international sources given the profitability of the illegal drug trade. In the Consolidated and Further Continuing Appropriations Act, 2012 ( P.L. 112-55 ; H.R. 2112 ), conferees included report language ( H.Rept. 112-284 , p. 240) that requires ATF to provide the Committees on Appropriations with annual data on the total number of firearms recovered by the government of Mexico, and of those, the number for which an ATF trace is attempted, the number successfully traced and the number determined to be manufactured in or imported into the United States prior to being recovered in Mexico. On April 26, 2012, in compliance with the provision described above, ATF released revised but limited trace data for calendar years 2007 through 2011. ATF underscored that the government of Mexico did not and does not provide it with data on the total number of firearms seized in that country, nor did the agency make any attempt to estimate the number of firearms seized in that country. Nevertheless, of 99,691 firearms submitted by Mexican authorities to ATF for tracing for those calendar years (2007-2011), 68,161 (68.3%) were considered to be U.S.-sourced, in that those firearms were either originally manufactured in or imported into the United States. Of those U.S.-sourced firearms, 27,825 (27.9%) were traced back to the initial purchaser, or the first retail purchaser of record. And, another 1,461 (1.4%) of those U.S.-sourced firearms were legitimately exported to Mexico from a U.S. gun dealer to a Mexican law enforcement or government agency. While ATF did not provide any data on the make, model, or caliber of (1) U.S.-sourced firearms, (2) firearms traced back to the initial purchaser, or (3) traced firearms with a short time-to-recovery, it did provide breakdowns by type of firearm. ATF noted that the percentage of firearms submitted for tracing that were rifles had shifted markedly during those years. For example, for 2007 rifles accounted for 28.2% of firearms submitted for tracing. That percentage increased to 58.6% for 2010 and decreased somewhat to 43.3% for 2011. The 112 th Congress has revisited the issue of veterans, mental incompetency, and firearms eligibility. On July 22, 2011, the House Committee on Veterans' Affairs Subcommittee on Disability and Memorials marked up and reported a veterans' benefits bill ( H.R. 2349 ). During markup, Representative Denny Rehberg successfully offered an amendment to the bill that would prohibit the Department of Veterans Affairs (VA) from determining a beneficiary to be mentally incompetent for the purposes of gun control, unless such a determination were made by a judge, magistrate, or other judicial authority based upon a finding that the beneficiary posed a danger to himself or others. As described below, similar amendments were considered in the 110 th and 111 th Congresses. On October 6, 2011, the full committee approved this bill. On October 11, 2011, the House passed H.R. 2349 by a voice vote. It includes the Rehberg amendment, which reflects a bill ( H.R. 1898 ) that Representative Rehberg previously introduced on May 13, 2011. Senator Burr introduced a similar bill ( S. 1707 ) on October 13, 2011. Proponents of the Veterans Second Amendment Protection Act, like the NRA, view the current VA policy as placing an unwarranted indignity on men and women, in many cases at the end of their lives, who have previously served their country honorably in the Armed Forces. Arguably, some of those veterans referred by the VA to the FBI as having been "adjudicated as mental defective" may have only been mentally incapacitated due to age or other related infirmities, as opposed to suffering from a severe mental illness or disability that caused them to behave in a threatening or dangerous manner. Opponents of the proposal, like the Brady Campaign, have countered that the VA has demonstrated due diligence by complying with the law and, by doing so, has increased public safety. They could argue further that the VA's current policy does not diminish national recognition of those veterans' honorable service; instead, it has been implemented to protect those veterans and others from the harm that might occur if they acquired a firearm and used it improperly. For a fuller discussion of underlying issues, see Appendix A . The ATF enforces federal criminal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. ATF works independently and through partnerships with industry groups; international, state and local governments; and other federal agencies to investigate and reduce crime involving firearms and explosives, acts of arson, and illegal trafficking of alcohol and tobacco products. Congress usually funds ATF in the Commerce-Justice-Science (CJS) appropriations bill. In the absence of an enacted bill for FY2012, Congress passed a continuing resolution ( P.L. 112-36 ) that funded ATF at its FY2011 level (less 1.503%) through November 18, 2011. As discussed further below, Congress passed full-year CJS appropriations in the Consolidated and Further Continuing Appropriations Act, 2012 ( H.R. 2112 ; H.Rept. 112-284 ), which the President signed into law ( P.L. 112-55 ) on November 18, 2011. For FY2012, this act provided ATF with $1.152 billion, or nearly $39.5 million more than the previous year. In part, the increased appropriation for FY2012 reflects that the FY2010/FY2011 Southwest border supplemental appropriation was annualized in that year's appropriation. As reflected in Figure 4 , if the $37.5 million FY2010/FY2011 Southwest border supplemental were included in ATF's FY2011 appropriation, the FY2012 appropriation would reflect a considerably smaller increase, $2.0 million. For FY2013, the Administration has requested $1.153 billion for ATF. Although this amount reflects a net increase of about $1.3 million, the FY2013 request includes no new budget enhancements for ATF. Instead, it anticipates over $26.9 million in savings or other offsets in either contract reductions ($24.8 million) or information technology savings ($2.1 million). As Figure 5 shows, the largest portion ($875.5 million, or 76%) of the requested appropriation would be allocated to the firearms budget decision unit. The second-largest portion ($253.7 million, or 22%) would be allocated to the arson and explosives budget decision unit. The remainder ($23.1 million, or 2%) would be allocated to the alcohol and tobacco diversion budget decision unit. By percentage, these allocations are comparable to those reported by ATF to correspond with the agency's FY2012 enacted appropriation. Also of significance, the Administration's request includes proposals to strip out futurity language that was attached to two ATF appropriations riders during the FY2012 appropriations cycle making those riders permanent law. The first rider prohibits ATF from consolidating or centralizing within DOJ the records of firearms acquisitions and dispositions (or any portion thereof) that federally licensed gun dealers are required by law to maintain. When gun dealers go out of business, however, those records are forwarded to ATF. And, the second rider prohibits ATF from electronically searching those out-of-business records by name or any personal identification code. For evidentiary purposes, those records are maintained on microform. For retrieval and storage purposes, out-of-business records are maintained in a digital format, so those records may be searched electronically by firearm serial number, but not by owner (first retail buyer of record). In addition, the Administration's request would strip out futurity language (inserted for FY2008 and every year thereafter) included in a controversial ATF appropriations rider known as the Tiahrt amendment. For a fuller discussion of underlying issues, see Appendix A . On April 19, 2012, the Senate Committee on Appropriations reported an FY2013 funding measure ( S. 2323 ) that would provide ATF with the same amount as requested by the Administration ($1.153 billion). The Senate bill, however, does not follow the Administration's request to strip the futurity language out of ATF appropriations riders that were made permanent in the previous year's appropriations act ( P.L. 112-55 ). On the one hand, Senate report language ( S.Rept. 112-158 , p. 73) noted that Operation Fast and Furious was only one part of ATF's Southwest border operations to reduce illegal gun trafficking to Mexico. On the other hand, language was included in the departmental general provisions that would continue to prohibit the expenditure of any funding under the bill from being used to facilitate the transfer of an operable firearm to a known or suspected agent of a drug cartel (§217). Another provision would continue to prohibit ATF from issuing regulations that would prohibit the importation of certain types of shotguns (§538). Yet another provision, which may have implications for ATF, prohibits any U.S. Attorney from holding multiple jobs outside of the scope of a U.S. Attorney's professional duty (§213). As described above, the U.S. Attorney for the District of Minnesota, B. Todd Jones, is currently serving as the interim acting ATF Director. On April 26, 2012, the House Committee on Appropriations approved a similar FY2013 funding measure ( H.R. 5326 ) that would also provide the same amount for ATF ($1.153 billion). This measure also includes provisions that are similar to those included in the Senate-reported bill described above (§§217, 536, and 213). In addition, the House measure includes futurity language in three additional long-standing prohibitions (riders) included in the ATF salaries and expenses appropriations language. These provisions would prohibit ATF from altering the regulatory definition of "curios and relics," requiring federally licensed gun dealers to conduct physical inventories," or revoking a federal firearms license for lack of business activity. In addition, during House full committee markup, Representative Rehberg successfully offered an amendment that would prohibit ATF from requiring multiple long gun sales reports. As described below, a similar Rehberg-sponsored amendment was included in the FY2012 House bill, but it was not included in an enacted bill. On May 10, 2012, the House passed H.R. 5326 , amended. Two amendments reduced ATF funding for FY2013 to $1.151 billion, or $537,000 less than the FY2012 appropriation. For FY2012, the Administration requested $1.147 billion for ATF. This amount would have funded 5,147 FTE positions and 5,181 permanent positions. Although it would have provided a $34.8 million increase (3.1%) over ATF's enacted FY2011 appropriation, nearly all of this increase would have been for increases to the agency's base budget, including the annualized $37.5 million Southwest border supplemental appropriation. Correspondingly, the Administration anticipated offsets and savings of $27.3 million, as well as a program increase of $1.5 million as a budget enhancement for ATF to participate in a DOJ-wide initiative to increase law enforcement electronic surveillance capabilities nationally. Reductions included $10.0 million in the National Integrated Ballistic Information Network (NIBIN), $4.0 million in reduced training opportunities for state and local law enforcement, and $1.0 in the alcohol and tobacco program. According to the ATF, the remaining $12.3 million in reductions would be sustained through other administrative efficiencies and cost reductions. As noted above and described below, Congress appropriated ATF $1.152 billion for FY2012. Figure 6 shows budget decision unit allocations, as proposed in the FY2012 budget request and as reported in the FY2013 budget request. Under the request, the firearms compliance and investigations decision unit was to be allocated the lion's share, 75%, of appropriated funding. Under the enacted appropriation, it was allocated 76%. The arson and explosives investigations decision unit and the alcohol and tobacco diversion decision unit were to be allocated 23% and 2%, respectively, of the requested appropriation. Under the enacted appropriation, however, the arson and explosives investigations decision unit was allocated 22%. On July 20, 2011, the House Committee reported an FY2012 CJS appropriations bill ( H.R. 2596 ; H.Rept. 112-169 ). This measure would have provided ATF with $1.111 billion, $1.1 million (0.1%) less than the FY2011 enacted amount and $35.9 million (3.1%) less than the Administration's FY2012 request. In full committee markup, the bill was amended with two firearms-related amendments. One, described above, would have prohibited ATF from implementing an OMB-approved information collection initiative, under which federally licensed gun dealers in Southwest border states are required to submit multiple sales reports for certain semiautomatic rifles to ATF. As discussed below, this provision was not included in the enacted FY2012 appropriation. The other would prohibit ATF from implementing additional restrictions on the importation of certain shotguns that include certain features (e.g., pistol grips, folding or collapsible stocks, laser sights, and the ability to accept large capacity ammunition feeding devices) that ATF has determined to be non-sporting. This prohibition was included in the enacted FY2012 appropriation. Moreover, H.R. 2596 included language of "futurity" in several firearms-related riders. As described below, similar language was included in three provisions in the enacted appropriation. On September 15, 2011, the Senate Committee on Appropriations reported an FY2012 CJS appropriations bill ( S. 1572 ; S.Rept. 112-78 ) that would have provided $1.09 billion for ATF, $22.3 million (2.0%) less than the FY2011-enacted amount, $57 million (5.0%) less than the Administration's request of $1.147 billion, and $21.1 million (1.9%) less than the House mark. The Senate folded S. 1572 into a Minibus appropriations bill ( H.R. 2112 ) and passed this measure. In addition to the Senate-passed Cornyn amendment ( S.Amdt. 775 , discussed above), several other firearms-related amendments were offered but not voted upon. For example, Senators Mark Begich and Orrin Hatch offered an amendment to broaden the circumstances under which handguns could be transferred legally in interstate commerce ( S.Amdt. 786 ). Senator Dean Heller offered an amendment to prohibit ATF from implementing its Southwest border multiple rifle sales reporting requirement ( S.Amdt. 843 ). Similar language, as described above, has been included in the House-reported bill ( H.R. 2596 ). Senator Hatch also offered three amendments to include language of "futurity" into firearms-related riders accompanying the ATF appropriation ( S.Amdt. 745 , S.Amdt. 770 , and S.Amdt. 875 ). The House-reported and -passed bill included similar futurity language. Senator Jon Tester offered an amendment that would overturn an ATF ruling that persons who have medical marijuana prescriptions are ineligible to possess firearms ( S.Amdt. 882 ). On November 14, 2011, House and Senate conferees reported H.R. 2112 ( H.Rept. 112-284 ), which has been enacted ( P.L. 112-55 ). It provides ATF with $1.152 billion for FY2012. This amount is $39.5 million (3.5%) greater than the FY2011 enacted amount, $4.7 million (0.4%) greater that the FY2012 request, $40.6 million (3.7%) greater than the House-reported amount, and $61.7 million (5.7%) greater than Senate-passed amount. As discussed above, this act includes revised language that reflects the Cornyn amendment. This provision (§219) prohibits any federal law enforcement officer from facilitating the delivery of an operable firearm to an individual known or suspected of being connected to a drug cartel. It also includes "futurity" language that makes three long-standing annual appropriation riders permanent law. For FY2012 and every year thereafter, these riders prohibit DOJ from consolidating or centralizing any records maintained by federally licensed gun dealers related to the acquisition and disposition of firearms; ATF from electronically retrieving firearm transfer records that have been submitted to ATF, when federally licensed gun dealers go out business, by searching those out-of-business records by any individual's name or other personal identification code; and the FBI from charging a fee in connection with a Brady background check for firearms transfer and possession eligibility, and requires further that the FBI destroy all Brady background check records related to approved firearm transfer records within 24 hours (§511). In addition, the act includes a provision (§541) that is similar to House language that would prevent ATF from implementing additional restrictions on the importation of certain shotguns, as well as report language requiring ATF to report to the House and Senate Appropriations Committees annually on firearm trace requests processed for Mexican authorities. On May 12, 2011, the House Judiciary Committee considered a bill, the FISA Sunsets Reauthorization Act of 2011 ( H.R. 1800 ), to extend certain expiring provisions of the Foreign Intelligence Surveillance Act (FISA). In full committee markup, Representative Mike Quigley offered an amendment that would have allowed the Attorney General to deny a firearms transfer to any person about whom the Attorney General gathered information during the course of a national security investigation (under FISA), if that information generated a "reasonable belief" that the firearm(s) might be used by the prospective transferee in terrorism-related conduct. This amendment was defeated by a vote of 11 to 21. During Senate consideration of similar bill, the PATRIOT Sunsets Extension Act of 2011 ( S. 1038 and S. 990 ), Senator Rand Paul offered several versions of an amendment ( S.Amdt. 328 , S.Amdt. 363 , and S.Amdt. 373 ) that would have exempted certain "firearms records" from the business records that can be secretly obtained by FBI agents during a FISA national security investigation (§215 of the USA PATRIOT Act, as amended). On May 26, 2011, during consideration of S. 990 , the Senate tabled S.Amdt. 363 by a vote of 85 to 10. Therefore, the amendment was not included in the enacted legislation ( P.L. 112-14 ). Following the Tucson shootings, issues were raised about the shooter's mental illness and drug use, as well as his use of large capacity ammunition feeding devices (LCAFDs). Another issue that was raised was banning firearms within the proximity of certain high-level federal officials. As described above, persons who have been "adjudicated mental defective" or who are "unlawful users of or addicted to any controlled substance" are prohibited from possessing a firearm or having one transferred to them. The FBI maintains files on those persons as part of the NICS Index. According to the FBI, as of December 31, 2010, the NICS Index included 1,107,758 records on individuals who had been adjudicated mental defective. Although the NICS Index included 2,092 records on individuals who are known to be drug users and addicts, arrest records for drug offenses are also contained in the Interstate Identification Index (III). Following the Virginia Tech mass shooting on April 16, 2007, Congress passed the NICS Improvement Amendments Act of 2007 (NIAA; P.L. 110-180 ), a law that established incentives to prompt state, local, and tribal governments to transfer mental defective files to the FBI for inclusion in the NICS Index. Although this act focused on mentally ill persons who were adjudicated to be a threat to themselves or others, it did not focus on drug users. As a consequence, Congress could revisit the NIAA to increase incentives for state, local, and tribal governments to transfer records on both categories of prohibited persons. Along these lines, Mayors Against Illegal Guns (MAIG) released a "plan to prevent further tragedies" like Tucson. The MAIG plan calls for the following steps: fully funding the NICS Improvement Amendments Act ( P.L. 110-180 ) to help agencies and states cover the costs of gathering records on prohibited persons and making them electronically available to the FBI; providing larger cuts (up to 50%) to a wider array of federal law enforcement assistance grant programs for not providing such records than what is currently provided for under P.L. 110-180 ; requiring every federal agency to certify to the Attorney General twice a year that all disqualifying records, including those related to drug use or addiction, have been electronically provided to the FBI; clarifying and expanding regulatory definitions related to mental health and drug use; and safeguarding the rights of people who are listed in databases queried by NICS. Senator Charles Schumer introduced a bill that would amend P.L. 110-180 to advance certain deadlines and apply deeper cuts to a wider array of federal law enforcement assistance grant programs ( S. 436 ). Representative Carolyn McCarthy introduced an identical measure ( H.R. 1781 ). Representatives McCarthy and John Dingell have reportedly submitted a request to GAO for an assessment of weaknesses in firearms-related background check procedures. On November 15, 2011, the Senate Committee on the Judiciary's Subcommittee on Crime and Terrorism held a hearing on the Fix Gun Checks Act of 2011 ( S. 436 / H.R. 1781 ). The Tucson shooter was reportedly armed with a 9mm Glock 19 semiautomatic pistol loaded with 31 rounds in a 33-round extended magazine. This pistol is normally equipped with a 15-round magazine, two of which the shooter also had on his person. He also had another 33-round extended magazine. He managed to fire at least 31 shots, emptying a single magazine. He killed 6 people and wounded another 13, including Representative Giffords. Three bystanders, one of whom was wounded, managed to subdue the shooter as he attempted to reload his second 30-plus round magazine. Representative McCarthy has introduced a bill to reinstate a ban on magazines that are capable of accommodating more than 10 rounds ( H.R. 308 ). Such a ban was in effect from September 13, 1994, through September 13, 2004, as part of the larger semiautomatic assault weapons ban (described below). Senator Frank Lautenberg has introduced a similar bill ( S. 32 ). Representatives Laura Richardson and Peter King have introduced bills ( H.R. 367 and H.R. 496 ) that would prohibit most people from carrying a firearm within 1,000 feet of certain high-level federal officials while those officials were holding a public event, campaigning for office, or otherwise acting in an official capacity. Both bills arguably are modeled on the Gun Free School Zone Act of 1990 ( P.L. 101-647 ), which prohibits firearm possession in a school zone (on the campus of a public or private school or within 1,000 feet of the grounds). Other salient firearms-related issues that continue to receive attention include (1) screening firearms background check applicants against terrorist watch lists; (2) combating gun trafficking and straw purchases; (3) reforming the regulation of federally licensed gun dealers; (4) requiring background checks for private firearms transfers at gun shows; (5) more-strictly regulating certain firearms previously defined in statute as "semiautomatic assault weapons"; and (6) banning or requiring the registration of certain long-range .50 caliber rifles, which are commonly referred to as "sniper" rifles. On November 5, 2009, U.S. Army Major Nidal Malik Hasan allegedly shot 13 persons to death and wounded over 30 at Fort Hood, TX. Prior to the shootings, Hasan had corresponded by email with a radical Muslim imam, Anwar al-Aulaqi, who U.S. authorities had long suspected of having substantial ties to al-Qaeda. Although FBI counterterrorism agents were aware of Hasan's communications with al-Aulaqi, it was unclear at what level Hasan was being scrutinized by the FBI. If he had been the subject of a full counterterrorism investigation, FBI policy would have required that he be watch-listed. Depending upon the sequence of events, had Hasan been watch-listed, there is a possibility that his purchase of a pistol and the required Brady background check could have alerted FBI counterterrorism agents to that transfer, and they might have been able to take steps that would have prevented the shootings. The Fort Hood shootings renewed interest in the U.S. government's use of terrorist watch lists for firearms- and explosives-related background checks. Before February 2004, terrorist watch list checks were not part of the Brady background check process because being a suspected or known terrorist was and is not a disqualifying factor for firearms transfer/possession eligibility under federal or state law. As is the case today, to determine such eligibility, the National Instant Criminal Background Checks System (NICS) queries three databases maintained by the FBI. They include the National Crime Information Center (NCIC), the Interstate Identification Index (III), and the NICS index. The NICS index includes disqualifying records on persons that would not be included in the III or NCIC, for example, persons dishonorably discharged from the Armed Forces, adjudicated as a mental defective, or convicted of certain serious immigration violations, among others. The III contains criminal history records for persons arrested and convicted of felonies and certain serious misdemeanors. The NCIC contains law enforcement files on fugitives and persons subject to restraining orders, among other persons. NCIC also contains a file known as the Violent Gang and Terrorist Organization File (VGTOF). Prior to the 9/11 attacks, this file included limited information on known or suspected terrorists and gang members. NICS examiners were not informed of VGTOF hits, as such information was not considered relevant to determining firearms transfer/possession eligibility. In November 2002, DOJ initiated a NICS transaction audit to determine whether prohibited aliens (non-citizens) were being improperly transferred firearms. As part of this audit, NICS procedures were changed so that NICS examiners would be informed of VGTOF hits. Under Homeland Security Presidential Directive 6, moreover, the Administration initiated a broad-based review of the use of watch lists, among other terrorist identification and screening mechanisms. In September 2003, the FBI-administered Terrorist Screening Center (TSC) was established and work was begun to improve and merge several watch lists maintained by the U.S. government into a consolidated Terrorist Screening Database (TSDB). Following those efforts, TSDB lookout records from other agency watch lists were downloaded into VGTOF. By May 2007, VGTOF contained more than 100,000 records. In 2009, the FBI created a separate file for "known and appropriately suspected terrorists (KST)" by splitting VGTOF into separate gang and terrorist files. As of March 31, 2010, the KST included 278,219 terrorist watch list records. In November 2003, DOJ directed the FBI to revise its NICS procedures to include measures to screen prospective firearms transferees and permittees against terrorist watch list records (KST, formerly VGTOF). Effective February 2004, the Brady background check process was altered to include a terrorist watch list check and to alert NICS staff when a prospective firearms transferee or permit applicant is potentially identified as a known or suspected terrorist. In the case of a watch list hit, NICS sends a delayed transfer (for up to three business days) response to the querying FFL or POC. If NICS examiners cannot find a prohibiting factor, they immediately contact the TSC and FBI Counterterrorism Division (CTD) to (1) validate the hit and (2) allow FBI Special Agents in the field to check for possible prohibiting factors. If no prohibiting factors are uncovered within the three-day period, a firearms dealer may proceed with the transaction at his discretion, but FBI counterterrorism officials continue to work the case for up to 90 days, during which time the background check is considered to be in an "open" status. If and when a transaction is approved, all identifying information submitted by or on behalf of the transferee is to be destroyed within 24 hours. At the end of the 90-day period, if no prohibiting factor has been reported to the NICS Center, all records related to the NICS transaction are destroyed except for the NICS Transaction Number (NTN) and date of the transaction. If the FFL proceeded with the transaction at his discretion following three business days and the applicant is found to be disqualified, then the ATF is to be notified and a firearms retrieval action is to be initiated in coordination with a JTTF. When Congress passed the Brady Act in 1994, the use of terrorist watch lists during firearms-related background checks was not considered. As a consequence, the Attorney General has no specific statutory authority to screen prospective gun buyers against terrorist watch list records. Nevertheless, the FBI adopted procedures to do this because being on such a list suggests that there may be an underlying factor that would bar a prospective background check applicant from possessing a firearm. Hence, a possible issue for Congress could be whether terrorist watch list checks should be incorporated statutorily into the Brady background checks for firearms. In addition, a proviso attached to the FY2005 DOJ annual appropriation and every year thereafter requires that NICS-generated approved firearms transaction records be destroyed within 24 hours. Nevertheless, as described above, the FBI has been retaining approved firearms transaction records for up to 90 days, if those records are related to terrorist watch list hits. Furthermore, information on the subjects of those checks are passed on to FBI investigators in the field. While the NICS records are eventually destroyed for non-denials, it is unknown what happens to the information generated by NICS-related terrorist watch list hits that are passed on to the FBI CTD and Special Agents in the field, who are usually assigned to Joint Terrorism Task Forces. Information about those firearms transactions is possibly recorded and stored electronically in the FBI's investigative case files. In the Brady Act, however, there is a provision that prohibits the (1) transfer of any Brady system record to any other federal or state agency, or (2) the use of the Brady system as a national registry of firearms or firearms owners. In light of the former prohibition, a second issue for Congress could be whether to grant the FBI greater authority to maintain and access NICS records for the purposes of counterterrorism, or should existing statutory limitations that were arguably designed to prevent the maintenance of and access to such records be strengthened. In light of the first two issues, it follows that a third issue for Congress could be whether the Attorney General should be given explicit authority to deny firearms transfers to watch-listed persons on a case-by-case basis, or should all known or suspected terrorists be statutorily prohibited from possessing firearms and explosives. As described above, although watch-listed persons may be the subject of ongoing foreign intelligence, national security, and criminal investigations, they may not be persons prohibited from possessing firearms or explosives under current law. As subsequent events would indicate, DOJ concluded that it was limited under current law in its authority to use terrorist watch lists as part of the background check processes to deny firearms and explosives transfers to known or suspected terrorists. In hearings before the House Committee on the Judiciary, Attorney General Alberto Gonzales was questioned several times by Members of Congress about NICS procedures and terrorist watch list hits. Representative Chris Van Hollen: "Does it make sense to you that we stop a person from boarding the airline in order to protect the public safety, [but] that an individual can turn around, get in their car, go to the local gun shop and buy 20 semiautomatic assault weapons?" Attorney General Gonzales: "I think we should be doing everything we can to ensure that people [who] are in fact terrorists shouldn't have weapons in this country, the truth of the matter is. But unless they are disabled [disqualified] from having a weapon under the statute there's not much that we can do other than maybe try and get them out of the country or, by the way, to see if there's any disability under the statute that would allow us to deny them a firearm." In 2005, then Attorney General Gonzales directed the DOJ to form a working group to review federal gun laws—particularly in regard to NICS background checks—to examine whether additional authority should be sought to prevent firearms transfers to known or suspected terrorists. Nearly two years later, on April 25, 2007, DOJ proposed legislation that would give the Attorney General authority to deny a firearm transfer, state-issued firearms permit, or explosive license to any person found "to be or have been engaged in conduct constituting, in preparation for, in aid of, or related to terrorism." In the 110 th Congress (2007-2008), Senator Lautenberg and Representative King introduced this proposal ( S. 1237 / H.R. 2074 ), but no further action was taken on either bill. In the 111 th Congress (2009-2010), several bills were introduced that would have addressed firearms- and explosives-related background checks and terrorist watch list checks. Senator Lautenberg and Representative King reintroduced their bill that was based on the DOJ draft proposal ( S. 1317 and H.R. 2159 ). Representative McCarthy reintroduced her bill, newly titled the No Fly, No Buy Act of 2009, that would have allowed the Attorney General to deny firearms to persons who are on the TSA's No Fly terrorist watch list ( H.R. 2401 ). And, Senator Lautenberg introduced a bill that would have allowed the Attorney General to maintain NICS records on approved transfers that were also related terrorist watch list hits ( S. 2820 ). In addition, GAO provided Congress with updated data on NICS-related terrorist watch list hits, lending renewed impetus to the reintroduction of the DOJ draft proposal. And, the November 2009 Fort Hood shootings renewed interest in terrorist watch list records and firearms-related background checks. Nearly four years after the first GAO report, GAO issued a follow-up report on NICS-related terrorist watch list hits in May 2009. GAO reported that from February 2004 through February 2009 there were 963 NICS background checks that resulted in terrorist watch list matches and, of those checks, about 90% (865) were allowed to proceed and a firearms or explosives transfer may have occurred; however, only one explosives background check resulted in a proceed with transaction; and of the 10% that resulted in denials (98), the denials were based on felony convictions, illegal immigration status, fugitive from justice status, and the unlawful use of, or addiction to, a controlled substance. All of these denials involved firearms, as opposed to explosives. In this report, GAO also recommended that if Congress should move forward with legislation providing the Attorney General with the discretionary authority to deny a firearms transfer or permit, or an explosives license/permit, based on a terrorist watch list hit, then, consideration should be given to including a provision in that legislation that would require the Attorney General to promulgate guidelines that would delineate under what circumstances such authority could be evoked. Following this report, Representative King and Senator Lautenberg reintroduced the DOJ draft proposal as nearly identical bills ( H.R. 2159 and S. 1317 ), which supporters dubbed the "Terror Gap" proposal. On May 5, 2010, the Senate Committee on Homeland Security and Governmental Affairs held a hearing on "Terrorists and Guns: The Nature of the Threat and Proposed Reforms." GAO testified about measures taken by the FBI to improve firearms and explosives background checks for counterterrorism purposes. GAO reported that from February 2004 through February 2010, there were 1,228 positive encounters with individuals watch-listed as terrorists through NICS related firearms or explosives transactions. These encounters involved 650 individuals because 450 of these individuals were involved in multiple transactions. Six of these individuals were involved in 10 or more transactions. In 1,119 encounters, the transactions were allowed to proceed. In 109 encounters, the transactions were denied. From March 2009 to February 2009, moreover, there were 272 positive encounters and all of the transactions were allowed to proceed, including one that involved explosives. Senator Joseph Lieberman, chair of the committee, noted that firearms had been used in at least two deadly terrorist plots perpetrated by Muslim extremists. Those incidents included the Fort Hood shootings noted above and the June 2009 Little Rock, AR, recruiting center shootings, where two U.S. servicemen were shot—one was killed and the other wounded. In several other thwarted plots, conspirators were arrested for planning to use firearms to attack servicemen at Fort Dix, NJ, in 2006 and the Quantico, VA, Marine base in 2009. Senator Lindsey Graham, however, voiced opposition to the Terror Gap proposal. He maintained that denying a firearms transfer based upon a felony conviction in a lawful court was fundamentally different from doing so based on a terrorist watch list record that was created by an investigator or intelligence analyst. In the 112 th Congress, Senator Lautenberg and Representative King have reintroduced the Terror Gap proposal ( S. 34 and H.R. 1506 ). As in the preceding two Congresses, these nearly identical bills are based upon the April 2007 DOJ proposed legislative language. In the 112 th Congress, four proposals that address gun trafficking have been introduced ( H.R. 2554 , S. 1973 , H.R. 4190 , and H.R. 6195 ). While no further action has been taken on any of these proposals, as described above, several Members have voiced their support for such a proposal and the Attorney General has indicated that the Administration would work with Congress to develop such a proposal. On July 15, 2011, Representative Carolyn Maloney introduced the Stop Gun Trafficking and Strengthen Law Enforcement Act of 2011 ( H.R. 2554 ). This proposal would amend the GCA to establish a new federal "trafficking in firearms" offense under two provisions. Under the first proposed provision, it would be unlawful for any person to receive, transfer, or otherwise dispose of two or more firearms that have been shipped or transported in interstate or foreign commerce (regardless of whether anything of value is exchanged), while knowing, or having reasonable cause to believe , that one or more of those firearms would be transferred subsequently to another person whose receipt of a firearm would be unlawful, or who intends to or will use, carry or possess, or dispose of the firearm unlawfully. Under the second proposed provision, it would be unlawful for any person knowingly to direct, promote, or facilitate such conduct. Violations of either provision would be punishable by a fine and/or not more than 20 years' imprisonment. Moreover, it would provide that any person who acts in the capacity of an organizer, supervisory position, or any other management position, in concert with five or more other persons would be subject to not more than 25 years' imprisonment. In addition, under H.R. 2554 it would also be unlawful to conspire to violate the first provision, and the proposal would make such a conspiracy punishable by a fine and/or not more than 10 years' imprisonment. On December 18, 2011, Senator Kirsten Gillibrand introduced the Gun Trafficking Prevention Act of 2011 ( S. 1973 ). This proposal would amend the Gun Control Act of 1968 (GCA) and establish a new federal "trafficking in firearms" offense. Under this provision, it would be unlawful for any person knowingly to ship, transport, transfer, or otherwise dispose of two or more firearms to another person if he (the transferor/seller) knows or has reasonable cause to believe that such actions would be, or would result in, a violation of any federal, state, or local law that is punishable by a term of imprisonment exceeding one year (excluding misdemeanors punishable by two years or less of imprisonment); receive two or more firearms from another person if he (the transferee/buyer) knows or has reasonable cause to believe that such receipt would be, or would result in, a violation of federal, state, or local law that is punishable by a term of imprisonment exceeding one year (excluding misdemeanors punishable by two years or less of imprisonment); make materially false statements to an FFL, and purchase, receive, or otherwise acquire two or more firearms for, or on behalf of, any other person (a straw purchase); and direct, promote, or facilitate the unlawful conduct described above. Violations of any of the four subparagraphs described above would be punishable by a fine and/or not more than 20 years' imprisonment for a violation. This provision would also establish an affirmative defense to any prosecution under the subparagraphs described above if the firearm(s) in question were transferred following a background check pursuant to 18 U.S.C. §922(t) that showed that the "actual buyer" was not a prohibited person under either federal or state law. S. 1973 would also make it unlawful to conspire to commit such violations, and would make such a conspiracy punishable at the same level as the actual criminal act(s), a fine and/or not more than 20 years' imprisonment. Regarding such conspiracies, the proposal would direct the U.S. Sentencing Commission to recommend increased penalties for graduated offense levels for violations that involve more than 4, but fewer than 15 firearms; more than 14, but fewer than 25 firearms; more than 24, but fewer than 100 firearms; or more than 100 firearms. It is noteworthy that the federal Sentencing Guidelines since 1987 have included a graduated table of sentencing enhancements based on the number of firearms involved. It was last amended in 2001 so that an offense level, used to determine the sentencing range, could be enhanced if the unlawful activity involved 3-7 firearms, 8-24 firearms, 25-99 firearms, 100-199 firearms, or 200 or more firearms. As the Sentencing Guidelines attempt to provide the most appropriate sentencing range based on the severity of the crime and the extent of the offender's criminal record, this bill would possibly impose a more severe sentencing range on a first-time or low-level offender because it would take a lesser number of firearms to trigger a sentence enhancement. In addition, S. 1973 includes several provisions designed to "crack down" on corrupt gun dealers, who knowingly violate certain provisions of the GCA, National Firearms Act (NFA), and Arms Export Control Act (AECA). With regard to firearms trace data, the proposal would require the Attorney General to annually identify certain FFLs who posed a "heightened risk of firearms being diverted to criminal use." Such determinations would be made based on a "specific criteria" that would include the following elements: short "time-to-crime" for firearms traced to the dealer, incomplete crime trace results for firearms sold by a dealer, significant or frequent reports by a dealer of firearms losses or thefts, and other violations of federal firearms laws by a dealer. Furthermore, it would increase penalties for certain recordkeeping violations from "not more than" one year to "up to" three years' imprisonment. Finally, it would require GAO to conduct a study on firearms that are either lost or stolen in transit between FFLs. On March 8, 2012, Representative Adam Schiff introduced the Straw Purchase Penalty Enhancement Act ( H.R. 4190 ). This bill would amend the GCA to create a mandatory minimum sentence of two years' imprisonment for any person who makes a false statement in violation of either 18 U.S.C. §§922(a)(6) or 924(a)(1)(A) in the firearms transfer records (ATF Form 4473) that FFLs are required to maintain under current law, if the transferee knows or has reason to believe that the false statement will further the transfer of two or more firearms to a prohibited person; and has the intent to conceal the identity of the prohibited person to whom the firearm is to be transferred. On July 25, 2012, Representative Peter King introduced H.R. 6195 , the Detectives Nemorin and Andrews Anti-Gun Trafficking Act of 2012. This proposal would have amended the GCA by creating a new subsection at 18 U.S.C §924—Penalties. This amendment would have created a new separate "gun trafficking" crime punishable by a fine and/or imprisonment of not more than 20 years for committing a certain offense under the GCA under one of two sets of conditions. The first set of conditions would have been the offering for sale, transfer, or barter of two or more handguns, semiautomatic assault weapons, short-barreled shotguns, short-barreled rifles, or machine guns, of which at least one was transported, received or possessed by that person and stolen or had the importer's or manufacturer's serial number removed. The second set of conditions would have been the offering for sale, transfer, or barter of two or more handguns, semiautomatic assault weapons, short-barreled shotguns, short-barreled rifles, or machine guns, of which at least one was offered by sale, transfer, or barter to another who is either prohibited by federal or state law from possessing a firearm, not 18 years of age, is in a school zone, or is not a resident of the state in which he has attempted to acquire the firearms. If someone committed one of the offenses already punishable by the GCA, each of which carries its own penalty, under either of these conditions, such a person could be prosecuted under this separate gun trafficking crime and face a fine and/or imprisonment of not more than 20 years. This bill was silent as to whether the sentences for the proposed "gun trafficking" crime and the individual predicate GCA offenses, if a person was prosecuted under both provisions, would have been served consecutively or concurrently. It appears that such a matter would have likely been influenced by the U.S. Sentencing Commission guidelines. This bill also included numerous other provisions oriented toward gun trafficking. Among other things, the bill would have (1) increased funding for Project Safe Neighborhoods; (2) required the AG to give a biennial report to Congress on firearms tracing and prosecutions; (3) required the FBI to give ATF access to its stolen gun files maintained in its National Crime Information Center; (4) required the AG to establish a "national instant stolen gun check system"; and (5) made it unlawful to transport, possess, or receive a firearm that had the importer's or manufacturer's serial number removed, obliterated, or altered, regardless of one's awareness of this fact. On at least two occasions during the 111 th Congress, the Senate Judiciary Committee postponed hearings on the Bureau of Alcohol, Tobacco, Firearms and Explosives Reform and Firearms Modernization Act ( S. 941 ). Senator Mike Crapo and Senator Patrick Leahy, chair of the Judiciary Committee, introduced this bill on April 30, 2009. Representatives Steve King and Zack Space introduced a companion bill ( H.R. 2296 ). In regard to regulating federally licensed firearms dealers, this proposal would have established a two tier, graduated penalty system for violations characterized as being of a minor or serious nature; established a process by which ATF licensing decisions could be reviewed by an administrative law judge; required the Attorney General to issue guidelines governing ATF investigations of GCA violations; and defined the "willful" standard of intent to mean "knowingly and intentionally" disregarding a "legal duty." Proponents for this proposal argue that these provisions would allow federal firearms licensees greater opportunity to address non-substantive recordkeeping issues that under current law could lead to the revocation of their licenses. Opponents argue that relaxing such provisions would weaken ATF authority and efforts to reduce the number of "kitchen table top" dealers, who are not substantively engaged in the business and, hence, are ineligible for such licenses, and "rogue" dealers, who are not adequately controlling and accounting for their firearms inventories. Additional provisions in the bill would have addressed several other firearms-related issues concerning machine guns, firearms parts, and handgun possession of a minor in the presence of a parent or legal guardian. In the 112 th Congress, Representative Steve King and Senator Mike Crapo have reintroduced this proposal ( H.R. 1093 / S. 835 ). Federal law does not regulate gun shows specifically. Federal law regulating firearms transfers, however, is applicable to such transfers at gun shows. Federal firearms licensees—those licensed by the federal government to manufacture, import, or deal in firearms—are required to conduct background checks on non-licensed persons seeking to obtain firearms from them, by purchase or exchange. Conversely, non-licensed persons—those persons who transfer firearms but who do not meet the statutory test of being engaged in the business—are not required to conduct such checks. To some, this may appear to be an incongruity in the law. Why, they ask, should licensees be required to conduct background checks at gun shows but not non-licensees? To those opposed to further federal regulation of firearms, it may appear to be a continuance of the status quo (i.e., non-interference by the federal government into private firearms transfers within state lines). On the other hand, those seeking to increase federal regulation of firearms may view the absence of background checks for firearms transfers between non-licensed/private persons as a loophole in the law that needs to be closed. A possible issue for Congress is whether federal regulation of firearms should be expanded to include private firearms transfers at gun shows and other similar venues. Among gun show-related proposals, there are two basic models. The first model is based on a bill ( S. 443 ) that was introduced in the 106 th Congress by Senator Lautenberg, who successfully offered this proposal as an amendment to the Senate-passed Violent and Repeat Juvenile Offender Act ( S. 254 ). Several Members introduced variations of the Lautenberg bill in the 107 th Congress. In the 108 th Congress, Representative Conyers—ranking minority Member of the Judiciary Committee—introduced H.R. 260 , which was very similar to the Lautenberg bill. In addition, former Senator Daschle introduced the Justice Enhancement and Domestic Security Act of 2003 ( S. 22 ), which included gun show language that was similar to the Lautenberg bill. The second model is based on a bill ( S. 890 ) introduced in the 107 th Congress by Senators McCain and Lieberman. In the 108 th Congress, Senator McCain reintroduced this proposal as well ( S. 1807 ). And, Representative Michael Castle introduced a similar gun show proposal ( H.R. 3832 ). Also in the 108 th Congress, on March 2, 2004, during consideration of the Protection of Lawful Commerce in Arms Act ( S. 1805 ), the Senate passed a gun show-related amendment ( S.Amdt. 2636 ) offered by Senator McCain by a yea-nay vote of 53-46 (Record Vote Number: 25). However, the bill's floor manager, Senator Larry Craig, pulled this bill from further floor consideration before a final vote could be taken on the measure rather than risk passage of a bill that included gun control and assault weapons ban provisions (the latter provision is described below). In the 109 th Congress, Representative Castle reintroduced his proposal ( H.R. 3540 ), but a similar measure was not introduced in the Senate. In the 110 th Congress, Representative Castle and Senator Lautenberg reintroduced separate gun show proposals ( H.R. 96 and S. 2577 ). Senator Biden included similar provisions in the Crime Control and Prevention Act of 2007 ( S. 2237 ). In the 111 th Congress, Senator Lautenberg and Representative Castle again reintroduced similar measures that would have required background checks for private firearms transfers at guns shows ( S. 843 and H.R. 2324 ). In the 112 th Congress, Senator Lautenberg has reintroduced this measure ( S. 35 ) and Representative McCarthy has introduced a companion measure ( H.R. 591 ). In 1994, Congress banned for 10 years the possession, transfer, or further domestic manufacture of semiautomatic assault weapons (SAWs) and large-capacity ammunition feeding devices (LCAFDs) that hold more than 10 rounds that were not legally owned or available prior to the date of enactment (September 13, 1994). The SAW-LCAFD ban expired on September 13, 2004. The SAW ban statute classified a rifle as a semiautomatic assault weapon if it was able to accept a detachable magazine and included two or more of the following five characteristics: (1) a folding or telescoping stock, (2) a pistol grip, (3) a bayonet mount, (4) a muzzle flash suppressor or threaded barrel capable of accepting such a suppressor, or (5) a grenade launcher. There were similar definitions for pistols and shotguns that were classified as semiautomatic assault weapons. Semiautomatic assault weapons that were legally owned prior to the ban were not restricted and remained available for transfer under applicable federal and state laws. Opponents of the ban argue that the statutorily defined characteristics of a semiautomatic assault weapon were largely cosmetic, and that these weapons were potentially no more lethal than other semiautomatic firearms that were designed to accept a detachable magazine and were equal or superior in terms of ballistics and other performance characteristics. Proponents of the ban argue that semiautomatic military-style firearms, particularly those capable of accepting large-capacity ammunition feeding devices, had and have no place in the civilian gun stock. During and following World War II, assault rifles were developed to provide a lighter infantry weapon that could fire more rounds, more rapidly (increased capacity and rate of fire). To increase capacity of fire, detachable self-feeding magazines were developed. These rifles were usually designed to be fired in fully automatic mode, meaning that once the trigger is pulled, the weapon continues to fire rapidly until all the rounds in the magazine are expended or the trigger is released. Often these rifles were also designed with a "select fire" feature that allowed them to be fired in short bursts (e.g., three rounds per pull of the trigger), or in semiautomatic mode (i.e., one round per pull of the trigger), as well as in fully automatic mode. By comparison, semiautomatic firearms, including semiautomatic assault weapons, fire one round per pull of the trigger. According to a 1997 survey of 203,300 state and federal prisoners who had been armed during the commission of the crimes for which they were incarcerated, fewer than 1 in 50, or less than 2%, used, carried, or possessed a semiautomatic assault weapon or machine gun. Under current law, any firearm that can be fired in fully automatic mode or in multi-round bursts is classified as a "machine gun" and must be registered with the federal government under the National Firearms Act of 1934. Furthermore, it is illegal to assemble a machine gun with legally or illegally obtained parts. The population of legally owned machine guns has been frozen since 1986, and they were not covered by the semiautomatic assault weapons ban. In the 108 th Congress, proposals were introduced to extend or make permanent the ban, whereas other proposals were made to modify the definition of "semiautomatic assault weapon" to cover a greater number of firearms by reducing the number of features that would constitute such firearms, and expand the list of certain makes and models of firearms that are statutorily enumerated as banned. A proposal ( S. 1034 ) introduced by Senator Dianne Feinstein would have made the ban permanent as would have a proposal ( H.R. 2038 / S. 1431 ) introduced by Representative McCarthy and Senator Lautenberg. The latter measure, however, would have modified the definition and expanded the list of banned weapons. Senator Feinstein also introduced measures that would have extended the ban for 10 years ( S. 2109 / S. 2498 ). In addition, on March 2, 2004, the Senate passed an amendment to the gun industry liability bill ( S. 1805 ) that would have extended the ban for 10 years, but the Senate did not pass this bill. In the 109 th Congress, Senator Dianne Feinstein introduced a bill that would have reinstated previous law for 10 years ( S. 620 ). Representative McCarthy and Senator Lautenberg reintroduced their bills to make the ban permanent ( H.R. 1312 / S. 645 ). In the 110 th Congress, Representative McCarthy reintroduced a similar proposal ( H.R. 1022 ) and another measure ( H.R. 1859 ) that would prohibit the transfer of a semiautomatic assault weapon with a large-capacity ammunition feeding device, among other things. Representative Mark Steven Kirk introduced the Assault Weapons Ban Reauthorization Act of 2008 ( H.R. 6257 ). Senator Biden included provisions to reauthorize the ban in the Crime Control and Prevention Act of 2007 ( S. 2237 ). In the wake of the Tucson shootings, Representative McCarthy introduced a measure that would reinstate the large capacity ammunition feeding device ban ( H.R. 308 ). Senator Lautenberg introduced a similar measure ( S. 32 ). In the 109 th Congress, legislation was introduced to regulate more strictly certain .50 caliber rifles. Some of these rifles are chambered to fire a relatively large round originally designed for the Browning Machine Gun (BMG) and have been adopted by the U.S. military as long-range "sniper" rifles. Gun control advocates argue that these firearms have little sporting, hunting, or recreational purpose. They maintain that these rifles could be used to shoot down aircraft, rupture pressurized chemical tanks, or penetrate armored personnel carriers. Gun control opponents counter that these rifles are expensive, cumbersome, and rarely, if ever, used to commit crimes. Furthermore, they maintain that these rifles were first developed for long-range marksmanship competitions and then adopted by the military as sniper rifles. The Fifty Caliber Sniper Weapons Regulation Act of 2005 ( S. 935 ), introduced by Senator Dianne Feinstein, would have amended the National Firearms Act (NFA) to regulate ".50 caliber sniper weapons" in the same fashion as short-barreled shotguns and silencers by levying taxes on the manufacture and transfer of such firearms and by requiring owner and firearms registration. In the 110 th Congress, Senator Feinstein introduced a similar measure ( S. 1331 ). The other proposal introduced by Representative James Moran, the 50 Caliber Sniper Rifle Reduction Act ( H.R. 654 ), also would have amended the NFA to include those weapons, but it would have also amended the Gun Control Act to effectively freeze the population of those weapons legally available to private persons and to prohibit any further transfer of those firearms. In other words, H.R. 654 would have grandfathered-in existing rifles but would have banned their further transfer. Consequently, the proposal would have eventually eliminated those rifles all together from the civilian gun stock. It would have been likely that covered .50 caliber rifles would have had to be destroyed or handed over to the ATF as contraband when the legal firearm owner died or wanted to give up the firearm. H.R. 654 included no compensation provision for rifles destroyed or handed over to the federal government. Furthermore, both proposals ( S. 935 and H.R. 654 ) would have defined ".50 caliber sniper weapon" to mean "a rifle capable of firing center-fire cartridge in .50 caliber, .50 BMG caliber, any other variant of .50 caliber or any metric equivalent of such calibers." Many rifles, and even some handguns, are chambered to fire .50 caliber ammunition, meaning the projectile is about one-half inch in diameter. Opponents of this legislation note that this definition was very broad and would have likely covered .50 caliber rifles that would not be considered "long-range" or "sniper" rifles. The .50 BMG caliber round, on the other hand, is an exceptionally large cartridge (projectile and casing), which was once used almost exclusively as a heavy machine gun round. Representative Moran also offered an amendment to the FY2006 Department of Commerce appropriations bill ( H.R. 2862 ) that would have prohibited the use of funding provided under that bill to process licenses to export .50 caliber rifles, but that amendment was not adopted by the House. Appendix A. Legislation in the 111 th Congress The 111 th Congress revisited several issues previously considered in the 110 th Congress. For example, Congress considered amendments to DC voting rights bills that would have further overturned DC gun laws ( S. 160 and H.R. 157 ). In addition, Congress passed several other gun-related provisions included in enacted legislation that address carrying firearms on public lands ( P.L. 111-24 ), transporting firearms in passenger luggage on Amtrak trains ( P.L. 111-117 ), widening law enforcement off-duty concealed carry privileges ( P.L. 111-272 ), prohibiting higher health care premiums for gun owners ( P.L. 111-148 ), and prohibiting the Department of Defense (DOD) from regulating firearms privately owned but lawfully held by service members, DOD civilian personnel, and their family members off-base ( P.L. 111-383 ). The 111 th Congress also reconsidered or newly considered several other provisions that were not enacted: gun rights restoration for veterans previously deemed to be mentally incompetent ( S. 669 and H.R. 6132 ), interstate reciprocity of concealed carry privileges ( S. 1390 and S. 845 ), firearms possession in public housing ( H.R. 3045 and H.R. 4868 ), and the treatment of firearms under bankruptcy proceedings ( H.R. 5827 / S. 3654 ). Constitutionality of DC Handgun Ban and Related Legislation On June 26, 2008, the Supreme Court issued its decision in District of Columbia v. Heller on the constitutionality of a DC law that banned handguns for 32 years, among other things. Passed by the DC Council on June 26, 1976, the DC handgun ban required that all firearms within the District be registered and all owners be licensed, and it prohibited the registration of handguns after September 24, 1976. In a 5-4 decision, the Supreme Court found the handgun ban to be unconstitutional because it violated an individual's right under the Second Amendment to possess a handgun in his home for lawful purposes such as self-defense. DC Council Passes Emergency Law On July 15, 2008, the DC Council passed a temporary, emergency law that allowed residents through a registration/certificate process to keep a handgun in their home as long as that firearm had a capacity of fewer than 12 rounds of ammunition and was not loadable from a magazine in the handgrip, which in effect limited legal handguns under the temporary law to revolvers as opposed to semiautomatic pistols. The emergency law also continued to require that handguns be kept unloaded and disassembled, or trigger locked, unless an attack in a home was imminent or underway. Pro-gun groups immediately criticized the council's emergency law for not being in the "spirit" of the Supreme Court's decision because it continued to ban semiautomatic pistols and did not fully roll back the trigger lock requirement. Since the initial emergency law was passed, the DC Council has passed several other pieces of similar temporary, emergency laws related to the Heller decision. These laws include new firearms-related provisions that were also included in permanent legislation passed by the DC Council that is described below. Legislation Related to DC Gun Laws Several Members of Congress were dissatisfied with the DC Council's temporary law. On July 24, 2008, Representative Mike Ross filed a motion to discharge the Rules Committee from consideration of H.Res. 1331 , a resolution that would have provided for the consideration of a bill to restore Second Amendment rights in the District of Columbia ( H.R. 1399 ). This bill was similar to previous bills introduced by Representative Mark Souder and Senators Kay Bailey Hutchison and Orrin Hatch in previous congresses. Representative Ross introduced H.R. 1399 in the 110 th Congress for himself and Representative Souder on March 27, 2007, and Senator Hutchison introduced a companion measure ( S. 1001 ) on March 28, 2007. In the 110 th Congress, Representative Travis Childers introduced a similar bill ( H.R. 6691 ) on July 31, 2008. All three bills would have amended the DC Code to limit the Council's authority to regulate firearms; remove semiautomatic firearms that can fire more than 12 rounds without manually reloading from the definition of "machine gun"; amend the registration requirements so that they do not apply to handguns, but only to sawed-off shotguns, machine guns, and short-barreled rifles; remove restrictions on ammunition possession; repeal requirements that DC residents keep firearms in their possession unloaded and disassembled, or bound by a trigger lock; repeal firearms registration requirements generally; and repeal certain criminal penalties for possessing or carrying unregistered firearms. Representatives John Dingell, John Tanner, and Mike Ross reportedly negotiated an agreement with the House leadership to consider H.R. 6691 in early September. H.R. 6691 included language that stated as a congressional finding that DC officials "have indicated their intention to continue to unduly restrict lawful firearm possession and use by citizens of the District." H.R. 6691 also included a provision that would have allowed DC residents to purchase firearms from federally licensed gun dealers in Virginia and Maryland. On September 9, 2008, the House Oversight and Government Reform Committee held a hearing on the possible effects H.R. 6691 might have on the District. On the same day, Representative Eleanor Holmes Norton introduced H.R. 6842 , a bill that would have required the DC mayor and Council to ensure that regulations were promulgated that would have been consistent with the Heller decision. On September 15, 2008, the House Oversight and Government Reform Committee reported H.R. 6842 ( H.Rept. 110-843 ). On September 17, 2008, however, the House amended H.R. 6842 with the text of H.R. 6691 and passed the Childers bill. DC Council Passes Permanent Legislation On December 16, 2008, the DC Council passed the Firearms Control Amendment Act of 2008 (FCAA; B17-0843) and the Inoperable Pistol Amendment Act of 2008 (IPAA; B17-0593). Mayor Adrian Fenty signed the FCAA into law on January 28, 2009 (L17-0372). This bill was transmitted to Congress on February 10, 2009. From the day of transmittal, Congress had 30 legislative days to review this bill under the DC Home Rule Act (according to the District of Columbia). Among other things, this law amends the DC Code to adopt the federal definition of "machine gun," which does not include semiautomatic pistols; prohibit the possession and registration of "assault weapons" and rifles capable of firing .50 caliber Browning Machine Gun (BMG) rounds; and require that all firearms made after January 1, 2011, be microstamped. Many provisions of this law, including the assault weapons ban and the microstamping provisions, were modeled after California state law. Mayor Fenty signed IPAA into law on January 16, 2009 (L17-0388). It was transmitted to Congress on February 4, 2009. Because the bill includes penalty provisions, Congress had 60 legislative days to review this bill under the DC Home Rule Act. Among other things, this permanent legislation amends the DC Code to criminalize the possession of inoperable firearms; criminalize the discharge of firearms; prohibit carrying a rifle or shotgun; allow for the transportation of firearms under the same conditions as permitted under federal law; and change the waiting period to purchase a firearm from 48 hours to 10 days. DC Voting Rights and Gun Laws in the 111 th Congress On February 26, 2009, Senator John Ensign successfully amended ( S.Amdt. 576 ) the District of Columbia House Voting Rights Act of 2009 ( S. 160 ) by a yea-nay vote of 62-36 (Record Vote Number 72) with language that would have overturned certain DC guns laws and prevent the District from legislating in these areas in the future. The Senate passed this bill on the same day by a yea-nay vote of 61-37 (Record Vote Number 73). This bill was tabled while the House leadership attempted to negotiate an end to the impasse over the DC gun laws and bring its version of the DC voting rights bill ( H.R. 157 ) to the floor. In April 2010, efforts were made to revive the voting rights bill, but some Members prepared amendments to overturn the city's gun laws. Consequently, Members managing the DC voting rights bill postponed further consideration rather than risk passage of amendments that would overturn the city's gun laws. Senator John McCain and Representative Travis Childers introduced their amendments as stand-alone bills, the Second Amendment Enforcement Act ( S. 3265 / H.R. 5162 ). In the 112 th Congress, Representative Mike Ross has introduced a proposal to restore Second Amendment rights in the District of Columbia ( H.R. 645 ). Constitutionality of the Chicago Handgun Ban On June 28, 2010, the Supreme Court issued its 5-4 decision in McDonald v. City of Chicago and found that the individual right to lawfully possess a firearm for the purposes of self-defense under the Second Amendment applied to the states by way of the Fourteenth Amendment. Although the McDonald decision arguably nullified the Chicago handgun ban by limiting a state, city, or local government's ability to prohibit handguns outright, it does not delineate what would constitute permissible gun control laws under the Second Amendment. Indeed, the Supreme Court remanded the Chicago handgun ban back to the Seventh Circuit Court of Appeals for a rehearing. Consequently, the delineation of permissible gun laws will likely be developed in future cases. Nevertheless, the city of Chicago has reportedly adopted handgun regulations that are similar to those adopted by the District of Columbia. These regulations allow eligible residents to register one operable handgun per household, but in most cases that handgun must be locked and rendered inoperable, and it cannot be carried outside of the home. Public Lands and Firearms Possession and Use In the 111 th Congress, Senator Tom Coburn successfully amended the Credit CARD Act of 2009 ( H.R. 627 ) with a provision ( S.Amdt. 1067 ) that allows private persons to carry firearms in national parks and wildlife refuges (effective February 22, 2010). This amendment passed by a vote of 67 to 29 (Record Vote Number 188) on May 12, 2009. Under H.Res. 456 , the House voted on the Coburn amendment as a separate measure and passed it by a vote of 279 to 147. President Barack Obama signed H.R. 627 into law on May 22, 2009 ( P.L. 111-24 ). Previously, in the 110 th Congress during consideration of a public land bill ( S. 2483 ), Senator Coburn offered but later withdrew an amendment ( S.Amdt. 3967 ) that would have overturned federal regulations that prohibit visitors to parks and wildlife refuges managed by the National Park Service (NPS) and Fish and Wildlife Service (FWS) from possessing operable and loaded firearms. While these regulations were last revised substantively in 1981 and 1983, similar firearms restrictions were promulgated in the 1930s in an effort to curb poaching and other illegal activities. There are exceptions for hunting and marksmanship under current law. Since the 1980s, however, many states have passed laws that allow persons to carry concealed handguns for personal protection. Although 48 states have "concealed carry" laws, only 24 of those states reportedly allow concealed handguns to be carried in state parks. On April 30, 2008, in part at the urging of some Members of Congress, the Department of the Interior (DOI) published proposed regulations that would authorize the possession of loaded and concealed firearms, as long as carrying those firearms in that fashion would be legal under the laws of the states where the public lands are located. While the initial comment period was scheduled to end on June 30, 2008, it was extended until August 8, 2008. DOI reported receiving approximately 90,000 comments on those proposed regulations. Final regulations were issued on December 10, 2008. Those regulations took effect on January 9, 2009. However, on March 19, a U.S. District Judge issued a preliminary injunction on the regulations in a lawsuit brought by three groups: the Brady Campaign to Prevent Gun Violence, the National Parks Conservation Association, and the Coalition of National Park Service Retirees. On March 20, the NRA filed a notice to appeal in Federal District Court in opposition to the preliminary injunction. Senator Coburn also introduced a bill, the Protecting Americans from Violent Crime Act of 2008 ( S. 2619 ), that was very similar to his proposed amendment and DOI's proposed regulations. Supporters of those proposals pointed to a reported rise in illegal activities and violent crime on public lands. Opponents argued that the risk of a violent crime encounter in National Parks and Wildlife Refuges was negligible. They further argued that allowing others to carry loaded and concealed handguns on their person would make them less safe. In the 111 th Congress, similar measures were introduced by Representative Doc Hastings and Senator Mike Crapo ( H.R. 1684 / S. 816 ). Amtrak Passengers and Firearms On September 16, 2010, Senator Roger Wicker amended the FY2010 Transportation-HUD appropriations bill ( H.R. 3288 ) with language to authorize private persons to carry firearms and ammunition in their checked luggage on Amtrak trains. The Wicker amendment ( S.Amdt. 2366 ) passed by a yea-nay vote, 68-30 (Record Vote Number 279). On September 17, 2009, the Senate passed this bill. Later, H.R. 3288 became the vehicle for the Consolidated Appropriations Act, 2010. Conferees retained the Wicker language in the conference agreement ( H.Rept. 111-366 ), and the President signed H.R. 3288 into law ( P.L. 111-117 ) on December 16, 2009. Section 159 of the act requires Amtrak, with the Transportation Security Administration, to report to Congress (within six months of enactment—June 16, 2010) on proposed guidance and procedures to implement a "checked firearms program." The reported guidance and procedures are to be implemented within one year of enactment. The act further requires that checked firearms be placed in a locked, hard-sided container, and that passengers planning to carry firearms in their luggage declare their intentions to Amtrak at the time they make their reservations or within 24 hours of departure. Similar requirements are set out for placing ammunition in checked luggage. Law Enforcement Officers Safety Act Amendments The 111 th Congress passed amendments to clarify and expand eligibility under the Law Enforcement Officers Safety Act (LEOSA; P.L. 108-277 ). This law authorizes certain qualified active-duty and retired law enforcement officers to carry concealed firearms across state lines, while off duty. Senator Leahy, the Judiciary Committee chair, introduced the amendments as a stand-alone bill ( S. 1132 ). In the House, Representative J. Randy Forbes introduced a similar measure ( H.R. 3752 ). The Senate Judiciary Committee approved S. 1132 on March 11, 2010, and the Senate passed the bill on May 13, 2010. The Senate Judiciary Committee filed a report on this bill on July 27, 2010 ( S.Rept. 111-233 ). The House passed S. 1132 on September 29, 2010. The President signed S. 1132 into law on October 12, 2010 ( P.L. 111-272 ). The 2010 LEOSA amendments (1) clarify that certain Amtrak and executive branch law enforcement officers are eligible for concealed carry privileges under P.L. 108-277 , (2) reduce the length of service criterion for eligibility under that law from 15 to 10 years, and (3) clarify other provisions of the law related to certification and credentialing. Previously, in the 110 th Congress, the Senate Judiciary Committee reported a similar bill ( S. 376 ; S.Rept. 110-150 ) on September 5, 2007. This bill was also introduced by Senator Leahy. Representative Forbes introduced a similar bill ( H.R. 2726 ). The language of S. 376 was incorporated into S. 2084 , the School Safety and Law Enforcement Improvement Act of 2007, when that bill was reported on September 21, 2007 ( S.Rept. 110-183 ). In the 109 th Congress, the Senate amended H.R. 1751 , the Court Security Improvement Act of 2006, with similar LEOSA provisions and passed that measure. Patient Protection and Affordable Care Act and Firearms The 111 th Congress included language in the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ) that prohibits data collection on gun ownership or higher premiums for gun owners under wellness program provisions. The catalyst for this language was an "action alert" that Gun Owners of America (GOA) sent out, urging its membership to oppose a Senate health care reform proposal released on November 18, 2009. The GOA argued that the Senate proposal, along with other enacted provisions of law, would have required doctors to provide "gun-related health data" to a computerized national health information network. With such information, the GOA maintained that the federal government would deny individuals the ability to obtain a firearm or firearms permit. Of particular concern for the GOA were mental health records. Another concern raised by the GOA was the possibility that insurance providers under the Senate proposal would have been required or prompted to raise premiums for persons who exhibited arguably "unhealthy behaviors," such as firearms ownership. Although the Senate proposal included provisions to amend the Health Insurance Portability and Accountability Act (HIPAA) that addressed electronic data transaction standards for national health information sharing purposes to facilitate eligibility determinations and health care plan enrollments, it did not include any provisions that would have directly required the national collection of "gun-related health data." Without a clear directive, it is debatable whether the Department of Health and Human Services (HHS) would have undertaken such data collection on firearms ownership and possession given other provisions in current law, albeit in different statutory contexts, that prohibit the establishment of a registry of privately held firearms or firearms owners. Dr. David Blumenthal, then National Coordinator for Health Information Technology at HHS, said that the current system does not include a database into which such information could be fed, nor are there plans to create one. Blumenthal added that "we don't want to do it and it's not authorized." Nor did the Senate proposal include any provisions that would have required or prompted insurance providers to raise premiums on gun owners. On the other hand, the Senate legislation did include provisions that would have codified and amended HIPAA wellness program provisions that would have addressed employer-based incentives for healthy behavior to reduce health care costs. Arguably, these provisions would not have precluded the Secretary of Health and Human Services from promulgating regulations that addressed risks associated with firearms ownership, possession, use, and storage. However, such regulations, if proposed, would have likely been tested in administrative and judicial review as to their impact on Second Amendment rights. Nonetheless, Senate legislators included new language in their Patient Protection and Affordable Care proposal, which the Senate passed as an amendment to H.R. 3590 on December 24, 2009. The Senate language, which was included in P.L. 111-148 , prohibits any wellness and health promotion activity sponsored under the act's HIPAA amendments from requiring the disclosure or collection of any information about the presence or storage of a lawfully possessed firearm or ammunition in the residence or on the property of an individual, or the lawful use, possession, or storage of a firearm or ammunition by an individual. The language also states that nothing in the bill would be construed to authorize any data collection on the lawful ownership, possession, use, or storage of firearms or ammunition, or to maintain records on individual ownership or possession of a firearm or ammunition. In addition, with regard to any health insurance to be provided under the act, this provision prohibits providers from increasing premium rates; denying coverage; or reducing or withholding discounts, rebates, or rewards for participation in a wellness program because of an individual's lawful ownership, possession, use, or storage of a firearm or ammunition. Finally, under the data collection activities authorized under the act, the language states that no individual would be required to disclose any information relating to the lawful ownership, possession, use, or storage of a firearm or ammunition. Guns Held Off-Base and Surplus Ammunition and Shell Casings In addition, two firearms-related provisions were included in the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 ( P.L. 111-383 ). One provision (§1062), sponsored by Senator Jim Inhofe, prohibits the Secretary of Defense, and by implication base commanders, from collecting any information on privately owned firearms kept by military personnel, Department of Defense civilian employees, and their family members off-base. Another provision (§346) sponsored by Senators Jon Tester and Max Baucus addresses the demilitarization of small arms ammunition of several types and calibers, including spent shell casings, which is commonly sold as military surplus. NICS Improvement Amendments Act of 2007 In the wake of the Virginia Tech tragedy, the 110 th Congress passed legislation to improve firearms-related background checks. The Senate amended and passed the NICS Improvement Amendments Act of 2007 ( H.R. 2640 ) following lengthy negotiations, as did the House, on December 19, 2007, clearing that bill for the President's signature. President Bush signed the bill into law on January 8, 2008 ( P.L. 110-180 ). This law amends and strengthens a provision of the Brady Handgun Violence Prevention Act (Brady Act; P.L. 103-159 ) that requires federal agencies to provide, and the Attorney General to secure, any government records with information relevant to determining the eligibility of a person to receive a firearm for inclusion in databases queried by NICS. The act also includes provisions designed to encourage states, tribes, and territories (states) to make available to the Attorney General certain records related to persons who are disqualified from acquiring a firearm, particularly records related to domestic violence misdemeanor convictions and restraining orders, as well as mental health adjudications. To accomplish this, the act establishes a framework of incentives and disincentives, whereby the Attorney General is authorized to either waive a grant match requirement or reduce a law enforcement assistance grant depending upon a state's compliance with the act's goals of bringing firearms-related disqualifying records online. The original proposal ( H.R. 2640 ) was introduced by Representative McCarthy and co-sponsored by Representative John Dingell. As passed by the House by a voice vote on June 13, 2007, H.R. 2640 reportedly reflected a compromise between groups favoring and opposing greater gun control. The Senate Judiciary Committee approved similar, but not identical, NICS improvement amendments as part of the School Safety and Law Enforcement Improvement Act of 2004 on August 2, 2007, and reported this bill on September 21, 2007 ( S. 2084 ; S.Rept. 110-183 ). The Senate Judiciary Committee included five other measures in S. 2084 . With some modification, those measures included the School Safety Enhancements Act ( S. 1217 ), the Equity in Law Enforcement Act ( S. 1448 ), the PRECAUTION Act ( S. 1521 ), the Terrorist Hoax Improvements Act ( S. 735 ), and the Law Enforcement Officers Safety Act of 2007 (LEOSA; S. 376 ). Support for the NICS improvement and the LEOSA amendments (described below) in S. 2084 was reportedly divided and uneven, however. Citing privacy and cost issues related to the NICS amendments, Senator Coburn reportedly placed a hold on that legislation. In addition, some opposition to NICS improvement amendments had coalesced around an assertion made by Larry Pratt of Gun Owners of America that, under these amendments, any veteran who was or had been diagnosed with Posttraumatic Stress Disorder (PTSD) and was found to be a "danger to himself or others would have his gun rights taken away ... forever." Under current law, however, any veteran or other VA beneficiary who is adjudicated or determined to be a mental defective, because he poses a danger to himself or others, or is incapable of conducting his day-to-day affairs, is ineligible to possess a firearm. A diagnosis of PTSD in and of itself is not a disqualifying factor for the purposes of gun control under the NICS improvement amendments or previous law. Under the enacted NICS improvement amendments, VA beneficiaries who have been determined to be mental defectives could appeal for administrative relief and possibly have their gun rights restored if they could demonstrate that they were no longer afflicted by a disqualifying condition. Veterans, Mental Incompetency, and Firearms Eligibility In the 110 th Congress, Senator Burr successfully amended the Veterans' Medical Personnel Recruitment and Retention Act of 2008 ( S. 2969 ) in full committee markup on June 26, 2008. The language of the Burr amendment would have provided that "a veteran, surviving spouse, or child who is mentally incapacitated, deemed mentally incompetent, or experiencing an extended loss of consciousness shall not be considered adjudicated as a mental defective" for purposes of the Gun Control Act, "without the order or finding of a judge, magistrate, or other judicial authority of competent jurisdiction that such veteran, surviving spouse, or child is a danger to him or herself or others." Senator Burr introduced a bill, the Veterans' 2 nd Amendment Protection Act ( S. 3167 ), that would have achieved the same ends as his amendment to S. 2969 . In the 111 th Congress, Senator Burr reintroduced his bill as S. 669 , and the Senate Committee on Veterans' Affairs reported this bill ( S.Rept. 111-27 ) on June 16, 2009. Representative Jerry Moran introduced a similar bill ( H.R. 2547 ). The House Veterans' Affairs Committee considered and approved a similar provision that Representative John Boozman offered as an amendment to a draft bill in full committee markup on September 15, 2010. This provision was included in the reported version of the bill ( H.R. 6132 ; H.Rept. 111-630 ). However, when the House considered H.R. 6132 under suspension of the rules, an amended version of H.R. 6132 was called up that did not include the Boozman provision. Mental Defective Adjudications Under 27 C.F.R. Section 478.11, the term "adjudicated as a mental defective" includes a determination by a court, board, commission, or other lawful authority that a person, as a result of marked subnormal intelligence or a mental illness, incompetency, condition, or disease, (1) is a danger to himself or others, or (2) lacks the mental capacity to manage his own affairs. The term also includes (1) a finding of insanity by a court in a criminal case and (2) those persons found incompetent to stand trial or found not guilty by reason of lack of mental responsibility pursuant to articles 50a and 72b of the Uniform Code of Military Justice, 10 U.S.C. Sections 850a, 876(b). This definition of "mental defective" was promulgated by the ATF in a final rule published on June 27, 1997. In the final rule, the ATF noted that the VA had commented on the "proposed rulemaking" and had correctly interpreted that "adjudicated as a mental defective" includes a person who is found to be "mentally incompetent" by the Veterans Benefit Administration (VBA). Under veterans law, an individual is considered "mentally incompetent" if he or she lacks the mental capacity to contract or manage his or her own affairs for reasons related to injury or disease (under 38 CFR §3.353). In a proposed rulemaking, the ATF opined that the inclusion of "mentally incompetent" in the definition of "mental defective" was wholly consistent with the legislative history of the 1968 Gun Control Act. Reportedly, the VA could have been the only federal agency that had promulgated a definition like "mentally incompetent" that overlapped with the term "mental defective." VA Referrals to the FBI In November 1998, the VBA provided the FBI with disqualifying records on 88,898 VA beneficiaries. VA rating specialists had determined based upon medical evidence that these beneficiaries were unable to manage their own financial affairs. The VA appointed a fiduciary for purposes of receiving and managing each beneficiary's VA benefits. According to the VA, during the determination process beneficiaries were notified that VA proposed to rate them "incompetent" and that they were able to request a hearing and submit evidence to the contrary if they wished. VA also advised these beneficiaries regarding their right to appeal any final rating regarding their ability to receive and manage their own VA benefits. Despite the resultant NICS referral, however, the VA did not necessarily inform the beneficiary that he would lose his gun rights as a consequence of this determination. As described above, under the P.L. 110-180 the VA is required to inform the beneficiary of this outcome. Interestingly, the Veterans Medical Administration has not submitted any disqualifying records on VA medical care recipients to the FBI for inclusion in NICS for any medical/psychiatric reason (like PTSD). While veterans with PTSD or any other condition, who have been involuntarily committed under a state court order to a VA medical facility because they posed a danger to themselves or others, are ineligible to ship, transport, receive, or possess a firearm or ammunition under federal law, the Veterans Medical Administration would not make a related referral about that ineligibility to the FBI. Instead, the state in which the court resides would submit the disqualifying record to the FBI, if such a submission would be appropriate and permissible under state law. Nevertheless, the decision by the VA to submit VBA records on "mentally incompetent" veterans to the FBI for inclusion in the NICS mental defective file generated some degree of controversy in 1999 and 2000. Critics of this policy underscored that veterans routinely consented to "mentally incompetent" determinations so that a fiduciary (designated payee) could be appointed for them. Those critics contended that to take away a veteran's Second Amendment rights without his foreknowledge was improper. They also pointed out that no other federal agencies were providing similar disqualifying records to the FBI. This controversy subsided, but it re-emerged when Congress considered the NICS improvement amendments (described above). According to the Bureau of Justice Statistics, as of May 1, 2011, there were 130,886 files in the NICS mental defective file, which had been referred to the FBI by the VA. Those VA files accounted for 99.2% of mental defective files (131,979) referred to the FBI by any federal department or agency. In the view of some Members of Congress, it may be incongruous that other federal agencies, such as the Social Security Administration, that provide similar disability and income maintenance benefits to persons who are mentally incapacitated refer relatively few, if any, firearms-related disqualifying records about beneficiaries whom they serve to the FBI. Moreover, there are other individuals in the U.S. population who are similarly incapacitated due to their age-related infirmities or mental disabilities, but in many cases there are no mechanisms for state or local authorities to make similar referrals to the FBI. As a consequence, even with the changes put in place by P.L. 110-180 , those Members of Congress may view the VA's continued referral of firearms-related disqualifying records on veterans who have had a fiduciary appointed on their behalf but have not behaved in a threatening or dangerous manner to be an unjustified indignity placed on individuals who have served their country honorably in the Armed Forces. Other Members of Congress would maintain that the VA has faithfully complied with the law and that public safety is enhanced by making those referrals to the FBI. They might also argue that opposition to the VA policy waned between November 1998 and the 2007 congressional debate, demonstrating that veterans who were "adjudicated mental defective," rarely, if ever, sought to acquire and were subsequently denied firearms in a manner that could be described as an injustice. Those Members would likely underscore that, in their view, the VA's current policy does not diminish national recognition of those veterans' honorable service. Rather, the VA's policy has been implemented to protect those veterans and others from the harm that might result if they acquired a firearm and used it improperly due to reasons possibly related to their mental incompetency. Public Housing and Firearms Possession and Use In the 110 th Congress, the House passed a bill ( H.R. 6216 ) on July 9, 2008, that would have made changes related to the administration of the public housing program administered by the Department of Housing and Urban Development (HUD) through local public housing authorities (PHAs). The bill includes a provision that would have prohibited the HUD Secretary from accepting as reasonable any management or related fees charged by a PHA for enforcing any provision of a lease agreement that requires tenants to register firearms that are otherwise legally possessed, or that prohibits their possession outright. On the other hand, the bill would have allowed PHAs to terminate the lease of any tenant who was found to be illegally using a firearm. The gun-related provision in H.R. 6216 reportedly reflected a compromise. The original language restricting fees for enforcing gun restrictions was included in a motion to recommit offered during floor debate on a similar public housing bill ( H.R. 3521 ). That bill was not approved by the House, but was sent back to the House Financial Services Committee for further consideration. A new version of the public housing bill ( H.R. 5829 ) was introduced that included language from the motion to recommit, but it did not include the lease termination proviso, and the bill received no further consideration. In the 111 th Congress, the Financial Services Committee reported the Section 8 Voucher Reform Act of 2009 ( H.R. 3045 ; H.Rept. 111-277 ) on July 23, 2009. In committee markup, Representative Price successfully amended the bill on July 9, 2009, with language that would have prevented authorities from prohibiting firearms in public housing. The committee approved another housing bill that included a similar provision ( H.R. 4868 ) on July 27, 2010. Concealed Carry and Reciprocity (Thune Amendment) On July 22, 2009, the Senate considered an amendment ( S.Amdt. 1618 ) offered by Senator Thune to the FY2010 Defense Authorization Act ( S. 1390 ) that would have arguably provided for national reciprocity between states regarding the concealed carry of firearms. By agreement, the amendment needed 60 votes to pass, but it was narrowly defeated by a recorded vote, 58-39. Senator Thune introduced a similar bill, the Respecting States Rights and Concealed Carry Reciprocity Act of 2009 ( S. 845 ). As background, the issue of concealed carry under state law can be divided into four categories: (1) no permit required, (2) mandatory or "shall issue," (3) discretionary or "may issue," and (4) no concealed carry permitted. In Alaska and Vermont, state law allowed concealed carry without a permit (no permit required), as is the case today. When the Thune amendment was debated, 35 states had "shall issue" laws, in that the state issues the permit as long as the applicant meets the eligibility criteria. Eleven states were "may issue" states, in that the state had discretion in whether to issue a permit. And, Wisconsin and Illinois state law prohibited the concealed carry of firearms by civilians under any circumstances. Many states with concealed carry laws have extended concealed carry privileges, or reciprocity, to the residents of other states. According to the NRA, however, those concealed carry laws are often very technical and subject to change. Moreover, there are no national eligibility criteria, or training standards regarding concealed carry. Although the Thune amendment did not address the issue of national standards, it arguably would have required "may issue" states to honor the permits issued by "shall issue" states. By extension, it would also have required "shall issue" and "may issue" states to honor the eligibility of all residents of Alaska and Vermont to carry concealed firearms in their states, as long as those persons were not otherwise prohibited from possessing firearms. Bankruptcy and Firearms Representative John A. Boccieri and Senator Leahy introduced the Protecting Gun Owners in Bankruptcy Act of 2010 ( H.R. 5827 / S. 3654 ). This proposal would have amended federal bankruptcy law to permit an individual to exempt from the property of his estate a single rifle, shotgun, or pistol, or any combination thereof, as long as the total value of the exemption did not exceed $3,000. On July 28, 2010, the House passed H.R. 5827 by a roll call vote (two-thirds required) of 307-113 (Roll no. 479). In the 112 th Congress, Representative Tim Griffin has introduced a similar measure ( H.R. 1181 ). ATF Appropriations and Southwest Border Gun Trafficking The 111 th Congress considered legislation to either fund ATF or authorize increased appropriations for the agency. The ATF enforces federal criminal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. ATF works both independently and through partnerships with industry groups; international, state, and local governments; and other federal agencies to investigate and reduce crime involving firearms and explosives, acts of arson, and illegal trafficking of alcohol and tobacco products. ATF Appropriations for FY2011 The President's FY2011 budget request included $1.163 billion for ATF, an increase of $42.2 million, or 3.8%, compared to the FY2010-enacted appropriation. Proposed increases (over base) included $11.8 million for Project Gunrunner and $1.2 million for Emergency Support Function #13 (ESF-13), the Public Safety and Security Annex to the National Response Framework (NRF). The NRF sets broad responsibilities and lines of authority for federal agencies in the event of a national emergency or major disaster. Under the NRF, the Attorney General is responsible for ESF-13, which entails all hazards law enforcement planning and coordination for the entire United States and its territories. The Attorney General, in turn, has delegated his responsibility for ESF-13's implementation to the ATF. On July 22, 2010, the Senate Appropriations Committee reported an FY2011 CJS appropriations bill ( S. 3636 ; S.Rept. 111-229 ). This measure would have provided ATF with $1.163 billion for FY2011, matching the Administration's request. On July 22, 2010, the Senate Appropriations Committee marked up and reported the FY2011 Commerce, Justice, Science, and Related Agencies (CJS) appropriations bill ( S. 3636 ). The Senate bill would have matched the Administration's request. In the absence of an enacted CJS appropriations bill, Congress passed several continuing resolutions. As described above, the 112 th Congress finalized the FY2011 ATF appropriation and provided the agency with $1.113 billion. ATF Appropriations for FY2010 For FY2010, the Administration requested $1.121 billion and 5,025 full-time equivalent (FTE) positions for ATF, or $66.6 million and 68 FTE positions more than the amounts appropriated for FY2009 ($1.054 billion and 4,957). Of the difference, $23.6 million and 22 FTE positions were base adjustments. For Southwest border enforcement, the FY2010 request included a budget enhancement of $18 million to support Project Gunrunner and $25 million for the new National Center for Explosives Training and Research Center (NCETR). Compared to the enacted FY2009 level of funding, the FY2010 request would have provided a 4.9% increase. For ATF, Congress appropriated $1.121 billion in the Consolidated Appropriations Act, 2010 ( H.R. 3288 ). The President signed this bill into law on December 16, 2009 ( P.L. 111-117 ). The act provided an amount that was equal to the Administration's request. This amount was $52.5 million more than the final FY2009-enacted amount, or an increase of 4.9%. Conference report language ( H.Rept. 111-366 ) indicated that the act included $18 million for Project Gunrunner, the same amount requested by the Administration. In addition, the act also included $10 million to increase the Violent Crime Impact Team program, $6 million for construction (phase two) of the NCETR, and $1.5 million to complete ATF headquarters construction projects. On July 28, 2010, the House passed an FY2010 supplemental appropriations bill ( H.R. 5875 ) that included $39.1 million for ATF to increase Southwest border gun trafficking investigations. On August 5, 2010, the Senate passed its version of H.R. 5875 , which included $37.5 million for ATF. On August 9, the House introduced a new border security supplemental bill ( H.R. 6080 ), which was subsequently passed by the House on August 10. This bill contained language identical to Senate-passed H.R. 5875 . Reportedly, the House took up the bill with a new number to avoid a dispute related to its constitutional obligation to originate all revenue measures. This dispute arose with the addition of funding provisions in Senate-passed H.R. 5875 that were not included in the House-passed version. On August 12, the Senate passed H.R. 6080 . On August 13, the President signed H.R. 6080 into law ( P.L. 111-230 ). It provides ATF with an additional $37.5 million for Project Gunrunner. Southwest Border Gun Trafficking On the Southwest border with Mexico, firearms violence has spiked sharply in recent years as drug trafficking organizations have reportedly vied for control of key smuggling corridors into the United States. In March 2008, President Felipe Calderón called on the United States to increase its efforts to suppress gun trafficking from the United States into Mexico. In the 110 th Congress, the House passed a bill ( H.R. 6028 ) that would authorize a total of $73.5 million to be appropriated over three years, for FY2008 through FY2010, to increase ATF resources dedicated to stemming illegal gun trafficking into Mexico as part of the Mérida Initiative. Similar authorizations were included in S. 2867 , H.R. 5863 , and H.R. 5869 . In the 111 th Congress, similar authorizations were included in several bills ( S. 205 , H.R. 495 , H.R. 1448 , and H.R. 1867 ). Tiahrt Amendment and Firearms Trace Data Limitations Representative Todd Tiahrt offered an amendment that placed several funding restrictions and conditions on ATF and the FBI during full committee markup of the FY2004 DOJ appropriations bill ( H.R. 2799 ). While modified, those restrictions were included in the Consolidated Appropriations Act, 2004 ( P.L. 108-199 ). Amended to the ATF appropriations every year since (FY2005-FY2012), the Tiahrt restrictions prohibit the use of any funding appropriated for ATF to disclose firearms trace or multiple handgun sales report data for any purpose other than supporting "bona fide" criminal investigation or agency licensing proceedings, prohibit the use of any funding appropriated for ATF to issue new regulations that would require licensed dealers to conduct physical inventories of their businesses, require the next-day destruction of approved Brady background check records, and require ATF to include certain data disclaimers with any firearms tracing study it releases. Of these limitations, the first, dealing with disclosure of firearms trace or multiple handgun sales report data, probably was and is the most contentious. A coalition of U.S. mayors, including New York City Mayor Michael Bloomberg, maintain that they should have access to such data in order to identify out-of-state federally licensed gun dealers who wittingly or unwittingly sell large numbers of firearms to illegal gun traffickers. For FY2008, the Tiahrt limitation on firearms trace and multiple handgun sales report data was the source of debate when the Senate CJS Appropriations Subcommittee did not include this limitation in its draft bill. Senator Richard Shelby amended the FY2008 CJS appropriations bill (which became S. 1745 ) with similar, but modified, limitations in full committee markup. Similar language was included in the House-passed CJS appropriations bill ( H.R. 3093 ), and was included in the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ; H.R. 2764 ), into which the CJS appropriations were folded. The modified FY2008 limitation included new language that authorizes ATF to share firearms trace data with tribal and foreign law enforcement agencies and federal agencies for national intelligence purposes; share firearms trace data with law enforcement agencies and prosecutors to exchange among themselves; and release aggregate statistics on firearms traffickers and trafficking channels, or firearms misuse, felons, and trafficking investigations. The FY2008 limitation, however, continued to prohibit the release of firearms trace data for the purposes of suing gun manufacturers and dealers. Moreover, the limitation includes the phrase "in fiscal year 2008 and thereafter," which made it permanent law according to the Government Accountability Office (GAO). Despite the futurity language, Congress has modified the limitation's language and included it (with futurity language) in the FY2009, FY2010, FY2011, and FY2012 Commerce, Justice, Science (CJS), and Related Agencies Appropriations Acts ( P.L. 111-8 , P.L. 111-117 , P.L. 112-10 , and P.L. 112-55 ). Appendix B. Major Federal Firearms and Related Statutes The following principal changes to the Gun Control Act have been enacted since 1968. The Firearms Owners' Protection Act, McClure-Volkmer Amendments ( P.L. 99-308 , 1986), eases certain interstate transfer and shipment requirements for long guns, defines the term "engaged in the business," eliminates some recordkeeping requirements, and bans the private possession of machine guns not legally owned prior to 1986. The Armor Piercing Ammunition Ban ( P.L. 99-408 , 1986, amended in P.L. 103-322 , 1994) prohibits the manufacture, importation, and delivery of handgun ammunition composed of certain metal substances and certain full-jacketed ammunition. The Federal Energy Management Improvement Act of 1988 ( P.L. 100-615 ) requires that all toys or firearm look-a-likes have a blazed orange plug in the barrel, denoting that it is a non-lethal imitation. The Undetectable Firearms Act ( P.L. 100-649 , 1988, amended by P.L. 108-174 , 2003), also known as the "plastic gun" legislation, bans the manufacture, import, possession, and transfer of firearms not detectable by security devices. The Gun-Free School Zone Act of 1990 ( P.L. 101-647 ), as originally enacted, was ruled unconstitutional by the U.S. Supreme Court ( United States v. Lopez , 514 U.S. 549 (1995), April 26, 1995). The act prohibited possession of a firearm in a school zone (on the campus of a public or private school or within 1,000 feet of the grounds). In response to the Court's finding that the act exceeded Congress's authority to regulate commerce, the 104 th Congress included a provision in P.L. 104-208 that amended the act to require federal prosecutors to include evidence that the firearms "moved in" or affected interstate commerce. The Brady Handgun Violence Prevention Act, 1993 ( P.L. 103-159 ), requires that background checks be completed on all non-licensed persons seeking to obtain firearms from federal firearms licensees. The Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ) prohibited the manufacture or importation of semiautomatic assault weapons and large-capacity ammunition feeding devices for 10 years. The act also bans the sale or transfer of handguns and handgun ammunition to, or possession of handguns and handgun ammunition by, juveniles (younger than 18 years of age) without prior written consent from the juvenile's parent or legal guardian; exceptions related to employment, ranching, farming, target practice, and hunting are provided. In addition, the act disqualifies persons under court orders related to domestic abuse from receiving a firearm from any person or possessing a firearm. It also increased penalties for the criminal use of firearms. The assault weapons ban expired on September 13, 2004. The Federal Domestic Violence Gun Ban (the Lautenberg Amendment, in the Omnibus Consolidated Appropriations Act for FY1997, P.L. 104-208 ) prohibits persons convicted of misdemeanor crimes of domestic violence from possessing firearms and ammunition. The ban applies regardless of when the offense was adjudicated: prior to, or following enactment. It has been challenged in the federal courts, but these challenges have been defeated. The Omnibus Consolidated and Emergency Appropriations Act, 1999 ( P.L. 105-277 ), requires all federal firearms licensees to offer for sale gun storage and safety devices. It also bans firearms transfers to, or possession by, most non-immigrants and those non-immigrants who have overstayed the terms of their temporary visa. The Treasury, Postal and General Government Appropriations Act ( P.L. 106-58 ) requires that background checks be conducted when former firearms owners seek to reacquire a firearm that they sold to a pawnshop. The Homeland Security Act of 2002 ( P.L. 107-296 ) establishes a Bureau of Alcohol, Tobacco, Firearms and Explosives by transferring the law enforcement functions, but not the revenue functions, of the former Bureau of Alcohol, Tobacco and Firearms from the Department of the Treasury to the Department of Justice. The Law Enforcement Officers Safety Act of 2004 ( P.L. 108-277 ) provides that qualified active and retired law enforcement officers may carry a concealed firearm. This act supersedes state level prohibitions on concealed carry that would otherwise apply to law enforcement officers, but it does not override any federal laws. Nor does the act supersede or limit state laws that permit private persons or entities to prohibit or restrict the possession of concealed firearms on their property or prohibit or restrict the possession of firearms on any state or local government property, installation, building, base, or park. The Protection of Lawful Commerce in Arms Act ( P.L. 109-92 ) prohibits certain types of lawsuits against firearms manufacturers and dealers to recover damages related to the criminal or unlawful use of their products (firearms and ammunition) by other persons. This law also includes provisions that (1) increase penalties for using armor-piercing handgun ammunition in the commission of a crime of violence or drug trafficking, (2) require the Attorney General to submit a report (within two years of enactment) on "armor-piercing" ammunition based on certain performance characteristics, including barrel length and amount of propellant (gun powder), and (3) prohibits federally licensed gun dealers from transferring a handgun to an unlicensed person without also providing a secure storage or safety device. The Violence Against Women and Department of Justice Reauthorization Act of 2005 ( P.L. 109-162 ) authorized to be appropriated for ATF the following amounts: $924 million for FY2006, $961 million for FY2007, $999 million for FY2008, and $1.039 billion for FY2009. The USA PATRIOT Improvement and Reauthorization Act of 2005 ( P.L. 109-177 ) includes a provision that requires that the ATF Director be appointed by the President with the advice and consent of the Senate. The Disaster Recovery Personal Protection Act of 2006, which was included in the Department of Homeland Security Appropriations Act, 2007 ( P.L. 109-295 ), amended the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. §5207) to prohibit federal officials from seizing or authorizing the seizure of any firearm from private persons during a major disaster or emergency if possession of that firearm was not already prohibited under federal or state law. It also forbids the same officials from prohibiting the possession of any firearm that is not otherwise prohibited. Also, the law bans any prohibition on carrying firearms by persons who are otherwise permitted to legally carry such firearms because those persons are working under a federal agency, or under the control of an agency, providing disaster or emergency relief.
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Congress has debated the efficacy and constitutionality of federal regulation of firearms and ammunition, with strong advocates arguing for and against greater gun control. During the 112th Congress, several mass-casualty shootings punctuated public discourse on gun control. In a January 8, 2011, Tucson, AZ, shooting, 6 people were killed and 14 wounded, including Representative Gabrielle Giffords, who was grievously wounded. In a July 20, 2012, Aurora, CO, theater shooting, 12 people were killed and 58 wounded. In an August 5, 2012, Milwaukee, WI, Sikh temple shooting, 6 people were killed and three wounded. Several Members of Congress called for reconsideration of an expired ban on high capacity ammunition feeding devices (H.R. 308 and S. 32), strengthening provisions designed to encourage states to make firearms-related disqualifying records more accessible to federal authorities (S. 436/H.R.1781), and tightening regulation of interstate ammunition transfers (S. 3458/H.R. 6241). As a matter of oversight, the 112th Congress also considered the implications of Operation Fast and Furious and allegations that the Department of Justice (DOJ) and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) mishandled that Phoenix, AZ-based gun trafficking investigation. On June 28, 2012, the House passed a resolution (H.Res. 711) and cited Attorney General Eric Holder with contempt for his failure to produce additional, subpoenaed documents related to that operation to the Committee on Oversight and Government Reform. The DOJ Office of the Inspector General issued findings that high-ranking officials within ATF, the Arizona U.S. Attorney's Office, and the DOJ Criminal Division were responsible for misguided strategies and tactics, errors in judgment, and management failures related to this operation. On May 18, 2012, the House passed the FY2013 Defense Authorization Act (H.R. 4310), which would amend a limitation on the Secretary of Defense's authority to regulate firearms privately held by members of the Armed Forces off-base. On May 10, 2012, the House passed a Commerce-Justice-State appropriations bill (H.R. 5326) that would fund ATF for FY2013, and on April 19, 2012, the Senate Committee on Appropriations reported a similar bill (S. 2323). On April 17, 2012, the House passed the Sportsmen's Heritage Act of 2012 (H.R. 4089), a bill that would require agencies that manage federal public lands to facilitate access to and use of those lands for the purposes of recreational fishing, hunting, and shooting. The Senate could consider a related bill (S. 3525). Related language was included in a House-reported Interior Appropriations bill (H.R. 6091). On November 16, 2011, the House passed a bill (H.R. 822) that would establish a greater degree of reciprocity between states that issue concealed carry handgun permits. On October 11, 2011, the House passed a Veterans' Benefits Act (H.R. 2349) that would prohibit the Department of Veterans Affairs from determining a beneficiary to be mentally incompetent for the purposes of gun control, unless such a determination is made by a judicial authority. This report also includes discussion of other salient and recurring gun control issues that have generated past or current congressional interest. Those issues include (1) screening firearms background check applicants against terrorist watch lists, (2) combating gun trafficking and straw purchases, (3) reforming the regulation of federally licensed gun dealers, (4) requiring background checks for private firearms transfers at gun shows, (5) more-strictly regulating certain firearms previously defined in statute as "semiautomatic assault weapons," and (6) banning or requiring the registration of certain long-range .50 caliber rifles, which are commonly referred to as "sniper" rifles. To set these and other emerging issues in context, this report provides basic firearms-related statistics, an overview of federal firearms law, and a summary of legislative action in the 111th and 112th Congresses.
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The purpose of this report is to provide background and analysis for Congress on U.S. rule of law (ROL) and justice sector assistance programs to Afghanistan. This report provides context for ROL issues in Afghanistan by defining ROL and the justice sector, describing the scope of the ROL problem in Afghanistan, including the role of corruption, and surveying the range of Afghan justice sector institutions. This report also describes U.S., Afghan, and multilateral policy approaches to the Afghan justice sector since the U.S. military invasion of Afghanistan in 2001, U.S. policy coordination and funding, and current U.S. justice sector assistance programs in Afghanistan. Additionally, this report examines several issues for the 112 th Congress, which is likely to remain concerned with all aspects of U.S. policy toward Afghanistan, including authorizing and appropriating ROL-related programs and assistance, as well as oversight on policy implementation and effectiveness. Issues for Congress include the implications of Afghan corruption on future U.S. foreign assistance to Afghanistan, limitations of U.S. ROL support efforts in Afghanistan, debates regarding U.S. support to the Afghan informal justice sector, and long-term effectiveness of U.S. ROL support efforts in Afghanistan. U.S. efforts to train and support Afghan police forces as well as counternarcotics and anti-corruption efforts are discussed due to their cross-cutting relationship to ROL, but they are not the primary focus of this report. After several decades of conflict, warlordism, and government misrule, the U.S. government and international community began to rebuild the Afghan government's capacity, including ROL institutions, following the 2001 fall of the Taliban. Helping Afghanistan build its justice sector, however, suffers from the same difficulties that have complicated all efforts to expand and reform governance in that country: lack of trained human capital; traditional affiliation patterns that undermine the professionalism, neutrality, and impartiality of official institutions; and complications from the broader lack of security and stability in Afghanistan. At stake in U.S. government and multilateral efforts to support ROL development in Afghanistan is the goal of a stable, capable, and legitimate Afghan government. In a report evaluating ROL programs in Afghanistan, the State Department's Inspector General's Office (OIG) states: In Afghanistan, there is a direct connect between the lack of a workable system of governance and the national security of the United States. The absence of a modern, functional government sustains the Taliban and Al Qaeda and encourages the rapid growth of the opium trade. Confidence that the government can provide a fair and effective justice system is an important element in convincing war-battered Afghans to build their future in a democratic system rather than reverting to one dominated by terrorists, warlords, and narcotics traffickers. Without ROL the country cannot progress no matter what contributions are made by outsiders. By all accounts, the challenges in Afghanistan confronting ROL development and justice sector reform remain substantial. Limits to ROL reflect deficiencies in or the absence of effective national laws, police forces, and judicial systems. Afghanistan suffers from significant resource limitations in implementing a formal ROL system and from high levels of corruption. By most accounts, official corruption, which involves the misuse of public office for private gain, permeates all sectors of governance and is particularly prevalent in the law enforcement and judicial sectors. The legitimacy of Afghan national law continues to be challenged by alternate power structures, including tribal and militia leaders, and the Taliban, as well as major faction or ethnic leaders. U.S. and Afghan officials have raised concerns that, in the absence of effective ROL and a functioning formal justice system, Afghans may turn to or be forced to use the Taliban justice system to resolve disputes. Given the challenges facing ROL efforts and the perceived security imperative to address current ROL shortcomings in Afghanistan, ROL efforts have become the subject of increasing attention within the Obama Administration's strategy for achieving U.S. goals in Afghanistan. Several U.S. policy and guidance documents provide a framework for U.S. participation in ROL operations in Afghanistan, including the 2009 Integrated Civilian-Military Campaign Plan and the 2010 Afghanistan and Pakistan Regional Stabilization Strategy , both of which identify as top priorities the strengthening of Afghan ROL and access to justice. While not formally approved, the U.S. government has also maintained draft strategies that specifically address ROL efforts and, separately, anti-corruption efforts in Afghanistan. In 2004, the United Nations (UN) Secretary-General described ROL as a "principle of governance" characterized by adherence to the principles of supremacy of law, equality before the law, accountability to the law, fairness in the application of the law, separation of powers, participation in decision-making, legal certainty, avoidance of arbitrariness, and procedural and legal transparency. Under this concept, "all persons, institutions and entities, public and private... are accountable to laws" publicly promulgated, equally enforced, independently adjudicated, and consistent with international human rights law. This definition is widely applied, including in official U.S. government documents by the Departments of State and Defense. ROL is often understood to be a foundational element for the establishment and maintenance of democracy and economic growth, and the vehicle through which fundamental political, social, and economic rights are protected and enforced. The concept assumes the existence of effective and legitimate institutions, primarily a country's national government, to administer the law as well as to guarantee personal security and public order. ROL also requires citizen confidence in the fairness and effectiveness of its application, including procedural fairness, protection of human rights and civil liberties, and access to justice. The absence of significant government corruption is considered a prerequisite for effective ROL to be established, because only in corruption's absence is the supremacy of law upheld. While ROL is dependent on all aspects of governance to function properly, it is the "justice sector" that is responsible for ensuring that the ROL is implemented. The justice sector thus encompasses the entire legal apparatus of a country and its society, including the criminal as well as the civil and commercial justice sectors. Administration of justice can take place through formal, state-run judicial mechanisms as well as through traditional, or informal, dispute resolution mechanisms. In additional to the formal judiciary, additional elements of the justice sector are drawn from the executive and legislative branches, as well as other public and private institutions. They include the ministries of justice, legislatures, law enforcement agencies, prisons, financial and commercial regulatory bodies, prosecutors' offices, public defenders, ombudsmen's offices, law schools, bar associations, legal assistance, non-governmental organizations (NGOs), legal advocacy organizations, and customary and religious non-state dispute resolution institutions. ROL plays a prominent role in counterinsurgency (COIN) operations and can take place in post-conflict situations as well. As part of such efforts, a common objective of ROL efforts is to help establish or strengthen a legitimate governing authority and framework to which the local populace gives consent. According to the revised 2006 U.S. Army COIN field manual, establishing the ROL is a "key goal and end state." Civilian planning efforts for post-conflict situations similarly include ROL as a component of their missions. The U.S. Department of State's Office of the Coordinator for Reconstruction and Stabilization (S/CRS) lists "justice and reconciliation" as one of five key components to post-conflict reconstruction "essential tasks"; under this heading, justice and reconciliation includes capacity building elements associated with the criminal justice system, indigenous police, judicial personnel and infrastructure, legal system reform, corrections, and human rights, among others. In post-conflict situations, a prerequisite for the establishment of permanent, democratic ROL may be the implementation first of "transitional justice." According to the United Nations, transitional justice comprises the "full range of processes and mechanisms associated with a society's attempt to come to terms with a legacy of large-scale past abuses, in order to ensure accountability, serve justice, and achieve reconciliation." Transitional justice may include both judicial and non-judicial activities that may variously include individual prosecutions, reparations, truth-seeking, institutional reform, and vetting and dismissals. Transitional justice may also include efforts to rebuild justice sector institutions that were destroyed or lack the capacity to fulfill its basic functions and responsibilities. Transitional justice mechanisms and efforts to rebuild or strengthen justice sector institutions in post-conflict situations can be undermined by spoilers and opposition forces. Particularly in post-conflict situations, powerful leaders and political figures that had previously benefitted from the absence of ROL may attempt to resist efforts that could result in the reduction of their political influence, social status, and financial interests. They can include formal opposition groups, such as political parties, NGOs, and religious groups. They can also include informal or illicit opposition groups, such as insurgents, local militias, warlords, "for-hire" armed groups, and organized crime and corruption networks. For Afghanistan, the term ROL has been used in the contexts described above. Justice sector assistance programs in Afghanistan have historically centered on efforts to build the capacity of the formal justice institutions (e.g., Supreme Court, Ministry of Justice, and Attorney General's Office). While current police and counternarcotics efforts in Afghanistan have ROL components, these programs have historically been implemented and evaluated separately from other ROL programs. Support to the Afghan National Police (ANP), for example, is mainly funded and categorized as a component of support to the security forces and security sector. Since the early 2000s, when the first formal U.S. government ROL programs were developed in Afghanistan, ROL programs have evolved to include greater emphasis on dispute resolution mechanisms that comprise the informal justice sector. This development is both considered central to the counterinsurgency (COIN) strategy in Afghanistan and controversial among human rights advocates. Corruption, involving the abuse of power, trust, or position for private or personal gain, can have widespread negative effects on the establishment of ROL, democratic governance, and economic development. It can undermine efforts to establish democracy by threatening the viability of publicly accountable and transparent government institutions. It can also exacerbate inequality in a society when there is a perception that government services and foreign donor aid funds are only available through bribery or extortion to those who can pay the highest price. Political interference in the justice sector in particular can compromise the impartiality and integrity of judicial processes by fostering a culture of impunity. The presence of such widespread and entrenched corruption in Afghanistan is widely assessed to be undermining Afghan public and international donor confidence in the ability to establish ROL in Afghanistan. Despite differences in methodology and scope, studies agree that corruption in Afghanistan is a significant and growing problem. According to a 2009 U.S. Agency for International Development (USAID) assessment, the country is challenged by "pervasive, entrenched, and systemic corruption" that has reached unprecedented levels (see Figure 1 ). Such corruption is reportedly undermining security, development, and state-building objectives. According to the NGO Transparency International, Afghanistan in 2009 was ranked the second-most corrupt country in the world (179 out of 180 countries ranked). At the upper levels of government, several press accounts and observers have asserted that Afghan President Hamid Karzai deliberately tolerates officials who are allegedly involved in the narcotics trade and other illicit activity. Press accounts further assert that President Karzai supports such officials' receipt of lucrative contracts from donor countries, in exchange for their political support. Examples of cronyism and favoritism were evident in early September 2010, when President Karzai ousted the management of the large Kabul Bank, which processes payments for public sector employees, because of revelations of excessively large loans to major shareholders. Among them are Mahmoud Karzai, the President's elder brother, who is a major shareholder of Kabul Bank, and the brother of First Vice President Muhammad Fahim. Aside from the issue of high level nepotism, observers say that most of the governmental corruption takes place in the course of performing mundane governmental functions, such as government processing of official documents (e.g., passports, drivers' licenses), in which those who process these documents routinely demand bribes in exchange for more rapid action. Other forms of corruption include Afghan security officials' selling U.S. and internationally provided vehicles, fuel, and equipment to supplement their salaries. In other cases, local police or border officials may siphon off customs revenues or demand extra payments to help guard the U.S. or other militaries' equipment shipments. Other examples include cases in which security commanders have placed "no show" persons on official payrolls in order to pocket their salaries. At a broader level, the U.S. Special Inspector General for Afghanistan Reconstruction (SIGAR) has assessed that the mandate of Afghanistan's Control and Audit Office (CAO) is too narrow and lacks the independence needed to serve as an effective watch over the use of Afghan government funds. Population survey-based assessments appear to support the view that it is the lower level corruption that most affects the population and colors its assessment of government. Government corruption registers as among the top problems facing Afghanistan today. The majority of respondents also identify corruption as having become a more significant problem compared to the prior year and as having consistently increased in scope and severity since 2006. According to the United Nations Office on Drugs and Crime (UNODC), as many as one out of every two Afghans experienced bribery in the past year, resulting in an estimated $2.5 billion in bribe payments in 2009 alone—an amount that almost rivals the estimated value of the Afghan drug trade. The average value of a single administrative bribe in Afghanistan in 2009, according to the cited studies, was reportedly between $156 and $160 and, among those who paid bribes, the average number of bribes paid per year was reportedly between 3.4 times and five times per year. Afghan institutions engaged in the justice sector comprise a mix of formal governing institutions and offices, as mandated by the 2004 Afghan Constitution, as well as a broad range of informal dispute resolution mechanisms. A centerpiece of early U.S. government and international ROL efforts was the development and final Afghan approval of a new Constitution, which formally created a central government, a bi-cameral legislature, and an independent judiciary. Elements of Afghanistan's legal infrastructure included judges, prosecutors, courthouses, prisons, and secular and S haria faculties of law. Due in part to the limited reach of the formal justice system to many parts of the country, as well as ongoing general distrust and lack of familiarity with the formal justice system, many Afghans have continued to rely on traditional, local forms of dispute resolution, which are generally characterized as informal justice systems (see Figure 2 ). Such traditional bodies are believed to vary significantly among the 364 districts that comprise Afghanistan and the degree to which they provide just, fair, and humane resolutions to disputes remains a source of debate among observers. The following sections describe, in turn, the various components of the formal and informal justice sectors. Included is a discussion of several of the key anti-corruption bodies within the formal Afghan justice system, which have been at the heart of recent controversy and policy discussion both in Afghanistan and the United States. Under the Afghan Constitution, approved in a "Constitutional Loya Jirga" in January 2004, Afghanistan's central government has several major law enforcement institutions, which are discussed in the following sections. Chapter seven of Afghanistan's Constitution spells out the role of the Judicial branch of its government. The judicial branch consists of one Supreme Court, Courts of Appeals, and primary courts that are regulated and organized by law. The Supreme Court is the highest judicial organ. The nine members of the Supreme Court are appointed by the President to ten year terms, subject to their confirmation by the elected lower house of parliament ( Wolesi Jirga , House of the People). The Supreme Court's primary role is to ensure that laws, decrees, treaties, and conventions comport with the provisions of the Constitution. The Supreme Court's budget also funds the work of the whole judicial branch of government, and the Court recommends appointments of judges throughout the judicial branch, subject to the concurrence of the President. The head of the Supreme Court is Abdul Salam Azimi. He became Chief Justice of the Supreme Court in 2006, after the lower house of parliament refused to re-confirm his hardline Islamist predecessor Fazl Hadi Shinwari. Azimi is a U.S. educated former university professor, and considered a reformer and a progressive. Formerly a legal advisor to Afghan President Hamid Karzai, Azimi played a key role in the drafting of the 2004 Constitution. However, some well-placed Afghan observers say that Azimi is not viewed as a key official in government and his influence is highly limited. According to article seven of the Constitution, the Attorney General is an independent office of the executive branch. Its duties are to investigate and prosecute crimes. It is the Attorney General's Office (AGO) that is tasked with prosecuting cases of official corruption. As part of the effort to expand ROL in Afghanistan, international donors are funding the construction of AGO provincial headquarters in each of Afghanistan's 34 provinces. The Attorney General is Mohammad Ishaq Aloko. He was appointed Attorney General in August 2008, after Karzai fired his predecessor purportedly for expressing interest in running against Karzai in the August 2009 presidential election. Aloko was an intelligence officer for the government of Mohammad Daoud, who ruled Afghanistan from 1973 to 1978, and Aloko took refuge in Germany when Communist governments took power in 1978. He is a Pashtun, from Qandahar, which is the political base of Karzai. A controversy erupted in August 2010 when Karzai ordered Deputy Attorney General Fazel Ahmad Faqriyar, to step down ostensibly for reaching the maximum 40 years of government service. However, calling into question independence of the office, Faqriyar said he was fired for refusing to block corruption investigations of high level officials, including four ministers. The Ministry of Justice (MOJ) has primary responsibilities for judicial affairs of the executive branch. Its main duty is to draft, review, or vet proposed laws for compliance with Afghanistan's Constitution. It also has responsibility for administering Afghanistan's prison system. That authority was transferred to the MOJ from the Ministry of Interior (MOI) in 2003, in part because most Afghans identify the MOI with torture and abuses during the Soviet occupation period. The Justice Minister, appointed and confirmed by the National Assembly in January 2010, is Habibullah Ghaleb. He is a Tajik who worked in the Ministry during the reign of King Zahir Shah and his successor, and then as deputy Attorney General during the 1992-1996 mujahedin -led government of Burhanuddin Rabbani. He was part of Afghanistan's delegation to the July 2007 Rome Conference on rebuilding Afghanistan's justice sector. The Ministry of Interior (MOI) is responsible for overseeing domestic security organs. Today, the MOI is primarily focused on combating the insurgency rather than preventing crime. The Ministry manages the Afghan National Police (ANP), which now numbers about 110,000, and is trained by the United States and partner forces in Afghanistan. The Ministry has struggled to curb the widely alleged corruption within the police forces, which has eroded the trust of the population in the ANP. Another factor that has contributed to lack of trust is the memory some Afghans have of the Ministry's role in suppressing domestic opposition to the Soviet occupation of Afghanistan, and the alleged torture conducted against captured mujahedin and other rebels in Afghanistan's prisons. The current Interior Minister, Bismillah Khan, assumed his position in July 2010, after his predecessor, Mohammad Hanif Atmar, was dismissed suddenly in June 2010 over disagreements with President Karzai. Atmar reportedly disagreed with Karzai over the terms on which to potentially reconcile with Taliban insurgent leaders and on other issues. Khan, a Tajik, was the highly regarded Chief of Staff of the Afghan National Army (ANA) and his appointment to Interior Minister was intended, partly, to restore ethnic balance in the security apparatus. Most of the top leadership of the security organs is Pashtun. The following section describes major anti-corruption and oversight entities in Afghanistan and recent developments regarding their status. In 2010, heightened international concern over the level and extent of Afghan corruption, as well as ongoing challenges to Afghan governance overall, have increased scrutiny of several of these agencies. In particular, reports indicate that President Karzai has sought to prevent vigorous anti-corruption investigations of his closest allies and supporters. Following recent political fallout from U.S.-backed corruption investigations in Afghanistan, some observers have questioned whether the benefits of strengthening Afghan anti-corruption institutions are worth the cost of aggravating the U.S. government's relationship with Karzai. In August 2008 Karzai, with reported Bush Administration prodding, set up the "High Office of Oversight for the Implementation of Anti-Corruption Strategy" that is commonly referred to as the High Office of Oversight (HOO). This entity has the power to identify and refer corruption cases to state prosecutors, and to catalogue the overseas assets of Afghan officials. In his November 19, 2009, inaugural address, Karzai announced the upgrading of the HOO by increasing its scope of authority and resources. On March 18, 2010, Karzai, as promised during the January 28, 2010, international meeting on Afghanistan in London, issued a decree giving the High Office of Oversight direct power to investigate corruption cases rather than just refer them to other offices. The U.S. government gave the HOO about $1 million in assistance during FY2009, and its performance was audited by SIGAR in December 2009. The audit found deficiencies in the capacity and independence of the HOO but noted that it was still relatively new and emerging as an institution. This body was established by a July 2005 Karzai decree; it was proposed by then Supreme Court Chief Justice Fazl Ahmad Shinwari. The Tribunal remains under the Supreme Court's jurisdiction. The prosecutions of drug traffickers are tried at the Counter Narcotics Tribunal (CNT) following investigation by a Criminal Justice Task Force (CJTF). Together the two units have 65 Afghan prosecutors and investigators. These investigative and prosecutory bodies have been established by decree. Eleven judges have been appointed to the Anti-Corruption Tribunal (ACT), which operates under the jurisdiction of the Supreme Court. The Tribunal tries cases referred by an Anti-Corruption Unit (ACU) of the Afghan Attorney General's Office (AGO). According to testimony before the House Appropriations Committee (State and Foreign Operations Subcommittee) by Ambassador Richard Holbrooke on July 28, 2010, the ACT has received 79 cases from the ACU and is achieving a conviction rate of 90%. This Tribunal also is under the jurisdiction of the Supreme Court. Amid heightened tensions between the U.S. government and President Karzai in mid-2010 over corruption investigations, mentors from the Department of Justice (DOJ) were required to temporarily suspend their support to the ACU. Two key investigative bodies have been established since 2008. The most prominent is the Major Crimes Task Force (MCTF), tasked with investigating public corruption, organized crime, and kidnapping. A headquarters for the MCTF was inaugurated on February 25, 2010. According to the Federal Bureau of Investigation (FBI) press release that day, the MTCF is Afghan led but it is funded and mentored by the FBI, the U.S. Drug Enforcement Administration (DEA), the U.S. Marshals Service (USMS), Britain's Serious Organised Crime Agency, the Australian Federal Police, the European Union Police Mission in Afghanistan, and the U.S.-led training mission for Afghan forces. The MCTF currently has 169 investigators working on 36 cases, according to Amb. Holbrooke's July 28, 2010 testimony. A related body is the Sensitive Investigative Unit (SIU), run by several dozen Afghan police officers, vetted and trained by the DEA. It is this body that led the arrest in August 2010 of a Karzai National Security Council aide, Mohammad Zia Salehi on charges of soliciting a bribe from the large New Ansari money trading firm in exchange for ending a money-laundering investigation of the firm. The middle of the night arrest prompted Karzai, by his own acknowledgment on August 22, 2010, to obtain Salehi's release (although he still faces prosecution) and to establish a commission to place the MCTF and SIU under closer Afghan government control. Following U.S. criticism that Karzai is protecting his aides (Salehi reportedly has been involved in bringing Taliban figures to Afghanistan for conflict settlement talks), Karzai pledged to visiting Senate Foreign Relations Committee Chairman John Kerry on August 20, 2010, that the MCTF and SIU would be allowed to perform their work without political interference. Afghans turn often to local, informal mechanisms such as local shuras or jirgas run by mullahs , mawlawis (highly qualified Islamic scholars), or other local elders or individuals with religious standing. The traditional justice sector often is used to adjudicate disputes involving local property, familial or local disputes, or personal status issues. Some estimates say that the majority of cases are decided in the informal justice system (see Figure 3 ). Recent surveys also show that the proportion of respondents who take cases to traditional mechanisms has increased while the proportion of those taking cases to state courts has fallen. This is widely attributed not only to lack of trust of the formal justice system but also to the logistical difficulty and security concerns inherent in traveling to major population centers where the formal system's infrastructure (courts) is located. The non-governmental dispute resolution bodies also are widely considered more responsive and timelier in resolving cases, particularly those types of cases that are usually brought to these local decision bodies. In the informal sector, Afghans can usually expect traditional practices of dispute resolution to prevail, including those practiced by Pashtuns. Some of these customs include traditional forms of apology (" nanawati " and " shamana ") and compensation for wrongs done. These and other justice and dispute resolution mechanisms are discussed at http://www.khyber.org/ articles/ 2004/ JirgaRestorativeJustice.shtml . Among the main criticisms is that the informal justice system is dominated almost exclusively by males. Some informal justice shuras take place in Taliban controlled territory, and some Afghans may prefer Taliban-run shuras when doing so means they will be judged by members of their own tribe or tribal confederation. Afghan and international efforts to strengthen ROL and the justice sector in Afghanistan are held together by a series of overlapping and evolving strategic frameworks. Justice sector strategy guidance is outlined in several Afghan strategic documents, including the 2008 Afghanistan National Development Strategy (ANDS), the National Justice Sector Strategy , National Justice Program , and most recently the 2010 ANDS Prioritization and Implementation Plan . Collectively, these documents lay out the key ROL objectives of the Afghan government, steps for implementation, and a framework for international donors to support Afghanistan's ROL sector. Separately, the U.S. government maintains a corresponding set of overlapping and evolving strategic frameworks for its civilian and military support to Afghanistan, which include ROL elements. Strategic efforts to strengthen ROL in Afghanistan began in 2001 following the United Nations-facilitated Bonn Conference, which culminated in an agreement that established an Afghan Interim Authority, as well as an interim legal framework and judicial system, which outlined steps to re-establish a permanent governance structure in Afghanistan. Under the Bonn Agreement, a Judicial Reform Commission was assigned the responsibility to rebuild the Afghan justice sector and strengthen ROL. To support the Judicial Reform Commission's efforts, Italy was assigned the lead donor nation role for judicial administration and the detention and corrections system. In the initial years following the 2001 Bonn Agreement, progress in the strengthening of the justice sector under the Judicial Reform Commission, as well as in the implementation of ROL assistance projects under the lead donor nation framework, was widely viewed as halting and under-resourced. In 2002 and 2003, the United Nations reported problems in the functioning of the Commission and in its inability to work collaboratively with other aspects of the justice sector, including the Ministry of Justice and the Supreme Court. Due to reported "competing fiscal priorities" and low levels of donor support in the justice sector generally, but particularly pronounced in the corrections sector, minimal progress reportedly took place in the initial years. Further, disconnects in donor coordination and commitments across sectors contributed to views that progress in the justice sector was lagging behind other sectors. Between 2004 and 2006, a series of governance milestones took place, which, while not necessarily resulting in sustained progress in the justice sector, nevertheless established a baseline for the eventual future direction of Afghan justice sector support. First, the Constitutional Loya Jirga concluded in January 2004 with the signing of the new Afghan Constitution. With the establishment of a formal Afghan government following approval of the Constitution, donor nations could begin to support the development of a formal Afghan government justice sector. At the end of 2004, national elections were held and in December 2004 President Karzai was inaugurated. December 2005 marked the end of the Bonn Agreement and the opening of an elected, bicameral National Assembly. In February 2006, the London Conference on Afghanistan culminated with the Afghanistan Compact and the interim Afghanistan National Development Strategy (iANDS), which, combined, set out strategic priorities and plans for Afghan development. One of the three principal pillars of the Compact and Strategy was "governance, ROL, and human rights." The concept of lead donor nations was also dropped at the 2006 London Conference. During this timeframe, the U.S. government became the largest contributor to programs in support of ROL and justice sector capacity building. By the end of 2006, it had become increasingly clear to many in the donor community that serious gaps remained in the Afghan justice sector. The United Nations described the Afghan justice system in 2006 as suffering from a lack of sufficiently qualified judges, prosecutors, and lawyers, as well as limited by the absence of necessary physical infrastructure to administer justice fairly and effectively. Earlier that year, the Afghan Supreme Court issued a report on judicial education that highlighted the system-wide absence of fundamental judicial capabilities: only about one-third of the 1,415 sitting judges in Afghanistan were found to possess higher education qualifications. Judicial officials had become targets for assassination, compounding problems of recruitment and retention. Prison riots and attacks as well as incidents of escaped prisoners underlined the security vulnerabilities of the corrections system. According to observers, well-connected prisoners were often released when relatives complained about their incarceration, leading to a perception that justice in Afghanistan was selectively applied. Other observers described low levels of public confidence in the justice sector, with due process systematically undermined by lengthy pretrial detentions, and the absence of legal defense representation. By December 2006, a United Nations Security Council mission to Afghanistan sought to emphasize the perceived importance of prioritizing justice sector support, stating: As a matter of highest priority, the mission urges the Government of Afghanistan with the support of its international partners to establish rule of law and good governance throughout the country. To this end, the mission encourages the Government to take immediate steps to strengthen justice sector institutions and provincial government, including the replacement of corrupt officials and local power brokers. In these efforts, the Government must enjoy the united support of the international community and adequate resources. More effective mechanisms for strategic planning, funding and coordination of rule of law programmes among international donors and agencies at the national and provincial levels are required. There is also the need to address the problem of endemic corruption within the judiciary and for a comprehensive review of judicial service. The mission calls upon donors to increase the coherence and scale of assistance in the development of Afghanistan's human capital, with special priority to be given to the reform of the country's civil service. Although donor contributions for justice sector assistance remained limited, compared to other sectors, 2007 was marked by previously unprecedented pledges. At the 2007 Ministerial-Level International Conference on ROL in Afghanistan, hosted in Rome, Italy, donors pledged to contribute $360 million over five years to justice sector reform. In 2008, the Afghan government released its final Afghanistan National Development Strategy (ANDS), as well as supplemental details for justice sector development in the National Justice Sector Strategy (NJSS) and National Justice Program (NJP). The ANDS sets out several ROL objectives to be met by the end of 2010. Objectives included completing the basic legal framework, including civil, criminal, and commercial law; rehabilitating the physical justice sector infrastructure; establishing active and operational formal justice sector institutions in all 34 Afghan provinces; reviewing and reforming oversight procedures related to corruption, lack of due process, and other miscarriages of the law; and implementing reforms to strengthen the professionalism, credibility, and integrity of justice sector institutions. The National Justice Sector Strategy (NJSS) is an element of the ANDS and sets out additional justice sector development goals to be met by 2013. The National Justice Program (NJP) set forth steps to implement the goals of the ANDS and the NJSS, using a combination of Afghan and bilateral and multilateral donor funds to develop and reform the justice system. Following the 2010 London Conference on Afghanistan in January, the international community relationship with the Afghan government has shifted into a new "transition" phase. In this new phase, international actors will continue to play a supporting role, but responsibility for Afghan security and development will rest with the Afghan government. In July 2010, a follow-on to the London Conference took place in Kabul, during which the Afghan government outlined its security and development goals for the next several years. Included among such goals were several related to governance and ROL. These goals were set forth in an updated supplement to the 2008 ANDS, called the ANDS Prioritization and Implementation Plan . This emerging phase is marked by two key trends in justice sector support efforts: (1) an increased concern about the extent of corruption within the Afghan government and (2) an increased interest about how to address the informal justice sector. Promoting ROL and justice sector development is part of the broader effort to increase the legitimacy of Afghan governance and institutions. Emphasis on this aspect of the overall U.S. strategy for stabilizing Afghanistan appears to be increasing under the Obama Administration, particularly as the Karzai government continues to be challenged by widespread perceptions of corruption. Specifics regarding the implementation of such broad ROL goals, however, continue to evolve. Justice sector assistance programs in Afghanistan have historically centered on efforts to build the capacity of the courts and justice agencies (e.g., Supreme Court, Ministry of Justice, and Attorney General's Office). These efforts include support to develop the physical infrastructure of the justice system, as well as training, mentoring, and other forms of capacity building. While the police are considered a component of the justice sector, assistance to the law enforcement sector in Afghanistan has historically been implemented and evaluated separately from other ROL programs. A similar explanation applies to counternarcotics efforts in Afghanistan, which also have ROL dimensions. More recent efforts have sought to expand upon existing programs to increase Afghan access to justice at the provincial and district level as well as to develop linkages between the formal and informal justice sector. Since approximately 2004, when the first formal U.S. government ROL programs were first implemented, ROL programs have evolved to include greater emphasis on the informal justice sector. This is a development that is both considered central to the counterinsurgency (COIN) strategy in Afghanistan and controversial among some for its lack of uniform adherence to international human rights standards and for other reasons. However, the traditional justice system is difficult for international donors to influence because it is practiced in areas that are not under government control or that are difficult to access. In February 2010, the State Department issued the Afghanistan and Pakistan Regional Stabilization Strategy , which includes "enhancing Afghan rule of law" as one of its nine "key initiatives" for Afghanistan. The 2010 Stabilization Strategy identifies five major ROL program objectives including strengthening traditional justice; capacity building for the formal justice sector; corrections sector support; enhanced access to formal justice; and enhanced and focused outreach. Justice sector reform is also featured as a policy priority in the U.S. C ounternarcotics S trategy for Afghanistan , last updated in March 2010. Although not available publicly, the Administration also maintains other strategies and guidance related to ROL and the justice sector, including, but not limited to a U.S. Strategy for R ule of Law in Afghanistan and a U.S. Strategy for Anti-Corruption in Afghanistan . According to the State Department, the R ule of Law Strategy is composed of four pillars, or goals: Pillar 1 : Tackle the pervasive culture of impunity and improve and expand access to the state justice sector, by increasing capacity and reducing corruption in the justice sector's institutions; Pillar 2 : Support corrections reform; Pillar 3 : Provide security and space for traditional justice systems to re-emerge organically in areas cleared of the Taliban and engage closely at the grassroots level to ensure dispute resolution needs in the local communities are being met; and Pillar 4 : Build the leadership capacity of the Afghan government's justice sector, and civil society generally. The 2010 Afghanistan and Pakistan Regional Stabilization Strategy followed on several prior strategic plans under the Obama Administration, which also emphasized ROL and related justice sector support programs. These included the 2009 Integrated Civilian-Military Campaign Plan and several earlier speeches by President Obama on the future direction of U.S. efforts in Afghanistan. The August 2009 Integrated Civilian-Military Campaign Plan , jointly released by the Departments of State and Defense, established a framework for the coordination of both civilian and military activities in Afghanistan. This Campaign Plan provided guidance on how to execute the U.S. mission in Afghanistan over the next three years, with particular emphasis on the immediate 12 to 18 month time frame. Among its goals, the Campaign Plan outlined 11 "transformative effects" or thematic missions to achieve, including improving access to justice; expansion of accountable and transparent governance; and countering the nexus of insurgency, narcotics, corruption, and criminality. On March 27, 2009, President Obama announced the key findings of a 60-day high-level review of U.S. efforts in Afghanistan. Cornerstone elements of the strategic review included an increased emphasis on counterinsurgency (COIN) and on strengthening the legitimacy of the Afghan government through increased civilian assistance. Support would occur not only at the national level, but also at the provincial and local government level. This announcement followed President Obama's speech at West Point on December 1, 2009, which reinforced the goal of strengthening the justice sector and ROL in Afghanistan and highlighted the importance of combating corruption and delivery of services through an increasingly resourced and combined military and civilian effort. U.S. government agencies that are involved in ROL-related programming and policymaking in Afghanistan include the following: State Department : particularly the Office of the Special Representative for Afghanistan and Pakistan (S/RAP), and the Bureaus of International Narcotics and Law Enforcement Affairs (INL) and South and Central Asian Affairs (SCA). Department of Justice (DOJ) : particularly Justice Department attorneys, the Federal Bureau of Investigation (FBI), the Marshals Service (USMS), the Drug Enforcement Administration (DEA), and the Criminal Division's International Criminal Investigative Training Assistance Program (ICITAP). U.S. Agency for International Development (USAID) : particularly the Bureau for Democracy, Conflict, and Humanitarian Assistance (DCHA) and the Asia Bureau. Department of Defense (DOD) : particularly through the U.S. Forces-Afghanistan/International Security Assistance Force (USF-A/ISAF), North Atlantic Treaty Organization (NATO)-ISAF Training Mission-Afghanistan (NTM-A), U.S. Central Command (CENTCOM), Judge Advocate General's Corps (JAG), Combined Joint Task Force 101 (CJTF-101), and Combined Joint Interagency Task Force 435 (CJIATF-435). Department of the Treasury: particularly the Office of Technical Assistance (OTA). Department of Homeland Security (DHS): particularly Immigration and Customs Enforcement (ICE). Given the multiplicity of U.S. entities involved, program and policy coordination has been an important aspect of ROL activities in Afghanistan. However, the history of ROL coordination in Afghanistan highlights the difficulties that policymakers encountered. In many ways, ROL policy coordination continues to be a work in progress. Following the establishment of the Afghan Constitution in 2004, formal U.S. assistance projects in the justice sector expanded significantly and soon were so numerous and lacking in coordination that they risked "wasteful duplication and contradictory legal reform efforts." According to a June 2008 report by the State Department's Office of the Inspector General (OIG), "So many different international partners and U.S. government agencies were working with so many different grantees and contractors that by 2004 serious questions were raised regarding how well the U.S. government and its allies were communicating with one another, coordinating their efforts, and monitoring their expenditures." Steps to address ROL coordination began roughly in 2005 with the establishment of a ROL coordinator position in Kabul. In November 2005, the U.S. Ambassador to Afghanistan requested a special ROL coordination office to be located within Embassy Kabul. In early 2006, a Special ROL Counselor, with the rank of Ambassador, was appointed, but held the position temporarily for approximately three months. In October 2006, the U.S. ROL coordinator position was filled on a permanent basis, with a deputy coordinator position filled in 2007. The ROL coordinator became the lead voice and source of ROL information, communication, and guidance of the U.S. government in Afghanistan—both in international donor meetings dealing with ROL matters and with Afghan government officials on matters with judicial sector implications. The ROL coordinator also chaired a weekly meeting at the U.S. Embassy in Kabul, initially called the Special Committee for ROL and later, under the Obama Administration, renamed the ROL Working Group, to plan and coordinate U.S. government ROL activities. The primary purpose of the ROL Working Group was to share information and update U.S. government agency representatives on their ROL activities and programming. Several changes to ROL coordination have taken place since the beginning of the Obama Administration. In June 2009, a new Ambassador-rank position was created at the U.S. Embassy in Kabul, the Coordinating Director for Development and Economic Affairs (CDDEA). This position was intended to oversee all U.S. government non-military assistance to Afghanistan. The ROL coordinator thus became subsumed under the CDDEA. In July 2010, the CDDEA's portfolio was split to establish a separate Ambassador-rank position specifically for justice sector issues entitled the Coordinating Director of ROL and Law Enforcement (CDROLLE). The CDROLLE position is currently held by Ambassador Hans Klemm, the former U.S. Ambassador to East Timor. Ambassador Klemm is the lead U.S. government representative for ROL policy in Afghanistan. The creation of the CDROLLE position represents the first time in which ROL issues are the core element of a portfolio handled by a permanent, Ambassador-rank official at the U.S. Embassy in Kabul. Under the CDROLLE directorate are representatives from the State Department's International Narcotics and Law Enforcement Affairs Bureau (INL), DOD, DOJ, FBI, DEA, Department of Homeland Security's Immigration and Customs Enforcement, and the U.S. Marshals Service. In parallel to the establishment of the CDROLLE position in July, the military established the Combined Joint Interagency Task Force 435 (CJIATF-435) at Camp Phoenix. CJIATF-435 is a follow-on to the Joint Task Force 435 (JTF-435), which began operations in January 2010 and was mainly focused on transitioning control of U.S. military detention operations in Afghanistan to the government of Afghanistan. CJIATF-435 expands upon existing detention and corrections-related activities, to focus also on the development of Afghan investigative, prosecutorial, and judicial capabilities. Subsumed under CJATIF-435 is a new entity called the ROL Field Force (ROLFF), commanded by Gen. Mark Martins. According to a press release, ROLFF's mission is "to provide essential field capabilities and security to Afghan, coalition, and civil-military ROL project teams in non-permissive areas of Afghanistan, in order to build Afghan criminal justice capacity and promote the legitimacy of the Afghan government." Also newly established is the ROL Interagency Planning and Implementation Team (IPIT). This coordinating entity, co-located with CJIATF-435, is intended to facilitate the implementation of jointly-run civilian and military ROL programs. While bureaucratic coordination on ROL issues has reportedly greatly improved, observers indicate that coordination across a sector as broad and multi-faceted as ROL will require ongoing upkeep and face ongoing challenges, according to some observers. Factors impeding ROL coordination include the continuous turnover of staff stationed in Afghanistan, as well as conflicting priorities, and differing operating time horizons and capabilities among the various entities involved in ROL efforts. These factors are a challenge not only among and between U.S. government entities, but also among the other international donors involved in ROL assistance in Afghanistan. Changes to the current coordination mechanisms in place or the relative participation of various U.S. agencies involved in ROL efforts may occur under the new CDROLLE and CJIATF-435, as both entities evolve. ROL programs have been mainly implemented at the national level in Kabul. More recently, U.S. efforts have focused on extending the reach of the U.S. civilian justice sector support efforts at the provincial and district levels. The recent increased emphasis on expanding ROL at the provincial and district levels is in part a response to a perceived oversaturation of ROL advisors in Kabul and an absence of civilian ROL advisors elsewhere in Afghanistan, where approximately 90% of the populace resides. In 2008, for example, U.S. government officials characterized the number of justice advisors in Kabul as having reached a "point of saturation" and that the baseline knowledge of the Afghan justice sector outside Kabul remained "fairly rudimentary." Additionally, due largely to the security situation and lack of comparable civilian presence at the provincial and district levels of Afghanistan, the U.S. military was often the primary interface with Afghan officials on ROL issues outside Kabul. To address such concerns, there has been a gradual expansion in the amount of ROL resources and, particularly since the 2009 announcement of a "civilian uplift," in the number of civilian ROL advisors in Afghanistan. Civilian funding for ROL efforts in Afghanistan has also increased in recent years. As part of the 2008 proposal for a "civilian uplift" to support provincial- and local-level capacity-building in Afghanistan, the number of U.S. government ROL advisors at U.S.-led provincial reconstruction teams (PRTs) and military task forces has increased to more than a dozen in 2010. Additionally, State Department advisors from the INL Bureau are located at seven Regional Training Centers (RTCs) in Bamyan, Gardez, Herat, Jalalabad, Kandahar, Konduz, and Mazar-e-Sharif. Most recently, the U.S. military has established a ROL field force (ROLFF), whose mission is to support jointly implemented civilian and military ROL projects in the field, including in otherwise non-permissive areas of Afghanistan. Although the U.S. government does not have a permanent presence throughout all 34 Afghan provinces and 364 Afghan districts, there are several mechanisms in place to spread and expand ROL programming beyond Kabul and into the provinces and districts. They are variously led or funded by the U.S. government, the Afghan government, or the United Nations. U.S. assistance to Afghanistan's justice sector is provided in the form of justice sector training, mentoring, equipping, and infrastructure building. Justice sector assistance is funded through both civilian and military appropriations vehicles and implemented by a combination of U.S. government agencies, NGOs and private contractors. Civilian expenditures on ROL support in Afghanistan have increased from an estimated $7 million in FY2002 to an estimated $411 million in FY2010, totaling $904 million from FY2002 to FY2010. In 2008, the State Department stated in testimony to Congress that Afghanistan's justice sector would require more than $600 million worth of additional assistance over the next five years. Other U.S. government reports indicate that $600 million might underestimate the likely costs, given degradations in the Afghan security environment since the estimate was made. U.S. ROL funding for programs in Afghanistan, including both civilian and military components, is difficult to identify and quantify. As a 2008 inspection review of ROL programs in Afghanistan by the State Department's Office of the Inspector General (OIG) explains: Funding for the ROL program in Afghanistan is split among several U.S. government agencies. There is no one place where all funds spent specifically on ROL can be identified. ROL program funding is often multiyear and is combined with other programs such as police training and corrections facilities, which often make identification of specific costs difficult. ROL programs are also funded by the UN, other bilateral donors, and a variety of NGOs. The result is that there is currently no way to readily identify ROL funding and subsequently identify duplicate programs, overlapping programs, or programs conflicting with each other. Afghans, while seemingly eager to embrace ROL, are confused by the variety of programs implemented specifically by INL, USAID, and the U.S. military units in Afghanistan. Funding figures from one source may not match other Department or agency funding matrices identifying funds that are ROL specific. Most non-Defense Department foreign assistance for ROL activities in Afghanistan is funded by from two foreign aid accounts: Economic Support Fund (ESF) and International Narcotics Control and Law Enforcement (INCLE). DOD ROL efforts are funded through the Commander's Emergency Response Program (CERP) and the Afghanistan Security Forces Fund (ASFF), among other sources. At least a few estimates for total U.S. government spending on ROL assistance are available. These estimates, however, suffer from several various limitations, which include differing or unclear criteria for what constitutes ROL programming, such as whether police, corrections, or justice-related counternarcotics assistance are included, and whether general governance capacity building assistance and support for human rights are included; incomplete or non-comparable estimates of ROL programming across agencies, due to the varying inclusion or omission of staffing and administrative program management costs, differing appropriations vehicles, as well as changes in foreign aid tracking methodologies since the beginning of ROL assistance in Afghanistan; and the unclear inclusion or omission of potential sources of ROL assistance funding and ROL assistance-related costs, particularly for U.S. military and law enforcement funding sources. As the 2008 OIG report explains, "the U.S. government, through several agencies, is funding many programs related to ROL.... However, no one source seems to have a clear picture of the scope of U.S. expenditure in this field." Overall, these estimates indicate that U.S. assistance to the Afghan justice sector has grown gradually since FY2002, accelerating in recent years to become the largest foreign donor in this sector (see Figure 4 ). In FY2002, the U.S. Government Accountability Office (GAO) estimates that the U.S. government provided $7 million for ROL programming. From FY2002 through FY2007, U.S. assistance totaled a combined $160 million for ROL programming. In the next two fiscal years, U.S. assistance for ROL in Afghanistan more than doubled prior expenditures. International donors also provided financial contributions to ROL efforts in Afghanistan. At the 2007 Rome Conference on ROL in Afghanistan, for example, international donors, other than the United States, pledged to contribute $83 million in new ROL assistance to be administered by the World Bank, which exceeded prior international commitments to contribute $82 million for ROL assistance in Afghanistan. The U.S. government pledged $15 million at the 2007 Rome Conference. It remains unclear, however, whether U.S. and other donor contributions will cover the estimated Afghan need for ROL assistance. The scope of U.S. ROL programs in Afghanistan is broad and inherently multi-disciplinary. The following sections break down such programs into three categories: major justice sector programs, selected other justice sector programs, and cross cutting ROL programs. Major programs include the primary projects implemented by the Departments of State, Justice, and Defense, as well as USAID. The State Department, USAID, and DOD also fund several smaller projects to support Afghanistan's justice sector. These are described in the section on selected other justice sector projects. Additionally, multiple other U.S. efforts in Afghanistan have implications for the ROL. While these projects tend not to be described or defined as ROL programs, many observers would agree that the success of these projects is likely to impact the success of the major U.S.-funded justice sector programs. The four major U.S. funded programs are the Judicial Sector Support Program (JSSP), the Corrections System Support Program (CSSP), the ROL Stabilization (RLS) Program, and the Senior Federal Prosecutors Program. JSSP, CSSP, and the Senior Federal Prosecutors Program are all managed and funded through the State Department's INL Bureau. The RLS program is a USAID-funded program that began in mid-2010 as a follow-on to USAID original ROL program, called the Afghanistan ROL Project (ARoLP). ARoLP ran from approximately October 2004 to June 2009. After roughly a year's hiatus, the expanded RLS program began. Unlike its predecessor, the RLS program has two sub-program elements, including one focused on the formal justice sector (mainly the Supreme Court) and a new, second component focused on the informal justice sector. DOD also funds multiple ROL projects. However, such efforts are not necessarily organized under a central program or project name. The State Department's INL Bureau funds the majority of U.S. government justice sector support to Afghanistan through several programs. INL's primary assistance program for such support is the Justice Sector Support Program (JSSP), which first began in mid-2005. The main focus of JSSP is to build the capacity of Afghanistan's criminal justice system through training and mentoring of justice sector personnel, including prosecution and defense services, the Attorney General's Office (AGO) and the Ministry of Justice (MOJ). Other areas of support include access to justice, gender justice issues, anti-corruption, legislative drafting, legal education and training, and public legal services. JSSP funds 32 U.S. justice sector advisors and 45 Afghan legal consultants who have experience and expertise as prosecutors, judges, defense attorneys, and other criminal justice system professionals, as well as additional support personnel. Through JSSP programming, more than 2,000 justice professionals, including judges, prosecutors, criminal investigative police, defense attorneys, victim and gender justice advocates, and others from 30 of 34 provinces have been trained since 2005. JSSP advisor teams are located in Kabul as well as in Herat, Balkh, Kunduz, Nangarhar, and Paktiya. INL plans on placing additional JSSP advisor teams in Kandahar and Bamyan as well potentially doubling the number of U.S. justice sector advisors and Afghan legal consultants involved in JSSP programs. In Kabul, the primary target Afghan agencies of JSSP programs include the AGO and MOJ. The JSSP program provides support to the AGO through training and mentoring, as well as advising the Afghan Attorney General on various issues, including anti-corruption enforcement, police-prosecutor coordination, gender issues, administrative reform, and legal reform. JSSP provides support to the MOJ and its key directorates, including the Policy and Strategy Unit, which provides policy and organizational reform advice to the Justice Minister. Other JSSP-funded support includes the development of a curriculum for the training of future Afghan prosecutors in the Stage course, which is a 12-month professional legal training program that follows undergraduate courses in law. The curriculum in development addresses issues such as gender justice and anti-corruption. Other projects to support access to justice include mentoring and capacity building for defense attorneys and private legal defense organizations. Advisors outside of Kabul focus on police-prosecutor training and promote access to justice by holding provincial justice conferences and training defense attorneys. Additionally, JSSP provides support to the Anti-Corruption Unit (ACU). The Corrections System Support Program (CSSP), managed by the State Department's INL Bureau, is the primary civilian-led corrections assistance program provided by the U.S. government to Afghanistan. U.S. corrections assistance began in 2005 as part of JSSP, and was subsequently split off in 2006 as a stand-alone program. CSSP was created in response to lagging international attention to the Afghan corrections system as the prisoner population grew from approximately 400 to 600 prisoners in the early 2000s to roughly 16,000 today. From 2007 to 2008 alone Afghanistan's prison population reportedly grew 21%. As with other aspects of the Afghan justice system, a State Department Inspector General (OIG) report on ROL efforts in Afghanistan describes Afghan corrections as suffering from poorly trained staff, inadequate pay, crumbling buildings, and poor connections to the other components of the justice sector. CSSP's goal is to train, mentor, and advise the Ministry of Justice's Central Prison Directorate (CPD) in developing a safe and humane prison system that will not radicalize prisoners. Space for the growing number of prisoners and the quality of existing facilities are priorities for support to the Afghan corrections system. Among its major projects, CSSP provides capacity building and infrastructure support to the corrections system. One example of a capacity building project is the development of a prisoner tracking system that will track both pretrial and sentenced prisoners. The system is intended to allow defendants to be tracked as they enter and move through various stages of the justice system process. It also helps to prevent prisoners from being held for longer periods than is legally permitted or required. Infrastructure support to the Afghan corrections system through CSSP includes the construction of new facilities and rehabilitation of existing ones. For example, CSSP is supporting the renovation and reconstruction of the Pol-i-Charkhi Prison, which includes related training, staffing and equipping. In addition, CSSP funding also supports operations and maintenance costs for the Counternarcotics Justice Center (CNJC) in Kabul, a secure facility built by the Army Corps of Engineers that houses the Counternarcotics Criminal Justice Task Force (CJTF), the Central Narcotics Tribunal (CNT), and a detention center. Other CSSP assistance projects also include support for pay and rank reform for corrections officers; programs to address the special needs of vulnerable prisoner populations, including women and juveniles; and the development of prisoner vocational industries, such as carpet weaving, to support prisoner reintegration and reeducation. In collaboration with the Combined Joint Interagency Task Force 435 (CJIATF-435), CSSP is establishing a new mobile team to assess prisons. CSSP projects are implemented through approximately 60 corrections advisors. As part of CSSP's training mission, more than 3,800 Afghan corrections staff have received training. Courses have included basic training and several advance and specialized courses, such as emergency response team training, English language programs, and special training for dealing with female inmates. Trainings are mainly conducted at training centers located in Kabul (at the Central Training Center) and at the Regional Training Centers (RTCs). Completion of the basic training curriculum is a prerequisite for a corrections officer to be included in any pay reform or salary supplement support program. The ROL Stabilization (RLS) program is USAID's follow-on to the Afghanistan ROL Project (ARoLP), which began in October 2004 and ended in June 2009. After roughly a year's hiatus due in part to contracting issues, the RLS program began in mid-2010. There are two parts to USAID's program, implemented in Afghanistan through two separate private contractors. One component focuses on the formal justice sector, primarily the courts system. A second component focuses on the informal justice sector. The formal component of the RLS program expands upon prior efforts under ARoLP to work with the Ministry of Justice, the Supreme Court, and the faculties of law and Sharia at private and public universities. Such efforts are intended to improve the capacity of the formal court system and raise citizens' awareness of their legal rights and how the judicial system operates. Originally introduced under ARoLP, the current RLS program will continue the release and implementation of an Afghanistan Case Assignment System (ACAS) in all Afghan courts. ACAS is designed to track and assign cases to judges across the judicial system. It is intended to strengthen the capacity of the Supreme Court to monitor and discipline judges, collect statistics on case flow, and make them publically available. The formal component of the RLS program also expands upon prior efforts to emphasize training and vetting of judges for corruption cases, particularly those involved in the recently established Anti-Corruption Tribunal (ACT). Planned efforts to support court capacity building under the formal component program include judicial administrative reform for pay and grade levels, infrastructure and financial management assistance, as well as judicial training at the national, provincial, and district levels. Under the formal component, the academic faculties of law and Sharia also receive support for legal study tours for Afghan law professors and curriculum development for the Supreme Court's judicial candidate training program (the judicial stage ). The informal component of the RLS program is a new element to USAID's ROL programming in Afghanistan. It is intended to be a one-year pilot program, beginning mid-2010, to provide immediate access to justice through shuras in cleared and held districts. The four pilot districts or villages include two in Kandahar Province (Arghandab and Dand) and two in Nangarhar Province (Besood and Sikh Rod). Planned activities include establishing links between the informal and formal justice sectors, including providing transportation to justice sector facilities and facilitating case referrals between the two systems; mapping the operation and function of the informal justice system; funding quick-impact projects, such as refurbishing justice facilities; and training and mentoring tribal elders and religious leaders. With funds from the State Department's INL Bureau, DOJ maintains a program to send DOJ prosecutors to Afghanistan to provide legal mentoring and training to build investigatory and prosecutorial capacity to combat corruption, drug trafficking, and other serious crimes. DOJ's focus has been to provide legal training and assistance to the Afghan Criminal Justice Task Force (CJTF), a specialized law enforcement entity for narcotics cases, and the Afghan Major Crimes Task Force (MCTF), a specialized crime investigation unit designed to address the most serious cases of corruption, kidnapping, and organized crime. Additionally DOJ supports the Attorney General Office's anti-corruption unit (ACU), and also provides other training initiatives for provincial judges, prosecutors, and investigators at Provincial Reconstruction Team (PRT) and Regional Training Center (RTC) locations outside of Kabul. Participating DOJ attorneys have also assisted Afghan officials with drafting several key legal documents, including a comprehensive counternarcotics law, military courts legislation and military courts penal and procedural law, as well as counterterrorism and extradition laws. The Senior Federal Prosecutors Program also provides criminal law advice to the U.S. Embassy in Afghanistan, Afghan government leadership, and U.S. law enforcement, as needed. As of October 2010, there are eight DOJ attorneys based in Kabul participating in the Senior Federal Prosecutors Program. They were recruited from the 93 U.S. Attorney's Offices in the United States for a tour in Afghanistan that lasts between one year and one-and-a-half years. Current DOJ plans are to expand the program from seven U.S. federal prosecutors to 15 by the end of 2010 and 21 by the end of 2011. In collaboration with the DOJ attorneys, the FBI also provides criminal investigatory training and mentoring initiatives to the same Afghan entities. As part of its counterinsurgency (COIN) and stability operations, and in conjunction with its civilian counterparts, the U.S. military provides various support to the justice sector in Afghanistan, particularly at the provincial and district levels. DOD support is provided through its PRTs, District Support Teams (DSTs), a division-level ROL team, and brigade-level Judge Advocate Generals. Since 2008, the U.S. military has held Key Leader Engagement meetings (KLEs) with provincial-level chief justices and other justice sector officials to facilitate cooperation with local officials on the development of justice sector infrastructure, training, and security of judges and courts. With funds from the Commander's Emergency Response Program (CERP), the U.S. military provides infrastructure support to improve provincial and district level judicial systems, including building or rehabilitating and furnishing prisons, detention facilities, and courthouses. DOD's CJTF-101, which operates within ISAF Regional Command-E (RC-E), supports judicial and prosecutor training. Training efforts have included the Continuing Legal Education program. Through its Provincial Reconstruction Teams (PRTs), the U.S. military has offered quarterly Continuing Legal Education programs on varying legal topics, including commercial law, criminal law, land disputes, civil rights, and gender justice to local judges, attorneys, prosecutors, corrections officers, and police officials. Under another justice sector initiative, called the "mobile courts/circuit rider initiative," DOD utilizes assets to enable secure transport of judges and prosecutors into non-permissive areas. At the national level, the U.S. military is also involved in police-justice sector integration through support to the Afghan Ministry of Interior's Legal Advisor's Office. Through its Provincial Reconstruction Teams (PRTs), the military also helps to produce and distribute legal texts and legal awareness materials for the radio and in print. The Defense Department is also increasingly supporting the training and mentoring of Afghan corrections and other aspects of the Afghan justice sector through Combined Joint Interagency Task Force 435 (CJIATF-435) and ongoing efforts to transition detention operations in Afghanistan to the Afghan government. CJIATF-435 is a July 2010 follow-on to Joint Task Force 435 (JTF-435), which was established in September 2009 and became operational in January 2010. JTF-435 assumed responsibility for U.S. detention operations in Parwan, including oversight of the detainee review processes, programs to facilitate the reintegration of detainees into society, and support for the promotion of the ROL in Afghanistan through corrections-related training and mentoring. As JTF-435 evolved into CJIATF-435, it has become engaged in a broader range of ROL support activities, including developing Afghan investigative, prosecutorial, and judicial capabilities. Several additional ROL assistance programs implemented by other agencies also are funded mainly by the State Department, though they are smaller in funding and scope of purpose. They include support for the following: Major Crimes Task Force (MCTF) . With funding mainly from the Defense Department, the FBI provides support to the Major Crimes Task Force (MCTF), an Afghan interagency entity designed to investigate high-level crimes related to public corruption and organized crime. Sensitive Investigations Unit (SIU) . With funding from the Defense Department and the State Department, DEA supports the Afghan Sensitive Investigations Unit (SIU). While the Sensitive Investigations Unit's primary purpose is the investigation of high-level drug-related criminal cases, investigations may also involve high-level corruption cases. Judicial Security . The U.S. Marshals Service (USMS) provides judicial security assistance to the Ministry of Interior's security personnel assigned to the Counternarcotics Judicial Center (CNJC). Several members of the Marshals' Tactical Operations Division Special Operations Group are in Kabul. High Office of Oversight (HOO). Between FY2011 and FY2013, USAID plans to provide the High Office of Oversight (HOO) $30 million to build capacity at the central and provincial level, according to USAID officials. By the end of the first quarter of 2010, USAID will have reportedly provided $1.4 million in start-up assistance to the HOO. USAID would pay for salaries of six High Office of Oversight senior staff and provides some information technology systems as well. Plans also include support for HOO to decentralize in conjunction with the establishment of regional Anti Corruption Tribunals. Legal Education . With grant funding from the State Department's INL Bureau, the University of Washington brings Afghan law professors to the United States, where they can enroll in law school courses and obtain certificates or Master of Law (LLM) degrees. Also with grant funding from the State Department's INL Bureau, the International Association of Women Judges (IAWJ) provides support to Afghan women in the legal profession. Research on the Informal Justice Sector . With funding from the State Department's INL Bureau, the U.S. Institute of Peace (USIP) has conducted, since mid-2007, studies on linkages between the formal and informal justice systems in Afghanistan. As part of the project, USIP conducted studies on the informal justice sector in four pilot districts that span both rural and urban environments—two districts in Herat, one district in Nangahar, and one district in Paktya. Multilateral Trust Funds . With funding from the State Department's INL Bureau, the U.S. government contributes to multilateral funds that address salary reform for judges, prosecutors, and corrections personnel. In addition to assistance programs specifically to the justice sector, discussed above, other crosscutting efforts have an impact on ROL goals. These include programs to strengthen the capacity of general Afghan governance, anti-corruption, women's issues, counternarcotics, and the Afghan security forces, particularly the Afghan National Police. As discussed above, widespread practices of corruption are generally attributed as undermining international efforts to establish ROL in Afghanistan. U.S. efforts to combat Afghan corruption overlap with U.S. efforts to strengthen the justice sector, particularly regarding support to investigate, prosecute, and incarcerate corrupt actors. In addition to such programs, the U.S. government is involved in other anti-corruption efforts, beyond the scope of Afghan justice sector assistance, but with theoretically positive consequences for strengthening ROL in Afghanistan. For example, NATO commander Gen. Petraeus established in mid-2010 an anti-corruption task force to address and prevent future allegations of defense contractor funds from being siphoned off by corrupt businesses, warlords, or insurgents. A U.S. interagency effort established last year to track and disrupt Taliban finances is reportedly increasingly focused on tracking corruption-related finances. Other U.S.-issued anti-corruption directives delineate procedures regarding how U.S. officials in Afghanistan should proceed when they identify incidents of corruption occurring. Other examples include USAID's commercial law and trade facilitation support programs. USAID's Economic Growth and Governance Initiative (EGGI) is designed to advance the anticorruption agenda by streamlining business registration and licensing procedures; improving mining, telecommunications, insurance, and energy regulation; strengthening supervision of the banking sector and improved financial intermediation; and enhanced reporting and collection of tax and non-tax revenues into the Central Treasury. USAID's Trade Access and Facilitation in Afghanistan (TAFA) project supports efforts to streamline and simplify the customs clearance process. The goal of such efforts is to reducing time and payments for trading across borders, which otherwise provide opportunities for corruption. A central limiting factor to efforts to strengthen ROL and the capacity of the justice sector is the overall weakness of Afghanistan's civil service capacity to manage the day-to-day operations of a modern bureaucracy. According to several DOD reports to Congress, the Afghan government is fundamentally limited by a lack of civil service capacity, human capacity, resources, and interagency planning and coordination. The absence of sufficient amounts of educated human capital to draw from particularly hampers Afghan ministry efforts to implement programs and deliver public services at all levels. To address this, USAID administers the Afghanistan Civil Service Support (ACSS) program, previously the Capacity Development Program, which supports efforts to train civil servants throughout Afghanistan in public administration. In 2010, more than 15,000 training sessions have been planned to support civil service development at the national and sub-national levels in five common administrative functions: financial management, project management, human resources management, procurement, and policy and strategic planning. Analysts widely agree that Afghan government capacity and performance has generally been more effective at the national level in Kabul than out at the provincial and district levels. To address this general tendency for Afghan government policy planning and functions to be less effective at local levels, USAID administers the Local Governance and Community Development program (LGCD) and the Afghan Municipal Strengthening Program to provide provincial and district governance capacity building, as well as an expanded focus on major urban municipalities. Though the scope of the Local Governance and Community Development program is broader than support specifically to the Afghan justice sector, it indirectly seeks to facilitate the expansion of ROL governance principles to the provincial and district levels. Vulnerabilities in Afghanistan's financial regulatory system have raised concerns about the likelihood that potentially significant sums of money may be laundered or otherwise illegally moved through the Afghan financial channels. Such vulnerabilities may include not only the formal banking system, but also bulk cash smuggling and informal value transfer mechanisms, such as hawala . The Department of the Treasury administers technical assistance to the Financial Intelligence Unit (FIU) at Afghanistan's central bank, which has covered financial sector oversight, supervision and enforcement as well as guidance in the registration of money service businesses. Other U.S. government agencies are also involved in various other efforts to track and investigate potential Afghan financial crimes. Land and property disputes represent the largest proportion of civil law cases in Afghanistan. To address this, USAID administers the Land Reform in Afghanistan project, valued at up to $140 million over five years beginning in FY2010. This project is intended to support efforts to reduce corruption in land transactions by raising awareness among citizens about land processes and procedures, by reducing the number of steps and preventing delays in land transactions, and by establishing a legal and regulatory framework to standardize land administration and property disputes. To improve institutional checks and balances through the legislative branch, USAID supports various programs to assist the Afghan National Assembly. Under one program, the Afghanistan Parliamentary Assistance Program (APAP), USAID supports the Budget Committee's capacity to understand, analyze, and oversee the budgeting process. Another program assists the Afghan Parliament's National Economic Commission to understand and support adoption of modern economic, commercial and financial legislation, and efforts to conduct cost-benefit analysis as a tool for economic decision-making. In addition to the gender justice component of the JSSP, the State Department provides additional support to women's issues through the Increasing Women's Rights and Access to Justice in Afghanistan Program and the Advancing Human Rights and Women's Rights within an Islamic Framework Program. Such programs are intended to train and educate male and female police officers, prosecutors, defense attorneys, corrections officers, and others in civil society on gender-sensitive interpretations and applications of the penal code sections that affect women. The State Department funds efforts to build the capacity of the Afghan government to investigate and prosecute human trafficking cases, as well as to provide training to improve victim identification, referral mechanisms, and the management and reporting of trafficking cases. Target government officials include police officers, judges, and prosecutors. Law enforcement and justice sector reform represents one of the five key pillars in the U.S. government's counternarcotics strategy for Afghanistan. To support this goal, the State Department, DOJ, particularly DEA, and DOD maintain several programs that are intended to enhance the Afghan judicial system as it relates to counternarcotics, train prosecutors, and build the infrastructure necessary to indict, arrest, try, convict, and incarcerate drug traffickers. The State Department, for example, provides funding to DOJ for the mentoring of Afghan investigators and prosecutors on the Criminal Justice Task Force and Afghan judges on the Central Narcotics Tribunal, both of which are co-located at the Counternarcotics Justice Center (CNJC), as well as the Provincial Counternarcotics Training Program. With State Department and DOD funding, DEA supports, trains, and equips specialized counternarcotics law enforcement units within the Afghan Counternarcotics Police (CNP), including the National Interdiction Unit (NIU), the Sensitive Investigative Unit (SIU), and the Technical Investigative Unit. These Afghan officers work with the DEA Kabul Country Office and the DEA Foreign-deployed Advisory Support Teams (FAST) on investigations. DOD also provides military support to Afghan counternarcotics forces through the Combined Joint Interagency Task Force–Nexus (CJIATF-N) and through the DOD-supported Afghan Counternarcotics Training Academy. Building and reforming the ANP is primarily a security mission in Afghanistan, but with significant implications for ROL. With DOD funding and State Department program support, Afghan National Police are trained, equipped, and mentored through the Focused District Development (FDD) program and other targeted efforts for the Criminal Investigations Division, Counternarcotics Police, Counterterrorism Police, Afghan National Civil Order Police, Kabul City Police, Afghan Provincial Police, and Afghan Border Police. Current Administration policy emphasizes expanding and improving Afghan governance as a long-term means of stabilizing Afghanistan, in recognition of the essential role effective ROL plays in securing Afghanistan. Yet, the weak performance of and lack of transparency within the Afghan government are growing factors in debate over the effectiveness of U.S. strategy in Afghanistan. Congress has been active in all aspects of U.S. policy toward Afghanistan, including authorizing and appropriating ROL-related programs and assistance, as well as conducting oversight on policy implementation and effectiveness. In the context of broader congressional interest in the evaluation, oversight, and funding of the overall U.S. effort in Afghanistan, the following sections identify several issues for Congress related to U.S. efforts to strengthen ROL and the justice sector in Afghanistan. These include recent Afghan corruption allegations and implications for congressional funding, criticism of ROL support efforts by program evaluators, U.S. support to the informal justice sector, and the future of U.S. support to Afghan ROL. Heightened alarm over the extent and scale of corruption in Afghanistan has spurred policymakers to question the direction of U.S. policy in Afghanistan under the Obama Administration. U.S. assistance to Afghanistan for FY2011 is under particular congressional scrutiny due to press allegations in June 2010 that corrupt Afghan officials may be pocketing billions of U.S. aid and logistics funding and siphoning it out of Afghanistan's Kabul Airport to financial safe havens elsewhere. Major concerns for Congress are whether U.S. assistance to Afghanistan is susceptible to waste, fraud, and diversion; whether such aid funds may be in part fueling Afghan corruption; and what can the U.S. government do to address potential vulnerabilities. In June 2010, Representative Nita Lowey, Chair of the House Appropriations Subcommittee responsible for the State Department's Foreign Operations budget, announced that she would place a hold on certain U.S. aid to Afghanistan until she has "confidence that U.S. taxpayer money is not being abused to line the pockets of corrupt Afghan government officials, drug lords, and terrorists." Following such allegations and congressional concern, several congressional hearings in July 2010 on the issue of civilian assistance to Afghanistan ensued. While the specific allegations of corruption were not confirmed, witnesses generally acknowledged corruption in Afghanistan to be a major impediment to establishing effective ROL efforts and overall reconstruction goals. Earlier in 2009, Representative Dave Obey, Chair of the House Appropriations Committee, also emphasized concerns regarding corruption and the need for specific and measurable benchmarks for anti-corruption improvement to justify future U.S. commitments Afghanistan. Recent concerns over corruption have also prompted a broader policy debate over the relative importance of fighting corruption among other U.S. strategic priorities in Afghanistan. Central questions in current debates include the following: How far should the U.S. government go in combating corruption in Afghanistan? Are there limits in the extent to which anti-corruption should be a priority in U.S. strategy to Afghanistan? How should anti-corruption investigations in Afghanistan be conducted and resolved? Through due process of Afghan law? Through diplomatic negotiation? Or with or without overt endorsement from President Karzai and other top-level Afghan officials? On the one hand, Obama Administration policy, as articulated in two major Afghanistan policy addresses on March 27, 2009, and December 1, 2009, emphasizes the need for more to be done to combat corruption within the Afghan government. The latter Obama statement, for example, specified that "the days of providing a blank check are over" for the Afghan government if it does not reduce corruption and deliver services. Supporters of such a policy approach have emphasized the importance of anti-corruption efforts in an overall counterinsurgency (COIN) strategy in Afghanistan, focused on improving Afghan perceptions of the Afghan government's legitimacy and transparency. Supporters would also emphasize the importance of anti-corruption efforts in plugging some of the most serious corruption-related leaks, including, potentially, the recently reported bulk cash movements out of the Kabul Airport. Recent Afghan investigations involving several U.S.-supported anti-corruption and oversight agencies may also be indicative of improvements in Afghan government capacity to combat corruption. Others, however, have questioned whether the benefits of anti-corruption efforts in Afghanistan outweigh several drawbacks. For example, recent high-profile corruption investigations targeting prominent Karzai supports have had the unintended consequence of aggravating U.S.-Karzai relations and also potentially undermining recent U.S. successes in strengthening Afghan anti-corruption capabilities. Some observers have discussed the possible need to avoid investigating and prosecuting particular high-level Afghan officials to avoid future complications in the U.S. government's relationship with President Karzai. Observers suggest that such an approach, while potentially beneficial from a diplomatic perspective, may risk facilitating the existing perceptions among many Afghans that high-level corrupt officials are exempt from the full force of Afghan law. Other observers have also argued that meaningful improvements in combating corruption in Afghanistan require a long-term U.S. commitment to stay in Afghanistan for potentially decades. Short of that, such observers predict that prioritizing anti-corruption will yield limited success. As Congress conducts oversight and appropriates funding for U.S. assistance programs to support ROL in Afghanistan, an issue to consider is the extent to which the Afghan government can absorb and effectively use such assistance. Such sentiments have been variously confirmed by the Special Inspector General for Afghanistan Reconstruction (SIGAR), U.S. Government Accountability Office (GAO), the State Department's Office of the Inspector General (OIG), and others in legislatively mandated reports to Congress on the status of U.S. ROL efforts in Afghanistan. Collectively, these reports indicate that although significant progress in establishing ROL in Afghanistan have been achieved, there appear to be several fundamental limitations on the ability of the U.S. government and other donors to strengthen the Afghan justice sector in the short term. For example, a 2009 GAO report identified low literacy rates and the related lack of basic computer skills as fundamental limiting factors for the recruitment of Afghan justice sector personnel, including police, prosecutors, investigators, and administrative staff, as well as for the ability to implement a modern management system for the justice sector. Retention of trained staff is also challenging as many reportedly leave Afghan ministries for better paying jobs with donor countries and NGOs. Separately, a 2010 State Department OIG report warned that there is "tension" between, on the one hand, the U.S. government's stated goals for ROL in Afghanistan, and on the other hand, the capacity and commitment of the Afghan government to implement such ambitions. Also missing are components of an effective ROL and anti-corruption program, according to program evaluators. Additional reported concerns included the following: The lack of both a formally approved ROL strategy and an anti-corruption strategy for Afghanistan limits the U.S. Embassy in Kabul from setting ROL and anti-corruption priorities and timelines, as well as identifying the appropriate number of personnel and needed skill sets, according to the State Department's OIG and SIGAR. The need for improved ROL coordination and guidance between the U.S. Embassy in Kabul and Provincial Reconstruction Teams (PRTs) in the field, as well as improved reporting on ROL-related activities from the field to the U.S. Embassy in Kabul, according to the State Department's OIG. The inability of Afghan anti-corruption and oversight institutions, such as the Afghan High Office of Oversight (HOO) and the Afghan Control and Audit Office (CAO), to function effectively due to the lack of independence, a weak legal framework, and lack of commitment from donors, including from the U.S. government, according to SIGAR. Observers have described current U.S. efforts to support Afghan ROL development, including increased emphasis on the informal justice sector and other civilian and military efforts to improve access to justice at the provincial and district level, to be in many ways unique and untested, due the sheer scale of the programs involved, the low level of existing justice sector capacity, gaps in U.S. government understanding of existing dispute resolution mechanisms throughout the country, the absence of security in many parts of Afghanistan, and the existence of entrenched corruption at all levels of the Afghan bureaucracy. This means that, while many U.S. projects may be assessed as helping to improve the Afghan justice system, other U.S. projects, at times, may be perceived as ineffective or even counterproductive. In this vein, human rights and development advocates have questioned the value of funding U.S. programs to support the informal justice sector in Afghanistan. One concern is how deeply the international community, including the United States, should be involved in trying to ensure that the informal justice sector provides equitable justice. Some see supporting the traditional justice sector as an expedient means of building ties to local community leaders—a process that can improve the prospects for the U.S. counterinsurgency (COIN) strategy. Others believe that supporting use of the traditional justice system could harm the longer term objective of building a democratic and progressive Afghanistan by preserving some of its undemocratic traditional elements. Still others believe that policies to address the sector might be viewed by Afghans as intrusive. There are also some international officials who feel that reforming or overseeing these mechanisms is beyond the scope of the international stabilization mission in Afghanistan. This debate is an issue of concern for U.S. lawmakers, given the recent strategic focus on improving Afghan access to justice and increased attention and funding to strengthen and support the informal justice sector in Afghanistan. Various analysts continue to disagree regarding the value and efficacy of U.S. support to the informal justice sector, with some, on the one hand, arguing that such support is vital, particularly in the short term, to ensure that increasing numbers of Afghans have access to fair and timely dispute resolution mechanisms. Others, on the other hand, argue that, given finite amounts of resources available to strengthen the justice sector, all of such resources should be devoted to strengthening the quality and reach of the formal justice sector. U.S. efforts to support ROL and anti-corruption in Afghanistan have evolved and grown since 2001, beginning with support to the Afghan Interim Authority, ratification in 2004 of the Afghan Constitution, and continuing through 2010 as the Obama Administration has sought to strengthen and expand the reach of Afghan justice institutions throughout the country. Proponents of the current U.S. approach to ROL institutions in Afghanistan would argue that it is informed by prior challenges and policy criticism and reflects a strategic evolution in the level of U.S. commitment, resources, and policy approach to ROL-related efforts in Afghanistan. Observers continue to debate, however, whether or to what extent these shifts in the level of U.S. commitment and resources for ROL efforts in Afghanistan will help the U.S. government reach its ultimate goal of developing a stable, capable, and legitimate Afghan government. At stake in such a debate is the long-term effectiveness and value of continued congressional funding and policy support for the Obama Administration's efforts to strengthen ROL in Afghanistan. Already, some U.S. government assessments raise concerns about the long-term effectiveness of current efforts. In 2008, the State Department's Office of the Inspector General (OIG) concluded that "the many U.S. efforts to support ROL in Afghanistan are laudable for their professionalism and tenacity, but it is often not clear how, even if, ROL efforts are being measured for success, and when the intense international attention wanes, whether these projects can be sustained." Separately, a Defense Department report in 2010 warned that there has been "little enduring progress despite significant investment toward reform, infrastructure and training" in the justice sector and that while Afghanistan has "achieved some progress on anti-corruption, in particular with regard to legal and institutional reforms, real change remains elusive and political will, in particular, remains doubtful." Afghan officials have also raised similar concerns, arguing that despite increasing resources devoted to justice sector support, efforts have not yet translated into a functional formal justice system in Afghanistan. The 112 th Congress may choose to address these long term issues in the context of the Obama Administration's review of U.S. strategy to Afghanistan, expected to take place in mid-2011. Other potential decision points for Congress may center on FY2011 appropriations and congressional review of the Administration's FY2012 budget request.
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Developing effective Afghan justice sector institutions is considered by many observers to be essential in winning the support of the Afghan population, improving the Afghan government's credibility and legitimacy, and reducing support for insurgent factions. Such sentiments are reinforced in the face of growing awareness of the pervasiveness of Afghan corruption. To this end, establishing the rule of law (ROL) in Afghanistan has become a priority in U.S. strategy for Afghanistan and an issue of interest to Congress. Numerous U.S. programs to promote ROL are in various stages of implementation and receive ongoing funding and oversight from Congress. Major programs include the following: State Department's Justice Sector Support Program (JSSP) and Corrections System Support Program (CSSP); U.S. Agency for International Development's (USAID's) formal and informal ROL stabilization programs (RLS); Justice Department's (DOJ's) Senior Federal Prosecutors Program, which, with State Department funds, provides legal mentoring and training; and Defense Department's (DOD's) operational support through Combined Joint Task Force 101 (CJTF-101), as well as through Combined Joint Interagency Task Force 435 (CJIATF-435). It is difficult to identify all the programs, activities, and actors involved in ROL in Afghanistan, in part because of the continued evolution of U.S. strategy and interagency coordination for supporting the Afghan justice sector. Among the most recent shifts in strategy, U.S. efforts are increasingly resourced by a surge in civilian personnel at the provincial and district levels. To align with counterinsurgency (COIN) objectives, the U.S. government is emphasizing not only ministerial-level institution-building, but also projects to improve local-level access to justice, including projects to support informal dispute resolution mechanisms. Policy coordination among U.S. civilian and military entities involved in ROL efforts in Afghanistan also continues to change—including, most recently, the establishment of an Ambassador-led Coordinating Director for Rule of Law and Law Enforcement (CDROLLE) directorate at the U.S. Embassy, a General-led Rule of Law Field Force (ROLFF) under the CJIATF-435, as well as an Interagency Planning and Implementation Team (IPIT) to coordinate all civilian and military ROL activities in Afghanistan. Future shifts in policy approaches may also occur as policymakers seek to address growing concerns regarding Afghan corruption. Observers debate whether or to what extent the increased U.S. commitment to and resources for ROL efforts in Afghanistan will help the U.S. government reach its ultimate goal of developing a stable, capable, and legitimate Afghan government. Many would argue that the challenges in Afghanistan to ROL development and justice sector reform remain substantial and many factors undermine prospects for success. Chief among these are ongoing allegations of severe corruption at all levels of the Afghan government, lack of overall security and stability, limited Afghan government capacity, the existence of competing justice mechanisms, and the persistence of traditional attitudes that perpetuate the perception that well-connected Afghans can avoid facing prosecution and conviction. These debates will likely continue in the 112th Congress, as Members remain concerned with all aspects of U.S. policy toward Afghanistan, including authorizing and appropriating ROL-related programs and assistance, as well as conducting oversight on policy implementation and effectiveness.
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The Americans with Disabilities Act (ADA), 42 U.S.C. §§12101 et seq. , provides broad nondiscrimination protection for individuals with disabilities in employment, public services, public accommodations and services operated by private entities, transportation, and telecommunications. Enacted in 1990 and amended in 2008 by P.L. 110-325 , the ADA is a civil rights statute that has as its purpose "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The ADA has been the subject of numerous lower court decisions and the Supreme Court has decided 20 ADA cases. In the most recent Supreme Court decision, United States v. Georgia, the Court held that title II of the ADA created a private cause of action for damages against the states for conduct that actually violated the Fourteenth Amendment. However, the Court did not reach the issue of whether the Eleventh Amendment permits a prisoner to secure money damages from a state for state actions that violate the ADA but not the Constitution. In the same term, the Supreme Court decided Arbaugh v. Y. & H Corp. , a case under Title VII of the Civil Rights Act of 1964, which has implications for the ADA's prohibition of discrimination where employers employ 15 or more employees. On December 7, 2007, the Supreme Court granted certiorari in Huber v. Wal-Mart Stores, to determine whether an individual with a disability who cannot perform her current job must be reassigned to a vacant, equivalent position without competing with other workers. However, the Court dismissed the petition since the case was settled prior to oral argument. The Eighth Circuit Court of Appeals in Huber held that Wal-Mart was not required to automatically reassign her to the vacant position she wanted but could place another, better qualified, candidate in the position. Noting that Wal-Mart did place the plaintiff in a less lucrative position, the court of appeals stated that the plaintiff "was treated exactly as all other candidates were treated for the Wal-Mart job opening, no worse and no better." Currently, there is a split in the circuits on this accommodation issue, and in light of the Court's dismissal of the case, there will continue to be divergent views. The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. The ADA's definition has been controversial and is the subject of several Supreme Court cases, including Sutton v. United Air Lines, Inc ., and Toyota Motor Manufacturing v. Williams . The ADA Amendments Act of 2008, P.L. 110-325 , rejected the Supreme Court's limited interpretations of the definition of disability in these cases. The ADA, as amended, defines the term disability with respect to an individual as "(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment (as described in paragraph (3))." Although this is essentially the same statutory language as was in the original ADA, P.L. 110-325 contains new rules of construction regarding the definition of disability, which provide that the definition of disability shall be construed in favor of broad coverage to the maximum extent permitted by the terms of the act; the term "substantially limits" shall be interpreted consistently with the findings and purposes of the ADA Amendments Act; an impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability; an impairment that is episodic or in remission is a disability if it would have substantially limited a major life activity when active; the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, except that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered. The findings of the ADA Amendments Act include statements indicating that the Supreme Court decisions in Sutton and Toyota as well as lower court cases have narrowed and limited the ADA from what was intended by Congress. P.L. 110-325 specifically states that the current EEOC regulations defining the term "substantially limits" as "significantly restricted" are "inconsistent with congressional intent, by expressing too high a standard." The codified findings in the original ADA are also amended to delete the finding that "43,000,000 Americans have one or more physical or mental disabilities...." This finding was used in Sutton to support limiting the reach of the definition of disability. The ADA Amendments Act states that the purposes of the legislation are to carry out the ADA's objectives of the elimination of discrimination and the provision of "'clear, strong, consistent, enforceable standards addressing discrimination' by reinstating a broad scope of protection available under the ADA." P.L. 110-325 rejected the Supreme Court's holdings that mitigating measures are to be used in making a determination of whether an impairment substantially limits a major life activity as well as holdings defining the "substantially limits" requirements. The substantially limits requirements of Toyota as well as the EEOC regulations defining substantially limits as "significantly restricted" are specifically rejected in the new law. The third prong of the definition of disability covers individuals who are "regarded as having such an impairment (as described in paragraph (3))." Paragraph 3 states that "[a]n individual meets the requirement of 'being regarded as having such an impairment' if the individual establishes that he or she has been subjected to an action prohibited under this Act because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity." However, impairments that are transitory and minor are specifically excluded from the "regarded" prong. A transitory impairment is one with an actual or expected duration of six months or less. The ADA Amendments Act also provides in a rule of construction in Title V of the ADA that a covered entity under Title I, a public entity under Title II, or a person who operates a place of public accommodation under Title III, need not provide a reasonable accommodation or a reasonable modification to policies, practices, or procedures to an individual who meets the definition of disability solely under the "regarded as" prong of the definition. The Supreme Court in Sutton questioned the authority of regulatory agencies to promulgate regulations for the definition of disability in the ADA. The definition of disability is contained in Section 3 of the ADA, and the ADA does not specifically give any agency the authority to interpret the definitions in Section 3, including the definition of disability. The Supreme Court declined to address this issue since, as both parties to Sutton accepted the regulation as valid, "we have no occasion to consider what deference they are due, if any." The ADA Amendments Act specifically grants regulatory authority and states that "[t]he authority to issue regulations granted to the Equal Employment Opportunity Commission, the Attorney General, and the Secretary of Transportation under this Act, includes the authority to issue regulations implementing the definitions contained in sections 3 and 4." The first ADA case to address the interpretation of the definition of disability was Bragdon v. Abbott , a case involving a dentist who refused to treat an HIV infected individual outside of a hospital. In Bragdon, the Court found that the plaintiff's asymptomatic HIV infection was a physical impairment impacting on the major life activity of reproduction thus rendering HIV infection a disability under the ADA. Two other cases the Court has decided on the definitional issue involved whether the effects of medication or assistive devices should be taken into consideration in determining whether or not an individual has a disability. The Court in Sutton v. United Air Lines and in Murphy v. United Parcel Service, Inc, held the "determination of whether an individual is disabled should be made with reference to measures that mitigate the individual's impairment...." In Albertsons Inc. v. Kirkingburg the Court held unanimously that the ADA requires proof that the limitation on a major life activity by the impairment is substantial. The Court held in Toyota Motor Manufacturing v. Williams, that to be an individual with a disability under the act, an individual must have substantial limitations that are central to daily life, not just limited to a particular job. The holdings of all these decisions have been changed by the enactment of the ADA Amendments Act, P.L. 110-325 . Title I of the ADA provides that no covered entity shall discriminate against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment. The term employer is defined as a person engaged in an industry affecting commerce who has 15 or more employees. Therefore, the employment section of the ADA, unlike the section on public accommodations which does not have this limit, is limited in scope to employers with 15 or more employees. This parallels the coverage provided in the Civil Rights Act of 1964. Title VII, like the ADA, prohibits employment discrimination only where employers employ 15 or more employees. In an unanimous decision in Arbaugh v. Y. & H. Corp. , the Court held that the 15-employee limitation in title VII of the Civil Rights Act was not jurisdictional, but rather was related to the substantive adequacy of a claim. Thus, if the defense that the employer employs fewer than 15 employees is not raised in a timely manner, a court is not obligated to dismiss the case. Since the ADA's 15- employee limitation language parallels that of Title VII, it is likely that a court would interpret the ADA's requirement in the same manner. The Supreme Court examined the definition of the term "employee" under the ADA in Clackamas Gastroenterology Associates P.C. v. Wells. In Clackamas, the Court held in a 7-2 decision written by Justice Stevens, that the EEOC's guidelines concerning whether a shareholder-director is an employee were the correct standard to use. Since the evidence was not clear, the case was remanded for further proceedings. Clackamas Gastroenterology Associates is a medical clinic in Oregon that employed Ms. Wells as a bookkeeper from 1986-1997. After her termination from employment, Ms. Wells brought an action alleging unlawful discrimination on the basis of disability under Title I of the ADA. The clinic denied that it was covered by the ADA since it argued that it did not have 15 or more employees for the 20 weeks per year required by the statute. The determination of coverage was dependent on whether the four physician-shareholders who owned the professional corporation were counted as employees. The Court first looked to the definition of employee in the ADA which states that an employee is "an individual employed by an employer." This definition was described as one which is "completely circular and explains nothing." The majority then looked to common law, specifically the common law element of control. This was the position advocated by the EEOC. The EEOC has issued guidelines which list six factors to be considered in determining whether the individual acts independently and participates in managing the organization or whether the individual is subject to the organization's control and therefore an employee. These six factors are: "Whether the organization can hire or fire the individual or set the rules and regulations of the individual's work; Whether and, if so, to what extent the organization supervises the individual's work; Whether the individual reports to someone higher in the organization; Whether and, if so, to what extent the individual is able to influence the organization; Whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and whether the individual shares in the profits, losses, and liabilities of the organization." Justice Stevens, writing for the majority, found that some of the district court's findings of fact, when considered in light of the EEOC's standard, appeared to favor the conclusion that the four physicians were not employees of the clinic. However, since there was some evidence that might support the opposite conclusion, the Court remanded the case for further proceedings. Justice Ginsburg, joined by Justice Breyer, dissented from the majority's opinion. The dissenters argued that the Court's opinion used only one of the common-law aspects of a master-servant relationship. In addition, Justice Ginsburg noted that the physician-shareholders argued they were employees for the purposes of other statutes, notably the Employee Retirement Income Security Act of 1974 (ERISA) and stated "I see no reason to allow the doctors to escape from their choice of corporate form when the question becomes whether they are employees for the purposes of federal antidiscrimination statutes." Once an ADA employment case has advanced past the threshold questions of whether the plaintiff is an individual with a disability, and whether the employer in question employs 15 or more employees, the next set of issues involve whether the individual can perform the essential functions of the job in question with or without reasonable accommodation. The qualifications standards used may also include a requirement that an individual shall not pose a direct threat to the health or safety of other individuals in the workplace. Title III contains a similar provision stating that an entity does not have to permit an individual to participate in or benefit from the services of the entity where the individual poses a direct threat to the health or safety of others. In Bragdon v. Abbott the Court dealt with this issue in the Title III (public accommodations) context and found that the ADA does not require that an entity permit an individual to participate in or benefit from the services of a public accommodation where such an individual poses a direct threat to the health or safety of others. The Court determined that there is a duty to assess the risk of infection "based on the objective, scientific information available" and that a "belief that a significant risk existed, even if maintained in good faith, would not relieve him from liability." The Court remanded the case for consideration of the weight to be given to various pieces of evidence relating to the direct threat issue and on remand the court of appeals for the first circuit concluded that the defendant had produced no legitimate scientific evidence to show that providing routine dental care would subject him to a significant risk of contacting HIV. The Supreme Court denied certiorari on May 24, 1999. Although the Court in Albertsons, Inc. v. Kirkingburg did not specifically address the direct threat language, it dealt with a related concept concerning federal safety regulations. In Albertsons , the Court held that an employer who requires an employee as part of a job qualification to meet applicable federal safety regulations does not have to justify enforcing those regulations, even if there is an experimental waiver program. The Supreme Court again dealt with the direct threat concept but in the context of Title I of the ADA regarding employment in Chevron U.S.A. Inc., v. Echazabal . The Court held unanimously in Echazabal that the ADA does not require an employer to hire an individual with a disability if the job in question would endanger the individual's health. The Court upheld a regulation by the Equal Employment Opportunity Commission (EEOC) that allows an employer to assert a direct threat defense to an allegation of employment discrimination where the threat is posed only to the health or safety of the individual making the allegation. The ADA's statutory language provides for a defense to an allegation of discrimination that a qualification standard is "job related and consistent with business necessity." The act also allows an employer to impose as a qualification standard that the individual shall not pose a direct threat to the health or safety of other individuals in the workplace but does not discuss a threat to the individual's health or safety. The ninth circuit in Echazabal had determined that an employer violated the ADA by refusing to hire an applicant with a serious liver condition whose illness would be aggravated through exposure to the chemicals in the workplace. After a review of the factual background, the Court's decision in Echazabal analyzed the statutory and regulatory language finding that the statutory provisions discussed above were "spacious defensive categories, which seem to give an agency (or in the absence of agency action, a court) a good deal of discretion in setting the limits of permissible qualification standards." In support of the EEOC regulations, the Court noted that Congress used language identical to that in the Rehabilitation Act "knowing full well" that the EEOC had interpreted that language to recognize threats to self. Justice Souter, writing for the Court observed that the ADA's language was not intended to define all the defenses available to an employer. "When Congress specified threats to others in the workplace...could it possibly have meant that an employer could not defend a refusal to hire when an worker's disability would threaten others outside the workplace? If Typhoid Mary had come under the ADA, would a meat packer have been defenseless if Mary had sued after being turned away?" The Court then turned to the issue of whether the EEOC had sufficient statutory basis for its regulatory interpretation. Finding that "Chevron's reasons for calling the regulation reasonable are unsurprising: moral concerns aside, it wishes to avoid time lost to sickness, excessive turnover from medical retirement or death, litigation under state tort law, and the risk of violating the national Occupational Safety and Health Act of 1970...." In addition, Justice Souter found that the EEOC regulations were not the kind of workplace paternalism that the ADA seeks to outlaw. "The EEOC was certainly acting within the reasonable zone when it saw a difference between rejecting workplace paternalism and ignoring specific and documented risks to the employee himself, even if the employee would take his chances for the sake of getting a job." The Court emphasized that a direct threat defense must be based on medical judgment that uses the most current medical knowledge. The Supreme Court had examined an analogous issue in UAW v. Johnson Controls, Inc. , which held that under the Civil Rights Act of 1964 employers could not enforce "fetal protection" policies that kept women, whether pregnant or with the potential to become pregnant, from jobs that might endanger a developing fetus. Although this case was raised by the plaintiff, the Supreme Court distinguished the decision there from that in Echazabal . The Johnson Controls decision was described as "concerned with paternalistic judgments based on the broad category of gender, while the EEOC has required that judgments based on the direct threat provision be made on the basis of individualized risk assessments." The Supreme Court reversed and remanded the lower court decision. On remand the district court entered summary judgment in favor of the employer and the ninth circuit reversed. The ninth circuit emphasized the individualized nature of the inquiry and found that Chevron was required "to do more than consider generalized statements of potential harm." In Raytheon Co. v. Hernandez, the Supreme Court was presented with the issue of whether the ADA confers preferential rehiring rights on employees who have been lawfully terminated for misconduct, in this case illegal drug use. However, the Court, in an opinion by Justice Thomas, did not reach this issue, finding that the ninth circuit had improperly applied a disparate impact analysis in a disparate treatment case and remanding the case. The Court observed that it "has consistently recognized a distinction between claims of discrimination based on disparate treatment and claims of discrimination based on disparate impact." Disparate treatment was described as when an employer treats some people less favorably than others because of a protected characteristic such as race, and liability depends on whether the protected trait actually motivated the employer's decision. Disparate impact, in contrast, involves practices that are facially neutral but in fact impact a protected group more harshly and cannot be justified by business necessity. Disparate impact cases do not required evidence of an employer's subjective intent. In Wright v. Universal Maritime Service Corp ., a unanimous Court held that the general arbitration clause in a collective bargaining agreement does not require a plaintiff to use the arbitration procedure for an alleged violation of the ADA. The Court's decision was limited since it did not find it necessary to reach the issue of the validity of a union-negotiated waiver. In other words, the Court found that a general arbitration agreement in a collective bargaining agreement is not sufficient to waive rights under civil rights statutes. The Court did not reach situations where collective bargaining agreements are very specific in requiring arbitration for alleged violations of civil rights statutes. The Supreme Court in U.S. Airways v. Barnett held that an employer's showing that a requested accommodation by an employee with a disability conflicts with the rules of a seniority system is ordinarily sufficient to establish that the requested accommodation is not "reasonable" within the meaning of the ADA. The Court, in a majority opinion by Justice Breyer, observed that a seniority system, "provides important employee benefits by creating, and fulfilling, employee expectations of fair, uniform treatment" and that to require a "typical employer to show more than the existence of a seniority system might undermine the employees' expectations of consistent, uniform treatment." Thus, in most cases, the existence of a seniority system would entitle an employer to summary judgment in its favor. The Court found no language in the ADA which would change this presumption if the seniority system was imposed by management and not by collective bargaining. However, Justice Breyer found that there were some exceptions to this rule for "special circumstances" and gave as examples situations where (1) the employer "fairly frequently" changes the seniority system unilaterally, and thereby diminishes employee expectations to the point where one more departure would "not likely make a difference" or (2) the seniority system contains so many exceptions that one more exception is unlikely to matter. Although the majority in Barnett garnered five votes, the Court's views were splintered. There were strong dissents and two concurring opinions. In her concurrence, Justice O'Connor stated that she would prefer to say that the effect of a seniority system on the ADA depends on whether the seniority system is legally enforceable but that since the result would be the same in most cases as under the majority's reasoning, she joined with the majority to prevent a stalemate. The dissents took vigorous exception to the majority's decision, with Justice Scalia, joined by Justice Thomas, arguing that the ADA does not permit any seniority system to be overridden. The dissent by Justice Souter, joined by Justice Ginsberg, argued that nothing in the ADA insulated seniority rules from a reasonable accommodation requirement. In Cleveland v. Policy Management Systems Corp. , the Supreme Court unanimously held that pursuit and receipt of SSDI benefits does not automatically stop a recipient from pursuing an ADA claim or even create a strong presumption against success under the ADA. Observing that the Social Security Act and the ADA both help individuals with disabilities but in different ways, the Court found that "despite the appearance of conflict that arises from the language of the two statutes, the two claims do not inherently conflict to the point where courts should apply a special negative presumption like the one applied by the Court of Appeals here." The fact that the ADA defines a qualified individual as one who can perform the essential functions of the job with or without reasonable accommodation was seen as a key distinction between the ADA and the Social Security Act. In addition, the Court observed that SSDI benefits are sometimes granted to individuals who are working. However, although these distinctions between the two statutes would rule out a special legal presumption, the Court did note that in some cases an earlier SSDI claim may genuinely conflict with an ADA claim. Therefore, if an individual has asserted that he or she is unable to work in an application for SSDI benefits, this may negate the ADA requirement that the individual with a disability be able to perform the essential functions of the job. For that reason the Court held that "an ADA plaintiff cannot simply ignore the apparent contradiction that arises out of the earlier SSDI total disability claim. Rather, she must proffer a sufficient explanation." Since the parties to the case in Cleveland did not have the opportunity to examine the plaintiff's contentions in court, the case was vacated and remanded for further proceedings. In Olmstead v. Georgia, the Supreme Court held that Title II of the ADA requires states to place individuals with mental disabilities in community settings rather than institutions when the State's treatment professionals have determined that community placement is appropriate, community placement is not opposed by the individual with a disability, and the placement can be reasonably accommodated. "Unjustified isolation...is properly regarded as discrimination based on disability." The Olmstead case had been closely watched by both disability groups and state governments. Although disability groups have applauded the holding that undue institutionalization qualifies as discrimination by reason of disability, the Supreme Court did place certain limitations on this right. In addition to the agreement of the individual affected, the Court also dealt with the issue of what is a reasonable modification of an existing program and stated: "Sensibly construed, the fundamental-alteration component of the reasonable-modifications regulation would allow the State to show that, in the allocation of available resources, immediate relief for the plaintiffs would be inequitable, given the responsibility the State has undertaken for the care and treatment of a large and diverse population of persons with mental disabilities." This examination of what constitutes a reasonable modification may have implications for the interpretation of similar concepts in the employment and public accommodations Titles of the ADA. In Pennsylvania Department of Prisons v. Yeskey, the Court found that state prisons were covered under Title II of the ADA. The state had argued that state prisoners were not covered since such coverage would "alter the usual constitutional balance between the States and Federal Government." The Supreme Court rejected this argument, observing that "the ADA plainly covers state institutions without any exception that could cast the coverage of prisons into doubt." The Supreme Court addressed issues involving prisoners under the ADA in Yeskey holding that state prisons are within the ADA's statutory definition of "public entity," but did not address the constitutional issues. These may be addressed next term in the pending decision of United States v. Georgia which raises the issue of whether Congress has validly abrogated State immunity from damage suits under Title II of the ADA in situations involving accommodations for prisoners with disabilities. The Eleventh Amendment states: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." The Supreme Court has found that the Eleventh Amendment applies to suits by citizens against their own states and cannot be abrogated by the use of Article I powers but that section 5 of the Fourteenth Amendment can be used for abrogation in certain circumstances. Section 5 of the Fourteenth Amendment states: "The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article." The circumstances where section 5 of the Fourteenth Amendment can be used to abrogate the Eleventh Amendment have been discussed in various Supreme Court decisions which reiterated the principle that the Congress may abrogate state immunity from suit under the Fourteenth Amendment and found that there were several conditions necessary for successful abrogation. Congressional power is limited to the enactment of "appropriate" legislation to enforce the substantive provisions of the Fourteenth Amendment. The legislation must be remedial in nature. There must be a "congruence and proportionality" between the injury to be prevented and the means adopted to that end. In recent years, the Supreme Court has examined numerous statutes to determine whether they properly abrogated the Eleventh Amendment and, in most cases, found the statutes lacking. However, the Court's federalism doctrine has been somewhat reined in by the recent decisions in Tennessee v. Lane (discussed below) and Nevada Dept. of Human Resources v. Hibbs, which upheld the Family and Medical Leave Act as a valid exercise of congressional power pursuant to section 5 of the Fourteenth Amendment. The limited nature of these holdings renders their application to other as yet untried aspects of the ADA regarding the Eleventh Amendment unclear. The Court's recent decision in United States v. Georgia, raised the issue of whether Congress had validly abrogated State immunity from damage suits under Title II of the ADA in situations involving accommodations for prisoners with disabilities but the Court decided the case on more narrow grounds, holding only that title II of the ADA created a private cause of action for damages against the states for conduct that actually violated the Fourteenth Amendment. The Supreme Court addressed issues involving prisoners under the ADA in Pennsylvania Department of Corrections v. Yeskey where the Court held that state prisons are within the ADA's statutory definition of "public entity" but did not reach the constitutional issues. United States v. Georgia involved the claims of a Georgia prisoner who is paraplegic and uses a wheelchair. The inmate claimed that he was confined for 23-24 hours a day to a cell so small that he was unable to maneuver his wheelchair. In addition, he argued that he was deprived of access to a toilet, and a shower and was forced to sit in his own bodily waste because prison officials refused to provide assistance. These conditions, he argued, violated the Eighth Amendment's prohibition on cruel and unusual punishment and the ADA. The Eleventh Circuit Court of Appeals did not address the sufficiency of the claim under title II of the ADA but found that the title II claims for monetary damages against the state were barred by sovereign immunity. The Supreme Court, in an unanimous opinion written by Justice Scalia, held that title II of the ADA created a private cause of action for damages against the states for conduct that actually violates the Fourteenth Amendment. In arriving at this holding, the Court noted that the plaintiff's claims for money damages under the ADA were based in large part on violations of section 1 of the Fourteenth Amendment and observed that this differed from other cases regarding the Eleventh Amendment such as Tennessee v. Lane. Justice Scalia recognized that the Supreme Court has been split "regarding the scope of Congress's 'prophylactic' enforcement powers under §5 of the Fourteenth Amendment," but found common ground in the recognition of section 5 powers to enforce the provisions of the Fourteenth Amendment by creating private remedies against actual violations of these provisions. Thus, Justice Scalia concluded for the Court, "insofar as Title II creates a private cause of action for damages against the States for conduct that actually violated the Fourteenth Amendment, Title II validly abrogates state sovereign immunity." United States v. Georgia is a limited decision which does not address the split in the Supreme Court regarding when there is abrogation of the Eleventh Amendment under the ADA. In Tennessee v. Lane , the Supreme Court retreated somewhat from its recent approaches to the application of the Eleventh Amendment, holding that Title II of the ADA, as it applies to the fundamental right of access to the courts, constitutes a valid exercise of congressional authority under section 5 of the Fourteenth Amendment. Lane was an action brought by George Lane and Beverly Jones, both paraplegics who use wheelchairs for mobility, against Tennessee. Mr. Lane alleged that he was compelled to appear in court to answer criminal charges and had to crawl up two flights of stairs to get to the court room. Ms. Jones, a certified court reporter, alleged that she was unable to gain access to a number of county courthouses, thus losing employment opportunities. In a 5-4 decision, with the opinion written by Justice Stevens, the Court noted that when analyzing an Eleventh Amendment immunity issue, two questions must be resolved: (1) whether Congress unequivocally expressed its intent to abrogate; and (2), if so, whether it acted pursuant to a valid grant of congressional authority. The ADA specifically provides for abrogation so the Court then applied the test set out in City of Boerne v. Flores, which found that legislation enacted pursuant to section 5 of the Fourteenth Amendment is valid if it had "a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end." Justice Stevens' opinion found that Title II of the ADA, like Title I, sought to prohibit irrational discrimination but noted that Title II also sought to enforce a variety of basic constitutional guarantees, including the right of access to the courts. Noting the pattern of disability discrimination that led to the enactment of the ADA, and the "sheer volume of evidence demonstrating the nature and extent of unconstitutional discrimination against persons with disabilities in the provision of public services," the Court held that the inadequate provisions of public services and access to public facilities was an appropriate subject for remedial prophylactic legislation. The final issue was whether Title II was an appropriate response to this history and pattern of discrimination. Although the Court had been urged to consider the entire sweep of Title II, Justice Stevens declined to broaden the ruling beyond the issue of the accessibility of judicial services. The Court held that the remedies were congruent and proportional to the goal of enforcing the right of access to the courts and emphasized that the Title II of the ADA requires only "reasonable modifications" that would not fundamentally alter the nature of the service provided and that do not impose an undue financial or administrative burden, or threaten historic preservation interests. Thus, the Court concluded, Title II "as it applies to the class of cases implicating the fundamental right of access to the courts, constitutes a valid exercise of Congress' §5 authority to enforce the guarantees of the Fourteenth Amendment." The Lane decision was close, 5-4, with two concurring opinions and a dissenting opinion written by Chief Justice Rehnquist. It is also limited in its scope. Although the Chief Justice argued in his dissenting opinion that Title II of the ADA ought to be considered as a whole, not on a case-by-case basis, the majority disagreed and reached a finding of constitutionality on the specific issue of the accessibility of judicial services. The majority's emphasis on detailed fact finding in the legislative history and its statement in the ADA's findings and purposes indicates how crucial these facts are to proper abrogation of the Eleventh Amendment. In addition, the Court's emphasis on the constitutional rights involved in the access to courts indicates that cases which do not involve such rights may not pass constitutional muster in subsequent decisions. In a previous decision on Title I of the ADA, the Supreme Court reached a different conclusion regarding abrogation. In Garrett v. University of Alabama, another 5-4 decision, the Court held that the Eleventh Amendment bars suits to recover monetary damages by state employees under Title I of the Americans with Disabilities Act (ADA). The majority opinion in Garrett stated that "Congress is the final authority as to desirable public policy, but in order to authorize private individuals to recover money damages against the States, there must be a pattern of discrimination by the States which violates the Fourteenth Amendment, and the remedy imposed by Congress must be congruent and proportional to the targeted violation. Those requirements are not met here...." A strong dissent by Justice Breyer, joined by Justices Stevens, Souter and Ginsburg, argued that the majority ignored powerful evidence of discriminatory treatment. Title III of the ADA prohibits discrimination against individuals with disabilities in places of public accommodations, including golf courses. In PGA Tour v. Martin , the Supreme Court held, 7-2, that professional golf tours are covered by Title III and that use of a golf cart by a golfer with a mobility impairment did not "fundamentally alter" the golf tournaments. Justice Stevens, writing for the majority, found that "under the ADA's basic requirement that the need of a disabled person be evaluated on an individual basis, we have no doubt that allowing Martin to use a golf cart would not fundamentally alter the nature of petitioner's tournaments." Justice Scalia, joined by Justice Thomas, wrote a scathing dissent arguing that the majority distorted "the text of Title III, the structure of the ADA, and common sense." The Supreme Court in Spector v. Norwegian Cruise Line, Ltd. held, in a decision written by Justice Kennedy, that the ADA applies to companies that operate foreign cruise ships in U.S. waters. Prior to this decision there had been a split in the circuits with the eleventh circuit holding in Stevens v. Premier Cruises Inc. that Title III of the ADA does apply to foreign cruise ships and the fifth circuit in Spector v. Norwegian Cruise Lines holding that the ADA would not be applicable since applicability would impose U.S. law on foreign nations. The Supreme Court's decision specifically held that the statute is applicable to foreign ships in the United States waters to the same extent that it is applicable to American ships in those waters. The majority concurred that cruise ships need not comply with the ADA if modifications would conflict with international legal obligations since the ADA only requires "readily achievable" accommodations. The 5-4 decision, however, was fragmented with various Justices joining for various aspects of the opinion. It is difficult, therefore, to determine exactly what type of accommodations would be required by the application of the ADA. Since the case below had been dismissed without a trial, it was remanded to determine the statutory requirements in this particular situation. The question of whether Title III requires any permanent and significant structural modifications that interfere with the international affairs of any cruise ship, foreign flag or domestic, was specifically left undecided. Justice Scalia, in his dissenting opinion, argued that the ADA should not be interpreted to apply in the absence of a clear statement from Congress. The ADA allows a court, in its discretion, to award attorneys' fees to a prevailing party. In Buckhannon Board and Care Home, Inc., v. West Virginia Department of Human Resources, the Supreme Court addressed the "catalyst theory" of attorneys' fees which posits that a plaintiff is a prevailing party if the lawsuit brings about a voluntary change in the defendant's conduct. The Court rejected this theory finding that attorneys' fees are only available where there is a judicially sanctioned change in the legal relationship of the parties. The Supreme Court in Barnes v. Gorman held in a unanimous decision that punitive damages may not be awarded under Section 202 of the ADA and Section 504 of the Rehabilitation Act of 1973. Jeffrey Gorman uses a wheelchair and lacks voluntary control over his lower torso which necessitates the use of a catheter attached to a urine bag. He was arrested in 1992 after fighting with a bouncer at a nightclub and during his transport to the police station suffered significant injuries due to the manner in which he was transported. He sued the Kansas City police and was awarded over $1 million in compensatory damages and $1.2 million in punitive damages. The Eighth Circuit Court of Appeals upheld the award of punitive damages but the Supreme Court reversed. Although the Court was unanimous in the result, there were two concurring opinions and the concurring opinion by Justice Stevens, joined by Justices Ginsburg and Breyer, disagreed with the reasoning used in Justice Scalia's opinion for the Court. Justice Scalia observed that the remedies for violations of both Section 202 of the ADA and Section 504 of the Rehabilitation Act are "coextensive with the remedies available in a private cause of action brought under Title VI of the Civil Rights Act of 1964." Neither Section 504 nor Title II of the ADA specifically mention punitive damages, rather they reference the remedies of Title VI of the Civil Rights Act. Title VI is based on the congressional power under the Spending Clause to place conditions on grants. Justice Scalia noted that Spending Clause legislation is "much in the nature of a contract" and, in order to be a legitimate use of this power, the recipient must voluntarily and knowingly accept the terms of the "contract." "If Congress intends to impose a condition on the grant of federal moneys, it must do so unambiguously." This contract law analogy was also found to be applicable to determining the scope of the damages remedies and, since punitive damages are generally not found to be available for a breach of contract, Justice Scalia found that they were not available under Title VI, Section 504 or the ADA. The exact implications of Gorman are not clear. Justice Stevens argued that the reasoning used in Justice Scalia's opinion has "potentially far-reaching consequences that go well beyond the issues briefed and argued in this case"; although he also noted that Justice Scalia did "cabin the potential reach of today's decision by stating that we do not imply, for example, that suits under Spending Clause legislation are suits in contract, or that contract-law principles apply to all issues that they raise."
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The Americans with Disabilities Act (ADA) provides broad nondiscrimination protection for individuals with disabilities in employment, public services, public accommodations and services operated by private entities, transportation, and telecommunications. Enacted in 1990, and amended in 2008 by P.L. 110-325, the ADA is a civil rights statute that has as its purpose "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." It has been the subject of numerous lower court decisions, and the Supreme Court has decided 20 ADA cases, most recently in 2006 United States v. Georgia. This report examines the Supreme Court decisions on the ADA. It will be updated as necessary.
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No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . [U.S. Constitution, Article I, §9] Over the years Congress has devised complex procedures for appropriations and authorization, but the pattern has been to separate the authorization and appropriation process and to establish separate committees to address the separate functions. Although intelligence spending has historically been shrouded in secrecy, the Constitution, statutory law, and legislative branch procedures apply to intelligence agencies as they do for all government departments and agencies. It is the purpose of this report to discuss the effects of the absence of intelligence authorization legislation subsequent to FY2005 and comment on the substantial but limited effects of recent intelligence authorization acts. It is recognized that the statutory requirements have been met by the catchall provisions in appropriations acts. The report will not focus on the reasons why Congress did not pass intelligence authorization; it is sufficient to note that Members did not choose to compromise either among themselves or with the White House on issues they considered important. In the absence of authorization legislation, intelligence activities continue to be carried out, and expensive and complex intelligence systems continue to be approved; but the process is somewhat different from that intended when the intelligence committees were established in the late 1970s and there are significant implications for congressional oversight of intelligence activities and, arguably, for the nation's intelligence effort as a whole. To carry out the constitutional duty of funding government activities, Congress has established a two-step process. First, it authorizes an agency or program. Secondly, Congress appropriates funds for the authorized agency or program. The separation of authorization and appropriations legislation provides Congress with an opportunity to permit one set of committees (authorizing committees) to address the needs of programs in their jurisdictions while another set of committees (appropriations committees) is designed to consider the finances of the federal government as a whole and guard against excess spending. In general, authorizing committees and their staffs develop extensive expertise in their agencies. Appropriations committees focus on allocating funds within an overall budget total. Appropriations committees are generally more limited in staff and often do not delve into the detailed activities of government departments. Authorization committees, however, have staff to undertake more detailed evaluations of agency programs and monitor implementation of congressional guidance. Appropriations bills (or continuing resolutions) must be enacted every year, but agencies and activities may be authorized on a standing basis. Such authorizations are provided to most agencies that carry out their designated responsibilities year after year. Some important agencies and programs, however, are authorized on an annual basis. In the 1960s, the size and complexity of defense programs led to a congressional determination to authorize the nation's defense effort on an annual basis and, since that time, the scope of national defense authorization acts has been expanded to include specific policy directions for all types of military activities and programs, ranging from personnel to procurement of major weapons systems. Defense authorization bills became a main focus of legislative interest and have guaranteed that congressional concerns are continuously addressed by the Defense Department. In the 1970s similar procedures would be established for intelligence agencies. A standing authorization for the Central Intelligence Agency (CIA) was provided by the National Security Act of 1947 (P.L. 80-235), and this was thought to be adequate. There was no perceived need for annual authorizations for CIA for over a quarter century, and the activities of other intelligence agencies were authorized as part of their parent departments' authorizations. In the mid-1970s, however, Congress, concerned about intelligence agencies operating behind a wall of secrecy, and at times engaged in questionable activities, created the two intelligence committees to provide oversight. The respective rules that established the Senate Select Committee on Intelligence (SSCI) and the House Permanent Select Committee on Intelligence (HPSCI) provided that "no funds would be expended by national intelligence agencies unless such funds shall have been previously authorized by a bill or joint resolution passed by the Senate [House] during the same or preceding fiscal year to carry out such activity for such fiscal year." (Both resolutions provided an exception for continuing appropriations bills or resolutions.) In 1985, Section 504 of the National Security Act was tightened to require that appropriated funds available to an intelligence agency could be obligated or expended for an intelligence or intelligence-related activity only if "those funds were specifically authorized by the Congress for use for such activities." After the establishment of the two intelligence committees, the appropriations committees came to defer more to them; one senior member of the House Appropriations Committees has been quoted as explaining in 1983, "Our subcommittee has backed off and done less as [HPSCI] has become more important. My own view is if you've got a committee dealing day in and day out with intelligence, that's the way it should be." Today, the intelligence committees have extensive staffs—approximately 40 each for SSCI and HPSCI. The House committee has subcommittees devoted to terrorism, human intelligence, analysis, and counterintelligence; intelligence community management; technical and tactical intelligence; and oversight and investigations. The Senate committee is not divided into subcommittees. Both committees annually conduct numerous classified hearings and a few unclassified hearings relating to intelligence activities and programs. Most intelligence spending is appropriated by the defense appropriations legislation prepared by the defense appropriations subcommittees, which each have approximately 15-20 staff members. The first intelligence authorization bill that became law was that for FY1979 ( P.L. 95-370 ); the Senate had passed an authorization bill the year before, but the House, not then having its own intelligence committee, took no action on the bill. From FY1979 to FY2005, annual intelligence authorization bills were enacted, although on many occasions the intelligence authorization acts were not signed until well into the fiscal year for which they authorized funds. When appropriations legislation has passed prior to enactment of intelligence authorization bills, Congress has met the requirement for specific authorization of intelligence activities through the use of a "catchall" provision in defense appropriations acts. For example, Section 8080 of the Consolidated Security, Disaster, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ), enacted on September 30, 2008, states, "Funds appropriated by this Act, or made available by the transfer of funds in this Act, for intelligence activities are deemed to be specifically authorized by the Congress for purposes of Section 504 of the National Security Act of 1947 (50 U.S.C. 414) during fiscal year 2009 until the enactment of the Intelligence Authorization Act for Fiscal Year 2009." This provision meets the requirements of the National Security Act while acknowledging the potential for subsequent passage of an intelligence authorization act. Similar provisions have been included in other defense appropriation acts and in various supplementary appropriations bills since, almost always, appropriation bills have been enacted prior to intelligence authorization bills. A section of some 60 words has thus been routinely substituted for authorizing bills that, along with their accompanying reports (with classified annexes), normally run to hundreds of pages. Undoubtedly, the executive branch gives consideration to congressional concerns, even those expressed informally, but the report language and guidance contained in an intelligence authorization bill undoubtedly does not have the prescriptive effects of enacted legislation. After the enactment of P.L. 108-487 , the Intelligence Authorization Act for FY2005, on December 23, 2004, until September 2010, the two intelligence committees reported authorization bills (of which some have been passed by the respective chambers and one of which—that for FY2008—passed by both houses only to be vetoed by the President). Each of these bills was accompanied by a report that provided extensive guidance for intelligence agencies and addressed a number of issues that the committees considered important. Such issues included a requirement for Senate confirmation of the Deputy CIA Director as well as the directors of the National Reconnaissance Office (NRO), the National Geospatial-Intelligence Agency (NGA), and the National Security Agency (NSA); the establishment of a Space Intelligence Center; and providing additional authorities to the DNI along with a provision that requires reports when acquisition costs for intelligence systems pass certain cost growth thresholds. Important to some Members was the inclusion of provisions establishing an Inspector General for the entire intelligence community. The Senate bill for FY2009, S. 2996 , sought to provide the DNI greater flexibility to coordinate the intelligence community response to an emerging threat that "should not depend on the budget cycle and should not be constrained by general limitations in appropriations law (e.g., 31 U.S.C. 1346) or other prohibitions on interagency financing of boards, commissions, councils, committees, or similar groups." These bills did not become law and intelligence programs were instead authorized by defense appropriations legislation between December 2004 and October 2010. In 2009, both the House and Senate intelligence committees reported intelligence authorization bills for FY2010 ( H.R. 2701 and S. 1494 , respectively). Each contained provisions that would require Senate confirmation of additional intelligence leaders and establish a statutory inspector general for the entire intelligence community. However, provisions in H.R. 2701 that would require more extensive notifications of covert actions drew strong objections from the Administration. S. 1494 passed the Senate on September 16, 2009, by a voice vote, but floor consideration of the House bill did not occur. FY2010 intelligence authorization legislation did become law, albeit without specific authorization of intelligence programs; it is discussed below. The need for closer integration of the nation's intelligence effort was a principal finding of the various assessments of the performance of the intelligence community prior to the 9/11 attacks and Operation Iraqi Freedom. The assessments concluded that intelligence agencies had not effectively coordinated the acquisition and dissemination of available intelligence. In response, the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ) established the position of DNI (and the Office of the DNI (ODNI)) with wide-ranging authorities over all intelligence agencies. The provisions included responsibility for preparing and ensuring the effective execution of the National Intelligence Program (NIP), which includes acquisition for major intelligence systems. The intent was to provide the DNI with significantly broader coordinative responsibilities and authorities than had been exercised by the former Director of Central Intelligence (DCI). The DCIs had not only responsibilities for the entire intelligence community but were also in direct charge of the CIA; the Intelligence Reform Act created a separate position of CIA Director, leaving DNIs responsible for coordinating the interagency intelligence effort. The NIP includes funding for the largest intelligence agencies—the Central Intelligence Agency (CIA), the National Security Agency (NSA), the National Reconnaissance Office (NRO), and the National Geospatial-Intelligence Agency (NGA). The Military Intelligence Program (MIP)—which is separate from the NIP—consists of the intelligence efforts that are designed (and funded) to support the needs of the Department of Defense (DOD) and its components. Most of the major intelligence agencies serve both national and military consumers, and the largest agencies, except the CIA, are part of DOD. After the DNI prepares a consolidated NIP and it is approved by the White House, it is forwarded to Congress as part of the Administration's overall annual budget submission along with relevant Congressional Budget Justification Books (CBJBs). The two intelligence committees review the NIP, holding hearings and preparing intelligence authorization legislation and accompanying committee reports. The two armed services committees also review national intelligence programs that are undertaken by DOD agencies (which constitute the bulk of the NIP largely due to the costs involved in satellite and signals intelligence systems). To facilitate and encourage cooperation between armed services and intelligence committees, the rules that established the intelligence committees provided that some Members (at least one on HPSCI and two on SSCI) serve on both committees. Although there is considerable overlap between the oversight responsibilities of armed services and intelligence committees, intelligence authorization bills provide Congress with a means to address the entire intelligence effort from a perspective broader than that of the Defense Department. A central challenge in overseeing intelligence activities is that budgeting and acquisition procedures were designed during the Cold War era when there were sharp distinctions between national and tactical intelligence and national-level consumers were largely limited to senior Washington policymakers. Today, in many cases, intelligence agencies serve an increasingly diverse variety of consumers throughout the government. Systems designed and operated to support policymakers in multiple agencies, such as reconnaissance satellites, are known as "national-level" systems. In many cases, however, they also produce information of direct interest to military commanders and a variety of other federal offices and, especially in regard to terrorist threats, even to state and local level officials. On the other hand, tactical military intelligence is designed (and funded) to be used by a single military service. Today, this information may also be of direct interest to national-level policymakers, especially in crisis situations. Although the original lines of demarcation between national and tactical intelligence have long since lost much of their importance for consumers of intelligence products, these categories are embedded in law and regulations and serve as the basis for acquisition and budgeting efforts. The cost of intelligence activities for national-level consumers was $53.9 billion for FY2012; military intelligence, which primarily supports military operations, easily adds billions more, although exact figures remain classified. Both intelligence committees review the NIP, but responsibilities differ in regard to oversight of defense-wide and tactical intelligence systems. The House intelligence committee is responsible for authorizing "intelligence and intelligence-related activities of all ... departments and agencies of the Government, including the tactical intelligence and intelligence-related activities of the Department of Defense." The Senate intelligence committee is not assigned responsibility for tactical intelligence and intelligence-related activities, which remain under the purview of the Senate Armed Services Committee (SASC). As a result, conference committees on intelligence authorization bills have always included members of the SASC. The goal of the post-9/11 reform effort has been to encourage transformation from the agency-centric practices of the past to "a true Intelligence enterprise established on a collaborative foundation of shared services, mission-centric operations, and integrated mission management." In addition to well-known threats from terrorist groups and hostile regional powers, the intelligence community should be organized to confront "a growing array of emerging missions that expands the list of national security (and hence, intelligence) concerns to include infectious diseases, science and technology surprises, financial contagions, economic competition, environmental issues, energy interdependence and security, cyber attacks, threats to global commerce and transnational crime." Such a configuration of the intelligence community, if achieved, will involve systems and capabilities that extend well beyond DOD. The future evolution of the nation's intelligence effort lies beyond the scope of this report, but most observers believe that its focus should not be on strictly military concerns and that the range of collection efforts and of "customers" is much wider than in previous decades. Some observers suggest that the absence of intelligence authorization legislation since FY2005 has had especially significant budgetary implications for overhead collection systems. For the national intelligence agencies in DOD—NSA, NGA, and the NRO—technical collection and processing systems are very expensive. Satellites, in particular, often cost over $1 billion each. Based on comments made by senior members of the Senate Intelligence Committee, there have been major disputes over some programs with substantial budgets. In 2004 media reports indicated that one classified satellite program originally opposed by the Senate intelligence committee, but supported by appropriations committees and HPSCI, almost doubled in cost from $5 billion to nearly $9.5 billion. In 2007 SSCI's report on the FY2008 authorization bill sharply criticized the space radar program (that apparently included both intelligence and non-intelligence components) and directed that no NIP funds be spent on the program. Although that bill was not enacted, the program was eventually terminated in March 2008. An October 2008 HPSCI report concluded: "there is no comprehensive space architecture or strategic plan that accommodates current and future national security priorities." Further, "the intelligence community and DOD seem at odds with each other over satellite program requirements. Without adequately defining the requirements of the combatant commanders, the Air Force and Intelligence Community are forced to hit an ever-moving or invisible target in managing overhead program requirements." Although some believe that "DOD needs its own space architecture to meet the needs of the war fighter … executive branch [spokesmen have] stated several times that it is not in the best interest of the country to pursue separate national and military space architectures." HPSCI's report criticizes satellite programs that include funding by both the NIP and the Military Intelligence Program. The NIP is controlled by the DNI and SSCI, and HPSCI have oversight responsibilities for it. The MIP, on the other hand, is controlled by the Secretary of Defense and the two armed services committees (with HPSCI having shared oversight of the MIP). HPSCI's report indicates that there are also differences within DOD over some satellite surveillance programs that reflect different perspectives of the Under Secretary of Defense for Intelligence (who also reports to the DNI as well as the Secretary of Defense) and the Under Secretary of Defense for Acquisition, Technology, and Logistics, who is responsible for DOD acquisitions efforts. Although the USD(I) advocates for intelligence, the USD(I) does not have acquisition decision authority within the DOD. The USD(AT&L) decides all acquisition matters. The inability of the USD(I) to control the final acquisition decision for a program can lead to decisions over jointly funded programs that do not equally benefit the national and military customer. The reported difficulties in achieving consensus in DOD and the executive branch have been reflected in different organizational proposals made by different congressional oversight committees. For instance, the FY2007 Defense Authorization Act ( P.L. 109-364 ) included a provision for the establishment of an operationally responsive space program office, separate from the NRO, that would develop space systems for combatant commanders to address concerns that some systems may be viewed in isolation from others without adequate concern for the implications of a specific decision for the entire interlinked effort. Arguably, it is the intelligence committees that have the mandate to ensure the coherence of the intelligence acquisition effort throughout the federal government and that the primary vehicles for ensuring coherence are annual authorization bills. Skeptics might see proposals for operationally responsive space systems as potentially duplicative of intelligence community programs. HPSCI also noted that within DOD there may be differences in approaches between the Under Secretary of Defense for Intelligence (USD(I)), who is the principal DOD point of contact with the DNI, and the Under Secretary of Defense for Acquisition, Technology, and Logistics, who may be more responsive to service needs. Taking a different approach, the Senate-passed version of S. 3001 , the FY2009 Defense Authorization Act, provided that the USD(I) may not establish or maintain "a capability to execute programs of technology or systems development or acquisition." The Administration objected to this provision, arguing that such provisions would prevent the USD(I) for carrying out the activities for which it was created, and it was deleted from the final version of the bill. The FY2009 act, P.L. 110-417 , requires instead that DOD produce a consolidated position: "the Secretary of Defense, in consultation with the Chairman of the Joint Chiefs of Staff, shall establish a policy and an acquisition strategy for intelligence, surveillance, and reconnaissance payloads and ground stations for manned and unmanned aerial vehicle systems. The policy and acquisition strategy shall be applicable throughout the Department of Defense and shall achieve integrated research, development, test, and evaluation, and procurement commonality." The DOD report is to be provided both to the armed services and intelligence committees. In addition, P.L. 110-417 also included a requirement for the DNI and Secretary of Defense to conduct a comprehensive review of the nation's space policy including a description of current and planned space acquisition programs. This report was to be submitted to the armed services and intelligence committees by December 2009, but preparation was reportedly delayed for several months. If the executive branch prepares a comprehensive space architecture the two intelligence committees would have major responsibilities to review it and to weigh its recommendations in an effort to authorize necessary programs and personnel with whatever modifications Congress finds appropriate. Other committees—especially the armed services and appropriations committees—would also have responsibilities to review such architectures. Congress returned to the issue in FY2011 Defense Authorization legislation. Section 911 of P.L. 111-383 provides that the Secretary of Defense and the DNI shall develop an integrated process for national security space architecture planning, development, coordination, and analysis. Concerns about the effectiveness of congressional intelligence oversight have been expressed both by Members and by outside observers for some time. The 9/11 Commission was especially critical on this point: So long as oversight is governed by current congressional rules and resolutions, we believe the American people will not get the security they want or need. The United States needs a strong, stable and capable congressional committee structure to give America's national intelligence agencies oversight, support, and leadership.... Tinkering with the existing structure is not sufficient. Either Congress should create a joint committee for intelligence, using the Joint Atomic Energy Committee as its model, or it should create House and Senate committees with combined authorizing and appropriations powers. In response to the 9/11 Commission's recommendations, the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ) established the position of DNI (and the Office of the DNI (ODNI)) with wide-ranging authorities over all intelligence agencies. Many recommendations of the 9/11 Commission were eventually adopted by Congress and the Bush Administration, including several that pertained to intelligence oversight, but Congress neither established a joint intelligence committee nor has it moved to create a committee with both authorizing and appropriating authorities. In November 2007, the Senate Intelligence Committee held a hearing to examine congressional oversight of U.S. intelligence activities, which indicated strong disquiet about prevailing procedures for addressing intelligence budgets. At the hearing former Members of Congress Lee Hamilton and Timothy Roemer, who had both served on the 9/11 Commission, reiterated their concerns with the current oversight process. Mr. Hamilton concluded that "the Senate of the United States and the House of the United States is not doing its job. And because you're not doing the job, the country is not as safe as it ought to be, because one of my premises is that robust oversight is necessary for a stronger intelligence committee." The 9/11 Commission's key oversight proposals have not been adopted by Congress. Instead, the House and the Senate attempted to strengthen oversight by establishing, within their respective appropriations committees, subcommittees on intelligence that would include members of the intelligence committees. First, in 2004 the Senate adopted S.Res. 445 (of the 108 th Congress), which called for an Appropriations Subcommittee on Intelligence with "jurisdiction over funding for intelligence matters, as determined by the Senate Committee on Appropriations." This subcommittee, however, has never been established. The House of Representatives in the 110 th Congress established a Select Intelligence Oversight Panel within the House Appropriations Committee. This subcommittee was then eliminated in H.Res. 5 of the 112 th Congress. Congress has also made changes to the existing oversight structure by, among other things, increasing the auditing authority of the Government Accountability Office and adding offices of inspector general to elements of the intelligence community. However, the overall structure of intelligence oversight is largely unchanged from the pre-9/11 structure criticized by the Commission. With that as context, if Congress plans to strengthen its oversight, the current annual intelligence authorization process, and the corresponding briefings and hearings related to intelligence activities and programs, represents one of the most important opportunities for Congress to exercise its oversight role. For a complete treatment of intelligence oversight structures, see CRS Report RL32525, Congressional Oversight of Intelligence: Current Structure and Alternatives . During the 111 th Congress it was evident that there was persistent interest in the enactment of intelligence authorization legislation, but it was also evident that there existed significant issues on which agreement would be difficult. A House bill ( H.R. 2701 ) was reported by the House Intelligence Committee in June 2009. A Senate version ( S. 1494 ) was reported in July 2009 and passed by the Senate in September 2009. It was sent to the House, but was held at the Speaker's desk. H.R. 2701 was given floor consideration in February 2010 and was passed by the House. Neither the House nor the Senate version was supported by the Administration, and after extensive discussions, another Senate intelligence authorization bill ( S. 3611 ) was reported in July 2010 and passed by the Senate in August 2010. This version was then incorporated into H.R. 2701 and passed the Senate in September 2010. It was subsequently accepted by the House just before the end of FY2010. It was ultimately signed by the President on October 7, 2010, and became P.L. 111-259 . According to media accounts, the issues that prevented earlier consideration of the legislation were the appropriate notification of Members of Congress of covert actions and other sensitive activities—whether the practice of notifying just the chairmen and ranking Members of the intelligence committees along with other congressional leaders was adequate. Some provisions provoked veto threats from the Administration and views of Members and senior executive branch officials were reconciled only after extensive discussions in the spring of 2010. Also difficult were provisions that affected parallel authorities of the DNI and the Secretary of Defense and the intelligence oversight role of the Government Accountability Office (GAO). Congressional efforts to oversee detention and interrogation practices after the 9/11 attacks and to establish specific penalties for intelligence personnel using certain interrogation techniques were major subjects of disagreement (although some of these were addressed in the Supplemental Appropriations Act of 2010, P.L. 111-212 ). Inasmuch as the new fiscal year would begin prior to the enactment of P.L. 111-259 , the act did not contain a classified annex for FY2010 similar to those that previous intelligence authorization acts incorporated to set spending levels for specific programs. The act addressed the issue of notification of covert actions in a way that avoided a veto and established the position of Inspector General for the intelligence community. Several provisions of the final FY2010 bill addressed DNI authorities. These included Section 401, which gave the DNI authority to conduct accountability reviews of elements of the intelligence community; Section 321, which required the DNI to conduct vulnerability assessments of every major system in the NIP; and Section 302, which extended the amount of time a member of the intelligence community may be detailed to another member of the community. The final bill also included a somewhat diluted provision related to GAO audit authority. The original Senate language reaffirmed GAO's authority to conduct audits of the Administration and management of the intelligence community and granted GAO the authority to conduct audits of sources and methods upon request from one of the congressional intelligence committees. However, the final bill left the scope of GAO access at the discretion of the DNI: "The Director of National Intelligence, in consultation with the Comptroller General of the United States, shall issue a written directive governing the access of the Comptroller General to information in the possession of an element of the intelligence community." In the 112 th Congress there was renewed determination to pass intelligence authorization legislation, and H.R. 754 , the intelligence authorization bill for FY2011, was passed by the House in May 2011. Subsequently, it was accepted by the Senate with a voice vote and was signed by the President on June 8, 2011, becoming P.L. 112-18 . The bill provided, in addition to a classified schedule of authorizations, only a few provisions relating to efforts to identify counterintelligence concerns, a report on the recruitment and retention of racial and ethnic minorities, and a provision commending members of the intelligence community for their role in the mission that killed Osama Bin Laden on May 1, 2011. By December 2011 both the House and Senate passed an intelligence authorization bill for FY2012. The bill, H.R. 1892 , passed the House on September 9 by a 384-14 vote, but was amended by the Senate by a voice vote and returned to the House on December 14. The House agreed with the Senate amendment on December 16. The President signed H.R. 1892 into law on January 3, 2012 ( P.L. 112-87 ). This FY2012 authorization contains a classified schedule of authorizations and included a number of provisions providing burial allowances for civilian employees of intelligence agencies who die while engaged in operations involving substantial elements of risk. The legislation also includes a provision permitting the establishment of accounts into which funds appropriated for Defense intelligence efforts could be transferred. The DNI could also transfer funds into these accounts. This provision was designed to improve the management of intelligence appropriations that are provided both to DOD and to the Office of the Director of National Intelligence. The 112 th Congress passed its last intelligence authorization bill during the last week of 2012. The process began in May 2012, when the House Permanent Select Committee on Intelligence completed the markup of H.R. 5743 , its intelligence authorization bill for FY2013, passing the legislation by a unanimous vote of 19-0. On May 31, 2012, the House of Representatives passed H.R. 5743 by a vote of 386-28. According to the May 17 press release of the Intelligence Committee, the bill includes $300 million of new initiatives and $400 million of intelligence enhancements. According to the committee's report, H.R. 5743 : Increases funding for counterintelligence. Authorizes the new Defense Clandestine Service. Enhances counterterrorism efforts against Al Qaeda and its affiliates around the world. Increases oversight on the spending of domestic intelligence agencies. Supports global coverage initiatives of the intelligence committee to ensure the U.S. is postured to address emerging issues and threats around the world. On July 24, 2012, the Senate Select Committee on Intelligence agreed to the text of S. 3454 , the Intelligence Authorization Act for FY2013, passing the legislation by a vote of 14-1, and the bill was reported to the Senate on July 30, 2012. Among other things, S. 3454 as passed by the committee: Prohibits persons possessing an active security clearance from entering into contracts with the media to provide analysis about classified intelligence activities. Prohibits the same personnel from entering into such contracts for a period of one year after they leave government service. Designates only the Director or Deputy Director of intelligence community elements and their designated public affairs staff may provide background or off-the-record information regarding intelligence activities to the media. Requests that DNI publish specific requirements for personnel with access to classified information, to include non-disclosure agreements, prepublication review, and disciplinary actions. Requires the Attorney General to report back to the committee on the effectiveness of and improvements for investigating and prosecuting unauthorized disclosures and to report on potential improvements. Requires the intelligence community to develop a comprehensive insider threat program management plan. Denies a current or future federal pension to an individual who has violated a non-disclosure agreement. Prohibits individuals with security clearances from retaining their clearance if they knowingly disclose classified information concerning a classified covert action. The "Committee Comments" in the report focused on the unauthorized disclosure of classified information, stating their "grave concern" with "both the quantity and substance" of the disclosures. These concerns were driven in part by a series of disclosures, such as one describing U.S. involvement with the Stuxnet computer virus that reportedly damaged Iran's nuclear program. Another high-profile incident in spring 2012 allegedly disclosed classified details of a joint Saudi/CIA operation that foiled an Al Qaeda in the Arabian Peninsula plot. Senator Wyden (D-OR), cast the only "no" vote for S. 3454 on the committee. Senator Wyden objected to Section 511, allowing the DNI and heads of the intelligence community to deny current or future federal pensions to individuals who have violated their non-disclosure agreement. Senator Wyden's concerns are the broad authority given to the intelligence agencies without explanation of the due process by which they would take away pensions. Director of National Intelligence James Clapper, in his April 12, 2011, response to the committee, stated similar concerns and asked the committee to remove this section. In December 2012 the House and Senate passed S. 3454 , the Intelligence Authorization for FY2013, which was signed into law by the President on January 14, 2013 ( P.L. 112-277 ). Of note, in order to secure passage, most of the provisions pertaining to unauthorized disclosure of classified information were dropped from the final bill. In recent years the U.S. intelligence community has begun a transformation from the agency-centric practices to "a true Intelligence enterprise established on a collaborative foundation of shared services, mission-centric operations, and integrated mission management." In addition to well-known threats from terrorist groups and hostile regional powers, the intelligence community also confronts "a growing array of emerging missions that expands the list of national security (and hence, intelligence) concerns to include infectious diseases, science and technology surprises, financial contagions, economic competition, environmental issues, energy interdependence and security, cyber attacks, threats to global commerce and transnational crime." Such a configuration of the intelligence community, if achieved, will involve systems and capabilities that extend well beyond DOD. A major challenge for Congress, not just in oversight of the intelligence community but of many other agencies, is the synergism (or lack thereof) that results from the collaborative efforts of various agencies. Congressional oversight and funding responsibilities are divided agency-by-agency and committee-by-committee. Oversight and appropriations committees are challenged to assess the interagency efforts; making tradeoffs and adjustments to Administration plans and proposals can be very difficult. The Intelligence Reform and Terrorism Prevention of 2004 created an "intelligence community" that spans multiple jurisdictions and that does not map well onto the traditional committee structures of the House and Senate. While that 2004 act addressed many of the 9/11 Commission's recommendations, Congress has not agreed to the two key oversight proposals—creating a joint committee for intelligence or creating separate House and Senate committees with authorizing and appropriations powers. The challenge for the 113 th Congress will be to work within its existing structure to help shape intelligence priorities while a more integrated intelligence community adjusts to new budget realities. DNI James Clapper addressed this issue in a speech in October 2011, stating that "We've experienced 10 years of growth ... now we're going to be in a much different mode." In March 2013 before the Senate Intelligence Committee, Mr. Clapper noted that cuts to the National Intelligence Program would be spread across six Cabinet departments and two independent agencies. He warned of "another damaging downward spiral" similar to that which he said occurred in the 1990s, and asked for the committee's support for his efforts to reprogram funds to mitigate the effect of budget cuts. Congress has an important role in the oversight of this altered intelligence environment, and the annual authorization process represents one of the most important opportunities to exercise this role. Intelligence authorization legislation does not guarantee effective interagency intelligence efforts, but proponents maintain that authorization acts are the best lever that Congress has in addressing the interagency effort. The two intelligence committees are positioned to have the most comprehensive information on intelligence activities broadly defined, including those conducted by agencies wholly independent of DOD. In the absence of intelligence authorization legislation, critics maintain that Congress does not exercise its option to adjust funding in accordance with a comprehensive assessment of the interrelationships of intelligence agencies. Some observers argue that this practice results in imbalances and weakens the overall intelligence effort; others maintain that the executive branch can efficiently adjust appropriated funds without unnecessary congressional micromanagement. In the 112 th Congress, intelligence authorization bills were passed and enacted for FY2011, FY2012, and FY2013; there appears to be a consensus that the need continues for intelligence authorization legislation.
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Since President Bush signed the FY2005 Intelligence Authorization Act (P.L. 108-487) in December 2004, no subsequent intelligence authorization legislation was enacted until the FY2010 bill was signed by President Obama in October 2010 (after the end of FY2010), becoming P.L. 111-259. Although the National Security Act requires intelligence activities to be specifically authorized, this requirement had been satisfied in previous years by one-sentence catchall provisions in defense appropriations acts authorizing intelligence activities. This procedure meets the statutory requirement but has, according to some observers, weakened the ability of Congress to oversee intelligence activities. Over the last two years, Congress has met its statutory requirement by passing three intelligence authorization bills that included classified schedules of authorizations and that were signed into law. Most recently, in December 2012, the House and Senate passed S. 3454, the intelligence authorization for FY2013, which was signed into law by the President on January 14, 2013 (P.L. 112-277). Key issues debated during the passage of these bills included the adequacy of Director of National Intelligence (DNI) authorities, Government Accountability Office (GAO) audit authority over the intelligence community, and measures to combat national security leaks. These three bills appear to reflect a determination to underscore the continuing need for specific annual intelligence authorization legislation. Annual intelligence authorization acts were first passed in 1978 after the establishment of the two congressional intelligence committees and were enacted every year until 2005. These acts provided specific authorizations of intelligence activities and were accompanied by reports that provided detailed guidance to the nation's intelligence agencies. The recent absence of intelligence authorization acts has meant that key intelligence issues have been addressed in defense authorization acts and defense appropriations acts that focus primarily on the activities of the Department of Defense (DOD). Several Members have maintained that this procedure has been characterized by misplaced priorities and wasteful spending estimates that could run into billions. One example is the eventual cancellation of a highly classified and very costly overhead surveillance system that had been approved without support from the two intelligence committees. The challenge for the 113th Congress will be to help shape intelligence priorities while the intelligence community shifts from a decade of growth to a time of shrinking budgets. Reforms since 9/11 have attempted to create a more collaborative, integrated community. Reflecting that reality, intelligence priorities, and corresponding budget cuts, will be spread across six Cabinet departments and two independent agencies. The two intelligence committees are positioned to have the most comprehensive information on intelligence activities broadly defined, including those conducted by agencies and those within DOD. Congress has an important role in intelligence oversight and in helping the community to avoid what DNI James Clapper in March 2013 called "another damaging downward spiral" similar to that which he said occurred after budget cuts in the 1990s. The annual intelligence authorization bill will be one of its most valuable legislative tools.
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Since assuming office in 2001, President Bush has been a strong supporter of free trade and trade liberalization. In numerous statements, he has touted the virtues of trade expansion. As he explained: "Our goal is to ignite a new era of economic growth through a world trading system that is dramatically more open and free." The President has promoted trade liberalization on multiple fronts: globally, regionally, and bilaterally. By pursuing multiple free trade initiatives, the Administration has tried to create "competition in liberalization" and more options. As explained by Robert Zoellick, President Bush's first U.S. Trade Representative, if free trade progress becomes stalled globally, then we can move ahead regionally and bilaterally. Globally, the Administration is now working to reach an agreement in the so-called Doha Round of multilateral trade talks being held among the 148 members of the World Trade Organization (WTO). Regionally, the administration is pursuing agreements with the countries of the Southern African Customs Union, Andean countries, and 34 countries of the Western Hemisphere to create a Free Trade Area of the Americas. Bilaterally, it is currently negotiating FTA's with Thailand, Panama, and the United Arab Emirates. The administration signed an FTA with Bahrain in 2004 and with Oman in 2005, and it is contemplating starting negotiations with a number of other countries. Possible new negotiating partners include Egypt, Malaysia, India and South Korea. The Bush Administration argues that these negotiations promote a host of U.S. domestic and foreign interests, both economic and political. At home, it views trade liberalization as providing substantial gains to American consumers and companies. Cuts in U.S. trade barriers can help American families to pay less for consumer goods and U.S. companies to lower their operating costs as a result of access to cheaper imported components. Increased competition in domestic markets also promotes innovation, increases in labor productivity, and long-term growth. Better access to foreign markets facilitates increases in U.S. exports, thereby increasing employment in sectors that may pay higher than average wages. U.S. investors can also benefit through rule changes and obligations that assure more dependable treatment by the host country. Trade liberalizing agreements, particularly FTAs, also promote the U.S. trade agenda and foreign interests in a number of ways. Some FTAs establish precedents or models that serve as catalysts for wider trade agreements. Many FTAs reward and support market reforms being undertaken by the negotiating partner. And still others help to strengthen U.S. ties with various countries and regions of the world. For example, by forging stronger economic ties with countries in the Middle East, such as Morocco, Jordan, and Bahrain, the U.S. hopes to strengthen its strategic position vis-a-vis all countries in the region by promoting economic prosperity and opportunity. At the same time, trade liberalizing agreements may carry economic and political costs. Increased foreign competition can lead to plant closings and job losses concentrated in certain regions and industries. Critics note that it may contribute to increased anxiety and wage pressures, as well as rising income inequality. Some of these concerns were central to the divisive debate in Congress this year over CAFTAâan agreement that became a proxy, in part, for more generalized concerns about America's standing in an increasingly globalized world economy. While CAFTA was approved by narrow margins in both houses, it is not clear how the outcome will affect the Administration's future free trade agreement program. The CAFTA was the most controversial free trade agreement vote taken by Congress since the North American Free Trade Agreement (NAFTA) implementing legislation was passed in 1993. The Senate passed the CAFTA implementing legislation on June 30, 2005 by a vote of 54 to 45 and House passed the legislation on July 28, 2005 by 217 to 215. Besides being the lowest margin of victory for any modern FTA agreement, the votes, particularly in the House, were highly partisan. Over 92% of House Democrats voted against the agreement, while over 88% of House Republicans voted in favor. In both the Senate and House debates, many proponents stressed a combination of economic and political arguments. Those in favor argued that, while imports from the CAFTA countries enter the U.S. virtually duty free, the agreement will level the playing field for U.S. commercial interests by eliminating 80% of the tariffs CAFTA countries impose on U.S. exports. As a result, they maintained the U.S. goes from one-way free trade toward a more reciprocal trading relationship that will increase U.S. exports and jobs. Others emphasized that the agreement would contribute to bolstering more market-oriented and democratic governments in the region, longstanding U.S. foreign policy interests. Many lawmakers who opposed the agreement cited provisions dealing with the treatment of labor and sensitive industries (sugar and textiles). In addition, the agreement clearly triggered more generalized anxieties concerning globalization's impact on the American economy and labor force. Future congressional consideration of similar trade accords are likely to raise similar controversies and challenges, thereby prompting the administration to address these issues as part of its trade liberalizing agenda. Labor issues in the agreement were controversial and may have been a major reason the vote divided largely along party lines. Disagreement revolved around whether the CAFTA countries had laws that complied with the U.S. or International Labor Organization (ILO) similar list of five internationally recognized worker rights (e.g. the right to organize unions and bargain collectively). Such standards have not been required by CAFTA, by trade promotion authority legislation outlining requirements for trade agreements, or by any other bilateral trade agreement. However, they have been required for decades by U.S. trade preference laws, which typically prohibit preferential treatment to countries which are not affording their workers internationally recognized worker rights. Therefore, these FTAs continue to be seen by may Democrats as a step backward from longstanding U.S. trade policy. Many Republicans argue that the agreement encourages these countries to improve their laws and enforcement as well. Moreover, they argued that the administration's commitment to earmark $40 million in appropriations for capacity building and enforcement over a four-year period would go a long way in strengthening these provisions. Further exacerbating partisan tensions was a long history over this issue. Some Democrats expressed clear annoyance that their support for stronger labor provisions was characterized by Bush Administration trade officials as being "economic isolationism." At the same time, many Republicans were upset that they were given little credit by the other side for the compromises they had made over the years in accommodating Democratic concerns. Partisan tensions were further exacerbated by different views on whether the process in producing the agreement and the implementing legislation was inclusive and consistent with consultation requirements provided under the Trade Promotion Authority statute. Following the CAFTA vote, U.S. Trade Representative Rob Portman has worked to narrow the gap on the divisive labor issue in both the Bahrain and Andean FTAs. House Democrats reportedly have been pleased by the Administration's efforts to obtain higher labor commitments and enforcement standards in the Bahrain agreement. But other reports suggest that the Administration and House Democrats remain far apart on how to handle the labor provisions in the Andean FTA. Thus, it remains unclear whether the FTA labor provisions will become a less divisive and partisan issue. A second contentious issue involved liberalization of U.S. restrictions in two industriesâtextiles and apparel, and sugarâthat still benefit from protective barriers. The agreement as signed by the Bush Administration provided some small additional opening of these two still protected markets. These changes, in turn, were opposed vigorously by segments of both industries and by both Republicans and Democrats that had important constituent interests to defend. To gain support for the agreement, the Bush Administration made some commitments that, on balance, will reduce the commercial benefits of the agreement to CAFTA countries as originally negotiated. Some analysts believe that this action may send a very negative signal to future negotiating partners about U.S. willingness to negotiate reciprocal trade concessions. An underlying problem for the administration may be that the partisan divide in Congress over trade issues, particularly labor standards, provides defenders of protected industries with greater power than in previous eras. As one scholar opined, a partisan divide "renders the basic support margin narrow, making trade policy hostage to any protectionist interests that hold the decisive, marginal votes." This partisan divide could become a major hurdle for completing agreements that require the reduction and eventual removal of U.S. barriers to imports. In cases where liberalization of protected U.S. industries is necessary to get other countries to reduce their own barriers to U.S. exports, the Bush Administration may have two options. First, it can work to bridge the partisan divide that arguably provides these industries with heightened leverage. Second, it can alter the way it promotes the benefits of trade liberalization. Traditionally, trade liberalization has been pursued by focusing attention on gains associated with export expansion through a reduction of foreign trade barriers with little discussion of the gains that reduction of U.S. trade barriers can provide to U.S. companies and consumers. But by highlighting more the two-way gains from trade (both exports and imports), some analysts believe that greater political support can be built for the kinds of actions that are necessary to sustain a trade liberalization policy. The CAFTA debate in Congress also served as a proxy for public concerns and anxieties about the effects of trade and globalization on the American economy. Record U.S. trade deficits, the rise of China as a world manufacturing power, and India's growing attractiveness as a source for outsourcing of white collar jobs all raised questions about the effects of trade agreements on U.S. workers. Some Democrats, in part, may have opposed CAFTA because they believe that working class Americans suffer most from attempts to accelerate economic integration. Their opposition may have been buttressed by public opinion polls showing that more that 50% of U.S. households may oppose these trade initiatives if they are not given the tools and training to compete with workers from all around the world. To ease the anxieties of the American public on globalization and trade agreements that accelerate economic integration, some policymakers are calling for more robust programs that will help American workers obtain the skills that are necessary to compete in the global economy. While the longstanding Trade Adjustment Assistance Program provides retraining and income support for workers displaced by import competition, some argue that a more comprehensive program that would cover not only workers displaced by trade competition but also by technological change and foreign outsourcing is needed to deal with broad distributional costs of globalization and the rise of economic insecurity among American workers. Proponents argue that such a plan could include meaningful retraining, wage and health insurance, and job search aid. Two obstacles are often cited to moving in this directionâcost and ideology. One estimate of a comprehensive program that extends trade adjustment to all workers, provides a general two-year wage insurance program and adds on business tax incentives comes to $20 billion a year. While this cost could be considered modest compared to an estimated $1 trillion in benefits the U.S. economy gains from globalization (international openness) every year, it also could be considered very costly in the context of an economy experiencing record budget deficits, prompting calls for reductions in government spending. In addition, the fact that some policymakers take a dim view of the ability of these kinds of programs to achieve the intended results, combined with some sense that a growing market economy is the best antidote to adjustment, provide another hurdle. The Bush Administration is now actively negotiating a large number of trade liberalizing agreements. The broadest and most ambitious initiative being negotiated is the Doha Round of multilateral negotiations. Negotiations are also taking place with Panama, Thailand, three Andean countries (Colombia, Peru, and Ecuador), and the United Emirates. Assuming that the divisions over labor issues, industry protection, and globalization anxieties that were imbedded in the CAFTA debate persist, these potential agreements could encounter differential obstacles. An ambitious Doha agreement is the administration's highest priority. With 148 countries involved in the negotiation, this trade negotiation provides the largest potential benefits for U.S. firms, farmers, and consumers. Some analysts maintain that large gains or benefits accruing to a broad spectrum of American stakeholders are necessary to help mobilize political support to eliminate or reduce remaining U.S. restrictions on politically sensitive industries and products. This is based on a belief that an ambitious agreement would require large concessions from trading partners that open substantially new market access opportunities for U.S. companies, and that these potential gains would be too tempting for U.S. industry not to support strongly. While labor issues are not part of the Doha negotiations, any big commercial agreement would likely trigger globalization anxieties among some segments of the body politic. Whether an ambitious agreement that provides large economic benefits to the U.S. economy might provide some impetus and support for devising a comprehensive adjustment program remains problematic. In the past, implementing legislation for multilateral agreements has included the creation or expansion of adjustment programs. The FTA's being negotiated with Thailand, Panama, and the Andean countries might encounter some or all the obstacles raised in the CAFTA debate. Thailand's labor conditions and exports of import sensitive products such as sugar and rice could prove contentious. Given that Thailand is a larger trading partner than the five CAFTA countries combined, globalization anxieties could also play a role in this agreement as well. In the case of Panama and the Andean countries, their labor laws and exports of sugar could raise concerns among some Members of Congress. But given that they are both very small trading partners, globalization anxieties are less likely to play a key role. To date, CAFTA-related controversies appear to be playing a small role in the FTAs concluded with countries of the Middle EastâJordan, Morocco, Bahrain and Oman. These four agreements have received broad bipartisan support not only because they are viewed favorably for advancing U.S. security interests, but also because the countries in commercial terms provide little competitive threat to U.S. producers and workers.
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Since taking office in January 2001, President Bush has supported trade liberalization through negotiations on multiple fronts: globally, regionally, and bilaterally. During this period, Congress has approved five free trade agreements (FTAs) that the Bush Administration has negotiated and signed. The FTAs are designed to promote broad economic and political objectives, both domestic and foreign. However, the debate in Congress over the last FTA approvedâthe Central American Free Trade Agreement (CAFTA)âwas contentious, sparking concerns about how Congress might consider future trade liberalizing agreements. This report analyses some of the challenges that became apparent in the aftermath of a divisive trade debate and how they could affect consideration of future trade agreements. This report will not be updated.
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RS20837 -- Distribution of Child Support Collections Updated March 4, 2003 P.L. 104-193 , the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (enacted August 22, 1996), replaced theAid to Families with Dependent Children (AFDC) entitlement program with a Temporary Assistance for NeedyFamilies (TANF)block grant and made major changes to the Child Support Enforcement (CSE) program. The rules governing howchild supportcollections are distributed among families, the state, and the federal government have changed substantially. In part,CSE distributionrules were changed to acknowledge the fact that child support would be significant, if not critical, to helpingsingle-parent familiesexit welfare and maintain self-sufficiency. Since the CSE program's inception, the rules determining who actually gets the child support arrearage payments have been complex,but not nearly as complicated as they are currently. It is helpful to think of the rules in two categories. First, thereare rules in bothfederal and state law that stipulate who has a legal claim on the payments owed by the noncustodial parent. Theseare calledassignment rules. Second, there are rules that determine the order in which child support collections are paid inaccordance with theassignment rules. These are called distribution rules. When a family leaves TANF, (1) the order of distribution of any child support collection depends on (1) when the arrearages accrued(pre-assistance, during-assistance, or post-assistance); (2) when the child support was assigned to the state (beforeOctober 1997,between October 1997 and October 2000, or after October 2000); (3) how the child support arrearages werecollected (through thefederal income tax refund offset program or by some other means); (4) the amount of the unreimbursed welfarebalance; and (5) whenthe arrearages were collected (before October 1997, between October 1997 and October 2000, or after October2000). Some of thecomplexity of the distribution rules ceased on October 1, 2000 when the rules were completely phased-in, but theconfusion withregard to the six categories of arrearages (mentioned below) remains. As a condition of TANF eligibility, the custodial parent must assign to the state the right to collect both current child supportpayments and past-due child support obligations (i.e., arrearages) which accrue while the family is on the TANFrolls (these are calledpermanently-assigned arrearages (2) ). The assignmentrequirement for TANF applicants and recipients also includes arrearagepayments that accumulated before the family enrolled in TANF (these are called pre-assistancearrearages). Pre-assistance arrearagesare temporarily assigned to the state while the family is receiving TANF assistance, with the exception of thefollowing. Pre-assistance arrearages which were assigned to the state before October 1, 1997 are consideredpermanently-assigned arrearages. While the family receives TANF benefits, the state is permitted to retain any current support and any assignedarrearages it collects upto the cumulative amount of TANF benefits which has been paid to the family . Under old law (pre-1996) states were required to pass through the first $50 of current monthly child support payments collected onbehalf of an AFDC family and to disregard it as income to the family so that it did not affect the family's AFDCeligibility or benefitpayment. The remaining amount of current child support collected was divided between the state and federalgovernments accordingto the state's AFDC federal matching rate. (3) The 1996 welfare reform law repealed the required $50 pass through and gives states the choice to decide how much, if any, of thestate share (some, all, none) of child support collected on behalf of a TANF family to send the family. If a stateelects thepass-through option, it still must pay the federal share of the collection to the federal government, regardless of howmuch childsupport is passed through to the family. The state can then do what it wants with its share. It can give all, a portion,or none of itsshare to families. If a state passes through all of its share to families, it may count that as income to the family or it may disregard all or some of thechild support collection so that it does not decrease the TANF payment of the family, but instead enables that familyto increase itstotal income by the child support amount without it affecting the family's TANF eligibility status or benefit amount. Some statessend the family two checks, one reflecting the TANF benefit and another reflecting the child support paymentreceived from thenoncustodial parent. States also have the option to pass their share of arrearage collections to former TANFrecipients (if thearrearage occurred while the family was a cash welfare recipient). Under prior law, once a family went off AFDC, child support arrearage payments generally were divided between the state andfederal governments to reimburse them for AFDC; if any money remained, it was given to the family. In contrast,under P.L.104-193 , payments to families who leave TANF are more generous. Under P.L. 104-193 , arrearages are to be paidto the family first,unless they are collected through the federal income tax refund offset (in which case reimbursing the federal andstate governmentsare to be given first priority). For collections made before October 1, 1997. If a custodial parent assigned her orhis child support rights to the state before October 1, 1997, the parent had to assign all support rights for supportpayments (bothcurrent and past-due) that accrued to the family during the period of AFDC receipt, as well as payments that hadaccrued before theirapplication for AFDC benefits. Moreover, these families had to permanently assign their rights to pre-assistancearrearages to thestate. This means that once these families go off welfare, any pre-assistance arrearages that are collected on theirbehalf go to thestate (and the federal government) as reimbursement for AFDC aid paid to the family. (4) For collections made on or after October 1, 1997 and before October 1, 2000. If acustodial parent assigned her or his child support rights to the state on or after October 1, 1997 and before October1, 2000, the parenthad to assign all support rights for both current and past-due payments accrued while the family is receiving TANFbenefits. Unlikepre-1997 assignments, the TANF applicant or recipient only had to temporarily (rather than permanently) assignto the state all rightsto support that accrued to the family before it began receiving TANF benefits. This temporaryassignment lasts until October 1, 2000or the date on which the family stops receiving TANF benefits, whichever is later. These temporarily-assigned arrearages become conditionally-assigned arrearages when the family leaves the TANF rolls (or onOctober 1, 2000, whichever date is later). They are considered conditionally-assigned because if they are collectedvia the federalincome tax refund offset program they are to be paid to the state (and federal government) rather than the family. Ifconditionally-assigned arrearages are collected through a method other than the federal income tax refund offset,they belong to thefamily. Since October 1, 1997, states have been required to distribute to former TANF families current child support and child supportarrearages that accrue after the family leaves TANF (these arrearages are called never-assignedarrearages) before the state and thefederal government are reimbursed for TANF payments to families. (However, arrearages that accrued before thefamily beganreceiving TANF benefits did not have to be distributed to the family first if the pre-assistance arrearages werecollected by the CSEagency before October 1, 2000.) As mentioned above, an exception to the distribution requirement occurs when the child support is collected via the federal incometax refund offset program. In federal income tax refund offset cases, the child support arrearage payment (up to thecumulativeamount of TANF benefits which has been paid to the family) is retained by the state (and federal government) ifsuch arrearages wereassigned to the state either temporarily or conditionally. Thus, if child support arrearages are collected via thefederal income taxrefund offset program, the family does not have first claim on the arrearage payments. For collections made on or after October 1, 2000 (5). If a custodial parent assignsher or his child support rights to the state on or after October 1, 2000, the parent has to assign all support rights thataccrue while thefamily is receiving TANF benefits. In addition, the TANF applicant must temporarily assign to the state all rightsto support thataccrued to the family before it began receiving TANF benefits. This temporary assignment lasts until the familystops receivingTANF benefits. For child support collections made after October 1, 2000 (unless the sum is collected through the federal income tax offset program),the state is required to first distribute to the former welfare family the amount collected to satisfy the currentmonthly child supportobligation. If any money remains, it is to be paid to the family to satisfy never-assigned arrearages, which are childsupport arrearagesthat accrued after the family went off welfare or arrearages owed to families that never received welfare. If thereis money remaining,it is to be paid to the family to satisfy unassigned pre-assistance arrearages (i.e., all previously assignedarrearages which exceed thecumulative amount of unreimbursed assistance when the family leaves welfare and which accrued before the familybegan receivingwelfare) and conditionally-assigned arrearages (described earlier). If there is still money remaining, it is to be usedto reimburse thestate and federal government for TANF benefits paid to the family; the state shall retain its share of the amount andpay to the federalgovernment the federal share of the collection (to the extent necessary to reimburse amounts paid to the family ascash assistance (6) ). If any money remains, it is to be paid to the family. These distribution rules do not apply to child support collections obtained by intercepting federal income tax refunds. Child supportarrearages collected through the federal income tax offset program are to be paid to the state (and the state is to paythe federal shareof the collection to the federal government). The state may only retain arrearages that have been assigned to thestate and only up tothe amount necessary to reimburse amounts paid to the family as cash assistance. If the amount collected throughthe tax offset exceeds the amount retained, the state must distribute the excess to the family. To reiterate, effective October 1, 2000, the state must treat any support arrearages collected on behalf of a former welfare family,except for those collected through the federal income tax offset program, as accruing in the following order: (1)to the period after thefamily stopped receiving cash assistance, (2) to the period before the family received cash assistance, and (3) to theperiod while thefamily was receiving cash assistance. The result of these child support distribution changes is that states are nowrequired to pay ahigher fraction of child support collections on arrearages to families that have left welfare by making these paymentsto families first(before the state and federal government). (7) Custodial parents and noncustodial parents alike are dissatisfied with the current child support distribution system. Custodial parentsare frustrated because they view child support arrearages as belonging to them. They argue that they had to rely onfamily and friendsfor financial assistance during periods when the noncustodial parent failed to pay child support that occurred beforethey went onwelfare. They contend that they (and not the state) are entitled to any pre-welfare arrearage payments that arecollected on theirbehalf. Noncustodial parents are annoyed because once they start paying child support they want to see that theirmoney actuallyhelps their children; explanations that welfare benefits are in effect child support paid by taxpayers have not satisfiedthem. Moreover, advocates point out that while promising families priority in collecting arrearages owed to them as aninducement toencourage them to move off welfare as soon as possible, the states and the federal government keep for themselvescollections madevia the federal income tax refund offset program-the most lucrative form of arrearage collection. (In tax year 2001,$1.6 billion inoverdue support was collected via federal income tax refunds.) In contrast, some observers maintain that the seemingly dual mission of the CSE program, on the one hand to pay back the state forwelfare costs and on the other to keep families off welfare has contributed to the complexity of the distributionsystem which mostagree was complicated from the program's beginning in 1975. They note that the states' share of retained childsupport collectionsgenerally amount to only 10% of all states' expenditures on the TANF program, and argue that for families currentlyreceiving TANFpayments, the states should continue to retain this declining source of funding to help improve their CSE programs. (See CRS Report RL30488, Analysis of Federal State Financing of the Child Support Enforcement Program .) During the 107th Congress, many Members favored a child support distribution approach that simply paid former welfare families allthe arrearages collected on their behalf (including federal income tax refund offsets) before reimbursing the stateor federalgovernment for any owed arrearages. On May 16, 2002, the House passed H.R. 4737 (the welfarereauthorization bill),which would have provided incentives to states to distribute more child support collections to ex-welfare familiesand permitted statesto give a portion of child support collections to TANF families without having to repay the federal government itsshare of the money. In addition, H.R. 4737 would have simplified child support assignment and distribution rules, and made manyotherchanges. In the 108th Congress, H.R. 4 , a welfare reauthorization bill almost identical in substance to H.R. 4737 , wasintroduced on February 4, 2003. H.R. 4 was passed by the House on February 13, 2003. It includes childsupportassignment and distribution rules identical to those in H.R. 4737 as passed by the House in the107th Congress.
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P.L. 104-193, the 1996 welfare reform law, substantively changed the rules governinghow child support collections are distributed among families, states, and the federal government. The general rulesin effect as ofOctober 1, 2000 are that child support collected during the time a family receives cash welfare belongs to the state;current childsupport and arrearages (past-due payments) that are owed to a family that is no longer receiving welfare belongsto the family; andchild support owed to a family that never received welfare belongs to the family. This is referred to as the "familiesfirst" childsupport distribution policy. (These "families first" distribution rules do not apply to child support collections madeby interceptingfederal income tax refunds.) Many policymakers contend that Congress should simplify the child supportdistribution system whichcurrently requires the tracking of six categories of arrearage payments to properly pay custodial parents. Legislationthat includedprovisions to simplify child support distribution procedures and provide more of the child support collected tocustodial parents(rather than the government) was passed by the House in the 106th and 107th Congresses, but not by the Senate. Similar legislation hasbeen reintroduced as part of the welfare reauthorization measure in the 108th Congress. This reportwill be updated as needed toreflect legislative activity.
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UNRWA was established in 1949 to provide relief assistance and programs for Palestinian refugees. With the continuation of conflict between Israelis and Palestinians, UNRWA's mandate has been renewed annually ever since it began operations in May 1950 and is currently extended to June 2005. In keeping with its mission, it provides relief and social services, including food, housing, clothing, and basic health and education to over 4.1 million registered Palestine refugees living mostly in the West Bank and Gaza Strip, but also in Jordan, Lebanon, and Syria. Currently, UNRWA operates approximately 900 facilities. It also manages a microfinance and microenterprise program and infrastructure projects to address the living conditions of refugees. Not all UNRWA-registered refugees receive all the benefits available. Only one third of registered Palestine refugees are living in camps. UNRWA typically provides services directly to its beneficiaries in coordination with public services provided by the host authorities. While it continues to conduct emergency and relief operations, over time it has also developed a broader human development program to address the continuing needs of Palestine refugees. UNRWA's role as provider to one group of refugees over 50 years is unique and continues to be seen as important in the evolving situation in the Middle East. UNRWA is a subsidiary organ of the United Nations; its chief officer, the Commissioner General, reports directly to the General Assembly. It is governed by a 10-member Advisory Commission of which the United States is a member. The Palestine Liberation Organization (PLO) is an observer on the Commission, which also includes other representatives of the Agency's major donors and host governments. Like the other members on the Commission, the United States participates in a semi-annual review of the UNRWA program and its budget. These meetings are typically held in May and September. Ninety-five percent of the UNRWA budget is funded through voluntary contributions from governments and the European Union. Most of these funds are in cash; approximately 7% is made up of in-kind donations. Another 4% comes largely from the U.N. regular budget and covers international staff costs. There are also voluntary cash contributions earmarked for specific projects. UNRWA funds are distributed among various programs including, education, health, relief and social services, and operational and common services. Refugees also make contributions where appropriate or possible in the form of co-payments, self help projects, or voluntary contributions. The UNRWA's regular budget for calendar year (CY) 2003 is $344 million. More than half of its budget is spent on educational and health programs. The project budget comprises mostly non-recurrent costs specifically earmarked by donors. UNRWA has recently made internal changes to improve its management and administration of resources, for example over the last several years, it has developed a new financial system, refined its budget presentations, and expanded its auditing procedures. The Department of State, Bureau of Population, Refugees, and Migration (PRM), deals with problems of refugees worldwide, conflict victims, and populations of concern to the United Nations High Commissioner for Refugees (UNHCR). Assistance includes a range of services from basic needs to community services to tolerance building and dialogue initiatives. Key programs include refugee protection (asylum issues, identification, returns, tracing activities) and quick impact, small community projects. Refugee emergencies lasting more than a year are funded from the regular Migration and Refugee Assistance (MRA) account through PRM. The MRA includes four major components: Overseas Refugee Assistance, Refugee Admissions, Humanitarian Migrants to Israel, and Administration. UNRWA receives funding under Overseas Refugee Assistance, where aid to refugees consists almost entirely of contributions to international organizations and to private voluntary organizations working under the direction of such organizations in caring for refugees outside the United States. A small amount, approximately 3%, is provided directly to private voluntary organizations or to governments of first asylum countries. The primary international agencies include UNHCR and UNRWA. U.S. contributions to UNRWA come from the regular MRA account and also through the Emergency Refugee and Migration Assistance (ERMA) account, which is made available for refugee emergencies. The chart below summarizes these contributions for recent years. For FY2003, it is anticipated that the overall spending for UNRWA will be similar to FY2002. The State Department does not provide a line item in its MRA budget request by country or specific organization. For FY2004, the overall request for the MRA account is $760.2 million slightly less than the $787 million appropriated for FY2003. Of the total for next year, $555.95 million is requested for Overseas Refugee Assistance, and of that, $102.32 million is requested for the Near East. The U.S. contribution to UNRWA usually covers 22-25% of the UNRWA total budget. See the table below for a historical summary of U.S. contributions to UNRWA. For information about other U.S. government funding to the Palestinians, see CRS Report RS22370, U.S. Foreign Aid to the Palestinians , by [author name scrubbed]. P.L. 87-510, the Migration and Refugee Assistance Act of 1962, as amended, is the permanent legislative authority under which U.S. refugee relief programs operate. Annual MRA funding is authorized in Department of State authorizing bills and appropriated in the Foreign Operations Appropriations acts. Language describing UNRWA assistance appears in the State Department Budget in Brief for FY2004. In CY2001, over 50 countries contributed to UNRWA. UNRWA appeals to donor nations for additional contributions are often used to cover emergency expenses. UNRWA continues to emphasize the critical importance of consistent and growing contributions to its regular budget. According to UNRWA, a number of factors affect its current operations. The volatile situation in Gaza and the West Bank, along with the Israeli response, have placed extra demands on UNRWA's emergency and refugee assistance. The increasing intensity of violence since February 2002 has disrupted and delayed humanitarian deliveries and affected the security and movement of UNRWA staff. The escalation of hostilities has also directly resulted in damage and destruction to housing and infrastructure. The UNRWA budget, which is funded almost entirely by voluntary contributions, fluctuates according to timing, amounts contributed, and exchange rates for foreign currencies. With increased use of UNRWA services, greater demands are being placed on the funding available. Deteriorating socio-economic conditions have had an enormous impact in terms of increasing unemployment and diminishing job security. A decline in the business sector has only aggravated the problem, placing extra demand on UNRWA's services. UNRWA reports that there is a mounting humanitarian crisis in the occupied Palestinian territory seen in deteriorating health conditions, rising poverty, and displacement of Palestinians. As the most vulnerable element of the population, refugees have been particularly affected. There is some concern that no effort has been made to settle the refugees permanently. Some in Congress have also questioned whether refugee rolls are inflated. While UNRWA periodically updates the rolls to try to eliminate duplication, its mandate covers relief and social services, but not resettlement. Although the refugee camps were meant to be temporary to provide some relief to the Palestinians, more than fifty years later, some are asking whether the UNHCR might be better placed to provide ongoing assistance. UNHCR would likely pursue a durable, long-term solution for the refugees. However, others have maintained that approach cannot work until there is a settlement between the Palestinians and Israelis. While the Palestinians argue that U.N. General Assembly Resolution 194 calls for a return to their homes or compensation, the Israelis say that because they did not cause the displacement, the international community is responsible for finding a solution. At present, UNRWA is still considered by many a unique organization that is better left in place until a way forward on the peace process can be found. For many years, Congress has raised concerns about how to ensure that UNRWA funds are used for the programs it supports and not for anything inappropriate, such as terrorist activities. In the past, some in Congress have been concerned that refugee camps were being used as military training grounds. The camps are not controlled or policed by UNRWA, but by the host countries. The FY2003 Foreign Operations appropriations requires that the GAO review efforts of UNRWA to ensure that its programs comply with Section 301(c) of the Foreign Assistance Act of 1961 and report to Congress no later than November 1, 2003. GAO responded to this mandate and was prepared to conduct a briefing by the agreed upon deadline. In addition, although not enacted into law, in the House Report on the FY2003 Foreign Operations appropriations bill ( H.Rept. 107-663 ), the conference committee agreed that the Secretary of State should comply with a requirement in the House-passed legislation to report to Congress on procedures that have been put in place to ensure that section 301(c) is enforced to the fullest degree possible. Concerns have been expressed about the content of textbooks and educational materials used by UNRWA with claims that they promote anti-Semitism and exacerbate tensions between Israelis and Palestinians. The host country, not UNRWA, provides the textbooks because students must take exams in host country degree programs. In House debate, amendment 15 offered by Representative Jarold Nadler to the FY2004 Foreign Operations appropriation recommended withholding the obligation of one third of the amount made available to UNRWA by the United States until these materials and textbooks had been replaced. It also called for UNRWA to establish a refugee resettlement program. The Nadler amendment failed on a point of order.
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Since 1950, the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) has provided relief and social services to registered Palestine refugees living mostly in the West Bank and Gaza Strip, but also in Jordan, Lebanon, and Syria. Ninety-five percent of the UNRWA budget is funded through voluntary contributions from governments and the European Union. U.S. contributions to UNRWA come from the regular Migration and Refugee Assistance (MRA) account and also through the Emergency Refugee and Migration Assistance (ERMA) account. The U.S. contribution to UNRWA usually covers 22-25% of the UNRWA total budget. The current cycle of violence in the Middle East presents particular challenges to UNRWA, including security, funding, and the impact of deteriorating socio-economic conditions. Recent congressional attention has focused on the issues concerning the progress of refugee resettlement, use of UNRWA funds, and the content of educational materials. This report will be updated as developments warrant.
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In 2002, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (the Corps) announced a reg ulation which redefined two key terms, "fill material" and "discharge of fill material," that identify the scope of certain activities subject to regulation under Section 404 of the Clean Water Act. The 2002 final rule completed a rulemaking begun in 2000 by the Clinton Administration. Its proposal had generated support from the mining industry and other regulated groups, and opposition from environmental groups. Their relative positions in support and opposition did not change when the final rule was issued, because it is substantially similar to the earlier proposal. The agencies received over 17,000 comments on the proposed rule. The revised rule was specifically intended to clarify the regulatory definition of fill material under Section 404 by replacing two separate and inconsistent definitions with a single, common definition. In terms of the types of regulated filling activities, it expanded the types of discharge activities that are subject to Section 404 permit requirements specifically to include construction or maintenance of the infrastructure associated with solid waste landfills and mining overburden. Further, the revised rule removed regulatory language which previously excluded "waste" discharges from Section 404 jurisdiction, a change that some argue allows the use of 404 permits to authorize certain discharges that could harm the aquatic environment. This part of the rule conforms with positions taken by the Clinton Administration and endorsed by the Bush Administration in litigation brought by environmental groups which challenged regulation of surface coal mining practices in Appalachia. The Administration's position supported industry's view concerning the proper Clean Water Act mechanism for regulating coal mining. However, that position was opposed by environmental groups, who believe that disposal of coal mining and other waste should be regulated more stringently under other provisions of the Clean Water Act, not Section 404. Thus, at issue was whether the rule change was largely procedural, as proponents argued, or whether it allowed weaker regulatory practices to apply to coal mining, as opponents argued. Under the Clean Water Act (CWA), it is unlawful to discharge any pollutant into waters of the United States without a permit issued in accordance with that act. The CWA contains two different permitting regimes: (1) Section 402 permits (called the National Pollutant Discharge Elimination System, or NPDES, permit program) address the discharge of most pollutants, and (2) Section 404 permits address the discharge of dredged or fill material into navigable waters of the United States at specified sites. The NPDES permit program is administered by EPA. The Corps and EPA have complementary roles under Section 404. Landowners seeking to discharge dredged or fill material must obtain a permit to do so from the Corps. EPA provides environmental guidance on Section 404 permitting and can veto a Corps permit, based on environmental impacts of the proposed discharge activity. The act's two separate permit programs differ in nature and approach. The NPDES program focuses primarily on the effects of discharges from industrial facilities and municipal sewage treatment plants on water quality and evaluates whether the discharge will adversely affect the chemical, physical, or biological integrity of the water. Under that program, pollutant discharges are controlled through the imposition of effluent limitations which restrict the quantities, rates, and concentrations of discharged constituents. Section 402 permits include limitations that reflect treatment with available pollution control technology, either to meet national minimum standards established by EPA, or more stringent treatment levels where needed to meet state-established water quality standards. The standard for issuance of a 402 permit is compliance with the effluent limitation and toxic pollutant control provisions of the act. EPA is authorized to issue NPDES permits; the agency has delegated this responsibility to 45 states, and EPA is the permitting authority in the remaining states. The Section 404 program focuses on discharges of two materials: dredged material and fill material. As described in the April 2000 proposal, "Fill material differs fundamentally from the types of pollutants covered by section 402 because the principal environmental concern is the loss of a portion of the water body itself." In contrast to the NPDES program's specific focus on water quality, the Section 404 program has a broader focus on effects of the discharge on the aquatic ecosystem as a whole, including wetlands. It requires evaluation of alternatives to the discharge and of measures to minimize and compensate for unavoidable adverse effects. Discharges that would have significant adverse effects on aquatic ecosystems are not allowed, and discharges also are not allowed if there are practicable alternatives with less adverse effects on the aquatic ecosystem. The standard for issuance of a 404 permit is consideration of the full public interest by balancing the favorable impacts against the detrimental impacts of a proposed activity to reflect the national concerns for both the protection and utilization of important resources. The Corps and EPA have complementary roles and regulations for the Section 404 program. The Corps' regulations (at 33 C.F.R. Parts 320-330) describe general regulatory policies, permit procedures and processing, and program definitions. EPA's regulations (at 40 C.F.R. Parts 230-232) provide the environmental guidelines for specifying disposal sites for dredged or fill material, procedures for a possible EPA veto of a permit, and definitions. Among the definitions of key terms contained both in the Corps' and EPA's regulations are two closely related definitions, "fill material" and "discharge of fill material." Neither term is defined in the Clean Water Act, leaving it to the administrative agencies to do so. Both the 404 and the NPDES programs regulate the "discharge of a pollutant," which the act defines as including, among others, dredged spoil, solid waste, chemical wastes, biological materials, rock, sand, and cellar dirt discharged into water. The determination of what is "fill material" is important, since fill material is subject to 404 permit requirements, while discharge of non-fill material is subject to NPDES permit requirements. EPA's and the Corps' definitions of "discharge of fill material" previously were identical and remain so in the revised definitions to mean "the addition of fill material into waters of the United States." They list, by way of example, activities typically related to construction for site development, roadways, erosion protection, etc., where the filling in of a waterbody occurs as a necessary element of the project. (40 C.F.R. §232.2 and 33 C.F.R. §323.2(f)) While before 2002 the two agencies defined "discharge of fill material" in identical terms, they had different regulatory definitions for the related term "fill material." The Corps' definition, at 33 C.F.R. §323.2(e), which was adopted in 1977, stated: The term "fill material" means any material used for the primary purpose of replacing an aquatic area with dry land or of changing the bottom elevation of an [sic] water body. The term does not include any pollutant discharged into the water primarily to dispose of waste, as that activity is regulated under section 402 of the Clean Water Act. While the Corps' definition centered on evaluating what is the primary purpose of a prospective discharge to determine whether it would be regulated by Section 404 or Section 402, EPA's definition, at 40 C.F.R. §232.2, focused on the effect of the material. EPA's definition had remained unchanged since it was adopted in 1988. It stated: Fill material means "any pollutant" which replaces portions of the "waters of the United States" with dry land or which changes the bottom elevation of a water body for any purpose. A central purpose of changing the agencies' rules was to conform the Corps' purpose-based definition of "fill material" with EPA's effects-based definition. This change was widely supported in public comments on the proposed rule. In the proposal and the final rule, the two agencies acknowledged that the different definitions and the "primary purposes" basis of the Corps' separate definition had caused confusion for some time, and had led to extensive litigation, as well. For example, the primary purpose test in the Corps' definition appeared to require the Corps to make a subjective determination about the primary purpose of a prospective discharge, and it also allowed a project proponent to seek to affect which regulatory regime would apply (Section 404 or Section 402) by simply asserting a purported purpose. Thus, in the May 2002 revision, the agencies said that they were adopting an identical definition of "fill material" that is more consistent with EPA's previous rule. It now states [T]he term fill material means material placed in waters of the United States where the material has the effect of: (i) Replacing any portion of a water of the United States with dry land; or (ii) Changing the bottom elevation of any portion of a water of the United States. In addition, however, the 2002 revised definition of fill material eliminated language contained in the Corps' previous regulation which had excluded "any pollutant discharged into the water primarily to dispose of waste" from Section 404 authorization. This change reflected the agencies' view that an exclusion for all waste is inappropriate, a view supported in industry comments but opposed by environmental groups. Simply because a material is disposed of for purposes of waste disposal does not, in our view, justify excluding it categorically from the definition of fill. Some waste (e.g., mine overburden) consists of material such as soil, rock and earth, that is similar to "traditional" fill material used for purposes of creating fast land for development. The agencies explained that, while trash or garbage discharges are "generally excluded" from Section 404 because of environmental and health concerns, such discharges may be permissible in some circumstances. "An example would be where recycled porcelain fixtures are cleaned and placed in waters of the U.S. to create environmentally beneficial artificial reefs. Such material would not be considered trash or garbage and thus would not be subject to the exclusion." EPA and the Corps believe that this is appropriate, and even environmentally beneficial, in situations where the otherwise excluded materials are being discharged in a manner consistent with traditional uses of fill material and where the review of the discharges under Section 404 can effectively ensure that the material will not cause or contribute to adverse environmental impacts. The final rule clarified the term "discharge of fill material" (previously identical for both agencies) by adding two additional examples of 404-regulated activities when these discharges have the effect of fill. First, it added "placement of fill material for construction or maintenance of any liner, berm, or other infrastructure associated with solid waste landfills" to distinguish fill material used for construction of solid waste landfills from discharges of leachate from landfills into waters of the U.S. which are subject to CWA Section 402. Second, the final rule's language concerning "mine overburden" expanded language in the 2000 proposal, which specified "placement of coal mining overburden." Based on comments that this language created confusion concerning whether under the proposal overburden or similar materials from other mining processes might not be covered, the agencies amended the definition in the final rule to include the phrase "placement of overburden, slurry, or tailings or similar mining-related materials" in the regulatory definition. The agencies' revised rules define certain types of discharges as specifically outside of the requirements of Section 404 and, conversely, define others as specifically subject to Section 404, thus not to Section 402. First, as discussed above, the final rule narrowed the regulatory definition of fill material: "The term fill material does not include trash or garbage." Second, the final rule included specific examples of materials that, according to EPA and the Corps, often constitute fill and thus should be subject to Section 404 requirements, not Section 402. The agencies added the following new text as further explanation of "fill material:" Examples of such material include, but are not limited to: rock, sand, soil, clay, plastics, construction debris, wood chips, overburden from mining or other excavation activities, and materials used to create any structure or infrastructure in the waters of the United States. (revised 33 CFR §323.2(e)(2) and revised 40 CFR §232.2(2)) In summary, EPA and the Corps did not de-list or remove from Section 404 coverage any of the types of construction-related activities previously defined as fill material but did narrow it to exclude trash or garbage. They modified their definitions by adding examples of several additional specific types of materials which will be considered as fill material, and thus are subject to Section 404 permitting. The most controversial aspect of the final rule was elimination of the waste exclusion previously contained in the Corps' definition of fill material, coupled with the specific inclusion of mining overburden to be regulated under Section 404. In some parts of the country, particularly in Appalachia, waste material that results from coal surface mining operations is deposited or discharged into waters of the United States as part of the overall mining activity. Historically, the Corps has regulated this type of discharge as fill, on the basis that such discharges result in the placement of rock and other material in such a way as to replace portions of a water body with dry land. The Corps believes that this practice is the most effective way to regulate activities associated with coal mining which involve discharge of pollutants into waters of the United States. However, some persons contend that the placement of such material is more a polluting activity than a filling activity, since the characteristics and quantities of material can alter the chemical, physical, or biological integrity of a waterbody, and thus, they argue, should be regulated by EPA as waste under CWA Section 402. This latter argument has been made by plaintiffs in several lawsuits. The first was brought in West Virginia in 1998 by a citizens group, the West Virginia Highlands Conservancy, challenging regulation of "mountaintop removal" surface coal mining practices in that state. Mountaintop mining involves removing large portions of a mountain in order to expose coal seams and depositing the dirt and rock into nearby valleys and streams. An October 1999 Opinion and Order by the U.S. District Court in that case stated, in dicta, that the "primary purpose" of the mountaintop mining refuse discharge is waste disposal, which is subject to Section 402, and, therefore, that the Corps lacks authority to regulate mountaintop removal under Section 404. In appealing the ruling, industry groups and labor unions said the court decision threatened the economy in West Virginia, because more stringent regulation would render mountaintop mining infeasible, while environmental and citizen groups supported the decision and argued that it should be upheld. Following the district court's ruling, the Clinton Administration sided with the industry in disagreeing with the court's finding that mountaintop mining must be regulated as waste under CWA Section 402, but it concurred with the court's related finding, supported by environmentalists, that the activity violates stream buffer zone requirements under the Surface Mining Control and Reclamation Act. On appeal, the 4 th U.S. Circuit Court of Appeals vacated the ruling, but did so on grounds of jurisdiction and state sovereignty, not the merits of the case. The court held that the regulation at issue was, in fact, a matter of state law, not federal law and, thus, the case should not have been brought in federal court. The Supreme Court declined to review the 4 th Circuit's decision. Subsequently, environmental groups filed legal challenges to several other individually permitted mountaintop removal permits. A federal district court granted judgment in favor of the plaintiffs in 2007, rescinding the permits at issue, and remanding the permits to the Corps for further proceedings. The district court found that the probable impacts of the valley fills would be significant and adverse under both the CWA and the National Environmental Policy Act and that the Corps had inadequately evaluated the cumulative impacts of the projects. However, in 2009, the 4 th Circuit Court of Appeals reviewed the lower court's ruling and found that the Corps had acted properly within the scope of its authority in determining the necessary scope of analysis in reviewing the permits and assessing the cumulative impacts of the proposed valley fills. The appeals court reversed and vacated the district court's opinion and order and injunction against the Corps, thus allowing the Corps to issue permits for mountain removal mining without requiring more extensive environmental review. Environmental groups have continued to pursue lawsuits to halt or restrict mountaintop mining operations in Appalachia. Other legal challenges to mountaintop mining practices have occurred, including challenges to mountaintop mining operations authorized by the Corps under its nationwide general permit program, specifically nationwide permit 21 (in contrast to individual permits challenged in the proceedings described above). In several different cases, environmental groups have argued that the impact of valley fills under nationwide permit 21 (NWP 21) violates the CWA, which authorizes general permits only for activities that individually and cumulatively will cause only minimal adverse environmental effect. Federal district courts have ruled in support of the plaintiffs in several of these cases, but the rulings have subsequently been reversed on appeal. As part of Administration efforts to strengthen regulatory controls over surface mining activities in Appalachia, in 2010, the Corps suspended use of NWP 21 in the Appalachian region. In 2012, the Corps reissued all of the existing nationwide permits, with modification of a number of them, including NWP 21. The previous version of NWP 21, issued in 2007, did not have any acreage or linear foot limits and relied on permit conditions and pre-construction notification reviews to reduce adverse impacts on the aquatic environment. The Corps determined that this approach had not adequately protected against loss of aquatic resources; thus the reissued permit added a ½-acre and 300-linear foot limit for the loss of stream beds when NWP 21 is used. Further, the reissued permit strictly prohibited use of NWP 21 to authorize discharges of dredged or fill material into U.S. waters to construct valley fills associated with surface coal mining. Projects no longer eligible under NWP 21 could seek authorization under a Section 404 individual permit, which can be issued for longer periods of time than a nationwide permit. The effective date of the reissued NWPs was March 19, 2012; they will expire on March 18, 2017. In June 2016, in advance of the March 2017 expiration date, the Corps proposed to reissue the existing nationwide permits. Regarding NWP 21, the proposal would delete the 2012 provision that provided a transition to limits in the permit; as a result, going forward, permittees are to be subject to a ½-acre and 300-linear foot limit for the loss of stream beds when NWP 21 is used. The Clinton Administration's position in the Bragg litigation was that the most appropriate and effective regulation of coal mining refuse, consistent with existing practice, is as fill under Section 404. Thus, the April 2000 proposal to amend EPA's and the Corps' regulations to include coal mining overburden in the definition of "discharge of fill material" was intended to conform those regulations with the historical practice, which both the Clinton and Bush Administrations contended is lawful, and the Administrations' position in that lawsuit. EPA's and the Corps' justification of the revised rule was that the changes were necessary to conform the agencies' rules and to bring those rules in line with long-standing practice, i.e., of treating mining overburden as fill to be regulated under Section 404. The coal mining industry supports the practice of regulating mountaintop mining discharges under Section 404 and thus supported the redefinition. Industry groups such as the National Mining Association contend that Section 404 is the appropriate regulatory mechanism for addressing activities that convert waters to dry land, but requiring Section 402 permits would effectively prohibit a broad range of mining activities which have been allowed by long-standing current practice. As described above, the types of materials associated with surface mining activities (e.g., rock and sand) are defined in the Clean Water Act as pollutants when discharged into U.S. waters. If such materials are subject to the act's Section 402 NPDES requirements, they are evaluated on the basis of whether they alter the chemical, physical, or biological integrity of the water. That standard is more stringent than evaluation under Section 404, which authorizes permits for fill discharges for constructive or useful purposes. Environmental groups strongly criticized the agencies' regulatory action to define coal mining overburden and other waste material as fill material. More generally, the environmental community opposed any proposal to allow additional discharges of waste into any waters of the United States. Thus, environmentalists opposed eliminating language in the Corps' previous regulation which had excluded waste discharges from Section 404. They argued that the prior waste exclusion language in 33 C.F.R. §323.2(e) correctly barred the Corps from issuing a 404 permit for waste disposal activities. Eliminating the waste exclusion, in their view, blurs the distinction between authority to regulate discharges for waste disposal (given to EPA under Section 402) and authority to regulate discharges of dredged or fill material (given to the Corps under Section 404). According to these groups, the changes contained in the May 2002 final rule codified a practice which is contrary to the Clean Water Act. They contend that under the revised definition, the Corps has the discretion to interpret the term "fill" broadly and to authorize any waste discharges—including those detailed in the final rule and others, such as coal ash refuse—so long as the effect of the discharge is to convert waters of the United States to dry land or change the bottom elevation, but irrespective of the impact on water quality or possible destruction of the waterbody. One analyst observed that the result of the 2002 rule revisions was to change the baseline of what is regulated by the 404 program, compared with the NPDES program. Under the Corps' previous regulation, the disposal of waste was solely subject to Section 402. Now, where the waste has the effect of fill, the government believes that regulation under Section 404 is appropriate. Thus, fill material now defines the extent of the NPDES program, because only pollutants subject to effluent limitations are excluded from regulation as fill. According to this view, the Section 404 permitting program has been expanded at the expense of EPA's NPDES program. Some congressional interest in these issues has been evident. Some Members of Congress criticized the 2000 proposal by the Clinton Administration, and several House and Senate Members also requested that the Bush Administration delay the final rule until Congress could review it. In 2002, following issuance of the revised regulations by the Corps and EPA, the Senate Environment and Public Works Committee held an oversight hearing to examine the rule, receiving testimony from Administration, mining industry, and public witnesses. Legislation intended to reverse the revised regulations was introduced in the 111 th Congress ( H.R. 1310 , the Clean Water Protection Act). It proposed to add a definition of "fill material" to the Clean Water Act similar to EPA's regulatory definition that was in effect before 2002 (see page 4, in " Redefinition of Key Terms "), plus a statement that the term does not include "any pollutant discharged into the water primarily to dispose of waste." This provision would allow pollutant discharges that replace portions of the waters of the United States with dry land or which change the bottom elevation of a water body for any purpose to be considered fill material. But it would reject the view reflected in the 2002 rule that some discharges for purposes of waste disposal (including mine overburden) should be allowable within the definition of fill. A somewhat narrower legislative approach was contained in another bill in the 111 th Congress, the Appalachia Restoration Act ( S. 696 ). It was similar to H.R. 1310 in that it proposed to define fill material to include pollutant discharges that replace portions of the waters of the United States with dry land or which change the bottom elevation of a water body for any purpose. But it would have excluded the disposal of excess spoil material from coal surface mining and reclamation activities, as described in Section 515(b)(22) of the Surface Mining Control and Reclamation Act, in waters of the United States. This provision appeared to allow discharges from some mining practices to be considered fill material, such as hardrock mining or mining of other minerals such as sand and gravel (thus qualifying for a 404 permit), while excluding discharges from surface coal mining activities. The significance of both bills is that discharges of materials that are not eligible for a Section 404 permit are regulated under CWA Section 402. As discussed in this report, because Section 402 discharge requirements are more restrictive than those for Section 404, some discharges that could be permitted under Section 404 cannot be authorized under Section 402. In 2009, the Senate Committee on Environment and Public Works Subcommittee on Water and Wildlife held a hearing on the impacts of mountaintop removal mining on water quality in Appalachia. No further action occurred on either proposal in the 111 th Congress. The Clean Water Protection Act was re-introduced in the 112 th and 113 th Congresses ( H.R. 1375 and H.R. 1837 , respectively). It was re-introduced in the 114 th Congress as H.R. 6411 . Reflecting a different approach, other legislation was introduced in the 113 th Congress to codify the current regulatory definition of fill material in the CWA ( H.R. 5077 ). Also in the 113 th Congress, the Consolidated and Further Appropriations Act, 2015 ( H.R. 83 / P.L. 113-235 ), enacted in December 2014, included a provision (Division D, Title I, Section 109) barring the Corps from developing, adopting, implementing, or enforcing revised regulations concerning definitions of "fill material" or "discharge of fill material," although the Corps had not—and still has not—indicated intention to do so. A similar provision was included in FY2016 appropriations legislation ( P.L. 114-113 ). Another court ruling that could affect interest in these issues is a 2009 Supreme Court decision in Coeur Alaska Inc. v. Southeast Alaska Conservation Council . The case dealt with the discharge of gold mining waste, or slurry, into a lake in southeast Alaska. In a 6-3 decision, the Court reversed a ruling by the U.S. Court of Appeals for the Ninth Circuit that had found that discharges from the gold mine are subject to regulation under CWA Section 402. The Supreme Court ruled that the mining discharges qualified as fill material regulated under Section 404, and that stricter requirements under Section 402 did not apply. Environmental advocates criticized the Court's ruling and urged that, in order to preclude similar rulings in the future, either Congress or the Administration should change the expansive definition of "fill material" adopted by the Corps and EPA in 2002.
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In May 2002, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (the Corps) announced a regulation redefining two key terms, "fill material" and "discharge of fill material," in rules that implement Section 404 of the Clean Water Act. This report discusses the 2002 rule, focusing on how it changes which material and types of activities are regulated under Section 404 and the significance of these issues, especially for the mining industry. The Clean Water Act contains two different permitting regimes: (1) Section 402 permits (called the National Pollutant Discharge Elimination System, or NPDES, permit program) address the discharge of most pollutants, and (2) Section 404 permits address the discharge of dredged or fill material into navigable waters of the United States at specified sites. These permit programs differ in nature and approach. The NPDES program focuses on the effects of pollutant discharges on water quality. The 404 program considers effects on the aquatic ecosystem and other national and resource interests. The Corps and EPA have complementary roles under Section 404. Landowners seeking to discharge dredged or fill material must obtain a permit from the Corps under Section 404. EPA provides environmental guidance on 404 permitting. The determination of what is "fill material" is important, since fill material is subject to 404 permit requirements, while discharge of non-fill material is regulated by EPA under the Section 402 NPDES permit program. The revised rule was intended to clarify the regulatory definition of fill material by replacing two separate and inconsistent definitions with a single, common definition. It expanded the types of discharge activities that are subject to Section 404 specifically to include construction or maintenance of the infrastructure associated with solid waste landfills and mining overburden. Further, the revised rule removed regulatory language which previously excluded "waste" discharges from Section 404 jurisdiction, a change that some argue allows the use of 404 permits to authorize certain discharges that harm the aquatic environment. The final rule completed a rulemaking begun in April 2000 by the Clinton Administration. Its proposal had generated support from the mining industry and other regulated groups, and considerable opposition from environmental groups. The final rule is substantially similar to the earlier proposal. Environmental groups say the rule allows for inadequate regulation of certain disposal activities, including disposal of coal mining waste. The Clinton and Bush Administrations said that the regulatory changes were intended to conform Corps and EPA regulations to existing lawful practice, but opponents contend that those practices violate the Clean Water Act (CWA). Legislation to reverse the revised regulations was introduced in the 114th Congress (H.R. 6411, the Clean Water Protection Act). Similar legislation was introduced in previous Congresses, but has not advanced.
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Congress enacted the Wild and Scenic Rivers Act of 1968 (WSRA) as part of a myriad of environmental conservation legislation enacted in the 1960s and 1970s. The act provides protection to certain rivers within the United States in order to balance the tendency toward development of the nation's rivers for industry or recreation. The act declares it to be the policy of the United States that certain rivers that possess "outstandingly remarkable scenic, recreational, geologic, fish and wildlife, historic, cultural, or other similar values, shall be preserved in free-flowing condition." The act further provides that "the established national policy of dam and other construction be complemented by a policy that would preserve other selected rivers ... in their free-flowing condition to protect the water quality of such rivers and to fulfill other vital national conservation purposes." In order to protect rivers according to the purpose of the act, the WSRA uses water rights to maintain flows and restrictions on development of federal projects to preserve the natural path of the rivers. This report analyzes the federal government's authority under the WSRA to maintain and preserve designated rivers. It examines the use of federal water rights under the act to ensure instream flows and the prohibitions on development of rivers for federal projects. Congress has continually made additions to the list of protected rivers under the WSRA. The 112 th Congress may consider legislation involving designation of certain river segments as well. Furthermore, congressional interest in the protections offered by the WSRA may arise from other legislative proposals, such as energy development projects that may conflict with the purposes of the WSRA. The WSRA created a national wild and scenic rivers system comprised of rivers meeting certain criteria outlined by the act. Eligibility for inclusion in the system depends on the nature of the river itself, although other bodies of water may be protected by the act. The WSRA defines river as "a flowing body of water or estuary or section, portion, or tributary thereof, including rivers, streams, creeks, runs, kills, rills, and small lakes." The act permits a river area to be included in the wild and scenic rivers system if it is a free-flowing stream and the related adjacent land area possesses one or more of the following values: scenic, recreational, geologic, fish and wildlife, historic, cultural, or other similar values. A river is "free-flowing" if it exists or flows "in natural condition without impoundment, diversion, straightening, rip-rapping, or other modification of the waterway." A river may be included even if it had previously been developed beyond its free-flowing condition upon restoration to such condition. A river may be included in the wild and scenic rivers system even if minor structures such as low dams or diversion works already exist along the section of the river proposed for inclusion, but the act specifically states that future construction of such structures is not condoned by the act. The WSRA intended for each river included in the national wild and scenic rivers system to be classified in one of three categories: wild, scenic, or recreational. A river will be classified as one of these categories depending on its characteristics and values at the time of designation and the desired level of protection. Although many designations in the statute specify two categories or do not specify any category, the act provides that rivers: if included, shall be classified, designated, and administered as one of the following: (1) Wild river areas—Those rivers or sections of rivers that are free of impoundments and generally inaccessible except by trail, with watersheds or shorelines essentially primitive and waters unpolluted. These represent vestiges of primitive America. (2) Scenic river areas—Those rivers or sections of rivers that are free of impoundments, with shorelines or watersheds still largely primitive and shorelines largely undeveloped, but accessible in places by roads. (3) Recreational river areas—Those rivers or sections of rivers that are readily accessible by road or railroad, that may have some development along their shorelines, and that may have undergone some impoundment or diversion in the past. Rivers may be designated by Congress, or, in some instances, be nominated by a governor and approved by the Secretary of the Interior. Designation provides certain protections from development and from the adverse effects of water resources projects for both the designated segment of the river and the adjacent land. Generally, designations identify the particular river, provide boundaries for the segment to be protected, and indicate what federal agency is responsible for administering the designated segment. Congress may also designate rivers for potential addition to the wild and scenic rivers system. After doing so, the Secretary of the Interior or the Secretary of Agriculture (if national forest lands are involved) is directed to study and submit reports on the suitability of the segments for inclusion to the President, who then makes recommendations to Congress regarding those segments. The boundaries of potential additions are generally defined to "comprise that area measured within one-quarter mile from the ordinary high water mark on each side of the river." Rivers in the wild and scenic rivers system are managed by various federal agencies, but typically are assigned to be administered by either the Secretary of Agriculture or the Secretary of the Interior. The WSRA requires the agency charged with administration of each segment to "establish detailed boundaries therefor (which boundaries shall include an average of not more than 320 acres of land per mile measured from the ordinary high water mark on both sides of the river)" and determine the most appropriate classification of the segment. Until this boundary determination is made, the default boundary of a designated river is "that area measured within one-quarter mile from the ordinary high water mark on each side of the river." The agency is also directed "to prepare a comprehensive management plan for such river segment to provide for the protection of the river values" and address issues of resource protection, development of lands and facilities, user capacities, and other management practices. The purpose of the Wild and Scenic Rivers Act is to preserve rivers "in free-flowing condition to protect the water quality of such rivers and to fulfill other vital national conservation purposes." To protect the flow of the river, the act provides for the assumption or creation of federal water rights sufficient to carry out the purposes of the act. Although Congress has repeatedly deferred to state law in the area of regulation of water use, Congress nonetheless has authority to "reserve" a federal water right if necessary. This authority is derived from the Winters doctrine of federal reserved water rights, announced by the U.S. Supreme Court in a decision regarding a reservation for tribal lands. Under the Winters doctrine, when Congress reserves some property for a federal purpose, it also reserves enough water to fulfill the purpose of the reservation. Courts are likely to be cautious in concluding that a federal water right is created, but may find such a right if Congress intended that such rights be created. Congress's intent may be indicated either by express language or by implication from a congressional purpose, reservation, or directive for which water is necessary. The WSRA implies a reserved right under a provision that prohibits any reservation that exceeds the amount necessary to achieve the goals of the act. The provision states that "[d]esignation of any stream or portion thereof as a national wild, scenic or recreational river area shall not be construed as a reservation of the waters of such streams for purposes other than those specified in this [act], or in quantities greater than necessary to accomplish these purposes." This provision indicates that the act would permit the reservation of a federal water right to some or all of the instream flows for the purposes that are specified in the act and up to the quantity necessary to achieve those purposes. The quantity of the federal right is often controversial under the WSRA. The Supreme Court has held that the federal government may reserve unappropriated water (water not subject to a right vested under state law) for federal purposes from federal "public domain" lands. The act provides that the right secures "the quantity necessary" to achieve the act's purposes, but that is not always a clear guideline. It is arguable what quantity is sufficient in each instance, and the protected amount may not be the full flow of the river. The WSRA protects rivers in their free-flowing condition, and the definition of free-flowing may seem to suggest that the full unappropriated flow as of the time of designation (i.e., subject to those existing uses and diversions that do not impair the purposes for which the river is being protected) is protected under the act. On the other hand, the act's reference to "necessary" water may indicate that the amount of the federal right may be less than the full amount of water available. In a river that is subject to heavy spring flows, for example, the argument might be made that some peak water flows could be impounded or diverted upstream as long as sufficient flow was released to the protected segment to maintain the values for which it was protected. The effect of designations and federal reservations under the WSRA also raises questions regarding the effect of the legislation on state laws. The limitation imposed to permit only the reservation of unappropriated waters reflects the WSRA's preservation of state law and jurisdiction over the waters of designated rivers. The WSRA states that the jurisdiction of the states over designated rivers "shall be unaffected by this [act] to the extent that such jurisdiction may be exercised without impairing the purposes of this [act] or its administration." Thus, it seems that the act would not affect existing water rights under state law and that subsequent appropriations under state law would be permissible so long as they did not adversely affect the designated rivers. Another question that arises related to the reservation of a federal right is the priority that right has among other water rights. The federal right vests and typically has a priority date as of the date of the reservation, whether or not the water is put to immediate use. Hence, the federal right is junior to rights existing on the date of the establishment of the federal right but senior to all rights vesting after that date. In some cases of federal reservations of water, the priority date may be the date of enactment of the legislation designating the river, or the legislation may provide for some other date of priority. It is of interest to note that, although federal reserved water rights would be available under the WSRA, they have not always been claimed. According to agency materials, in instances where another underlying federal right (e.g., national forest reserves) exists and appears adequate to provide sufficient water, a WSRA federal right might not be asserted. Similarly, if a right to adequate instream flows is available under state law, the United States has applied for necessary water by that route. Adequate flows may also be obtained under a specific state statute, through cooperative agreements, by filing defensive protests objecting to possibly harmful water right applications by others, or through purchase of necessary water from willing sellers. Although permitted by the WSRA, the United States has never condemned water rights for WSRA purposes to CRS's knowledge. Since the Wild and Scenic Rivers Act was enacted in 1968, dozens of rivers have been added to the list of protected waterways and some include multiple bodies of water. Designating a river under the act is not intended to change the flow of a river, but simply to protect the river from future changes. However, the lack of specificity in water rights protection under the act, and an unclear priority date for the rivers, have led some to include water rights protections within subsequent legislation designating specific rivers, especially in the arid West. The vast majority of wild and scenic river legislation does not address water rights. The few designations that do reference water rights, and their different forms, are discussed here. Generally, concerns have been raised as to the appropriate nature of water rights under WSRA designations. Upstream landowners and development interests, including state and local governments, may be concerned about whether new downstream wild and scenic segments may limit their water use and future water diversions. Conversely, downstream landowners and others may fear that upstream designations will limit their future water development options. Several factors may be considered when evaluating the water rights for a proposed river. One consideration is the type of designation of the river—wild, scenic, or recreational. The amount of water needed to protect the values of each section may vary depending upon the type of designation and its placement in the watershed. For example, water usage related to a protected waterway presumably would be most restricted if the river were designated as wild . Development or water usage near wild rivers cannot change the essential characteristics of primitive watersheds and shorelines, and unpolluted waters. A recreational river would have the fewest restrictions of the three types, as that designation applies to rivers that already have some access by roads, some development along their shorelines, and some impoundment or diversion of waters in the past. However, future restrictions on development, including on water resource projects, apply even to recreational rivers. Another key factor is the type of land through which the river flows. National parks, national forests, and wilderness areas have established water rights for waters within their boundaries to protect their resources. In each of these areas, the rivers themselves are an important resource. The implied water rights conferred by the Wild and Scenic Rivers Act for a specific river designated inside one of these land areas would be an overlay to those existing rights, that is, a second layer of rights reserving water to the extent needed to accomplish the purpose of the designation. In many areas, protection of wild and scenic values may be accomplished with the original reserved water right. However, the implied priority date created with the designation of the federal land may create a conflict when a river designation includes a specific priority date. Arguably, the more specific priority date could supersede the more general implied priority date, effectively eliminating the more senior priority right the river once enjoyed. This conflict has not been tested in the courts. Water rights provisions can address different purposes. One goal may be to quantify the extent of the new water right under state law. Another goal may be to establish a priority date for any new water rights created by the designation. For example, the enacting legislation for the Clarks Fork Wild and Scenic River in Wyoming, which is designated as a wild river, has this language about water rights: The Secretary of Agriculture is directed to apply for the quantification of the water right reserved by the inclusion of a portion of the Clarks Fork in the Wild and Scenic Rivers System in accordance with the procedural requirements of the laws of the State of Wyoming: Provided , That, notwithstanding any provision of the laws of the State of Wyoming otherwise applicable to the granting and exercise of water rights, the purposes for which the Clarks Fork is designated, as set forth in this chapter and this paragraph, are declared to be beneficial uses and the priority date of such right shall be November 28, 1990. This provision has the benefit of clearly establishing a priority right, as well as the date and quantity of that priority. The Clarks Fork River is in a national forest. It is not clear whether this water rights designation provides a second, albeit junior, water right, or whether it has the effect of thwarting the existing water rights that exist due to the land designation, giving the water rights created by the designation a lower priority than if the statute had been silent. A water rights provision might also establish that the river designation does not interfere with established water rights. An example of this type of water rights language is found in the statute protecting the Cache la Poudre River in Colorado. This wild river is in both a national park and a national forest. Its water rights language is as follows: Inclusion of the designated portions of the Cache la Poudre River... shall not interfere with the exercise of existing decreed water rights to water which has heretofore been stored or diverted ... as of the date of enactment of this title.... The reservation of water established by the inclusion of portions of the Cache la Poudre River in the Wild and Scenic Rivers System shall be subject to the provisions of this title, shall be adjudicated in Colorado Water court, and shall have a priority date as of the date of enactment of this title. This water right provision recognizes existing water rights for stored and diverted water. It also establishes a priority date as of the date of the act for each river segment within the designation. Additionally, it establishes jurisdiction for any disputes over water. However, the section preserving existing water rights refers only to those waters "stored or diverted." As noted above, it could be argued that this provision undercuts the existing priority of water rights created by designation of the Cache la Poudre segments in Rocky Mountain National Park and Roosevelt National Forest and gives those segments a more junior priority as of the date of the act. It could also be claimed the language creates an overlay. The legislative history of the clause could be read as indicating that the House of Representatives believed it was providing a priority right for the first time for the river. In any event, when a priority is specifically created within a designation, any existing priorities should also be addressed to avoid ambiguity as to their status. Only one example was found where the existing priority rights of the designated water body were acknowledged. That language is found in the proposed legislation to change Black Canyon of the Gunnison National Monument into a national park and make the Gunnison River a wild and scenic river. It states: "No water rights or the reservation of water which would expand on the existing reserved water right for the Black Canyon of the Gunnison National Monument, shall be created by this designation." This language appeared to address the Gunnison River's water rights adequately, and likely would have assuaged concerns from upstream and downstream owners that their water usage would not be changed or limited by the designation, even if not expressly stated. Other water rights provisions would focus on protecting existing rights, rather than establishing a priority date. For example, the proposed legislation for Northern Rockies ecosystem protection included this language: "Nothing in this Act may be construed as a relinquishment or reduction of any water rights reserved, appropriated, or otherwise secured by the United States in the State of Idaho, Montana, Wyoming, Oregon, or Washington on or before the date of enactment of this Act." This language would appear to protect any water rights that existed at the time of the designation, including any water rights that the designated rivers may have. A different version of water rights language clarifies that a river's designation as recreational will not interfere with adjacent landowners' water supply. The Missouri River segments protected under the act have this language regarding water rights: "In administering such river, the Secretary shall ... permit access for such pumping and associated pipelines as may be necessary to assure an adequate supply of water for owners of land adjacent to such segment and for fish, wildlife, and recreational uses outside the river corridor established pursuant to this paragraph." To the extent a water rights provision is needed, it could simply address existing water rights, including those of the designated water body, and state that no modification of those rights would occur as a result of the designation. In addition to using reserved water rights to protect the flows of designated rivers, the WSRA provides protection for a designated river by limiting the licensing of dams, reservoirs and other water project works on, or adversely affecting, protected segments. The WSRA prohibits the Federal Energy Regulatory Commission (FERC) from licensing "the construction of any dam, water conduit, reservoir, powerhouse, transmission line, or other project works under the Federal Power Act ... on or directly affecting any river" designated as part of the national wild and scenic rivers system. Likewise, no other federal agency may "assist by loan, grant, license, or otherwise in the construction of any water resources project that would have a direct and adverse effect on the values for which [a designated] river was established." The prohibitions on water and power projects are very broad in the WSRA. The prohibitions generally limit federal agencies from recommending authorization of such projects, or appropriations to begin construction on such projects, that would have an adverse affect on the purpose of the designation. The restrictions placed on FERC and other federal agencies regarding rivers designated under the WSRA extend to rivers designated as potential additions to the wild and scenic rivers system, at least to some degree. The same prohibition on licenses for construction or assistance for construction applies for a period of three complete fiscal years following any congressional action that designates a river as a potential addition. However, if, during that period, the relevant administering agency determines that the river should not be included in the wild and scenic rivers system and provides appropriate notice to Congress, the project agency may proceed with project plans. The act does not prohibit "licensing of, or assistance to, developments below or above a wild, scenic or recreational river area or on any stream tributary thereto which will not invade the area or unreasonably diminish the scenic, recreational, and fish and wildlife values present in the area on the date of designation" as an addition or potential addition to the wild and scenic rivers system.
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Congress enacted the WSRA as part of a myriad of environmental conservation legislation enacted in the 1960s and 1970s. The act provides protection to certain rivers within the United States in order to balance the tendency toward development of the nation's rivers for industry or recreation. The act declares it to be the policy of the United States that certain rivers that possess "outstandingly remarkable scenic, recreational, geologic, fish and wildlife, historic, cultural, or other similar values, shall be preserved in free-flowing condition." The act further provides that "the established national policy of dam and other construction be complemented by a policy that would preserve other selected rivers ... in their free-flowing condition to protect the water quality of such rivers and to fulfill other vital national conservation purposes." Under the act, rivers meeting certain criteria may be designated for inclusion in a national rivers system and classified for specific protections. A river may be classified as wild (the most primitive rivers with the most restrictive protections), scenic (rivers with some access with intermediate protections), or recreational (rivers with some development with the most lenient protections). Designated federal agencies issue comprehensive management plans to ensure the protected values of the river. In order to accomplish the goals of the act, the WSRA uses two main methods of protection: water rights to maintain flows and restrictions on development for federal projects to preserve the natural path of the rivers. This report analyzes the federal government's authority under the WSRA to maintain and preserve designated rivers. It provides an overview of the WSRA and the process by which rivers are designated and administered under the act. It also examines the use of federal water rights under the act to ensure instream flows and the prohibitions on development of rivers for federal projects.
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C riminal prosecutions involving classified information inherently create a tension between the government's legitimate interest in protecting sensitive national security information and a criminal defendant's rights under the United States Constitution and federal law. In many cases, the executive branch may resolve this tension before any charges are formally brought by simply forgoing prosecution in order to safeguard overriding national security concerns. "Graymail" colloquially refers to situations where a defendant may seek to introduce tangentially related classified information solely to force the prosecution to dismiss the charges against him. However, in other cases, classified information may actually be material to the defense and excluding it would violate the defendant's constitutional rights. This tension was the primary factor leading to the 1980 enactment of the Classified Information Procedures Act (CIPA), which "provides pretrial procedures that will permit the trial judge to rule on questions of admissibility involving classified information before the introduction of the evidence in open court." These procedures are intended to provide a means for the court to distinguish instances of graymail from cases in which classified information is actually material to the defense. Courts have generally agreed that CIPA does not create any new privilege against the disclosure of classified information, but merely establishes uniform procedures to determine the materiality of classified information to the defense in a criminal proceeding. The U.S. Court of Appeals for the Second Circuit (Second Circuit) has held that CIPA "presupposes a governmental privilege against disclosing classified information" in criminal matters. Therefore, before discussing the specifics of the Classified Information Procedures Act in criminal prosecutions, this report will first provide a general overview of the government's ability to restrict disclosures in civil litigation by asserting the state secrets privilege. The state secrets privilege is a judicially created evidentiary privilege that allows the government to resist court-ordered disclosure of information during civil litigation if there is a reasonable danger that such disclosure would harm the national security of the United States. Although the common law privilege has a long history, the Supreme Court first described the modern analytical framework of the state secrets privilege in the 1953 case of United States v. Reynolds. If the state secrets privilege is appropriately invoked to cover protected information in civil litigation, it is absolute; the disclosure of the underlying information cannot be compelled by the court. Still, a valid invocation of the privilege does not necessarily require dismissal of the lawsuit. In Reynolds , for instance, the Supreme Court did not dismiss the plaintiffs' claims, but rather remanded the case to determine whether the claims could proceed absent the privileged evidence. Controversy has arisen with respect to the question of how a case may proceed in light of a successful claim of privilege. Courts have varied greatly in their willingness to either grant government motions to dismiss a claim in its entirety or allow a case to proceed "with no consequences save those resulting from the loss of evidence." Whether the assertion of the state secrets privilege is fatal to a particular suit, or merely excludes privileged evidence from further litigation, is a question that is highly dependent upon the specific facts of the case. Prosecutions implicating classified information can vary factually, but an important distinction that may be made among such prosecutions regards whether the defendant already has access to the classified information in question. In cases where the defendant is accused of leaking classified information, she may already be privy to such information, and the government may be seeking to prevent further disclosure to the general public. However, in the case of terrorism prosecutions, the more typical concern is likely to be how classified information can be used as part of the prosecution's case against the defendant. In these cases, protective orders preventing disclosure to the defendant, as well as to the public, may be sought by the government. Constitutional issues related to withholding classified information from a criminal defendant arise during two distinct phases of criminal litigation. First, issues may arise during the discovery phase, when the defendant requests and is entitled to classified information in the possession of the prosecution. Secondly, issues may arise during the trial phase, when classified information is sought to be presented to the trier-of-fact as evidence of the defendant's guilt. The issues implicated during both of these phases are discussed below. CIPA contains a number of provisions that are intended to create opportunities to resolve issues related to the use of classified information in advance of trial in a secure setting. For example, at any time after charges have been filed against a defendant, any party may request a pretrial conference to discuss issues related to the potential disclosure of classified information. Among the issues that may be discussed are schedules for discovery requests and hearings to determine the relevance, admissibility, and materiality of classified information. CIPA also requires a defendant to notify the court and the prosecution of any classified information that he reasonably expects to disclose or cause the disclosure of. If a defendant fails to provide such notice, he may be penalized by being precluded from using such evidence at trial. In order to ensure that the disclosure of classified information is not premature, the government may also take an interlocutory appeal of any CIPA ruling, rather than waiting until a trial has concluded. In this way, the government does not have to risk disclosure of classified information that would later have been determined by a reviewing court to be protected. Such appeals will be expedited by the court of appeals. In order to safeguard classified information that is disclosed, CIPA authorizes courts to issue protective orders prohibiting or restricting the disclosure of such classified information. In some cases, protective orders may limit disclosure to individuals or attorneys, even from those who have received security clearances from the government. However, some defendants may be ineligible for the necessary security clearances. In these cases, courts may issue protective orders prohibiting cleared counsel from sharing any classified information with the defendant. In the event that the defendant's attorneys are also unable to obtain the necessary security clearances, courts have appointed counsel with the necessary security clearance to represent the defendant in matters where disclosure of classified information may be necessary. However, in some cases, cleared counsel have been prohibited from disclosing the classified information to the uncleared defendant or uncleared defense counsel. For example, in In re Terrorist Bombings of United States Embassies in East Africa , the court entered a protective order limiting disclosure of classified material to certain persons who had obtained sufficient security clearances. The defendant's attorneys were able to obtain security clearances, but the defendant was not. Because of this, the defendant's attorneys were unable to share with their client all the information they learned from the classified documents. Other facts deemed by the court to be relevant to the defendant's case were declassified or stipulated by the government. The defendant in this case argued that this restriction on communication violated his Sixth Amendment right to have the assistance of counsel. The Second Circuit rejected this claim, noting that the right to the assistance of counsel does not preclude every restriction on communication between defense counsel and the defendant. In this instance, the court believed that the restrictions were justified because the disclosure of the classified information "might constitute a particularly disastrous security breach—one that, perhaps, might place lives in danger." Furthermore, the Second Circuit found that the restrictions were limited and carefully tailored because they permitted cleared defense counsel to discuss the "relevant facts" with the defendant. The mechanics of discovery in federal criminal litigation are governed primarily by the Federal Rules of Criminal Procedure. These rules provide the means by which defendants may request information and evidence in the possession of the prosecution, in many cases prior to trial, including classified information. CIPA authorizes a court to permit the government to propose redactions to classified information provided to the defendant as part of discovery, but "does not give rise to an independent right to discovery" of classified information. Alternatively, a court may permit the government to summarize the classified information, or to admit relevant facts in lieu of providing discovery. In support of such procedures, the government may submit an affidavit written statement explaining why the defendant is not entitled to the redacted information. The statement may be viewed by the court ex parte and in camera . Under federal law, there are certain classes of information that the prosecution must provide if requested by the defendant. For example, Brady material, named after the seminal Supreme Court case Brady v. Maryland , refers to information in the prosecution's possession which is exculpatory or tends to prove the innocence of the defendant. This may encompass statements by witnesses that contradict, or are inconsistent with, the prosecution's theory of the case. Such information must be provided to the defense, even if the prosecution does not intend to call those witnesses. Prosecutors are considered to have possession of information that is in the control of agencies that are "closely aligned with the prosecution," but whether information held exclusively by elements of the intelligence community could fall within this category does not appear to have been addressed by the courts. Additionally, Jencks material refers to written statements made by a prosecution witness, who has testified or may testify. For example, this would include a report made by a witness called to testify against the defendant. In the Supreme Court's opinion in Jencks v. United States , the Court noted the high impeachment value a witness's prior statements may have, to show either inconsistency or incompleteness of the in-court testimony. Subsequently, this requirement was codified by the Jencks Act. Classified information that is also Jencks or Brady material is still subject to CIPA and may be provided in a redacted or substituted form, but the operation of Jencks and Brady may differ in this context. For example, under Section 4 of CIPA, which deals with disclosure of discoverable classified information, the prosecution may request to submit either a redacted version or a substitute of the classified information in order to prevent harm to national security. While the court may reject the redacted version or substitute as an insufficient proxy for the original, this decision is made ex parte without the defendant's input. In some cases, the issue may not be the disclosure of a document or statement, but whether to grant the defendant pre-trial access to government witnesses. In United States v. Moussaoui , one issue raised was the ability of the defendant to depose "enemy combatant" witnesses who were, at the time the deposition was ordered, considered intelligence assets by the United States. Under the Federal Rules of Criminal Procedure, a defendant may request a deposition in order to preserve testimony at trial. In Moussaoui , the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) had determined that a deposition of the witnesses by the defendant was warranted because the witnesses had information that could have been exculpatory or could have disqualified the defendant for the death penalty. However, the government refused to produce the deponents, citing national security concerns. In light of this refusal, the Fourth Circuit, noting the conflict between the government's duty to comply with the court's discovery orders and the need to protect national security, considered whether the defendant could be provided with an adequate substitute for the depositions, such as summaries of the witnesses' statements. The court also noted that substitutes would necessarily be different from depositions, and that these differences should not automatically render the substitutes inadequate. Instead, the appropriate standard was whether the substitutes put the defendant in substantially the same position he would have been absent the government's national security concerns. Here, the Fourth Circuit seemed to indicate that government-produced summaries of the witnesses' statements, with some procedural modifications, could be adequate substitutes for depositions. CIPA provides the government with an opportunity to request a hearing to determine the use, relevance, or admissibility of any classified information that may be disclosed at trial. This hearing may be conducted in camera if the Attorney General certifies that a public proceeding might result in disclosure of classified information. Before the hearing, the government may be required to give the defendant notice of the classified information at issue and its relevancy to the charges against the defendant. If the information in question is held to be material to the defense, but the government still objects to its disclosure, the court is required to accept that assertion without scrutiny and impose nondisclosure orders upon the defendant. However, in such cases the court is also empowered to dismiss the indictment against the defendant or impose other sanctions that are appropriate. Therefore, once classified information has been determined through the procedures under CIPA to be material, it falls to the government to elect between permitting the disclosure of that information or the sanctions the court may impose, including dismissal of charges against the defendant. If the court concludes that classified information is admissible and authorizes its disclosure at trial, CIPA establishes a framework by which the government may petition the court to permit certain alterations to evidence in order to introduce the relevant information in an alternative form. These substitutions may occur during discovery or at trial. During discovery, a court may, "upon a sufficient showing," permit the government to "delete specified items of classified information," "substitute a summary of the information," or "substitute a statement admitting relevant facts that the classified information would tend to prove." Prior to the introduction of evidence at trial, a court may likewise permit the government to redact, summarize, or substitute classified information, but only so long as the substitution "provide[s] the defendant with substantially the same ability to make his defense as would disclosure of the specific classified information." If the substitute is rejected by the court, disclosure of classified information may still be prohibited if the Attorney General files an affidavit with the court objecting to disclosure. However, if the Attorney General files such an objection, the court may dismiss the indictment; find against the government on any pertinent issue; strike testimony; or take any other action as may be appropriate in the interests of justice. Two recent CIPA cases, both of which involved federal prosecutions of former intelligence officials for allegedly disclosing classified information, provide insight into the scope of a court's authority to permit evidentiary substitutions. In United States v. Drake , a federal district court approved the government's request to submit evidentiary substitutions for unclassified , but otherwise protected, information. In United States v. Sterling , the court permitted the prosecution to use evidentiary substitutions for evidence introduced in its own case-in-chief, as opposed to merely providing substitutes for evidence introduced by the defendant. Both of these rulings are discussed in more detail in the following sections. Section 6(c) of CIPA specifically provides the government with the authority to make evidentiary substitutions for classified information during a criminal prosecution. However, in some cases prosecutors have also sought to submit substitutions for unclassified information that the government believes would threaten national security if disclosed as part of the evidentiary record. For example, in U nited S tates v. Drake , the government sought to make substitutions for evidence that, though not classified, was protected under a separate statutory evidentiary privilege expressly applicable to the National Security Agency (NSA). The Drake case involved an unauthorized disclosure prosecution against a former NSA employee under the Espionage Act. Drake was accused of leaking classified information relating to the NSA Inspector General investigation that found that the agency had inefficiently used resources in developing a specific secret program. After a series of CIPA hearings in which the court determined which classified information sought by the defense was relevant and admissible, the government provided the court with proposed evidentiary substitutions for admissible evidence that included substitutions and redactions for both classified and unclassified evidence. As to the substitutions of unclassified evidence, the government argued that though not classified, the evidence was "protected material" under 50 U.S.C. Section 402—a statutory privilege that protects against the "disclosure of the organization or any function of the National Security Agency, or any information with respect to the activities thereof." In short, the government asserted that admissibility decisions under CIPA, including determinations of the adequacy of a substitution, remained subject to statutory, military, and other traditional common law privileges, as CIPA had never altered "the existing law governing the admissibility of evidence." In addition, the government argued that courts retain "inherent authority outside of CIPA to resolve the legal and evidentiary issues relating to the protected information through the use of substitutions." The defense objected to the government's proposed use of substitutions for unclassified evidence—arguing that CIPA provided the exclusive basis upon which a court could permit substitutions for evidence in a criminal case. As CIPA, by its terms, applied only to classified information, the court, according to the defendant, had no grounds to permit substitutions, redactions, or summaries with respect to unclassified information. Even if the court had authority to permit substitutions for unclassified information protected by a valid privilege, the defense asserted that the NSA privilege, which had previously only been asserted in civil cases, had no application in a criminal trial. The federal district court held that the government was permitted to submit substitutions for unclassified information protected under the NSA's statutory privilege, as CIPA does not "foreclose the consideration of substitutions for information based upon an assertion" of an otherwise applicable government privilege. Relying on the Fourth Circuit's decision in U nited S tates v. Moussaoui , the district court determined that federal courts have the inherent "authority to allow or reject substitutions for unclassified information that is protected by a Government privilege." In Moussaoui , the defense had requested access to a witness for use at trial. The government objected, noting that the witness in question was an enemy combatant, a national security asset, and, therefore, unavailable. The Fourth Circuit accepted the government's position, holding that although CIPA was inapplicable to the unclassified testimony in question, the statute provided a "useful framework" for considering the appropriateness of substitutions. Thus, rather than providing the defense with unfettered access to the witness, the Fourth Circuit permitted the witness to be deposed with specific precautions. Drawing an analogy to Moussaoui , the Drake court held that as long as the NSA privilege was applicable, the court was not prohibited from allowing adequate substitutions for protected evidence. Specifically, for the Drake court CIPA did not represent the exclusive means by which a court could permit evidentiary substitutions. The court next turned to whether the NSA privilege was applicable in a criminal prosecution. As no court had yet held that the NSA statutory privilege applied in criminal cases, the district court looked to the analogous state secrets privilege—generally considered a common law evidentiary privilege with application primarily in the civil context—to inform its decision. Citing a case from the U.S. Court of Appeals for the Second Circuit (Second Circuit), in which it was determined that the state secrets privilege was applicable to criminal cases, the district court determined, by analogy, that the NSA privilege would similarly apply in the criminal context. Accordingly, as the NSA had asserted an applicable government privilege, the agency was free to submit substitutions for unclassified evidence protected under 50 U.S.C. § 402. A second dispute that has arisen in the context of allowing substituted evidence in criminal leak prosecutions has been whether CIPA permits the government to submit substitutions for its own evidence. Typically in CIPA cases, the defense will submit a 5(a) notice, which provides the court and the prosecution with notice of any classified information that the defense reasonably expects to disclose or cause to be disclosed at trial. Following this submission, the court will generally hold CIPA hearings in which the court makes "all determinations concerning the use, relevance, or admissibility of classified information that would otherwise be made during the trial or pretrial proceedings." After the court determines what evidentiary items are relevant and admissible, the government will generally propose any necessary substitutions for that evidence. Thus, substitutions generally are submitted in place of classified information that the defense expects to use in its own case. However, in U nited S tates v. Sterling , the government gave notice to the court that it also sought to submit substitutions for classified information it wished to introduce itself for use in its case-in-chief. Sterling involves a former Central Intelligence Agency (CIA) officer who was convicted of disclosing classified information to author James Risen. During preliminary hearings in the case, the defense objected to the prosecution's use of substitutions for its own evidence. CIPA, the defense asserted, permitted the court to grant a request to use substituted evidence in only two scenarios: (1) under Section 4, in complying with the prosecution's discovery obligations, and (2) under Section 5 and Section 6, for use "in lieu of classified information that the defense intends to use in any pretrial or trial proceeding." "Notably absent," argued the defense, "is any statutory provision allowing for the Government to use substitutions or redactions for information it seeks to introduce into evidence at trial." Although unable to cite to any previous cases that had interpreted CIPA as distinguishing between evidence introduced by the defense and evidence introduced by the prosecution, or any express language within the statute that clearly made such a distinction, the defense relied upon the history and primary purposes of CIPA as the basis for its argument. First, the defense argued, the statute was "intended to implement procedures that allow for the defense to gain access to classified information so as not to impede a defendant's right to a fair trial." Second, the defendant argued that CIPA was enacted to combat the practice of "graymail," where a "criminal defendant threatens to reveal classified information during the course of his trial in the hope of forcing the government to drop the charge against him." Neither concern, the defense argued, was triggered where the government is permitted to substitute evidence it seeks to present in its own case-in-chief. In response, the government argued that nothing in the text of CIPA distinguished between evidence submitted by the prosecution and evidence submitted by the defense. In the view of the government, CIPA authorizes the government to propose substitutions "upon any determination by the court authorizing the disclosure of specific classified information." The government relies on the text of CIPA, noting that neither Section 4, 6, nor 8 of CIPA states that the provided substitution authority only applies to defense evidence. Additionally, contrary to the defense's reading of the legislative history, the government argued that while "graymail" was undoubtedly a concern behind CIPA, the legislative history suggests that Congress was also concerned with the disclosure of any classified evidence at trial, regardless of which party introduced the evidence. The government contended that CIPA, when read as a whole, was enacted to establish procedures for use in criminal prosecutions involving classified information that prevents "the disclosure in the course of trial of the very information the laws seek to protect." The substitution provisions of CIPA that exist to protect classified information, would, according to the government, therefore apply to any classified information that arises during trial, not simply classified information that the defense seeks to introduce. The U.S. District Court for the Eastern District of Virginia rejected the defense's interpretation of CIPA. Instead, based on "reasons stated on the record during a sealed hearing," the court held that the government "will be permitted to use limited substitutions and redactions in exhibits subject to the court's determination that the exhibits are relevant, not cumulative, and not shown by the defense to be unfairly prejudicial." While the sealed nature of the opinion makes it unclear what the basis was for the court's ruling, the fact that it ruled for the government suggests that the court found the government's arguments to be persuasive. Together, the Drake and Sterling cases reinforce that CIPA does not represent the exclusive means by which a court can prevent disclosure of sensitive or classified information within criminal proceedings. CIPA is not intended to alter the rules of evidence, and therefore does not affect traditional powers of the judiciary to craft certain methods for safeguarding protected information. Thus, rather than imposing procedural limitations on the court, CIPA may be more accurately characterized as supplementing judicial authority to resolve evidentiary disputes in criminal cases involving classified information. Additionally, the statute has not been read by the courts as simply establishing a procedure by which defendants are provided with access to classified information necessary to their defense; rather, the statute also serves the broader purpose of protecting the disclosure of classified information generally by providing the government with procedures for carrying out prosecutions without risking the disclosure of protected information. In some cases, the use of CIPA procedures can also implicate constitutional concerns. As described above, there may be instances where disclosure of classified information to the defendant would be damaging to national security. In these instances, the prosecution may seek to present evidence at trial in a manner that does not result in disclosure to the defendant. One proposed scenario might be the physical exclusion of the defendant from those portions of the trial, while allowing the defendant's counsel to remain present. However, such proceedings could be viewed as unconstitutionally infringing upon the defendant's Sixth Amendment right to confrontation. Similar confrontation issues may be raised by use of the "silent witness rule," a procedure that may be offered by the government as a substitution for classified information that would be otherwise admissible in a criminal defendant's trial. Under this procedure, a witness whose testimony may include classified information will respond to questions by making references to particular portions of a classified document. The classified document may be made available to the parties, the court, and members of the jury. However, it is not made available to members of the public that may be in the gallery of the court. In this way, the witness may testify without disclosing classified information to members of the public at large. If the defendant is not allowed to personally review classified information in the same manner that it is made available to the jury, the use of the silent witness rule may violate the defendant's right to confront the evidence used against him. For example, in United States v. Abu Ali , the trial court permitted the prosecution to use the silent witness rule, while only providing the defendant and uncleared counsel with a redacted version of the document. In contrast, the members of the jury were allowed to hear the testimony using an unredacted version of the same document. The Fourth Circuit subsequently held this procedure to be unconstitutional, stating: If the government does not want the defendant to be privy to information that is classified, it may either declassify the document, seek approval of an effective substitute, or forego its use altogether. What the government cannot do is hide the evidence from the defendant, but give it to the jury. Such plainly violates the Confrontation Clause. The use of the silent witness rule for selected pieces of classified evidence has been approved by courts under CIPA when its use has not raised Confrontation Clause issues. For example, in Sterling , the government sought an interlocutory appeal from a district court order permitting government witnesses to testify using pseudonyms from behind physical screens, but allowing the jury and defense to have a key to the witnesses' true names. Specifically, the government sought to preclude the jury and defense from knowing the witnesses' true identities. Sterling had argued that such exclusions would violate his right to have a public trial and to confront witnesses against him. Sterling also argued that, in his particular case, the use of such security measures was "unduly suggestive," as the jury may confuse the purposes of the secrecy measures used in the witnesses' testimony and make inferences about the sensitive nature of the information he had allegedly disclosed. Sterling argued that these inferences would be prejudicial because the actual sensitivity of such information was a contested issue in his trial. The Fourth Circuit held that the district court had correctly allowed the defense to access the witnesses' true identities, noting that "Sterling knows, or may know, some of the witnesses at issue, and depriving him of the ability to build his defense in this regard could impinge on his Confrontation Clause rights." However, the court reversed that part of the district court's order allowing the jury to know the witnesses' true names, finding the witnesses' identities to be clearly sensitive information that would not provide any benefit to the jury's deliberations. The Fourth Circuit also held that any concerns about the undue influence of the security measures could be cured by instructing the jury that "Sterling's guilt cannot be inferred from the use of security measures in the courtroom."
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A criminal prosecution involving classified information may cause tension between the government's interest in protecting classified information and the criminal defendant's right to a constitutionally valid trial. In some cases, a defendant may threaten to disclose classified information in an effort to gain leverage. Concerns about this practice, referred to as "graymail," led the 96th Congress to enact the Classified Information Procedures Act (CIPA) to provide uniform procedures for prosecutions involving classified information. Examples of recent cases implicating CIPA have arisen in the context of prosecutions against alleged terrorists, as well as prosecutions involving the unauthorized disclosure of classified information by former intelligence officials. CIPA provides procedures that permit a trial judge to rule on the relevance or admissibility of classified information in a secure setting. The Act requires a defendant to notify the prosecution and the court of any classified information that the defendant may seek to discover or disclose during trial. During the discovery phase, CIPA authorizes courts to issue protective orders limiting disclosure to members of the defense team that have obtained adequate security clearances and to permit the government to use unclassified redactions or summaries of classified information that the defendant would normally be entitled to receive. If classified information is to be introduced at trial, the court may allow substitutes of classified information to be used, so long as they provide the defendant with substantially the same ability to present a defense and do not otherwise violate his constitutional rights. Among the rights that may be implicated by the application of CIPA in a criminal prosecution are the defendant's right to have a public trial, to be confronted with the witnesses against him, and to have the assistance of counsel. Application of CIPA may also be implicated by the obligation of the prosecution to provide the defendant, under Brady v. Maryland, with exculpatory information in its possession and the separate obligation to provide the defendant with government witnesses' prior written statements pursuant to the Jencks Act.
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The "Foreign Service Overseas Pay Equity Act of 2008," H.R. 3202 , as amended, would eliminate, over three years, the pay difference between those Foreign Service personnel serving in Washington, D.C. and those serving abroad who are not eligible for a locality pay adjustment. This bill was referred to both the House Committee on Foreign Affairs (HCFA) and the House Committee on Oversight and Government Reform (HOGR). On July 16, 2008, HCFA favorably reported the bill by voice vote. On August 1, 2008, an identical companion bill was introduced in the Senate, S. 3426 , and referred to the Senate Committee on Foreign Relations (SFRC). On September 23, SFRC considered and reported S. 3426 , without amendments. On July 16, 2008, the Senate Committee on Appropriations reported its FY2009 Department of State, Foreign Operations and Related Programs appropriations bill, S. 3288 . In its bill, the Senate Appropriations Committee met the Administration's request for funding needed to eliminate the existing 20.89% pay differential over two years. At a time when 55% of U.S. Foreign Service personnel are serving at a hardship and/or danger post, the 110 th Congress, in its closing days, may choose whether and how to address an issue that both the Department of State and the Foreign Service consider to be a high priority personnel issue—the elimination of a 20.89% pay difference between service in the Washington, D.C. and service abroad for the vast majority of the members of the Foreign Service below the Senior Foreign Service level. The pay difference is the result of federal locality pay laws not covering the salary of federal employees posted abroad. While opponents question the need for a change in the compensation system because of the other allowances and benefits that Foreign Service often get when serving abroad, proponents for the elimination of the pay difference contend that the disparity has negative implications on the morale of the Foreign Service, considerations about overseas assignments, and possibly eventually on retention. Both the Department of State and the American Foreign Service Association (AFSA), the professional association and the recognized bargaining agent for the Foreign Service, said the elimination of this pay disparity is very important to them. During the 109 th Congress, Republican and Democratic leadership of both the House Committee on International Relations and the Senate Committee on Foreign Relations worked to resolve this pay differential issue by developing a proposal called the Foreign Service Compensation Reform. The Administration had agreed to the creation of a new Foreign Service pay compensation system if it were performance-based. This proposal—developed through negotiations among the House and Senate committees, the Administration, and AFSA—would have (1) placed the Foreign Service compensation system on a pay-for-performance (PFP) basis with pay adjustments made only on the basis of performance and not longevity, and (2) eliminated the current pay difference by creating a new worldwide pay structure at the Washington, D.C., salary level over two years. However, reportedly due to concerns among the House floor managers as to whether there was sufficient support for passage, this proposal was not included in the final version of H.R. 6060 , the Department of State Authorities Act of 2006, which was originally intended to carry the Foreign Service Compensation Reform proposal and a few other provisions. H.R. 6060 was passed by the House and Senate, and enacted as P.L. 109-472 . For the 110 th Congress, the Administration, in its FY2009 budget request, urged the enactment of legislation creating a new performance-based compensation system for the Foreign Service along the lines of the 109 th Congress PFP compromise, and requested the appropriation of $35.9 million to implement the first of two phases of the new compensation system. On July 16, 2008, the Senate Appropriations Committee reported its FY2009 State Department/Foreign Operations and related programs appropriations legislation, S. 3288 . This bill provided sufficient funding levels to meet the Administration's request. On the same day, the House Committee on Foreign Affairs (HCFA) favorably reported the "Foreign Service Overseas Pay Equity Act of 2008," H.R. 3202 , as amended, which, without providing for a performance-based pay system, would eliminate the pay disparity over three years. This bill, which was introduced by Representative Chris Smith and has 29 cosponsors, was referred to both HCFA and HOGR. On August 1, 2008, Senator John Kerry, with five cosponsors, introduced an identical companion bill, S. 3426 , which was referred to the SFRC. On September 23, 2008, the SFRC considered and reported S. 3426 without amendments. The Foreign Service personnel system, like the Civil Service system, has salary ranges associated with various ranks, and within those ranges there are "step increases" in salary that a person can receive over time, even without a promotion. While the Administration is seeking changes to the personnel system to make it performance-based, Foreign Service personnel believe that its personnel system is already a performance-based system. Members of the Foreign Service point to elements of their personnel system, such as annual promotion reviews by independent promotion panels instead of by one's supervisor, an "up-or-out" system with specific time limits for promotions, and a mandatory five percent low ranking requirement that can lead to separation from the Service that, they believe, makes it performance-based. Former AFSA President, Ambassador J. Anthony Holmes, said, "The reality is that the present FS personnel system, with its rank-in-person, not in-job, annual evaluations, and competitive up-or-out system is inherently PFP already." The Foreign Service personnel system, which is separate and quite different from the Civil Service system, was created under the authorities provided by the Foreign Service Act of 1980 ( P.L. 96-465 ; 22 U.S.C. 3901 et seq.). In 2008, there are currently about 11,500 State Department Foreign Service Officers and Specialists, with two-thirds of them serving abroad at over 260 posts and missions at any one time. The remaining third is generally posted in Washington, D.C. Typically, members of the Foreign Service spend two-thirds of their careers abroad, serving at each post for one to three years before being assigned elsewhere in the world. Currently, about 55% of Foreign Service personnel are serving in posts designated as hardship and/or danger posts. Members of the Foreign Service cannot spend more than six years at a time serving in domestic assignments. The Director General of the Foreign Service, on a case-by-case basis, may provide a waiver of up to two years if a member of the Service seeks to extend his or her stay in the continental United States beyond six years. Foreign Service personnel carry their rank-in-person as opposed to rank-in-position as the Civil Service generally does. Thus a member of the Foreign Service can advance in rank on the merits of his or her performance, while a member of the Civil Service often can only advance beyond the rank designated for a position by successfully competing for an open position at a higher rank. Grades or ranks within the Foreign Service are divided into two major categories: the Senior Foreign Service (SFS), of which there are about 600 individuals, and the regular Service which is comprised of about 10,500 Officers and Specialists. The SFS is divided into five pay categories and, like the Civil Service Senior Executive Service (SES), requires a presidential appointment into the senior service. The regular Foreign Service is divided into nine ranks or grades with the 01 level the highest. Most Foreign Service Officers enter the Foreign Service at the 05 or 06 levels while some Specialists may enter at lower grades. Generally entering Officers serve for four to five years before being tenured and fully commissioned as Foreign Service Officers, usually at the 04 rank. Generalist Foreign Service Officers are assigned to one of five cones upon entry into the Foreign Service—Political, Economic, Public Diplomacy, Management, and Consular. However, during their career, they will do assignments outside of their cone. The personnel system for the Foreign Service is basically an "up-or-out" system that reviews the members of the Foreign Service annually for promotion unless they have been promoted within the previous year. Promotion panels, each usually consisting of four or five higher grade officers and a public panelist, are formed each year to consider the members of the Foreign Service at ranks of 04 and above for promotion. Those Foreign Service personnel below the 04 rank, who are neither tenured nor commissioned, receive Administrative Promotions at the discretion of the Director General. Promotion panels are generally organized to compare individuals in the same rank and cone. For instance, one promotion panel reviewed 02 political officers and management officers—160 Management and 240 Political Officers. Criteria or precepts for promotion are negotiated between the Department and the American Foreign Service Association (AFSA), currently the recognized bargaining agent for the Foreign Service. Promotion panels begin by reviewing the Employee Evaluation Report files, which can go back five years or to the previous promotion. In most cases, there are fewer available open positions than there are individuals determined to be promotable by the panel. The panel then rank orders those promotable to fill the slots accordingly. After making its promotion decisions, the panel makes its recommendations to the Secretary of State who reviews and forwards them to the Senate. The Senate has the responsibility of approving the promotion lists developed by the promotion panels and recommended by the Secretary of State. Promotion panels are also required to "low-rank" five percent of those reviewed for promotion. The panel then recommends to the Secretary of State whether those individuals should be referred to the Performance Standards Review Board for possible separation from the Service or should be provided a letter for the individual's file, instructing the individual to take career counseling. The personnel system has a promotion-required Time-in-Class (TIC) limitation of no more than 10 to 15 years at one grade without a promotion for FS-01 through 04 depending upon the grade, and a seven years limitation at each senior rank for members of the SFS. There is also a Time-in-Service (TIS) limitation of 27 years for appointments to the Senior Foreign Service. If a person exceeds these TIC and TIS limitations, the individual is separated from the Foreign Service. Because of this system, most members of the Foreign Service leave the Service in their mid-50s at an 01 or 02 rank after a full and distinguished career. The Federal Pay Comparability Act of 1990 excludes federal employees posted outside the continental United States from receiving locality pay adjustments. Locality pay is designed to create pay comparability between federal employees and non-federal workers doing the same levels of work within a specific geographic locality in the continental United States. There is no basis for comparison of Foreign Service personnel posted abroad to non-federal workers in the United States. As a result, Foreign Service personnel, who spend about two-thirds of their careers posted abroad, receive less salary when they are posted abroad and less of a career total than their Civil Service counterparts who spend a career in the United States. Each year since 1990, the difference has increased every year, and by 2008, an individual's salary was 20.89% higher if he/she served in Washington, D.C., as opposed to serving abroad. Proponents of revision to the Foreign Service system indicated that the gap impacts negatively on morale and the assignments system by providing disincentives for overseas tours. They assert that the intent of pay adjustments such as the hardship and danger pay differentials are nullified when locality pay is not counted. They point out that if a person were to go to a 15% hardship post from a Washington, D.C. assignment, he/she would experience a 5.89% decrease in salary. Both the Administration and the Foreign Service seek to remove the pay difference issue, but they are also motivated by different considerations. According to a 2008 AFSA survey, the top legislative issue for members of the Foreign Service is the elimination of the pay disparity that exists between service abroad and service in Washington, D.C., which is where most Foreign Service personnel are domestically assigned. From the perspective of many in the Foreign Service, it is a matter of equity and of a recognition of their work as they serve abroad often in difficult and dangerous conditions. In 2005, as members of the Senior Foreign Service were reaching retirement, statistics showed they were trying to serve in assignments in the continental United States instead of serving abroad and suffering the loss of pay which could affect their retirement savings. Thus, in 2005, the pay difference was eliminated for those in the Senior Foreign Service. The compensation system for the Senior Foreign Service changed to a formalized pay-for-performance system with adjustments to salary based solely on performance, and the pay levels were brought to the Washington, D.C. salary level regardless of where they were posted. Supporters of changing the pay system to cover the entire Foreign Service and the Administration both argue that the pay disparity "created an increasing pay disincentive to overseas service,." as it did for the Senior Foreign Service prior to 2005. Further, even among the Foreign Service serving at the same post, only mid- and junior-ranked personnel would suffer the pay gap while those in the Senior Foreign Service and those detailed to an embassy would not because the pay difference exists for only those Foreign Service personnel posted abroad who are at the rank of 01 and below. A 2006 Government Accountability Office (GAO) study discussing obstacles to attracting mid-level officers to hardship posts also noted the impact of the pay difference as a deterrent to bidding for hardship assignments: [O]fficers and State personnel we interviewed both at hardship posts and in Washington, D.C. consistently cited the lack of locality pay as a deterrent to bidding at hardship positions. In 2002, we reported that the differences in the statutes governing domestic locality pay and differential pay for overseas service had created a gap in compensation penalizing overseas employees. This gap grows every year, as domestic locality pay rates increase, creating an ever-increasing financial disincentive for overseas employees to bid on hardship posts. After accounting for domestic locality pay for Washington, D.C., a 25 percent hardship post differential is eroded to approximately 8 percent. As estimated in our 2002 report, differential pay incentives for the 15 percent differential hardship posts are now less than the locality pay for Washington, D.C., which is currently 17 percent and can be expected to soon surpass the 20 percent differential hardship posts. The George W. Bush Administration, in its FY2009 budget, requested $35.9 million for the Department of State to fund the first step of transition to a performance-based system and a global rate of pay for Foreign Service personnel at grades of 01 and below. The Administration seeks to have these changes made in a manner agreed upon during the 109 th Congress, the "Foreign Service Compensation Reform" proposal. The Administration has made such funding requests since FY2007 "to eliminate longevity-based pay increases and institute a strictly pay-for-performance system similar to that instituted for the Senior Foreign Service in P.L. 108-447 ." The proposal would equalize the proposed global rate with equivalent salary levels in Washington, D.C., which includes locality pay. Over the past few years, the Bush Administration contended that the current GS pay framework is a "failure." It maintained that the "one size fits all" approach of the GS pay schedule can mask dramatic disparities in the market value of different federal jobs, and uses on-the-job longevity as a substitute for performance. The Administration had once proposed repealing the current GS Schedule by 2010, and replacing it with "a system of occupational pay groups, pay bands within those groups and pay for performance across the federal government. The new system would be a pay-for-performance system." At the request of the Administration, Congress developed new structures for civilians working for the Departments of Defense (DOD) and Homeland Security (DHS). These personnel systems were challenged in the courts by federal employee unions, and now the changes are currently being made in only parts of the DOD. Thus, while agreeing that the Foreign Service pay difference should be eliminated, the Administration continues to urge that these changes should be made in the context of a pay-for-performance basis that would replace the current longevity-based system. Because of the changes in the Congress following the 2006 elections, the drive to move the Civil Service System and the Foreign Service System to being performance-based as envisioned by the Administration, did not achieve majority support in the Congress. Both H.R. 3202 , as amended in the House Foreign Affairs Committee, and S. 3426 are identical in language. "Foreign Service Overseas Pay Equity Act of 2008." This section adjusts the Foreign Service salary level for ranks of 01 and below who are serving abroad, but not in a non-foreign area, to be comparable to the Washington, D.C. salary level with locality pay. The new salary level with locality pay would be treated in the same manner in terms of taxes and retirement and other benefits as if the individual were serving in Washington, D.C. To reach the full Washington, D.C. salary level with locality pay, the section provides that it shall be accomplished over three years with a one-third increase in each of those three years. Once the overseas salary level is comparable to the Washington, D.C. level with locality pay, the section states that the salary levels shall remain comparable. Through the Foreign Relations Authorization Act, Fiscal Year 2003, Congress established a system of computing the annuity of Foreign Service personnel serving abroad to be as if he/she were serving in Washington, D.C. This system, commonly referred to as "Virtual Locality Pay," was developed so that the individual would not be negatively affected in the annuity computation because of a lower salary that did not include locality pay. However, because the individual serving overseas would have the those years computed as if he/she were serving in Washington, that individual's contribution to the Foreign Service retirement system also would have to be at a level as if the individual were serving in Washington. The Conforming Amendments of Section 2 make adjustments to the Foreign Service retirement systems by eliminating the "Virtual Locality Pay" system. When the Foreign Service overseas salary level reached the Washington, D.C. level with locality pay, the "Virtual Locality Pay" system would not be required. The "Virtual Locality Pay" system was instituted because, as the locality pay disparity became larger, it created an incentive for Foreign Service personnel approaching retirement to seek assignment to Washington, D.C. as opposed to going abroad. As a person approached retirement, the lower salary levels received because of the pay disparity for service abroad, would negatively affect annuity computations at a time when a person would want to have the highest salary levels possible. For the Foreign Service, these levels would be achieved by serving in Washington, D.C. An examination of assignment bids among those approaching retirement at that time showed that this was in fact happening. The Conference Report accompanying the legislation explains: Foreign Service Officers serving overseas do not receive locality pay. Thus, as they near retirement, they have a significant financial incentive to seek assignment to Washington, D.C. This often deprives overseas posts of the more experienced officers. Under this section, an officer, while serving overseas, will have his or her annuity calculated as if he or she were actually receiving locality pay. The Foreign Service Act of 1980 currently authorizes the Secretary of State to provide, at the Secretary's discretion, a death gratuity to the survivors of any Foreign Service employee who dies as a result of injuries sustained in the performance of the employee's duty abroad. The amount of the death gratuity is equal to the employee's annual salary at the time of death. This section amends the current death gratuity provision in two ways: The death gratuity is increased for Foreign Service employees who die as a result of injuries sustained in the performance of his/her duty from the equivalent of one year's salary to the salary of a level II of the Executive Schedule. A death gratuity is authorized for employees compensated under local compensation plans. The amount of the death gratuity for the individual is equal to the greater of one year's salary at the time of death, or one year's salary at the highest step of the highest grade on the local compensation plan that the employee was under at the time of death. On September 17, 2008, the Congressional Budget Office (CBO) issued a cost estimate for the Foreign Service Overseas Pay Equity Act of 2008, H.R. 3202 / S. 3426 . The Administration, in its February 2008 budget, requested funds to eliminate the pay disparity in two steps, instead of three as proposed by H.R. 3202 and S. 3426 . The Administration estimates that it would cost about $35.9 million in the first year and $152.9 million (Budget Authority [BA]) to fully eliminate the pay difference. The CBO estimates that the direct cost of adjusting the pay difference as proposed by H.R. 3202 / S. 3426 would be $148 million in BA or $126 million in Outlays (O). Because the adjustment would be accomplished over three years, the estimated cost for FY2009 would be $49 million (BA) or $42 million (O), which is one-third of the estimated total cost. The CBO also estimated that the increase in the salary of Foreign Service personnel posted abroad would also "lead to an increase in other benefits paid to FSOs, such as life insurance, health insurance, hardship pay, and danger pay." CBO estimates that in FY2009, this would come to a total cost of $84 million (BA) or $72 million (O). Over a five-year period form FY2009 to FY2013, the total cost of both the salary adjustment and the increase in other benefits paid would be $1.4 billion (BA) or $1.3 billion (O). The CBO also estimated that the Section 3 Death Gratuities provision would, based on historical data, be paid less than five times a year. This would be $588,235 BA or $500,000 (O) in a year, or a total of $1 million (O) over five years. For the past several years, both the Bush Administration and the members of the Foreign Service, through AFSA, have sought to change the compensation system of the regular non-Senior Foreign Service personnel to eliminate the pay disparity between service abroad and service in Washington, D.C. Some members, congressional staff, and others engaged in this discussion also are aware that Foreign Service personnel serving abroad often get allowances and benefits for being abroad. For example, if a member of the Foreign Service were to serve in Mexico City, Mexico, the person would receive a Hardship Differential of 15% of base salary; 20% Cost of Living Allowance (20% of an amount determined by a Mexico City "shopping basket"); an annual Education Allowance for each child; and a Quarters Allowance to cover rent and utilities (the amount for the allowance is based upon the grade of the Foreign Service member). These allowances and benefits can change from post-to-post even within the same country. Further, if the member of the Foreign Service, for personal reasons, goes to the post by him/herself, the family will receive a Separate Maintenance Allowance. These economic questions as well as the questions of equity, recognition of the work of the Foreign Service, impact upon the morale, assignments process, and possibly retention are often weighed against each other as members and their staff consider this issue. Many view this proposed compensation system as a "pay raise" for the Foreign Service and ask why salaries should be increased when Foreign Service personnel already receive so many benefits. Supporters for the change state that this is not a pay raise, but rather a correction of 14 years of unintended inequity that is growing every year in the overseas compensation for the Foreign Service. They argue that ending this pay difference would help validate the work the Foreign Service does, including the significant efforts and sacrifices that they and their families make in service to the United States. In many posts abroad, Foreign Service personnel receive a post/hardship differential of 5—35% of base pay, a cost-of-living allowance, an education allowance for their children, and a housing allowance. These can add significantly to the base salary level. Providing locality pay for those serving abroad would increase the compensation levels. The lack of locality pay is no longer a matter of retirement benefits because the virtual locality pay for retirement computation in current law already takes care of the impact on an annuity. Those who question the need for this change argue that the Foreign Service is already well taken care of when they serve abroad. Those who support eliminating the pay differential contend that the allowances exist to address specific costs and hardships unique to working for long years overseas: Danger pay compensates for the extreme risks of living in a country wracked by war, terrorism, political violence or endemic lawlessness. Education allowances make it possible for Foreign Service members to cover their children's education when no viable public schools are available. Cost-of-living allowances help defray the cost of food and other daily needs of life in countries where those things are vastly more expensive than in the United States. These were never meant to obviate the need for the basic locality pay adjustment that all other federal employees get. Because one of the biggest benefits that members of the Foreign Service receive is free housing when posted abroad, many believe that this should compensate for any loss derived from the lack of locality pay. These critics point out that if Foreign Service personnel own a home in the United States, they would be able to rent it out while they are gone, and build equity while the government takes care of their living quarters for free. They ask if the locality pay adjustment is really necessary. Supporters of the change in the Foreign Service compensation system explain that while the housing abroad is free, members of the Foreign Service are not reaping a financial windfall even when they own a home in the United States. These supporters explain: "Most of our members own a home in the U.S. on which they have to pay a mortgage, upkeep, insurance and property taxes—and renting it out (often impossible) rarely covers all of these expenses and is itself a costly proposition." These supporters for eliminating the pay difference also point out that there are often hidden costs to serving overseas that do offset any gain from free housing. Among these is the fact that it is often impossible for the spouse to get employment and a salary equivalent to what could be earned in the United States. Also there are numerous out-of-pocket costs for being overseas. These include travel not covered by authorized visitation basis from distant economically developing nations. This type of travel may include attending the funeral of a family member, going to a family member's wedding, or graduation, or seeing a family member who is suffering from a life-threatening illness. Critics of the current death gratuity provisions believe the official status of a U.S. government employee working at an embassy should not matter in terms of a death gratuity. The Civil Service employee detailed to an embassy and the Foreign Service member posted to the embassy should both receive the same death gratuity, particularly if either or both died in a similar manner such as the bombing of an embassy. They were both serving the United States. Supporters of the Foreign Service personnel-only death gratuity provision in the legislation state that there is a difference between the Civil Service employee and the Foreign Service member who dies while detailed at an embassy. For the Civil Service employee, it was a matter of choice. For the Foreign Service Officer, service abroad is a condition of employment. Foreign Service personnel are expected to be "Worldwide Available," and expected to spend the larger proportion of their career abroad—that is why there are limits on the number of years a member of the Foreign Service can stay continuously in the United States, and why generally a member of the Service spends about two-thirds of his/her career abroad. They point out that when a member of the Foreign Service dies abroad, after a long career outside the United States, the family often does not have the same support structure to help them when they return to the United States as they would have had if they had lived continuously in a community. The death gratuity is intended to help the family transition into a new life.
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Proponents of revisions in the Foreign Service compensation system point out that as increasing numbers of Foreign Service personnel are going to posts of increased hardship and danger, Foreign Service personnel serving abroad receive 20.89% less than their colleagues who are posted in Washington, D.C. due to the loss of locality pay when serving abroad. These proponents of revision maintain that this difference negatively impacts morale and assignment considerations, and eventually retention also. Both the 109th and 110th Congresses have considered proposals to eliminate this pay difference. The American Foreign Service Association (AFSA) has been working for several years with congressional supporters to change the compensation system. Since FY2007, the George W. Bush Administration has requested funds to create a new performance-based compensation system for the Foreign Service and eliminate the pay differential. For FY2009, the Administration requested $34.7 million for the first stage of a transition to pay equity. The Senate Appropriations Committee provided sufficient funding to meet the Administration's request in its appropriations bill, S. 3288, reported on July 18, 2008. The "Foreign Service Overseas Pay Equity Act of 2008," H.R. 3202, as amended, would eliminate the pay differences over three years. This bill was referred to both the House Committee on Foreign Affairs (HCFA) and the House Committee on Oversight and Government Reform (HOGR). HCFA reported the bill on July 16, 2008. An identical bill was introduced in the Senate, S. 3426, on August 1, 2008, and was referred to the Senate Committee on Foreign Relations (SFRC). The SFRC reported the bill, without amendments, on September 23, 2008. The major difference between the Administration's proposal and the current legislation is that the Administration, while proposing to eliminate the pay difference over two years, also seeks to develop a new performance-based worldwide compensation system for the Foreign Service. H.R. 3202 and S. 3426 would eliminate the pay differences over three years without reference to developing a new performance-based system. AFSA states that the Foreign Service personnel system is already performance-based, and the pay adjustment proposals eliminate an unintended inequity. Others with concerns about the legislation, however, state this is basically a pay increase for the Foreign Service and question whether increases are needed because of the benefits and allowances Foreign Service personnel generally receive when posted abroad. This report discusses (1) the legislative background leading to a proposal to change the compensation system, (2) the current Foreign Service personnel system and why the Foreign Service views it as already performance-based, (3) an examination of why the Foreign Service and the Administration are both requesting that Congress change the compensation system, (4) an examination of H.R. 3202 and S. 3426, the "Foreign Service Overseas Pay Equity Act of 2008," and (5) some issues that Congress might be asked to consider. This report may be updated.
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Over the last several years, both the Supreme Court and Congress have actively considered the scope of class action lawsuits. For the 2015 term, the Court accepted three cases with implications for these suits. In Campbell-Ewald Co. v. Gomez , the Court held that a defendant's offer to provide complete relief to settle a plaintiff's individual claims did not moot a class action filed by that individual. In Tyson Foods, Inc. v. Bouaphakeo , the Court decided that each person joined in a class action suit need not prove, individually, that she was harmed by the claimed misconduct, if statistical models can be used to show such harm. In Spokeo, Inc. v. Robins , the Court will consider whether a class action meets the standing requirements of Article III if the plaintiff suffered a statutory injury from a violation of the Fair Credit Reporting Act but no actual damages. Finally, in January 2016, the House passed H.R. 1927 , the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2016, which would provide that class action suits could be certified only if proposed class members had suffered injuries of the same type and scope. T he class action suit is a procedural device for joining numerous parties in a civil lawsuit when the "issues involved are common to the class as a whole" and when the issues "turn on questions of law applicable in the same manner to each member of the class." The suit is "an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Class actions "save[] the resources of both the courts and the parties by permitting an issue potentially affecting every [class member] to be lit igated in an economical fashion .... " The class action also affords aggrieved parties a remedy when it is not economically feasible to obtain relie f, such as where each claim involves only a small dollar amount. The modern class action appears to be derived from the Bill of Peace, an equitable proceeding developed by the English Court of Chancery, which enabled an equity court to hear an action by or against representatives of a group if the plaintiff could establish that the number of people involved was so large as to make traditional joinder impossible or impracticable. If the court allowed the suit to proceed on a representative basis, the resulting judgment would bind all members of the group, whether they were present during the action or not. The advantage of the representative suit was that it was cheaper and more convenient to bring a single proceeding in equity rather than to adjudicate multiple actions at law. Class suits have long been a part of American jurisprudence, starting with their authorization by federal courts under equity rules. These rules gradually became codified at the state and federal level, but were generally restricted to cases where the class shared a common or general interest and where the parties were too numerous for the cases to be combined traditionally under joinder. With the increasing complexity and interconnectedness of modern society, the class action has taken on a more prominent role. Federal class action suits are currently brought under Rule 23 of the Federal Rules of Civil Procedure (Rule 23). Rule 23(a) provides that a member of a class may sue or be sued on behalf of all members only if all of the following four elements are present: (1) the class is so numerous that joinder of all members is impracticable [("numerosity") ]; (2) there are questions of law or fact common to the class [("commonality")]; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class [("typicality") ]; and (4) the representative parties will fairly and adequately protect the interests of the class [("adequacy") ]. Rule 23(b) further requires that one of the following elements be proven by the party seeking to bring the action: (1) prosecuting separate actions by or against individual class members would create a risk of: (A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or (B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests; (2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or (3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include: (A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action. For purposes of this report, Rule 23(b)(1) will be referred to as the "inconsistency test," Rule 23(b)(2) will be referred to as the "general applicability test," and Rule 23(b)(3) will be referred to as the "predominance test." For many years, federal courts stated that Rule 23 should be given a liberal rather than a restrictive interpretation, meaning that the rule should be interpreted and applied to favor certification of class actions. The Supreme Court had also indicated that a court should not inquire into the merits of the plaintiffs' claims while performing a Rule 23 analysis. The Court, however, had more recently determined that a court should grant class certification only after it has performed a "rigorous analysis" to determine whether the prerequisites of Rule 23 have been satisfied. This seeming conflict was clarified by the Court's decision in Wal-Mart Stores, Inc. v. Dukes which held that, in some cases, an inquiry into the merits of a case is required. In Wal- M art, the Court reversed a decision certifying a class of Wal-Mart employees who alleged sex discrimination under Title VII of the Civil Rights Act of 1964 and sought equitable relief, a declaratory judgment, and backpay. The Court in Wal-Mart found that the "commonality" required by Rule 23(a)(2) not only requires that class members "have suffered the same injury," but also that their claims involve a "common contention" as to how the law was violated. The Court initially determined that there was no proof that the company "operated under a general policy of discrimination." The only company-wide policy that the plaintiffs' submitted as evidence of discrimination was Wal-Mart's policy of allowing discretion by local supervisors over employment matters. While the Court has recognized that giving discretion to lower-level supervisors can be the basis for liability under Title VII, the Court found that the disparate nature of the claims that would arise in such a situation would be unlikely to give rise to a common question of liability or damages. The Court held that "Rule 23 does not set forth a mere pleading standard," but it requires a plaintiff to "affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." "What matters ... [is] the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation." The class members' claims "must depend upon a common contention ... of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Although such a rigorous analysis will frequently overlap with an inquiry into the merits, the Court stated "[t]hat cannot be helped." The plaintiffs offered statistical evidence to establish gender discrimination by comparing the number of women promoted to management positions nationwide with the number of women in the available pool of hourly workers. The Court rejected the sufficiency of such evidence to establish the required proof of commonality, finding that the plaintiffs were additionally required to establish that there was a challenged employment practice common to each claim. The Court also rejected anecdotal evidence of discrimination, noting that the 120 affidavits filed addressing discrimination claims represented a small percentage of the thousands of class members participating in the case. The Court concluded that the commonality requirement needed for class certification was not met where Wal-Mart did not have a uniform classwide discriminatory employment practice, but instead allowed employment decisions to be made by low-level employees. The Court in Wal- M art also addressed the issue of how damages for backpay might be calculated for the class, if gender discrimination were established. The Court overruled the Ninth Circuit's holding that such damages could be determined in a "Trial by Formula." Under this statistical approach, a sample set of class members who had been the subject of gender discrimination would be selected, and a special master, using depositions, would evaluate the backpay owed. The percentage of claims determined to be valid would then be applied to the entire remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery. The Court rejected such a statistical method of establishing injury for the class and held that Wal-Mart was entitled to individualized determinations of each employee's eligibility for backpay. In the subsequent case of Amgen Inc. v. Connecticut Retirement Plans & Trust Funds , however, the Court indicated that the holdings of Wal-Mart should not be interpreted too broadly. In Amgen , the Court considered whether, in a private securities-fraud action alleging reliance on a material misrepresentation or omission, "questions of law or fact common to class members predominate[d]," thus satisfying the predominance requirement for class certification. The plaintiffs' case relied on the "fraud-on-the-market" theory, which permits certain securities-fraud plaintiffs to invoke a rebuttable presumption of reliance on material misrepresentations aired to the general public. The Court in Amgen held that the while the plaintiffs must prove the materiality of misrepresentations to prevail on the merits, that such proof was not a prerequisite to class certification. The Court stated that "Rule 23(b)(3) requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class. Because materiality is judged according to an objective standard [under the 'fraud-on-the-market' theory], the materiality of Amgen's alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent." "... Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage. Merits questions may be considered to the extent—but only to the extent—that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." Yet, in the more recent Comcast Corp. v. Behrend , the Court indicated a willingness to evaluate as part of class certification whether classwide damages would be ascertainable in the merits case. Comcast considered the certification of a class by the U.S. Court of Appeals for the Third Circuit (Third Circuit) of more than 2 million current and former Comcast subscribers who alleged violation of the federal antitrust laws by "clustering," i.e., the purchase of competing cable systems in selected regions and the swapping to competitors of systems outside those regions. As in Amgen, the plaintiffs sought certification under the "predominance test." In order to meet this test, plaintiffs needed to show that the injury to each individual was "capable of proof at trial through evidence that [was] common to the class rather than individual to its members"; and (2) that the damages resulting from that injury were measurable "on a class-wide basis" through use of a "common methodology." The plaintiffs had sought certification under four theories of antitrust impact. The U.S. District Court for the Eastern District of Pennsylvania (District Court), however, certified a class on only one of these theories: that "clustering" limited competition by reducing the number of "overbuilders," that is, cable companies competing in the market where Comcast operates. The District Court held that an antitrust impact could be shown on a classwide basis based on a proffered economic model, even though this model did not isolate damages resulting from the "overbuilders" theory from the three other theories. The District Court held that the exact calculation of such injury should be addressed during the merits of the case, and the Third Circuit affirmed. The Supreme Court reversed, determining that a "plaintiff's damages case must be consistent with its liability case, particularly with respect to the alleged anticompetitive effect of the violation," and that the economic model proposed by the plaintiffs could not analyze the individual impact on class members of the economic damages that were the subject of the class certification. While the District Court and the Third Circuit had not considered a damage analysis to be relevant for purposes of class certification, the Supreme Court stated that the District Court's holding "flatly contradicts our cases requiring a determination that Rule 23 is satisfied, even when that requires inquiry into the merits of the claim." In the 2015 Supreme Court term, the Court agreed to consider three cases which involved class action lawsuits: Campbell-Ewald Co. v. Gome z , Tyson Foods , Inc. v. Bouaphakeo , and Spokeo , Inc. v. Robins . These cases address important issues that have the potential to reshape jurisprudence concerning certification of class actions. In Campbell-Ewald Co v. Gomez , the Court held that an unaccepted offer of complete relief to a named plaintiff's claim did not render that case moot. Campbell-Ewald arose from alleged violations of the Telephone Consumer Protection Act (TCPA), which prohibits any person, absent the prior express consent of a telephone recipient, from "mak[ing] any call ... using any automatic telephone dialing system ... to any telephone number assigned to a paging service [or] cellular telephone service." The TCPA authorizes a private right of action for a violation of this prohibition, and a plaintiff may recover "actual monetary loss" or $500 for each violation, whichever is greater. In 2006, the Campbell-Ewald Company (Campbell), a nationwide advertising and marketing company, transmitted text messages regarding U.S. Navy recruitment to over 100,000 recipients. One of these recipients was the petitioner in this case, Jose Gomez, who alleged that he had not provided prior express consent to receive the solicitation. Gomez filed a class action suit on behalf of himself and a nationwide class of individuals who had received, but had not consented to the receipt of, the text message. Gomez sought statutory damages, costs, attorney's fees, and an injunction against unsolicited messages. Prior to Gomez's having filed a motion in the case for class certification, Campbell offered to settle Gomez's individual claim and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68 (Rule 68). Campbell then moved to dismiss the case, arguing that its offer mooted Gomez's individual claim by providing him with complete relief. Because Gomez had not yet moved for class certification, Campbell argued that the class action claims were also moot. The question before the Supreme Court was whether an unaccepted offer can moot a plaintiff's claim, thereby depriving federal courts of Article III jurisdiction. The Court held that the plaintiff's claim was not rendered moot by an unaccepted offer. The Court has previously held that a case becomes moot "only when it is impossible for a court to grant any effectual relief whatever to the prevailing party." In Campbell-Ewald, the Court noted that, under principles of contract law, a settlement offer, absent acceptance, is not binding on either party. Further, under Rule 68, an unaccepted offer is "considered withdrawn" if not accepted within specified time limits. "In short, with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset." The Court did, however, reserve the question whether the result would be different "if a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." While this decision does not appear to disturb existing case law, it addresses an important issue—whether plaintiffs in class action cases can be compelled to accept a settlement offer before class certification. If a plaintiff were to accept a settlement offer before class certification, the case would be dismissed, and the defendant would avoid the necessity of defending itself against a class action with a potentially large numbers of plaintiffs. While another plaintiff could bring a similar action, the defendant would have a similar opportunity to compel settlement. While the Court rejected the argument that a settlement offer by itself was sufficient to render a case moot, it did not "decide whether the result would be different if a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." If this latter mechanism were found to render a case moot, it might become a tool for defendants to avoid class action cases. In Tyson Foods , Inc. v. Bouaphakeo , the Supreme Court upheld a $2.9 million award against Tyson Foods, Inc. (Tyson) for violations of the Fair Labor Standards Act (FSLA). The named plaintiffs were current and former employees of Tyson at a meat-processing facility in Storm Lake, Iowa, who sought class certification under the "predominance test." The employees claimed that Tyson failed to pay overtime under the FSLA for donning (putting on) and doffing (taking off) personal protective equipment before work, during lunch, and after production, and for transporting the items from lockers to the production floor. Tyson calculated compensated work time based on "gang time," which is the time that employees are at their working stations and the production line is moving. Although Tyson did not record the amount of time that it took for employees to perform donning and doffing of personal protective equipment as worktime, it did add a uniform number of minutes of compensated time per day ("K-Code time") for the donning and doffing of items "unique" to the meat-processing industry for employees who worked in a department where knives are used, and for walking time required of the employees. Although the FLSA does not require compensation for time in transit to work or to preliminary or postliminary activities, it does require compensation for activities that are an "integral and indispensable part of the principle activities." The employees sued, claiming that the K-Code time was insufficient to cover compensable pre- and post-production line activities. The employees were granted "class certification" under the FLSA, which allows named plaintiffs to sue "for and in behalf of ... themselves and other employees similarly situated." In order to prove liability and damages, the plaintiffs relied on individual timesheets, along with average donning, doffing, and walking times calculated from 744 observations of employees at work. A jury returned a verdict for the plaintiffs, and a final judgment totaling $5,785,757.40 was awarded. The defendants in Tyson Foods , relying on Wal - M art , argued to the Supreme Court that the use of the 744 observations as "representative evidence" made class certification improper. As discussed previously, the Wal-Mart Court rejected the use of a sample set of class members who had been the subject of gender discrimination to extrapolate the backpay owed to the class, holding that Wal-Mart had the right to litigate statutory defenses to individual claims. In Tyson Foods , however, the Supreme Court rejected this comparison with the "Trial by Formula" that had been at issue in Wal-Mart . The Court in Tyson Foods held that Wal-Mart could be distinguished because the employees seeking backpay in Wal-Mart were not similarly situated, so that depositions which detailed the ways in which other employees were discriminated against by their particular store managers could not have been used in individual gender discrimination suits. In contrast, the statistical evidence introduced in Tyson Foods did not prove liability only for a sample set of class members, but rather was intended to prove liability for all members of the class. While the plaintiffs did rely on inference to extrapolate the average time for donning, doffing, and walking, these inferences applied to each class member individually. The Court found that, in many cases, the use of representative samples is "the only practicable means to collect and present relevant data" to establish liability, and that the use of the 744 samples here was permissible under the circumstances of the case. The Court declined, however, to establish categorical rules for when inferences from representative data would be admissible as "just and reasonable," noting that "[w]hether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action." The Court's decision in Tyson Foods addressed an important issue in class certification—what methods plaintiffs can use to establish, as required by the predominance test, that there are questions of law and fact common to a class. While the use of statistical evidence to establish a class was found insufficient in the Wal-Mart case because the plaintiffs' claims were too diverse, the use of statistical evidence in Tyson Foods was upheld because it applied to the liability of defendants to claims from similarly situated plaintiffs. Although the Court declined to articulate all the situations in which statistical evidence could be introduced to establish class certification, it left open the possibility that statistical evidence could be used in a number of future cases. In Spokeo , Inc. v. Robins , the Court has been asked to determine whether an individual plaintiff has Article III standing to sue a website under the Fair Credit Reporting Act (FCRA) for publishing inaccurate personal information about him to potential employers. In Spokeo , the issue to be considered by the Court is whether a plaintiff who suffers no concrete harm may nonetheless have standing based on a bare violation of a federal statute. Although the plaintiff's request for class certification has not yet been reached in this case, the establishment of Article III standing by the plaintiff would raise the possibility that class action lawsuits could be brought based on statutory damage claims alone, arguably reducing the importance of establishing individualized injuries as part of the class certification process. Spokeo, Inc. operates a website that provides users with personal information about individuals, including contact data, marital status, age, occupation, and wealth level. The plaintiff sued Spokeo for a willful violation of the FCRA by providing false information about him, specifically that he had a graduate degree, was employed, was in the top 10% nationwide for wealth, was in his 50s, was married, and had children. The report also included a photograph purporting to be the plaintiff, which it was not. The plaintiff, who was unemployed, claimed that the information caused harm to his employment prospects, and that this had caused "anxiety, stress, concern, and/or worry about his diminished employment prospects." The plaintiff also alleged a failure by the company to comply with various notice requirements associated with providing consumer information. Article III, Section 2 of the Constitution requires that, for a court to exercise federal judicial authority, there must be a "case or controversy," and one of the components of a "case or controversy" is standing. The three components of standing are: (1) the plaintiff has suffered an "injury in fact" that is: (a) concrete and particularized (b) and actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. In Spokeo , however, the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) held that the violation of a statutory right is sufficient to confer standing, even absent a showing of actual harm. The Ninth Circuit found that the interests protected by the FCRA are sufficiently concrete and particularized to satisfy the injury-in-fact requirement of Article III. The defendant in the case has argued in its merits brief to the Supreme Court that, historically, a violation of a statutory right could not, absent further injury, serve as the basis for Article III standing. The defendant has also argued that the collection of statutory damages by parties who only suffered violation of a statutory right more closely resembles a fine than recovery for damages. The defendant has added that allowing self-interested private parties, as opposed to public prosecutors, to enforce laws in the absence of concrete harm threatens violation of separation-of-powers principles, as it intrudes on the executive branch's duty under the Take Care Clause to decide which cases warrant prosecution. The defendant also has contended that the practical impact of allowing suits based on injuries to a statutory right would be amplified in the context of a Rule 23 class action. Specifically, "[o]nce concrete harm is no longer an element of the plaintiff's case, the named plaintiff will argue that issues of injury and causation have been transformed from individualized matters to issues susceptible to common proof because, under an 'injury-in-law' regime, the actual impact of the alleged legal violation is no longer relevant." The plaintiff, on the other hand, has argued that English common law and early American law allow for a right of action for the invasion of a private legal right without any further showing of harm. The plaintiff further has asserted that, when no evidence is given of the amount of loss, courts have long awarded either nominal damages or statutory damages. While admitting that he must have more than an injury common to all members of the public, the plaintiff has argued that an invasion of a legally protected interest is sufficient to establish standing as long as the invasion is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. The plaintiff also has cited examples of prior Supreme Court cases where a statutory right conferred standing even absent cognizable injury, arguing that his right to statutory damages presents a real dispute regarding injury, and asserting that the right not to have false information regarding oneself provided to others is an extension of the common law doctrine of defamation. In oral argument, a number of Justices asked questions about whether the alleged injury that is the basis for the suit is "concrete" enough to sustain the lawsuit. Chief Justice Roberts and Justice Kennedy suggested that an "injury in fact" (not an "injury in law") is needed to establish standing, with Justice Scalia stating that the requirement of "injury in fact" is contemplated within the term "concrete." Justice Sotomayor, however, suggested that the application of the term "concrete" to legally created rights is not required under long-standing case law. Justice Kagan, in turn, expressed the view that Congress might be better at identifying concrete harm than the Court, and observed that Congress had identified the dissemination of inaccurate information as harming persons individually. The Court's decision in this case is pending as of the date of this report's publication. The implications of this case for class actions are significant. If Congress can establish a statutory claim that meets the requirements of Article III standing without a showing of actual injury to a plaintiff, this would raise the possibility that class action lawsuits could be brought based on the violation of statutory claims alone. If this is the case, class actions brought under those claims might be more easily certified than class actions where proof of injury may vary from plaintiff to plaintiff. H.R. 1927 , the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2016, passed the House on January 8, 2016. The bill provides that "[n]o Federal court shall certify any proposed class seeking monetary relief for personal injury or economic loss unless the party seeking to maintain such a class action affirmatively demonstrates that each proposed class member suffered the same type and scope of injury as the named class representative or representatives." The bill also requires that this determination shall be made based on a "rigorous analysis of the evidence presented.... " The House Judiciary Committee report on H.R. 1927 (House Report) notes that class action rules require that the claims and defenses of representative parties are "typical" of a class, but suggest that in some cases, courts have allowed class certification without showing that all members of the class share a common injury of the same type and comparable scope. For instance, the House Report states that in certain class action suits, class certification has been permitted for defective products, even though the majority of absent class members experience no damages due to this defect. The House Report states that the bill would allow class members who experience de minimis or nonexistent damages to bring separate class actions from people who are injured more significantly. Dissenting Members on the Committee, however, assert in the House Report that the proposed bill would increase the difficulty of bringing class actions, as it would require class action plaintiffs to prove the merits of their case at the preliminary stage of class certification. These Members also stated that in many cases—including civil rights, antitrust, and privacy cases—it would be "virtually impossible" to prove that class members suffered the same "type" or "scope" of injury at the certification stage. These members also assert that proponents of the bill consider "benefit of the bargain" cases (where the injury of a defective product is that it is of less value than a non-defective product) to be examples of "no-injury" class actions, even though an economic injury has been suffered. While the Supreme Court has accepted a variety of cases over recent years regarding class action lawsuits, the impact of these cases on the availability of class actions have been mixed. In Wal-Mart Stores, Inc. v. Dukes , the Court has limited the ability of plaintiffs who are not similarly situated from bringing class action suits, which may result in smaller class sizes. The Court in Campbell-Ewald Co. v. Gomez declined to find that a defendant's offer to provide complete relief to settle a plaintiff's individual claims would moot a class action lawsuit before certification, which might have made it more difficult for a particular individual to bring a class action. The Court, however, left open the possibility that such an action might be rendered moot by the defendant putting funds in an account payable to the plaintiff. In Tyson Foods, Inc. v. Bouaphakeo , the Court held that each person joined in a class action suit need not prove, individually, that she was harmed by the claimed misconduct, if statistical models can show such harm. Although the Court declined to articulate all the situations in which statistical evidence could be introduced, it left open the possibility that such evidence could be used in a number of future class action cases. In Spokeo, Inc. v. Robins , the Court is still considering whether a class action meets the standing requirements of Article III if the plaintiff suffered a statutory injury but no actual damages. If the Court finds that a statutory injury is sufficient to satisfy Article III, class actions brought under those claims might be more easily certified than class actions where proof of injury may vary from plaintiff to plaintiff. In January 2016, the House passed H.R. 1927 , the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2016. This legislation, if enacted into law, would arguably limit the size of some class action suits by limiting class action suits to class members who have suffered injuries of the same type and scope.
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The class action suit is a procedural device for joining numerous parties in a civil lawsuit when the issues involved are common to the class as a whole and when the issues turn on questions of law applicable in the same manner to each member of the class. Class actions are intended to save the resources of both the courts and the parties by permitting an issue potentially affecting every class member to be litigated together in an economical fashion. The class action is also intended to allow parties to pursue a legal remedy when it is not economically feasible to obtain relief, such as where each claim involves only a small dollar amount. The modern class action appears to be derived from the Bill of Peace, an equitable proceeding developed by the English Court of Chancery, which enabled an equity court to hear an action by or against representatives of a group, if the plaintiff could establish that the number of people involved was so large as to make joinder impossible or impracticable. Class suits have long been a part of American jurisprudence, starting with their authorization by federal courts under equity rules. These rules gradually became codified at the state and federal level, but were generally restricted to cases where the class shared a common or general interest and where the parties were too numerous for the cases to be combined under traditional rules of joinder. With the increasing complexity and interconnectedness of modern society, the class action has taken on a more prominent role. Over the last several years, both the Supreme Court and Congress have actively considered the scope of class action lawsuits. In Wal-Mart Stores, Inc. v. Dukes, decided in 2011, the Court has limited the ability of plaintiffs who are not similarly situated from bringing class action suits, which may result in smaller class sizes. During the 2015 term, the Court in Campbell-Ewald Co. v. Gomez declined to find that a defendant's offer to provide complete relief to settle a plaintiff's individual claims would moot a class action lawsuit before certification, which might have made it more difficult for a particular individual to bring a class action. The Court, however, left open the possibility that such an action might be rendered moot by the defendant putting funds in an account payable to the plaintiff. In Tyson Foods, Inc. v. Bouaphakeo, also decided during the 2015 term, the Court held that each person joined in a class action suit need not prove, individually, that she was harmed by the claimed misconduct, if statistical models can show such harm. Although the Court declined to articulate all the situations in which statistical evidence could be introduced, it left open the possibility that such evidence could be used in a number of future class action cases. In Spokeo, Inc. v. Robins, the Court has been asked to consider whether a class action meets the standing requirements of Article III if the plaintiff suffered a statutory injury but no actual damages. If the Court finds that a statutory injury is sufficient to satisfy Article III, class actions brought under those claims might be more easily certified than class actions where proof of injury may vary from plaintiff to plaintiff. In January 2016, the House passed H.R. 1927, the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2016. This legislation, if enacted into law, would arguably limit the size of some class action suits by limiting class action suits to class members who have suffered injuries of the same type and scope.
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Censure is a reprimand adopted by one or both chambers of Congress against a Member of Congress, President, federal judge, or other government official. While the censure of a sitting Member of Congress is considered a formal disciplinary action, non -Member censure is simply used to highlight conduct deemed by the House or Senate to be inappropriate or unauthorized. There is no uniform language used to censure non-Members. This complicates efforts to identify all attempts to censure the President. The presidential censure resolutions listed in this report contain variations of the words or phrases: censure, condemn, unconstitutional, usurp, unauthorized, abuse of power, violation, or disapproval. Early resolutions of censure (Andrew Jackson, 1834; Abraham Lincoln, 1864) criticized the President for acting in "derogation" of the Constitution. More recent resolutions, including the most recent censure resolution submitted, ( H.Res. 700 , 115 th Congress), have used the words "censure and condemn" to reprimand the President. There are two types of censure resolutions: those that target Members of Congress and those that target executive or judicial branch officials. Article 1, Section 5, of the Constitution grants each chamber the ability to "punish its Members for disorderly Behaviour." Resolutions censuring a Senator or Representative are based on this power. In contrast, Congress has no disciplinary authority over the President except through impeachment. Thus, presidential censure resolutions express the "sense of" the House and/or Senate without additional legal implications. Both Member and non-Member censure resolutions are usually simple resolutions. As such, they do not have the force of law and are not signed by the President. However, the House and Senate treat the two types of censure resolutions differently in a parliamentary sense. Simple resolutions that censure a Member of Congress for "disorderly behavior"—that is, resolutions carrying out the function of disciplining a Member under the Constitution—are privileged for consideration in both the House and Senate. In the House, privileged resolutions have precedence over the regular order of business; they can be called up on the floor when the House is not considering another matter. In the Senate, the motions to proceed to privileged resolutions are not debatable." House censure resolutions generally qualify as questions of the privileges of the House under Rule IX. In this context, the censure of a Representative would occur through a formal vote of the House on a resolution disapproving of the Member's conduct. Such resolutions include the requirement that the offending Member stand in the well of the House as the resolution of censure is read aloud by the Speaker. (If the resolution reprimands a Member of the House without using the term censure, this step is not taken.) The most recent instance of a Representative being formally censured in this way by the House occurred in 2010. In the Senate, the Select Committee on Ethics may recommend disciplinary action against a Senator, including "censure, expulsion, or recommendation to the appropriate party conference regarding such Member's seniority or positions of responsibility." The last time a Senator was formally censured by such a privileged resolution was in 1990. While resolutions censuring a Member of Congress are privileged in the respective chamber, resolutions that censure, condemn, disapprove of, or express a loss of confidence in an executive or judicial branch official are not privileged and do not enjoy a special parliamentary status. Non-Member censure resolutions express the formal opinion of the House or Senate. Thus, they are considered under the regular parliamentary mechanisms used to process "sense of" legislation. The last presidential censure resolution to receive congressional floor consideration occurred in the Senate in 1912 (William Howard Taft). All subsequent resolutions have been referred to House or Senate committees without further action. Nevertheless, the following parliamentary scenarios are possible when considering non-Member censure resolutions. Should a House committee report a non-Member censure resolution, the full House may consider it by unanimous consent, under the Suspension of the Rules procedure, or under the terms of a special rule reported by the Committee on Rules and adopted by the House. If widespread support exists for the censure resolution, unanimous consent or the Suspension of the Rules procedure may be used. Otherwise, the resolution could be brought to the floor under a special rule reported by the Committee on Rules. All three of these parliamentary mechanisms require, at a minimum, the support of the majority party leadership in order to be entertained. If the censure resolution was not supported by the House majority party leadership, obtaining floor consideration would likely be difficult. Members could try to employ the House discharge rule (Rule XV, clause 2) to bring a censure resolution (or a special rule providing for its consideration) to the chamber floor. In the Senate, a Member could make a unanimous consent request to consider a censure resolution at the time it was submitted. If any Senator objected to this procedure, consideration of the resolution would effectively be blocked. A Senator might instead submit the resolution for it to be referred to committee in the usual way. The Senate committee might then report the censure resolution, allowing the measure to be called up on the floor by unanimous consent or by debatable motion. In either case, the resolution and any preamble therein would each be separately debatable and amendable, including by non-germane amendment. If a Senator introduces an amendment that contains censorious language or attempts to alter a resolution of censure, that amendment would also be subject to debate. As a result, without unanimous consent, one or more cloture processes, requiring supermajority vote thresholds, might be necessary in order to reach a final vote on censure language in the Senate. As stated earlier, there is no uniform language of censure. Therefore, the designation of censure is somewhat subjective. The censure resolutions identified in this report either contained the word "censure" or explicitly cited an alleged abuse of presidential power. Using these criteria, CRS identified 13 former Presidents who were the subject of censure attempts while in office: 11 by resolutions of censure, one via a House committee report, and another through an amendment to an unrelated resolution. On four occasions, the House or Senate adopted resolutions that, in their original form, charged the President with abuse of power. Otherwise, presidential censure resolutions have remained in committee without further consideration or were not adopted in a floor vote. The following sections provide additional information on each censure attempt. The measures are also listed in Table 1 . The four adopted censure-related resolutions were all simple resolutions. As such, they expressed the "sense of" the respective chamber but did not have the force of law or contain any disciplinary authority. In two cases identified (Presidents Lincoln and Taft), the resolutions were amended on the chamber floor so that they no longer clearly censured the President. In another case (President Buchanan), the resolution's language may have intended a lesser rebuke than censure. The fourth case, President Andrew Jackson, remains the clearest case of presidential censure by resolution, although his censure was subsequently expunged. The Jackson case stemmed from a dispute over the Second Bank of the United States. In 1832, Jackson vetoed legislation to renew the Bank's charter and began removing the government's deposits. The following year, some Members of Congress launched an investigation, during which Jackson refused to provide a requested document. In response, on December 26, 1833, Senator Henry Clay of Kentucky (Anti-Jacksonian Party) submitted a resolution of censure. As modified by Clay, the measure resolved, "That the President, in the late Executive proceedings in relation to the public revenue, has assumed upon himself authority and power not conferred by the Constitution and laws, but in derogation of both." On March 28, 1834, after three months of intense debate, the Senate agreed to the censure resolution. That April, Jackson submitted an "Executive protest," which argued that the Senate's censure of a non-Senator was "wholly unauthorized by the Constitution, and in derogation of its entire spirit." The Senate countered, on May 7, with resolutions that called the President's protest itself, "a breach of the privileges of the Senate," which could not be recognized or "entered on the Journals." By early 1837, however, pro-Jackson Democrats had gained the Senate majority, and they voted to remove the censure from chamber records. On January 16, the Secretary of the Senate drew black lines around the original resolution in the Senate Journal , adding the words, "Expunged by order of the Senate." On June 11, 1860, Representative Robert Hatton of Tennessee (Opposition Party) reported five resolutions on behalf of the Committee on the Expenditures in the Navy Department, a select committee appointed during the previous 35 th Congress. All five resolutions charged the Secretary of the Navy, Isaac Toucey, with ethical violations related to military contracts. The fourth resolution also reprimanded the President, alleging that the President and the Secretary awarded contracts based on "party relations" and the "pending elections." By doing so, the resolution stated, "they have set an example dangerous to the public safety, and deserving the reproof of this House." However, the fifth resolution, targeting just Toucey, used the word censured to condemn the Secretary's appointment of an engineer with financial interests in Navy projects. Thus, it could be argued that the House chose a weaker reprimand for the President. On June 13, the House voted to adopt all five resolutions. The fourth resolution, targeting the President and Secretary of the Navy, passed in a 106-61 vote. On May 11, 1864, Senator Garret Davis of Kentucky (Unionist Party) introduced a resolution reprimanding President Lincoln for allowing two generals to return to military service after they won election to the House. Senator Davis' original measure resolved, "That the arrangement aforesaid, made by the President and the Secretary of War with Generals Schenck and Blair, to receive from them temporarily their commissions of major general, with discretion, on their part, at any time during this session of Congress to resume them, was in derogation of the Constitution of the United States, and not within the power of the President and the Secretary of War, or either of them, to make." The Senate referred the resolution to the Judiciary Committee. On June 15, the committee reported, and the Senate approved, an amended version of the resolution. The new language affirmed that an officer must be re-appointed "in the manner provided by the Constitution," but no longer overtly censured the President. On July 15, 1912, Senator Joseph Bailey of Texas (Democratic Party) introduced S.Res. 357 after President Taft was accused of trying to influence a disputed Senate election. The original text resolved, "That any attempt on the part of the President of the United States to exercise the powers and influence of his great office for the purpose of controlling the vote of any Senator upon a question involving the right to a seat in the Senate violates the spirit, if not the letter, of the Constitution, invades the rights of the Senate, and ought to be severely condemned." In debate, Senator Bailey stated that his resolution targeted a "particular circumstance" involving the current President. Still, he was open to amending his own resolution in order to gain supporters. On July 16, in a 35-23 vote, the Senate adopted the amended version of the resolution. The new text substituted "violates" to "would violate" and removed the final phrase, "and ought to be severely condemned." Thus, as amended, the resolution referred to potential presidential actions without specifically censuring Taft's past behavior. Between 1800 and 1952, at least three Presidents were the subject of critical resolutions that were not adopted. In addition, one President (Polk) had his actions condemned by an amendment to a resolution, while another (Tyler) received criticism in a House committee report. Richard Nixon's years in office (1969-1974) marked a new period in presidential censures. Since 1972, several Presidents have been subject to multiple censure attempts. Most resolutions have used variations of the phrase "censure and condemn" or, in reference to Presidents Nixon and Clinton, called for the President's resignation. In all cases, these resolutions (1972-2016) have been referred to committee with no further action. Information on resolutions dated 1973-present is available from Congress.gov. On February 20, 1800, Representative Edward Livingston of New York (Jeffersonian Republican Party) introduced three resolutions accusing the President of judicial interference. The text described the case of a "fugitive" accused of crimes aboard a British ship. According to the first two resolutions, the President advised a federal judge to release the man into British custody, even though the fugitive claimed to be an American citizen acting in self-defense. The third resolution condemned the President, stating: "his advice and request to the Judge of the District Court ... are a dangerous interference of the Executive with Judicial decisions; and that the compliance with such advice and request on the part of the Judge of the District Court of South Carolina, is a sacrifice of the Constitutional independence of the Judicial power, and exposes the administration thereof to suspicion and reproach." On March 8, the full House voted (61-35) in concurrence with the Committee of the Whole's decision to defeat the three resolutions. The Tyler case followed the unexpected death of President William Henry Harrison early in his term of office. Once John Tyler assumed the presidency, he vetoed a number of bills, angering several Members of Congress. On August 10, 1842, the former President, Representative John Quincy Adams of Massachusetts (Whig Party), moved to form a select committee to consider the President's latest veto message and "report thereon." The following week, Representative Adams submitted the committee's report, which recommended a constitutional amendment to lower the threshold to overturn presidential vetoes from a two-thirds vote to a simple majority. The report itself issued criticism of the President's actions, including his "continual and unrelenting exercise of executive legislation, by the alternate gross abuse of constitutional power and bold assumption of powers never vested in him by any law." On August 17, the House voted (100-80) to approve the report, but did not have the necessary two-thirds support required to adopt the resolution amending the Constitution. In this case, the House did not approve a censure resolution. Still, the report itself may be considered a form of presidential censure. In response to the criticism, Tyler submitted an official protest, but the House refused to recognize it. On January 3, 1848, the House considered a resolution congratulating Generals Zachary Taylor and Winfield Scott for their military service during the Mexican-American War. Representative George Ashmun of Massachusetts (Whig Party) offered an amendment to a motion to refer the resolution to the Committee on Military Affairs. The amendment instructed the committee to add the phrase, "in a war unnecessarily and unconstitutionally begun by the President" to the resolution. In an 85-81 vote, the House approved the amendment. However, the underlying resolution was never adopted. Instead, both chambers passed a joint resolution in praise of the generals, and this one included no criticism of Polk or the war. The Grant case followed months of acrimony between the President and Senator Charles Sumner of Massachusetts (Republican Party), who previously served as chairman of the Foreign Relations Committee. As chairman, Senator Sumner led efforts to defeat the President's treaty to annex the Dominican Republic. However, the conflict subsequently led to Sumner's replacement as chairman at the start of the 42 nd Congress (March 4, 1871). On March 24, Senator Sumner introduced an eight-part resolution that addressed the President's recent deployment of ships along the Dominican coast. Section five of the resolution called the action, without the authority of Congress, "an infraction of the Constitution of the United States and a usurpation of power not conferred upon the President." On March 27, Senator Sumner modified his own resolution to insert additional text: this "belligerent intervention ... [was] unauthorized violence, utterly without support in law or reason, and proceeding directly from that kingly prerogative which is disowned by the Constitution of the United States." Two days later, the Senate voted 39-16 to table the resolution. During the Korean War, steel workers were scheduled to strike on April 9, 1952. However, hours before the scheduled walkout, President Truman issued an executive order directing the Department of Commerce to seize control of steel mills associated with the United Steelworkers of America. In response, Representative Burr Powell Harrison of Virginia (Democratic Party) introduced H.Con.Res. 207, condemning the seizure as "without authority in law." The measure marked the first known attempt to reprimand a President with a concurrent resolution. Such measures require the agreement of both houses of Congress. However, on April 9, the resolution was referred to the House Committee on the Judiciary and received no further consideration. Beginning in 1972, President Nixon was the subject of several House resolutions (simple and concurrent) that either sought his censure or called for his resignation. Introduced on January 18, 1972, H.Con.Res. 500 (92 nd Congress) addressed the President's conduct during the Vietnam War. It was referred to the House Foreign Affairs Committee. All other resolutions pertained to the President's conduct related to the Watergate break-in (June 17, 1972) and were referred to the House Judiciary Committee. The first group of Watergate resolutions, submitted between October 23, 1973, and December 4, 1973, followed the firing of special prosecutor Archibald Cox on October 20. The second set, H.Res. 1288 and H.Con.Res. 589 (August 2 and 8, 1974), were submitted after the Judiciary Committee adopted articles of impeachment (July 27-30, 1974). Three resolutions, H.Res. 684 , H.Con.Res. 376 , and H.Res. 734 , stated that the President "should resign" but did not cite a specific abuse of power. Thus, they arguably could be considered "no confidence" resolutions, not measures explicitly expressing censure. Nixon resigned on August 9, 1974, one day after the last censure resolution, H.Con.Res. 589 , was submitted. The Clinton resolutions concerned the President's testimony before a grand jury in August 1998. The testimony was alleged to contradict an earlier deposition that the President had given in January. In response, some Members of Congress considered either censuring or impeaching the President for perjury and obstruction of justice. Introduced between September 1998 and February 1999, five resolutions considered alternatives to impeachment proceedings. H.Res. 531 (September 11, 1998) called for the President's immediate resignation. The resolution, however, also stated that he "abused the office." Therefore, the measure might be considered both a resolution of "no confidence" and one of censure. All other resolutions used variations of the phrase, "censure and condemn," in reference to the President's conduct. H.J.Res. 139 and H.J.Res. 140 were introduced on December 17, 1998, two days before the House approved two articles of impeachment, while H.J.Res. 12 (January 6, 1999) was introduced one day before the start of the President's Senate impeachment trial. The final resolution, S.Res. 44 , was introduced on February 12, 1999, the same day that the Senate voted to acquit the President of all charges. Note that H.J.Res. 139 , H.J.Res. 140 , and H.J.Res. 12 were joint resolutions. Unlike simple and concurrent resolutions, final approval of joint resolutions requires passage by both houses of Congress, and then the President must sign them or allow them to become law without his signature. These specific joint resolutions also mandated that the President, by his signature, agree to the following conditions: acknowledge censure and condemnation, donate $500,000 to the Treasury, not deliver in person any State of the Union address, not involve himself in Democratic Party or campaign activities, and not serve in public office after his term as President concluded. The joint resolutions' procedural and policy requirements made them the most controversial of the Clinton censure resolutions. However, like the other censure resolutions, H.Res. 531 and S.Res. 44 , the joint resolutions were referred to committee without further consideration. The George W. Bush resolutions addressed the Administration's response to the September 11, 2001, attack on the United States and its prosecution of the global war on terrorism. S.Res. 398 charged the "unlawful authorization of wiretaps of Americans." S.Res. 303 and H.Res. 626 targeted President Bush and Attorney General Alberto R. Gonzales; both measures resolved to censure and condemn them for "disregarding statutes, treaties, and the Constitution." The remaining four resolutions, H.Res. 636 , , S.Res. 302 , and H.Res. 625 sought to censure either President Bush alone, or in addition to Vice President Richard Cheney, for actions related to the war in Iraq. S.Res. 302 was referred to the Senate Foreign Relations Committee. The other resolutions were referred to either the House or Senate Judiciary Committees. While no resolutions were reported out of committee, the Senate Judiciary Committee, on March 31, 2006, held hearings on S.Res. 398 . The five Obama censure resolutions contained a variety of charges. H.Res. 425 (November 20, 2013) charged a failure to execute laws, as well as the "usurpation of the legislative power of Congress." H.Res. 652 (June 26, 2014) charged "actions beyond the laws of the United States." H.Res. 582 (January 7, 2016) cited usurpation of Congress, while H.Res. 588 (January 13, 2016) stated that the President failed to fulfill the duties of Commander in Chief. The final resolution, H.Res. 607 (February 4, 2016), again charged actions beyond the laws and usurpation of Congress. All measures were simple House resolutions, which were referred to the Judiciary Committee, and subsequently by the committee to its Subcommittee on the Constitution and Civil Justice. The resolutions received no action. Notes: * Entries marked with an asterisk called for the President's resignation. If the resolution did not include additional language reprimanding the President or his conduct, it is arguably not a resolution of censure. H.Res. 531 (105 th Congress) is both a resolution of "no confidence" and a resolution of censure because it included the phrase, "abused the office."
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Censure is a reprimand adopted by one or both chambers of Congress against a Member of Congress, President, federal judge, or other government official. While Member censure is a disciplinary measure that is sanctioned by the Constitution (Article 1, Section 5), non-Member censure is not. Rather, it is a formal expression or "sense of" one or both houses of Congress. As such, censure resolutions targeting non-Members use a variety of statements to highlight conduct deemed by the resolutions' sponsors to be inappropriate or unauthorized. Resolutions that attempt to censure the President for abuse of power, ethics violations, or other behavior, are usually simple resolutions. These resolutions are not privileged for consideration in the House or Senate. They are, instead, considered under the regular parliamentary mechanisms used to process "sense of" legislation. Since 1800, Members of the House and Senate have introduced resolutions of censure against at least 12 sitting Presidents. Two additional Presidents received criticism via alternative means (a House committee report and an amendment to a resolution). The clearest instance of a successful presidential censure is Andrew Jackson. A resolution of censure was approved in 1834. On three other occasions, critical resolutions were adopted, but their final language, as amended, obscured the original intention to censure the President. In the remaining cases, resolutions remained in committee, without further consideration, or were not adopted in a floor vote. Nevertheless, presidential censure attempts have become more frequent since the Richard Nixon era. This report summarizes the procedures that may be used to consider resolutions of censure and the history of attempts to censure the President (1st-114th Congresses). It also provides citations to additional reading material on the subject.
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The President is responsible for appointing individuals to positions throughout the federal government. In some instances, the President makes these appointments using authorities granted to the President alone. Other appointments are made with the advice and consent of the Senate via the nomination and confirmation of appointees. Presidential appointments with Senate confirmation are often referred to with the abbreviation PAS. This report identifies, for the 112 th Congress, all nominations to full-time positions requiring Senate confirmation in 40 organizations in the executive branch (27 independent agencies, 6 agencies in the Executive Office of the President [EOP], and 7 multilateral organizations) and 4 agencies in the legislative branch. It excludes appointments to executive departments and to regulatory and other boards and commissions. A pair of tables presents information for each agency in this report. The first table in each pair provides information on full-time positions requiring Senate confirmation as of the end of the 112 th Congress and the pay levels of those positions. The second table for each agency tracks appointment activity within the 112 th Congress by the Senate (confirmations, rejections, returns to the President, and elapsed time between nomination and confirmation) as well as further related presidential activity (including withdrawals and recess appointments). In some instances, no appointment action occurred within an agency during the 112 th Congress. Information for this report was compiled using the Senate nominations database of the Legislative Information System (LIS) at http://www.lis.gov/nomis/ , the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents , telephone discussions with agency officials, agency websites, the United States Code , and the 2012 Plum Book ( United States Government Policy and Supporting Positions ). Related Congressional Research Service (CRS) reports regarding the presidential appointments process, nomination activity for other executive branch positions, recess appointments, and other appointments-related matters may be found at http://www.crs.gov . During the 112 th Congress, President Barack Obama submitted 34 nominations to the Senate for full-time positions in independent agencies, agencies in the EOP, multilateral agencies, and legislative branch agencies. Of these nominations, 27 were confirmed, 6 were returned to the President, and 1 was withdrawn. The President made one recess appointment during this period to a position in organizations covered in this report. Table 1 summarizes the appointment activity. The length of time a given nomination may be pending in the Senate varies widely. Some nominations are confirmed within a few days, others are not confirmed for several months, and some are never confirmed. For each nomination covered by this report and confirmed in the 112 th Congress, the report provides the number of days between nomination and confirmation ("days to confirm"). The mean (average) number of days elapsed between nomination and confirmation was 142.7. The median number of days elapsed was 112.0. Agency profiles in this report are organized in two parts: a table listing the organization's full-time PAS positions as of the end of the 112 th Congress and a table listing appointment action for vacant positions during the 112 th Congress. Data for these tables were collected from several authoritative sources. As noted, some agencies had no nomination activity during this time. In each agency profile, the first of the two tables identifies, as of the end of the 112 th Congress, each full-time PAS position in the organization and its pay level. For most presidentially appointed positions requiring Senate confirmation, the pay levels fall under the Executive Schedule, which, as of January 2013, ranged from level I ($199,700) for Cabinet-level offices to level V ($145,700) for lower-ranked positions. The second table, the appointment action table, provides, in chronological order, information concerning each nomination. It shows the name of the nominee, position involved, date of nomination, date of confirmation, and number of days between receipt of a nomination and confirmation. It also notes actions other than confirmation (i.e., nominations returned to or withdrawn by the President). The appointment action tables with more than one nominee to a position also list statistics on the length of time between nomination and confirmation. Each nomination action table provides the average "days to confirm" in two ways: mean and median. Although the mean is a more familiar measure, it may be influenced by outliers in the data. The median, by contrast, does not tend to be influenced by outliers. In other words, a nomination that took an extraordinarily long time might cause a significant change in the mean, but the median would be unaffected. Examining both numbers offers more information with which to assess the central tendency of the data. Appendix A provides two tables. Table A-1 relists all appointment action identified in this report and is organized alphabetically by the appointee's last name. Table entries identify the agency to which each individual was appointed, position title, nomination date, date confirmed or other final action, and duration count for confirmed nominations. In the final two rows, the table also includes the mean and median values for the days to confirm column. Table A-2 provides summary data on the appointments identified in this report and is organized by agency type, including independent executive agencies, agencies in the EOP, multilateral organizations, and agencies in the legislative branch. The table summarizes the number of positions, nominations submitted, individual nominees, confirmations, nominations returned, and nominations withdrawn for each agency grouping. It also includes mean and median values for the number of days taken to confirm nominations in each category. During the 112 th Congress, the Presidential Appointments Streamlining and Efficiency Act ( P.L. 112-166 ) was enacted, which eliminated the requirement for the Senate's advice and consent for 163 positions in federal agencies. A number of those positions, listed in Appendix B , have been included in previous versions of this tracking report. This report notes each agency and position affected. Appendix C provides a list of department abbreviations. Appendix A. Summary of All Nominations and Appointments to Independent and Other Agencies Appendix B. Positions Affected by P.L. 112-166 Appendix C. Agency Abbreviations
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The President makes appointments to positions within the federal government, either using the authorities granted to the President alone or with the advice and consent of the Senate. This report identifies all nominations that were submitted to the Senate for full-time positions in 40 organizations in the executive branch (27 independent agencies, 6 agencies in the Executive Office of the President [EOP], and 7 multilateral organizations) and 4 agencies in the legislative branch. It excludes appointments to executive departments and to regulatory and other boards and commissions, which are covered in other reports. Information for each agency is presented in tables. The tables include full-time positions confirmed by the Senate, pay levels for these positions, and appointment action within each independent agency. Additional summary information across all agencies covered in the report appears in the appendix. During the 112th Congress, the President submitted 34 nominations to the Senate for full-time positions in independent agencies, agencies in the EOP, multilateral agencies, and legislative branch agencies. Of these 34 nominations, 27 were confirmed, 1 was withdrawn, and 6 were returned to him in accordance with Senate rules. For those nominations that were confirmed, a mean (average) of 142.7 days elapsed between nomination and confirmation. The median number of days elapsed was 112.0. The President made one recess appointment to a full-time position in an independent agency during the 112th Congress. Information for this report was compiled using the Senate nominations database of the Legislative Information System (LIS) at http://www.lis.gov/nomis/, the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents, telephone discussions with agency officials, agency websites, the United States Code, and the 2012 Plum Book (United States Government Policy and Supporting Positions). This report will not be updated.
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Noncitizen eligibility varies among the needs-based housing programs administered by the U.S. Department of Housing and Urban Development (HUD). Two laws govern noncitizen treatment in housing programs: Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) and Section 214 of the Housing and Community Development Act of 1980, as a mended. There is uncertainty surrounding how the eligibility requirements of PRWORA and Section 214 interact, leading to conflicting interpretations of the categories of noncitizens eligible for certain housing programs. Also, the documentation requirements for establishing eligible immigration status reflect the differing eligibility rules and are dependent on (1) the housing program, (2) the citizenship status of the applicant, and (3) the age of the applicant. In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) which established new restrictions on the eligibility of noncitizens for public benefits. PRWORA explicitly states that aliens, unless they are qualified aliens, are not eligible for "federal public benefits," a term defined in the law to include public and assisted housing. However, PRWORA did not make those who had been receiving housing benefits before the date of enactment (August 22, 1996) ineligible for housing benefits. Likewise, PRWORA exempted certain types of programs that are usually thought of as emergency programs from the eligibility restrictions. In addition, although no HUD program is considered a "federal means-tested public benefit" (FMTPB), PRWORA also included more stringent eligibility requirements for FMTPBs (discussed later in this report). PRWORA created the term "qualified alien," a term which did not previously exist in immigration law, to encompass the different categories of noncitizens who are not prohibited by PRWORA from receiving federal public benefits. Qualified aliens are defined as Legal Permanent Residents (an alien admitted for lawful permanent residence (LPR)); refugees (an alien who is admitted to the United States under §207 of the Immigration and Nationality Act (INA)); asylees (an alien who is granted asylum under INA §208); an alien who is paroled into the United States (under INA §212(d)(5)) for a period of at least one year; an alien whose deportation is being withheld on the basis of prospective persecution (under INA §243(h) or §241(b)(3)); an alien granted conditional entry pursuant to INA §203(a)(7) as in effect prior to April 1, 1980; and Cuban/Haitian entrants (as defined by P.L. 96-422 ). Additionally, under PRWORA, certain battered aliens are eligible for federal public benefits if they can demonstrate (in the opinion of the agency providing such benefits) "[that] there is a substantial connection between such battery or cruelty and the need for the benefits to be provided." Nonimmigrants (i.e., aliens in the United States for a temporary period of time such as foreign students and agricultural workers) and unauthorized (illegal) aliens are not considered qualified aliens. In addition, aliens who have been granted deferred action are not considered qualified aliens. Although PRWORA explicitly states that aliens, unless they are qualified aliens, are not eligible for "federal public benefits," certain aliens—including aliens who are not qualified aliens—are exempt from this eligibility restriction. Specifically, any alien who was receiving assistance from programs for housing or community development assistance or financial assistance administered by the Secretary of Housing and Urban Development, any program under Title V of the Housing Act of 1949, or any assistance under Section 306C of the Consolidated Farm and Rural Development Act, on the date of the enactment of PRWORA (August 22, 1996) is exempt from PRWORA's eligibility restrictions. PRWORA also exempts types of programs , usually thought of as emergency programs, from alien eligibility requirements including Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General's sole and unreviewable discretion after consultation with appropriate federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient's income or resources; and (iii) are necessary for the protection of life or safety. Thus, nonimmigrants and unauthorized aliens (i.e., aliens who do not meet the definition of qualified aliens) are eligible for emergency programs. A week after the enactment of PRWORA, former Attorney General Janet Reno published a notice specifying what types of programs, services and assistance were exempt from alien eligibility limitations. According to the notice, services or assistance necessary for the protection of life and safety include short-term shelter or housing assistance for the homeless, for victims of domestic violence, or for runaway, abused or abandoned children; and programs, services or assistance to help individuals during periods of heat, cold or other adverse weather conditions. Although PRWORA includes "public or assisted housing" in the definition of federal public benefits, HUD has released few regulations interpreting PRWORA or its impact on alien eligibility for the housing programs administered by HUD. Part of HUD's failure to issue regulations regarding the impact of PRWORA on housing programs reportedly stems from an ongoing discussion of how to classify HUD's homeless programs and which, if any, fit the definition of "necessary for the protection of life and safety" as defined in the notice. HUD published a regulation in 2000 which stated that no HUD program was a "federal means-tested public benefit" (FMTPB). FMTPBs have stricter eligibility requirements than federal public benefits including five-year ban for qualified aliens entering after the date of enactment (August 22, 1996); "deeming" which means that the sponsor's resources (and those of the sponsor's spouse) are used in calculating the financial eligibility of a qualified alien until the noncitizen becomes naturalized or has accumulated 40 quarters (10 years) of documented work; and authority of the government to seek reimbursement from the alien's sponsor for the cost of FMTPB provided to the sponsored alien. Since HUD programs are not considered FMTPBs, none of the more stringent eligibility requirements apply to any HUD program. Subsequent to the enactment of PRWORA, Congress enacted legislation which made victims of trafficking eligible for public benefits. This law did not amend PRWORA to include trafficking victims as eligible for public benefits; rather, it stated that victims of trafficking shall be eligible for benefits and services "under any Federal or State program" to the same extent as refugees. Thus, victims of trafficking are eligible for housing programs to the same extent that refugees are eligible for these programs. Section 214 of the Housing and Community Development Act of 1980, as amended, states that only certain categories of noncitizens are eligible for benefits under specified housing programs. HUD programs covered under Section 214 include the programs under the U.S. Housing Act of 1937 (Public Housing and Section 8 tenant-based vouchers and project-based rental assistance), Section 235 Homeownership Assistance, Section 236 Rental Assistance and Section 101 Rental Supplements. These programs provide direct rental or homeownership assistance to low-income families. Public Housing and Section 8 tenant-based vouchers are administered by quasi-governmental, local public housing authorities (PHAs); the other programs are primarily administered by private property owners under contract with HUD. Section 214 predates PRWORA. Under Section 214, the Secretary of Housing and Urban Development may not make financial assistance available to an alien unless the alien both is a resident of the United States and is an alien lawfully admitted for permanent residence as an immigrant ... excluding, among others, alien visitors, tourists, diplomats, and students who enter the United States temporarily with no intention of abandoning their residence in a foreign country; an alien who ... is deemed to be lawfully admitted for permanent residence [under the registry provisions of the INA]; an alien who has qualified ... [as a refugee or asylee]; an alien who is lawfully present in the United States as a result of an exercise [of the Attorney General's parole authority] ...; an alien within the United States as to whom the Attorney General has withheld deportation [on the basis of prospective persecution] ...; or an alien lawfully admitted for temporary or permanent residence under Section 245A of the Immigration and Nationality Act. Unauthorized aliens are not eligible for financial assistance under Section 214-covered programs. Many households that include U.S. citizens or qualified aliens also include ineligible aliens (e.g., unauthorized aliens). Section 214 of the Housing and Community Development Act of 1980, as amended, requires HUD and local public housing authorities to provide prorated assistance to families in which at least one member has eligible immigration status. A prorated housing benefit is calculated by reducing the benefit due to the family by the proportion of nonqualified aliens in the household. The aliens eligible for housing assistance under Section 214 are similar to those eligible for federal public benefits under PRWORA (i.e., those who are not prohibited from eligibility), with some exceptions. Both statutes allow LPRs, asylees, refugees, and those on the registry to be eligible for assistance. Both statutes allow parolees eligibility, but PRWORA states that the alien must be paroled into the U.S. for a period of one year, while no time-limit is specified in §214. Both statutes extend eligibility to aliens whose deportation is being withheld on the basis of prospective persecution, but §214 only references those whose deportation is withheld on the basis of prospective persecution post-1996, while PRWORA includes anyone whose deportation is withheld pre- or post-1996. Only PRWORA specifically allows eligibility for Cuban/Haitian entrants. Only PRWORA allows battered immigrants who can show a substantial connection between the battery and the need for benefits to be eligible. Both PWORA and Section 214 do not make nonimmigrants and unauthorized aliens eligible for benefits. In addition, neither section makes those with deferred action eligible for benefits. It is also important to note that while Section 214 applies only to those programs covered by Section 214 (primarily the direct rental assistance programs), PRWORA applies to all programs providing federal public benefits. As noted earlier, HUD has not published guidance as to which of its programs are considered as providing federal public benefits. In the 108 th Congress, Senator Christopher (Kit) Bond offered S.Amdt. 224 which was passed by a voice-vote and added to the Senate version of H.J.Res. 2 , a FY2003 omnibus appropriations bill, but it was not included in the final version of the bill. The amendment would have added the category "qualified alien" to the categories of noncitizens eligible for housing benefits under Section 214 of the Housing and Community Development Act of 1980, bringing Section 214 into conformity with PRWORA. The amendment would have effectively made Cuban/Haitian entrants, aliens whose deportation was being withheld on the basis of prospective persecution prior to 1996, and certain battered aliens statutorily eligible for housing benefits. Due to the complicated nature of the interaction of the housing law and PRWORA there was confusion over the purpose of the amendment. While some viewed the amendment as a technical correction, others were concerned that it would have broadened noncitizens' eligibility for housing programs, and still others were concerned that it might have restricted eligibility. While the Bond amendment was not included in the conference agreement, the conference report directed the Department [of Housing and Urban Development] to work with the Department of Justice to develop any necessary technical corrections to applicable housing statutes with respect to qualified aliens who are victims of domestic violence and Cuban and Haitian immigrants to ensure that such statutes are consistent with the Personal Responsibility and Work Opportunity Act of 1996 and the Illegal Immigration Reform and Personal Responsibility Act of 1996 ( H.Rept. 108-10 ). There are several potentially conflicting interpretations of the interaction of Section 214 and PRWORA and uncertainty regarding HUD's interpretation of the noncitizen eligibility restrictions. Under one possible interpretation, to be eligible for Section 214 programs, a class of noncitizens cannot be prohibited from receiving benefits under PRWORA and must be listed as an eligible class under Section 214. For example, parolees who have been in the United States for less than one year would be ineligible for Section 214 programs because, although they are eligible under Section 214, they are prohibited under PRWORA. On the other hand, battered immigrants would be ineligible for Section 214 programs because, although they are not ineligible for benefits under PRWORA, they are not listed as eligible under Section 214. Interestingly, under this interpretation, the interaction between Section 214 and PRWORA make the alien eligibility requirements for Section 214 housing programs more restrictive than the requirements for other federal public benefits, although by itself Section 214 is not necessarily more restrictive than the provisions in PRWORA. A second possible interpretation depends on whether or not PRWORA makes qualified aliens affirmatively eligible for benefits. PRWORA states "[n]otwithstanding any other provision in the law ... an alien who is not a qualified alien ... is not eligible for any federal public benefits." It could be asserted that by not prohibiting qualified aliens from federal public benefits, PRWORA grants eligibility to qualified aliens for federal public benefits. Since PRWORA effectively supercedes Section 214 (given the "notwithstanding" clause), under this interpretation, all noncitizens who are qualified aliens would be eligible for Section 214-covered housing programs. Despite statutory and regulatory arguments, this second interpretation may, in fact, reflect what is happening in practice. Prior to the enactment of PRWORA, HUD released regulations based on Section 214 that established a standard for verifying an applicant's immigration status. To verify eligibility, PHAs and property owners use the Systematic Alien Verification for Entitlements (SAVE) program, which enables federal, state, and local governmental agencies to obtain immigration status information to determine eligibility for public benefits. The SAVE system is also used to determine noncitizen eligibility for other benefits including Medicaid, Temporary Assistance for Needy Families (TANF), and food assistance which use the noncitizen eligibility restrictions outlined in PRWORA. As a result, it is possible that some housing authorities are using the noncitizen eligibility requirements specified in PRWORA, without regard to Section 214. As noted earlier, mixed families are eligible to receive prorated assistance from Section 214-covered programs. HUD's homeless programs include the Shelter Plus Care (S+C) program, the Supportive Housing Program (SHP), the Single Room Occupancy (SRO) program, and the Emergency Shelter Grants (ESG) program, all of which are funded under the Homeless Assistance Grants account, as well as the Housing for Persons with AIDS (HOPWA) program. One of the programs funded through the Homeless Assistance Grants is a Section 214-covered program: the SRO program. Housing units for homeless individuals provided through the SRO program are developed through the Section 8 Moderate Rehabilitation program and receive Section 8 rental assistance. As a result, nonqualified aliens (e.g., nonimmigrants and unauthorized aliens) as defined by Section 214 are ineligible for the SRO program. However, HOPWA and the remaining homeless programs—S+C, SHP, and ESG—are not covered by Section 214. Although PRWORA lists "housing assistance" as a federal public benefit governed by the statute, HUD has not issued regulations to clarify whether HUD homeless assistance programs are considered "federal public benefits," and therefore subject to PRWORA's noncitizen eligibility restrictions. Assuming the homeless assistance programs (S+C, SHP, ESG, and HOPWA) are governed by PRWORA, citizens and qualified aliens are effectively eligible for benefits from all homeless assistance programs if they meet need standards. The status of nonqualified aliens is less clear, as the assistance provided through some of HUD's homeless programs could fit the PRWORA exception allowing nonqualified aliens access to emergency programs. The exception applies if the benefit provided meets three requirements: 1. it is an in-kind benefit provided through public or private nonprofit organizations, 2. the benefit is not conditioned on a client's income or resources, and 3. the benefit is necessary for the protection of life and safety. Temporary emergency shelter provided through the ESG program could fulfill the requirements of this exception. However, some transitional and all permanent housing may not meet the second requirement. Formerly homeless individuals who reside in permanent supportive housing provided through S+C or SHP pay a portion of their income toward rent. The same is true for some transitional housing provided through SHP. HUD has not published guidance indicating which, if any, of its programs are considered to meet the three requirements for exception from PRWORA as emergency programs. Another portion of PRWORA that could be relevant for homeless assistance programs is a provision that exempts "nonprofit charitable organizations" that provide federal public benefits from having to verify the eligibility of program participants. To the extent that administrators of HUD's homeless assistance programs are nonprofit organizations, which many of them are, they are not required under the terms of PRWORA to verify their clients' citizenship status. Thus, nonqualified aliens may be receiving services from these organizations, regardless of their eligibility status. Furthermore, HUD has not published guidance regarding the verification of immigration status for homeless programs that are not governed by Section 214, whether or not they are administered by a charitable organization, making it even more unclear whether or not, in practice, nonqualified aliens receive benefits. (See discussion under " Documentation and Verification " later in this report.) Mixed families are not separately dealt with in regulations for HUD homeless assistance programs and, given their ambiguous eligibility status and the lack of verification guidance, it is unclear how they are treated. The other needs-based housing programs administered by HUD are significantly different from the Section 214-covered programs in that they primarily provide funding to nonprofits, states, and units of local governments to provide a variety of forms of assistance to low-income individuals, families, and communities. Examples of other HUD needs-based housing programs include the Section 202 Housing for the Elderly program, the Section 811 Housing for the Disabled program, the Community Development Block Grant program and the HOME Investment Partnerships program. The Section 202 and 811 programs are similar to the Section 8 project-based rental assistance program (which is a Section 214-covered program), but they are administered by nonprofits rather than PHAs. HOME and CDBG are block grants administered by units of state and local government, who generally award the funds to nonprofit partners. HOME funds housing activities; CDBG funds community development-related activities. Presumably, the PRWORA restrictions on noncitizen eligibility apply to the other HUD needs-based housing programs; however, the assistance provided through these programs may or may not be considered "federal public benefits." HUD has not issued guidance defining which types of assistance under the other needs-based housing programs are "federal public benefits" and subject to PRWORA's noncitizen eligibility restrictions. Further, HUD has not issued guidance as to how participating entities should implement the PRWORA restrictions. Assuming the PRWORA restrictions apply to these programs, and since they are not covered by Section 214, it can be interpreted that citizens and qualified aliens are effectively eligible for benefits from all other HUD needs-based programs, if they meet need standards. Nonqualified aliens (e.g., unauthorized aliens), as a result of PRWORA, are not legally eligible for any housing benefits from other HUD needs-based programs. However, it is important to note that, unlike Section 214-covered programs, there are no regulations requiring the verification of beneficiaries' citizenship for other HUD needs-based programs, so it is possible that nonqualified aliens may be receiving housing benefits, regardless of their eligibility. (See discussion under " Documentation and Verification " later in this report.) Further, much of the assistance provided by the other needs-based housing programs is administered through nonprofits, which, as noted earlier in this report, are not required to verify immigration status. As a result, while certain nonqualified aliens may be ineligible for assistance under the other HUD needs-based programs, to the extent that assistance is provided by charitable organizations, their status is not required to be verified, so they may be receiving assistance. Mixed families are not separately dealt with in regulations for other HUD needs-based housing programs and, given their ambiguous eligibility status and the lack of verification guidance, it is unclear how they are treated. As discussed above, noncitizen eligibility varies among HUD's needs-based housing programs, and is governed by both PRWORA and Section 214. An important component of any policy discussion on eligibility is the mechanism by which eligibility is determined. The following section discusses the documentation requirements for citizens and noncitizens to demonstrate eligibility for housing assistance. For the Section 214-covered programs, which include the largest housing assistance programs (Public Housing and the Section 8 tenant-based voucher and project-based rental assistance programs), PHAs and private property owners are required to verify the eligibility of each person in a household. Every applicant must declare in writing under threat of perjury that he or she is a citizen, an eligible noncitizen, or is choosing not to provide documentation (and is therefore ineligible for assistance). Citizens are not required to provide documentation of their citizenship status, although PHAs may adopt a policy requiring documentation, such as a U.S. passport. Also, household members over the age of 6 must provide their Social Security numbers and/or certify that they have not received a Social Security number in order to receive housing assistance. It is important to note, however, that Social Security numbers do not prove citizenship or eligible immigration status. Noncitizens age 62 or older are required to provide a signed declaration under threat of perjury of their eligible immigration status and proof of their age. PHAs and property owners are not required to further verify their immigration status. Other eligible noncitizens/qualified aliens must provide a signed declaration under threat of perjury of their eligible immigration status, documentation from the Department of Homeland Security (DHS), and a signed verification consent form relating to communications between DHS and HUD. A PHA or property owner may provide an extension of up to 30 days if a family certifies that the required evidence is temporarily unavailable and they need more time to locate the required documents. Once the documents have been submitted, a PHA or property owner must verify the documents using the SAVE system (discussed earlier in this report). If the alien thinks that the information returned through the SAVE system is inaccurate, the alien may appeal to DHS. A PHA or property owner may provide assistance temporarily while the alien's status is being verified. Other noncitizens who are members of households that include eligible noncitizens/qualified aliens may choose not to contend that they have eligible immigration status. In the case of these mixed-status families, eligible noncitizen/qualified alien members of the families may receive pro-rated benefits; however, the family must identify in writing to the PHA or property owner any family members who will be living in the household but have elected not to contend that they have eligible immigration status. As discussed above, HUD has not issued guidance defining which programs or types of assistance under the other needs-based housing programs are subject to PRWORA's noncitizen eligibility restrictions. Further, HUD has not issued guidance as to how participating entities should implement the PRWORA restrictions. As a result, the documentation requirements for these programs are unknown. Therefore, it is unclear how, and the extent to which, the entities that administer other needs-based housing assistance are verifying eligible immigration status for noncitizen beneficiaries. Additionally, much of the funding provided through HUD's other needs-based housing programs is administered through charitable organizations. As noted earlier, PRWORA included language permitting nonprofit charitable organizations to choose not to verify noncitizen eligibility for federal public benefits.
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The issue of noncitizen eligibility for federally funded programs, including needs-based housing programs, is a perennial issue in Congress. Noncitizen eligibility varies among the needs-based housing programs administered by the U.S. Department of Housing and Urban Development (HUD), such as Public Housing, Section 8 vouchers and project-based rental assistance, homeless assistance programs, housing for the elderly (§202) and the disabled (§811), the HOME program, and the Community Development Block Grants (CDBG) program. Two laws govern noncitizen eligibility for housing programs: Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Welfare Reform) and Section 214 of the Housing and Community Development Act of 1980, as amended. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) explicitly states that aliens, unless they are qualified aliens, are not eligible for "federal public benefits," a term defined in the law to include public and assisted housing. Under the statute, unauthorized (illegal) aliens do not meet the definition of qualified aliens, and as a result, they are ineligible for "federal public benefits." However, PRWORA did not make those who had been receiving housing benefits before the date of enactment (August 22, 1996) ineligible for housing benefits. Likewise, PRWORA exempts certain types of programs that are usually thought of as emergency programs from the alien eligibility restrictions. HUD has not issued guidance implementing the PRWORA provisions. Section 214 of the Housing and Community Development Act of 1980 states that only certain categories of noncitizens are eligible for benefits under the housing programs covered by Section 214. Unauthorized aliens are not eligible for benefits under Section 214. The aliens eligible for housing assistance under Section 214 are similar to those eligible for federal public benefits under PRWORA, with some exceptions. There is uncertainty surrounding how the eligibility requirements of PRWORA and Section 214 interact, leading to conflicting interpretations of the categories of noncitizens eligible for housing programs. A provision addressing this issue was considered during the FY2003 appropriations debate, but not included in the final bill. There has been congressional interest regarding the implementation of the eligibility requirements for housing programs. Specifically, questions have been raised as to the documentation requirements placed on both citizens and noncitizens in determining eligibility for housing programs. The documentation requirements are dependent on (1) the housing program, (2) the citizenship status of the applicant, and (3) the age of the applicant.
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The Logan Act, designed to cover relations between private citizens of the United States and foreign governments, has prompted much controversy as to its scope and effect in its more than 200 years. Described as either a "paper dragon or sleeping giant" by one commentator, proclaimed to be possibly unconstitutional by others, it represents a combination of legal and policy factors in both domestic and international concerns. As amended, the act states: Any citizen of the United States, wherever he may be, who, without authority of the United States, directly or indirectly commences or carries on any correspondence or intercourse with any foreign government or any officer or agent thereof, in relation to any disputes or controversies with the United States, or to defeat the measures of the United States, shall be fined under this title or imprisoned not more than three years, or both. This section shall not abridge the right of a citizen to apply, himself or his agent, to any foreign government or the agents thereof for redress of any injury which he may have sustained from such government or any of its agents or subjects. In 1994 the fine was changed from $5,000 to "under this title." Otherwise, there do not appear to have been any substantial changes in the act since its original enactment on January 30, 1799, as 1 Stat. 613. After the French Revolution, difficulties developed between the Federalist Administration of the United States and the various revolutionary governments of France. Because the United States had not assisted the French revolutionaries to their satisfaction and because the United States had ratified the Jay Treaty with Great Britain, the French government authorized plunderings of American merchant ships. In 1797 President Adams sent John Marshall, Charles C. Pinckney, and Elbridge Gerry as special envoys to France to negotiate and settle claims and causes of differences which existed between the French Directory and the United States. This mission resulted in the XYZ letters controversy, and its failure led to such strong anti-France feelings in the United States that preparations for war were begun by the Congress. After the unsuccessful envoys returned from France, Dr. George Logan, a Philadelphia Quaker, a doctor, and a Republican, decided to attempt on his own to settle the controversies. Bearing a private certificate of citizenship from his friend, Thomas Jefferson, who at the time was Vice President, Logan sailed for France on June 12, 1798. In France he was hailed by the newspapers as the envoy of peace and was received by Talleyrand. The French Directory, having concluded that it was politically wise to relax tensions with the United States, issued a decree raising the embargo on American merchant ships and freed American ships and seamen. Logan, however, received a less friendly response from the United States after he returned. Secretary of State Timothy Pickering told him that the French decree was illusory. General Washington expressed his disapproval of Logan's actions. President Adams recommended that Congress take action to stop the "temerity and impertinence of individuals affecting to interfere in public affairs between France and the United States." Representative Roger Griswold of Connecticut introduced a resolution in Congress to prevent actions similar to Logan's: Resolved , That a committee be appointed to inquire into the expediency of amending the act entitled "An act in addition to the act for the punishment of certain crimes against the United States," so far as to extend the penalties, if need be, to all persons, citizens of the United States, who shall usurp the Executive authority of this Government, by commencing or carrying on any correspondence with the Governments of any foreign prince or state, relating to controversies or disputes which do or shall exist between such prince or state, and the United States. The resolution was passed, and the committee was appointed. On January 7, 1799, Griswold introduced in the House a bill based on the resolution: Be it enacted, etc. , that if any person, being a citizen of the United States, or in any foreign country, shall, without the permission or authority of the Government of the United States, directly or indirectly, commence or carry on any verbal or written correspondence or intercourse with any foreign Government, or any officer or agent thereof, relating to any dispute or controversy between any foreign Government and the United States, with an intent to influence the measures or conduct of the Government having disputes or controversies with the United States, as aforesaid; or of any person, being a citizen of or resident within, the United States, and not duly authorized shall counsel, advise, aid or assist, in any such correspondence with intent as aforesaid, he or they shall be deemed guilty of a high misdemeanor; and, on conviction before any court of the United States having jurisdiction thereof, shall be punished by a fine not exceeding—thousand dollars, and by imprisonment during a term not less than—months, not exceeding—years. The bill was debated at length, and various amendments were proposed, some of which passed and some of which did not. The House of Representatives passed the bill on January 17, 1799, and the Senate passed it on January 25, 1799. It was signed and became a law on January 30, 1799. There appear to have been few indictments under the Logan Act. The one indictment found occurred in 1803 when a grand jury indicted Francis Flournoy, a Kentucky farmer, who wrote an article in the Frankfort Guardian of Freedom under the pen name of "A Western American." Flournoy advocated in the article a separate Western nation allied to France. The United States Attorney for Kentucky, an Adams appointee and brother-in-law of Chief Justice Marshall, went no further than procuring the indictment of Flournoy, and the purchase of the Louisiana Territory later that year appeared to cause the separatism issue to become obsolete. So far as can be determined, there have been no prosecutions under the Logan Act. However, there have been a number of judicial references to the act, among which are the following. Judge Sprague of the Circuit Court for the District of Massachusetts mentioned the Logan Act in two charges that he made to grand juries during the Civil War. On October 18, 1861, he said: There are other defenses to which our attention is called by the present condition of our country. A few months since a member of the British parliament declared, in the most public manner, that he had received many letters from the Northern states of America urging parliament to acknowledge the independence of the Southern confederacy. Such an announcement ought to arrest the attention of grand juries; for if any such communication has been made by a citizen of the United States, it is a high misdemeanor. St. 1799, c. 1. (1 Stat. 613) was especially designed to prevent such unwarrantable interference with the diplomacy and purposes of our government. In the second grand jury charge referring to the Logan Act, made in 1863, Judge Sprague stated: We have seen it stated in such form as to arrest attention, that unauthorized individuals have entered into communication with members of parliament and foreign ministers and officers in order to influence their conduct, in controversies with the United States, or to defeat the measures of our government. It ought to be known that such acts have been long prohibited by law. American Banana Co. v. United Fruit Co . referred to the Logan Act as follows: No doubt in regions subject to no sovereign, like the high seas, or to no law that civilized countries would recognize as adequate, such countries may treat some relations between their citizens as governed by their own law and keep to some extent the old notion of personal sovereignty alive [citations omitted]. They go further, at times, and declare that they will punish anyone, subject or not, who shall do certain things if they can catch him, as in the case of pirates on the high seas. In cases immediately affecting national interests they may go further still and may make, and, if they get the chance, execute similar threats as to acts done within another recognized jurisdiction. An illustration from our statutes is found with regard to criminal correspondence with foreign governments. Rev. Stat., § 5335. Burke v. Monumental Division, No. 52 was a case charging a union member with betraying the interests of his union at the time of negotiation between the union and a railroad during a labor dispute. The court compared the union's reaction toward the act of its member with Congress's feelings at the time of enactment of the Logan Act. [T]he plaintiff's conduct is characterized as "traitorous," and it is said that he has committed "moral perjury." This is strong language; but there is no reason to question that it is really meant, and that those responsible for its use believe it to be fully justified. The truth doubtless is that to them the Brotherhood and the roads appear to be almost distinct sovereignties. At a time when it is at grip with the companies, for a member to let one of the latter sue in his name, for the purpose of preventing the use by it of one of its most efficient means of warfare, does to them seem treasonable. Within the limits of their power, they are determined to punish any such proceeding. They feel about it as did Congress when in 1799 it enacted the so-called Logan Act ... making it a crime for any citizen to have intercourse with a foreign government with intent to defeat the measures of his own. United States v. Bryan refers to 18 U.S.C. § 5, which is the predecessor of 18 U.S.C. § 953: That the subject of un-American and subversive activities is within the investigating power of the Congress is obvious. Conceivably, information in this field may aid the Congress in legislating concerning any one of many matters, such as correspondence with foreign governments.... United States v. Peace Information Center held that Congress had the power to enact the Foreign Agents Registration Act of 1938 under its inherent power to regulate external affairs as well as under its constitutional power to legislate concerning national defense and that the act is not subject to any constitutional infirmity. The court mentioned similarities between the Logan Act and the Foreign Agents Registration Act, and the language used appears to indicate that the court believed that the Logan Act, like the Foreign Agents Registration Act, is constitutional. Citizens of the United States are forbidden to carry on correspondence or intercourse with any foreign government with an intent to influence its measures or conduct in relation to any disputes or controversies with the United States. The Act under scrutiny in this case represents the converse of the last mentioned statute. The former deals with citizens of the United States who attempt to conduct correspondence with foreign governments. The latter affects agents of foreign principals who carry on certain specified activities in the United States. Both matters are equally within the field of external affairs of this country, and, therefore, within the inherent regulatory power of the Congress. In Martin v. Young , which concerned a petition for habeas corpus by a serviceman awaiting trial by a general court martial, the principal issue was whether the petitioner could be tried in a civil court for the offense charged against him by the Army. A part of the specification stated: [That petitioner while interned in a North Korean prisoner of war camp, did] without proper authority, wrongfully, unlawfully, and knowingly collaborate, communicate and hold intercourse, directly and indirectly, with the enemy by joining with, participating in, and leading discussion groups and classes conducted by the enemy reflecting views and opinions that the United Nations and the United States were illegal aggressors in the Korean conflict.... The court stated that the conduct described in the specification violated at least three criminal statutes under which the petitioner could be tried in a civil court, one of which was the Logan Act, and granted the petition. However, the Department of Justice did not prosecute Martin under the Logan Act. Pennsylvania v. Nelson held that the Smith Act, which prohibits the knowing advocacy of the overthrow of the United States Government by force and violence, supersedes the enforceability of the Pennsylvania Sedition Act, which proscribes the same conduct. The reason given for the pre-emption is that the federal statutes touch a field in which the federal interest is so dominant that the federal system must be assured to preclude enforcement of state laws on the same subject. The Court mentioned that "[s]tates are barred by the Constitution from entering into treaties and by 18 U.S.C. § 953 from correspondence or intercourse with foreign governments with relation to their disputes or controversies with this Nation." Briehl v. Dulles upheld certain Department of State regulations which provided that no passport shall be issued to members of the Communist Party. The court referred to other valid federal statutes which restrict persons in the area of foreign relations: We have statutes dealing with persons who act as agents of a foreign government, or those who have "correspondence" with a foreign government with intent to influence its measures in relation to disputes or controversies with our Government or to defeat the measures of the United States. In Waldron v. British Petroleum Co . the plaintiff sued for triple damages under the Clayton Act for alleged conspiracy of the defendants to prevent the importation and sale by the plaintiff of Iranian oil. The defendants asserted that the plaintiff had obtained his contract through a series of violations of criminal statutes including the Logan Act. The court held that, in order to maintain this defense, the defendants would have to show that the plaintiff sought to thwart some clearly and unequivocally asserted policy measures of the United States instead of merely statements of opinion, attitude, and belief of government officials. The defendants were unable to show this. Further, the court noted that: Another infirmity in defendants' claim that plaintiff violated the Logan Act is the existence of a doubtful question with regard to the constitutionality of that statute [Logan Act] under the Sixth Amendment. That doubt is engendered by the statute's use of the vague and indefinite terms, "defeat" and "measures" [citation omitted]. Neither of these words is an abstraction of common certainty or possesses a definite statutory or judicial definition. Since, however, there are other grounds for disposing of this motion, it is not necessary to decide the constitutional question. Furthermore, any "ambiguity should be resolved in favor of lenity" [citation omitted]. The court also indicates that, although Congress should perhaps eliminate the vagueness of the Logan Act, the act remains valid despite the lack of prosecutions under it. The Court finds no merit in plaintiff's argument that the Logan Act has been abrogated by desuetude. From the absence of reported cases, one may deduce that the statute has not been called into play because no factual situation requiring its invocation has been presented to the courts. Cf. Shakespeare, Measure for Measure, Act II, Scene ii ("The law hath not been dead, though it hath slept.") It may, however, be appropriate for the Court (Canons of Judicial Ethics, Judicial Canon 23) to invite Congressional attention to the possible need for amendment of Title 18 U.S.C. § 953 to eliminate this problem by using more precise words than "defeat" and "measures" and, at the same time, using language paralleling that now in § 954. United States v. Elliot also refers to the Logan Act and reaffirms the statute as it is discussed in Waldron : Pertinent, too, is Waldron v. British Petroleum Co. , [citation omitted] wherein this court held vital a previously unenforced section of the Logan Act (18 U.S.C. § 953) promulgated in 1799. In Agee v. Muskie suit was brought to revoke Agee's passport on the basis that his activities abroad were causing serious damage to the national security or foreign policy of the United States. In the Appendix to the case there are comments on various specific laws which Agee had allegedly violated. One of these was the Logan Act. Agee is quoted as stating that "in recent weeks" prior to December 23, 1979 he proposed to the "militants" in Iran (who obviously under 18 U.S.C. § 11 are a "faction and body of insurgents" constituting a "foreign government") that they should compel the United States to "exchange ... the C.I.A.'s files on its operations in Iran since 1950 for the Captive Americans" [citation omitted]. Such conduct violates 18 U.S.C. § 953 which prohibits any citizen of the United States from carrying on correspondence or intercourse with any foreign government (the Iranian terrorist faction) "with intent to influence [its] measures or conduct or [that] of any ... agent thereof [footnote omitted]. Agee's violation of this act with the Terrorists is self evident from his own uncontradicted statement. In ITT World Communications, Inc. v. Federal Communications Commission the court found that the lower court had misread ITT's complaint concerning violation of the Logan Act. Under the Administrative Procedure Act, a party has standing to secure judicial review of any "agency action" that causes a "legal wrong" [footnote omitted]. The district court held that ITT has not suffered a legal wrong, reading its complaint solely to allege a violation of the Logan Act's prohibition of unauthorized negotiation with foreign governments [footnote omitted]. Because only the Department of State is aggrieved by violations of that criminal statute, the court reasoned, ITT's alleged injury is not legally cognizable. We respectfully conclude that the district court misread ITT's complaint. The gravamen of ITT's allegation is quite specific: "The activities of the FCC ... are unlawful and ultra vires , and in excess of the authority conferred on the Commission by the Communications Act " [footnote omitted]. Whether the complaint's two references to the Logan Act [footnote omitted] should be construed as an attempt to state a separate cause of action (as the Commission insists) or as mere illustrative matter not intended to assert a claim (as ITT argues), a cause of action under the Communications Act has clearly been alleged. In Equal Employment Opportunity Commission v. Arabian American Oil Co. , suit was brought to determine whether Title VII of the Civil Rights Act of 1964 applied extraterritorially to regulate employment practices of United States employers who employed United States citizens abroad. The Court, in its holding that there was not sufficient evidence to indicate that the act was intended to apply abroad, stated: Congress' awareness of the need to make a clear statement that a statute applies overseas is amply demonstrated by the numerous occasions on which it has expressly legislated the extraterritorial application of a statute. See, e.g. , ... the Logan Act, 18 U.S.C. § 953 (applying Act to "any citizen ... wherever he may be ... "). United States v. DeLeon concerned whether 8 U.S.C. Section 1326, which makes it a crime for an alien who has been previously deported to enter, attempt to enter, or be found in the United States unless certain conditions are met, applies to conduct occurring outside the United States. In holding that the statute does apply to conduct occurring outside the United States, the court stated: More important, assuming that the Convention [Convention on the Territorial Sea and the Contiguous Zone] also provides or ratifies a power to regulate certain conduct within the contiguous zone, that has a substantial adverse effect within the United States. That power was assumed to exist well before the Convention, e.g., Logan Act.... In a series of reviews of a general court-martial, styled United States v. Murphy, the appellant, who was charged with committing crimes abroad, urged the Logan Act as a basis for his being denied effective assistance of counsel. The appellant contends that he was denied effective assistance of counsel at a critical stage of the proceedings due to an erroneous interpretation of the Logan Act.... The Logan Act prohibits unauthorized negotiation with a foreign government.... In appellant's case, the Federal Republic of Germany declined to exercise criminal jurisdiction, in accordance with existing Status of Forces Agreements [footnote omitted]. The appellant's counsel decided, after personal research and consultation with other military lawyers, that he was prohibited from attempting to persuade the German authorities to exercise jurisdiction. The appellant now argues that his trial defense counsel's failure to negotiate with the Federal Republic of Germany, which does not allow capital punishment, denied him effective assistance of counsel. We disagree.... In a 2010 case, Strunk v. New York Province of the Society of Jesus , the plaintiff brought suit against New York City, New York State, and federal officials, asserting that government officials and agencies violated the Logan Act by acting as agents of a foreign government (presumably, the Vatican) in association with or under the direction of the Roman Catholic Church, the Society of Jesus, and the Sovereign Military Order of Malta. The plaintiff alleged that these circumstances caused him and the citizens of New York unspecified "collective spiritual and individual temporal injuries" and demanded a declaratory judgment and injunctive relief to enjoin the entities from conducting unspecified activities. The United States District Court for the District of Columbia dismissed the action for lack of subject matter jurisdiction and plaintiff's lack of standing, stating: The Court concludes that plaintiff cannot establish an injury in fact, that he is without standing to bring his claims, and that this Court lacks jurisdiction to hear this matter. The court stated that only the U.S. Department of State is aggrieved by a violation of the Logan Act and that only the U.S. Attorney General has the constitutional authority to conduct criminal litigation on behalf of the federal government. A search of statements issued by the State Department concerning the Logan Act from 1975 onward has found at least two opinions. In these instances the department did not consider the activities in question to be inconsistent with the Logan Act. One opinion concerned the questioning of certain activities of Senators John Sparkman and George McGovern with respect to the government of Cuba. The department stated: The clear intent of this provision [Logan Act] is to prohibit unauthorized persons from intervening in disputes between the United States and foreign governments. Nothing in section 953, however, would appear to restrict members of the Congress from engaging in discussions with foreign officials in pursuance of their legislative duties under the Constitution. In the case of Senators McGovern and Sparkman the executive branch, although it did not in any way encourage the Senators to go to Cuba, was fully informed of the nature and purpose of their visit, and had validated their passports for travel to that country. Senator McGovern's report of his discussions with Cuban officials states: "I made it clear that I had no authority to negotiate on behalf of the United States—that I had come to listen and learn...." (Cuban Realities: May 1975, 94 th Cong., 1 st Sess., August 1975). Senator Sparkman's contacts with Cuban officials were conducted on a similar basis. The specific issues raised by the Senators (e.g., the Southern Airways case; Luis Tiant's desire to have his parents visit the United States) would, in any event, appear to fall within the second paragraph of Section 953. Accordingly, the Department does not consider the activities of Senators Sparkman and McGovern to be inconsistent with the stipulations of Section 953. A 1976 statement by the Department of State concerned a letter written by Ambassador Robert J. McCloskey, Assistant Secretary of State for Congressional Relations, to Senator John V. Tunney in reply to a constituent's inquiry about a visit of former President Nixon to the People's Republic of China. The letter stated: Mr. Nixon's visit to the People's Republic of China was undertaken entirely in his capacity as a private United States citizen. In accordance with the expressed wishes of the Government of the People's Republic of China and as a normal matter of comity between governments, the U.S. Government permitted an aircraft from the People's Republic of China to land in California in connection with the visit. Aside from activities related to the Chinese special flights (including provision of an escort crew to insure safety of operations in U.S. airspace), the U.S. Government's role in the visit was limited to the provision by the Secret Service of personal protective services, as required by law, to the former President.... It is the responsibility of the Department of Justice to make determinations of whether criminal statutes of this sort have been transgressed and whether individuals should be prosecuted under them. However, the Department of State is unaware of any basis for believing that Mr. Nixon acted with the intent prohibited by the Logan Act. In this connection, it should be noted that no one has ever been prosecuted under the Logan Act.... In a number of instances, people have been alleged, often by political opponents, to have violated the Logan Act. For example, critics have suggested that Ross Perot's efforts to find missing American servicemen in Southeast Asia have violated the Logan Act. Critics alleged that former House Speaker Jim Wright violated the Logan Act in his relations with the Sandinista government. In 1984 while campaigning for the Democratic nomination for President, Reverend Jesse Jackson went to Syria to help in the release of a captured American military flyer and to Cuba and Nicaragua. The trips by Reverend Jackson occasioned comments from a number of people, most notably from President Reagan, that Reverend Jackson had violated the Logan Act. Other private citizens, such as Jane Fonda, have made trips which have been criticized as violative of the Logan Act. One of the most recent allegations involving a possible Logan Act violation focuses on a letter signed by 47 U.S. Senators to Iran suggesting that an agreement between the President and the Iranian leadership would be an executive agreement that another President or Congress would be able to abrogate. There have apparently been no official sanctions taken in any of these instances. Commenters have raised questions about various issues associated with a 2015 letter signed by 47 U.S. Senators to Iran suggesting that negotiations about a nuclear deal between the President and the Iranian leadership would be an executive agreement that another President or Congress could abrogate. Three of these issues involve the constitutionality of the act, its application in this situation to Members of Congress, and its current viability. With respect to the act's constitutionality, there is the above-discussed case, United States v. Peace Information Center , in which the court seemed to suggest that, because of similarities between the Logan Act and the Foreign Agents Registration Act, both acts are constitutional in that they "are equally within the field of external affairs of this country, and, therefore, within the inherent regulatory power of the Congress." Yet, there are commenters who continue to discuss whether the Logan Act is constitutional. For example, in a 1987 Emory Law Journal article, there is discussion about whether the act may infringe on rights involving freedom of speech and right to travel. The application of the act to Members of Congress is also a topic of discussion. In the above-discussed State Department statement concerning the questioning of Senators Sparkman and McGovern with respect to the government of Cuba, the department found that their activities did not violate the act and emphasized that nothing in the act "would appear to restrict members of the Congress in pursuance of their legislative duties under the Constitution." The State Department did not state that there is a general exemption from the act for Members of Congress; rather, it focused on the particular activities of these two Senators. Some commenters appear to believe that the 47 Senators signing the letter to Iran were acting outside permissible "pursuance of their legislative duties." Others, however, believe that: [I]t could be argued that the letter's signatories do wield official U.S. authority and are federal officers in their capacity as U.S. senators. But even if they don't...a Logan Act prosecution would fall apart because of subsequent federal free speech cases that have taken a dim view of attempts to criminalize speech. The discussion of whether the act is currently viable may hinge on the fact that, despite its having been law for more than 200 years, no one has been prosecuted for violating it. Its viability may also involve constitutional issues, such as freedom of speech and right to travel, mentioned above, since these constitutional issues appear not to have been litigated with respect to the Logan Act. However, the act still remains law, and its viability should likely not be summarily dismissed. Although it appears that there has never been a prosecution under the Logan Act, there have been several judicial references to it, indicating that the act has not been forgotten and that it is at least a potential point of challenge that has been used against anyone who without authority allegedly interferes in the foreign relations of the United States. There have been efforts to repeal the act, one of the most significant occurring in the late 1970s. For example, Senator Edward Kennedy proposed in the 95 th Congress to delete the Logan Act from the bill to amend the United States criminal code. Senator James Allen insisted on reenacting the act in exchange for promising not to prolong debate over the bill, and Senator Kennedy agreed to this. However, since the House was unable to consider the criminal reform bill in the 95 th Congress, the possibility of deleting the act in a conference committee was eliminated. In early 2015, renewed interest in the act resulted from a letter sent to Iran by 47 U.S. Senators. It is possible that this interest will result in congressional consideration of whether the act should be repealed or retained.
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The Logan Act, codified at 18 U.S.C. § 953, states: Any citizen of the United States, wherever he may be, who, without authority of the United States, directly or indirectly commences or carries on any correspondence or intercourse with any foreign government or any officer or agent thereof, in relation to any disputes or controversies with the United States, or to defeat the measures of the United States, shall be fined under this title or imprisoned not more than three years, or both. This section shall not abridge the right of a citizen to apply, himself or his agent, to any foreign government or the agents thereof for redress of any injury which he may have sustained from such government or any of its agents or subjects. The Logan Act was intended to prohibit United States citizens without authority from interfering in relations between the United States and foreign governments. There appear to have been no prosecutions under the act in its more than 200-year history. However, there have been a number of judicial references to the act, and it is not uncommon for it to be used as a point of challenge concerning dealings with foreign officials There has been renewed interest in the Logan Act in 2015 as the result of a letter signed by 47 U.S. Senators to Iran suggesting that negotiations about a nuclear deal between the President and the Iranian leadership would be an executive agreement that another President or Congress would be able to abrogate. Some have raised questions about the constitutionality of the act, whether it applies to Members of Congress, and its current viability. Commenters have provided arguments that both support and oppose the legality of the Senators' letter. Although attempts have been made to repeal the act, it remains law and at least a potential sanction which could be used against anyone who without authority interferes in the foreign relations of the United States.
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Multilateral development banks (MDBs) are international institutions that provide financial assistance, typically in the form of loans and grants, to developing countries in order to promote economic and social development. The United States is a member and significant donor to five major MDBs. These include the World Bank and four smaller regional development banks: the African Development Bank (AfDB); the Asian Development Bank (AsDB); the European Bank for Reconstruction and Development (EBRD); and the Inter-American Development Bank (IDB). Congress plays a critical role in shaping U.S. policy at the MDBs through funding and oversight of U.S. participation in the institutions. This report provides an overview of the MDBs and highlights major issues for Congress. The first section discusses how the MDBs operate, including the history of the MDBs, their operations and organizational structure, and the effectiveness of MDB financial assistance. The second section discusses the role of Congress in the MDBs, including congressional legislation authorizing and appropriating U.S. contributions to the MDBs and congressional oversight of U.S. participation in the MDBs. The third section discusses broad policy debates about the MDBs, including their effectiveness, the trade-offs between providing aid on a multilateral or bilateral basis, the changing landscape of multilateral aid, and U.S. commercial interests in the MDBs. MDBs provide financial assistance to developing countries, typically in the form of loans and grants, for investment projects and policy-based loans. Project loans include large infrastructure projects, such as highways, power plants, port facilities, and dams, as well as social projects, including health and education initiatives. Policy-based loans provide governments with financing in exchange for agreement by the borrower country government that it will undertake particular policy reforms, such as the privatization of state-owned industries or reform in agriculture or electricity sector policies. Policy-based loans can also provide budgetary support to developing country governments. In order for the disbursement of a policy-based loan to continue, the borrower must implement the specified economic or financial policies. Some have expressed concern over the increasing budgetary support provided to developing countries by the MDBs. Traditionally, this type of support has been provided by the International Monetary Fund (IMF). Most of the MDBs have two major funds, often called lending windows or lending facilities. One type of lending window is primarily used to provide financial assistance on market-based terms, typically in the form of loans, but also through equity investments and loan guarantees. Non-concessional assistance is, depending on the MDB, extended to middle-income governments, some creditworthy low-income governments, and private-sector firms in developing countries. The other type of lending window is used to provide financial assistance at below market-based terms (concessional assistance), typically in the form of loans at below-market interest rates and grants, to governments of low-income countries. In recent years, two MDBs (the AsDB and the IDB) have transferred concessional lending to their main, non-concessional lending facilities to increase their lending capacities. The World Bank is the oldest and largest of the MDBs. The World Bank Group comprises three subinstitutions that make loans and grants to developing countries: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), and the International Finance Corporation (IFC). The 1944 Bretton Woods Conference led to the establishment of the World Bank, the IMF, and the institution that would eventually become the World Trade Organization (WTO). The IBRD was the first World Bank affiliate created, when its Articles of Agreement became effective in 1945 with the signatures of 28 member governments. Today, the IBRD has near universal membership with 189 member nations. Only Cuba and North Korea, and a few microstates such as the Vatican, Monaco, and Andorra, are nonmembers. The IBRD lends mainly to the governments of middle-income countries at market-based interest rates. In 1960, at the suggestion of the United States, IDA was created to make concessional loans (with low interest rates and long repayment periods) to the poorest countries. IDA also now provides grants to these countries. The IFC was created in 1955 to extend loans and equity investments to private firms in developing countries. The World Bank initially focused on providing financing for large infrastructure projects. Over time, this has broadened to also include social projects and policy-based loans. The IDB was created in 1959 in response to a strong desire by Latin American countries for a bank that would be attentive to their needs, as well as U.S. concerns about the spread of communism in Latin America. Consequently, the IDB has tended to focus more on social projects than large infrastructure projects, although the IDB began lending for infrastructure projects as well in the 1970s. From its founding, the IDB has had both non-concessional and concessional lending windows. The IDB's concessional lending window was called the Fund for Special Operations (FSO), whose assets were largely transferred to the IDB in 2016. The IDB Group also includes the Inter-American Investment Corporation (IIC) and the Multilateral Investment Fund (MIF), which extend loans to private-sector firms in developing countries, much like the World Bank's IFC. The AfDB was created in 1964 and was for nearly two decades an African-only institution, reflecting the desire of African governments to promote stronger unity and cooperation among the countries of their region. In 1973, the AfDB created a concessional lending window, the African Development Fund (AfDF), to which non-regional countries could become members and contribute. The United States joined the AfDF in 1976. In 1982, membership in the AfDB non-concessional lending window was officially opened to non-regional members. The AfDB makes loans to private-sector firms through its non-concessional window and does not have a separate fund specifically for financing private-sector projects with a development focus in the region. The AsDB was created in 1966 to promote regional cooperation. Similar to the World Bank, and unlike the IDB, the AsDB's original mandate focused on large infrastructure projects, rather than social projects or direct poverty alleviation. The AsDB's concessional lending facility, the Asian Development Fund (AsDF), was created in 1973. In 2017, concessional lending was transferred from the AsDF to the AsDB, although the AsDF still provides grants to low-income countries. Like the AfDF, the AsDB does not have a separate fund specifically for financing private-sector projects, and makes loans to private-sector firms in the region through its non-concessional window. The EBRD is the youngest MDB, founded in 1991. The motivation for creating the EBRD was to ease the transition of the former communist countries of Central and Eastern Europe (CEE) and the former Soviet Union from planned economies to free-market economies. The EBRD differs from the other regional banks in two fundamental ways. First, the EBRD has an explicitly political mandate: to support democracy-building activities. Second, the EBRD does not have a concessional loan window. The EBRD's financial assistance is heavily targeted on the private sector, although the EBRD does also extend some loans to governments in CEE and the former Soviet Union. Table 1 summarizes the different lending windows for the MDBs, noting what types of financial assistance they provide, who they lend to, when they were founded, and how much financial assistance they committed to developing countries in 2017. The World Bank Group accounted for half of total MDB financial assistance commitments to developing countries in 2017. Also, about three-quarters of the financial assistance provided by the MDBs to developing countries was on non-concessional terms. Figure 1 shows MDB financial commitments to developing countries since 2000 financed from their ordinary capital resources (OCR), the lending facility traditionally focused on non-concessional financial assistance. As a whole, financial assistance funded out of OCR resources was relatively stable in nominal terms until the global financial crisis prompted major member countries to press for increased financial assistance. In response to the financial crisis and at the urging of its major member countries, the IBRD dramatically increased lending between FY2008 and FY2009. Regional development banks also had upticks in lending between 2008 and 2009. MDB non-concessional assistance, particularly by the IBRD, fell to pre-crisis levels as the financial crisis stabilized, but has been rising again in the past few years. Figure 2 shows concessional financial assistance provided by the MDBs to developing countries since 2000. The World Bank's concessional lending arm, IDA, has grown steadily over the decade in nominal terms, although it has decreased over the past two years, while the regional development bank concessional lending facilities, by contrast, have remained relatively stable in nominal terms. Figure 3 lists the top recipients of MDB financial assistance in 2017. It shows that several large, emerging economies, such as Brazil, India, China, and Turkey, receive a steady flow of financial assistance from the MDBs. Figure 3 also shows the top recipients of concessional financial assistance. In 2017, Nigeria and Vietnam were top recipients of financial assistance from IDA, and Nepal and Afghanistan were top recipients of financial assistance from the AsDF. MDBs are able to extend financial assistance to developing countries due to the financial commitments of their more prosperous member countries. This support takes several forms, depending on the type of assistance provided. The MDBs use money contributed or "subscribed" by their member countries to support their assistance programs. They fund their operating costs from money earned on non-concessional loans to borrower countries. Some of the MDBs transfer a portion of their surplus net income annually to help fund their concessional aid programs. To offer non-concessional loans, the MDBs borrow money from international capital markets and then relend the money to developing countries. MDBs are able to borrow from international capital markets because they are backed by the guarantees of their member governments. This backing is provided through the ownership shares that countries subscribe as a consequence of their membership in each bank. Only a small portion (typically less than 5%-10%) of the value of these capital shares is actually paid to the MDB ("paid-in capital"). The bulk of these shares are a guarantee that the donor stands ready to provide to the bank if needed. This is called "callable capital," because the money is not actually transferred from the donor to the MDB unless the bank needs to call on its members' callable subscriptions. Banks may call upon their members' callable subscriptions only if their resources are exhausted and they still need funds to repay bondholders. To date, no MDB has ever had to draw on its callable capital. In recent decades, the MDBs have not used their paid-in capital to fund loans. Rather it has been put in financial reserves to strengthen the institutions' financial base. Due to the financial backing of their member country governments, the MDBs are able to borrow money in world capital markets at the lowest available market rates, generally the same rates at which developed country governments borrow funds inside their own borders. The banks are able to relend this money to their borrowers at much lower interest rates than the borrowers would generally have to pay for commercial loans, if, indeed, such loans were available to them. As such, the MDBs' non-concessional lending windows are self-financing and even generate net income. Periodically, when donors agree that future demand for loans from an MDB is likely to expand, they increase their capital subscriptions to an MDB's non-concessional lending window in order to allow the MDB to increase its level of lending. This usually occurs because the economy of the world or the region has grown in size and the needs of their borrowing countries have grown accordingly, or in response to a financial crisis. An across-the-board increase in all members' shares is called a "general capital increase" (GCI). This is in contrast to a "selective capital increase" (SCI), which is typically small and used to alter the voting shares of member countries. The voting power of member countries in the MDB is determined largely by the amount of capital contributed and through selective capital increases; some countries subscribe a larger share of the new capital stock than others to increase their voting power in the institutions. GCIs happen infrequently. Quite unusually, all the MDBs had GCIs following the global financial crisis of 2008-2009; simultaneous capital increases for all the MDBs had not occurred since the mid-1970s. Figure 4 summarizes current U.S. capital subscriptions to the MDB non-concessional lending windows. Currently, the largest U.S. share of subscribed MDB capital is with the IDB at 30%, while its smallest share among the MDBs is with the AfDB at 6.6%. Figure 5 lists the top donors to the MDBs's non-concessional facilities. The United States is the largest donor to the non-concessional lending windows to the IBRD, the IFC, the EBRD, and the IDB. The United States is tied with Japan for the largest financial commitment to the AsDB and is the second-largest donor to the AfDB. Other top donor states include Western European countries, Japan, and Canada. Additionally, several regional members have large financial stakes in the regional banks. For example, among the regional members, China and India are large contributors to the AsDB; Nigeria, Egypt, South Africa, and Algeria are major contributors to the AfDB; Argentina, Brazil, and Venezuela are large contributors to the IDB; and Russia is a large contributor to the EBRD. Concessional lending windows do not issue bonds; their funds are contributed directly from the financial contributions of their member countries. Most of the money comes from the more prosperous countries, while the contributions from borrowing countries are generally more symbolic than substantive. The MDBs have also transferred some of the net income from their non-concessional windows to their concessional lending windows in order to help fund concessional loans and grants. As the MDB extends concessional loans and grants to low-income countries, the window's resources become depleted. The donor countries meet together periodically to replenish those resources. Thus, these increases in resources are called replenishments, and most occur on a planned schedule ranging from three to five years. If these facilities are not replenished on time, they will run out of lendable resources and have to reduce their levels of aid to poor countries. Figure 6 summarizes cumulative U.S. contributions to the MDB concessional lending windows. The United States has made the largest financial commitment to IDA over time, relative to the other concessional lending facilities. Figure 7 shows the top donor countries to the MDB concessional facilities. The United States is been the largest donor to IDA and is a major donor to the AsDF and the AsDB. Other top donor states include the more prosperous member countries, including Japan, Canada, and those in Western Europe. The World Bank is a specialized agency of the United Nations. However, it is autonomous in its decisionmaking procedures and its sources of funds. It also has autonomous control over its administration and budget. The regional development banks are independent international agencies and are not affiliated with the United Nations system. All the MDBs must comply with directives (for example, economic sanctions) agreed to (by vote) by the U.N. Security Council. However, they are not subject to decisions by the U.N. General Assembly or other U.N. agencies. The MDBs have similar internal organizational structures. Run by their own management and staffed by international civil servants, each MDB is supervised by a Board of Governors and a Board of Executive Directors. The Board of Governors is the highest decisionmaking authority, and each member country has its own governor. Countries are usually represented by their Secretary of the Treasury, Minister of Finance, or Central Bank Governor. The United States is represented by the Treasury Secretary. The Board of Governors meets annually, though it may act more frequently through mail-in votes on key decisions. While the Boards of Governors in each of the banks retain power over major policy decisions, such as amending the founding documents of the organization, they have delegated day-to-day authority over operational policy, lending, and other matters to their institutions' Board of Executive Directors. The Board of Executive Directors in each institution is smaller than the Board of Governors. There are 24 members on the World Bank's Board of Executive Directors, and fewer for some of the regional development banks. Some major donors, including the United States, are represented by their own Executive Director. Other Executive Directors represent groups of member countries. Each MDB Executive Board has its own schedule, but they generally meet at least weekly to consider MDB loan and policy proposals and oversee bank activities. Decisions are reached in the MDBs through voting. Each member country's voting share is weighted on the basis of its cumulative financial contributions and commitments to the organization. Figure 8 shows the current U.S. voting power in each institution. The voting power of the United States is large enough to veto major policy decisions at the World Bank and the IDB. However, the United States cannot unilaterally veto more day-to-day decisions, such as individual loans. Congress plays an important role in authorizing and appropriating U.S. contributions to the MDBs and exercising oversight of U.S. participation in these institutions. For more details on U.S. policymaking at the MDBs, see CRS Report R41537, Multilateral Development Banks: How the United States Makes and Implements Policy , by [author name scrubbed] and [author name scrubbed]. Authorizing and appropriations legislation is required for U.S. contributions to the MDBs. The Senate Committee on Foreign Relations and the House Committee on Financial Services are responsible for managing MDB authorization legislation. During the past several decades, authorization legislation for the MDBs has not passed as freestanding legislation. Instead, it has been included through other legislative vehicles, such as the annual foreign operations appropriations act, a larger omnibus appropriations act, or a budget reconciliation bill. The Foreign Operations Subcommittees of the House and Senate Committees on Appropriations manage the relevant appropriations legislation. MDB appropriations are included in the annual foreign operations appropriations act or a larger omnibus appropriations act. In recent years, the Administration's budget request for the MDBs has included three major components: funds to replenish the concessional lending windows, funds to increase the size of the non-concessional lending windows (the "general capital increases"), and funds for more targeted funds administered by the MDBs, particularly those focused on climate change and food security. Replenishments of the MDB concessional windows happen regularly, while capital increases for the MDB non-concessional windows occur much more infrequently. Quite unusually, all the MDBs increased their non-concessional windows in response to the global financial crisis of 2008-2009 and the resulting increased demand for financing. As international organizations, the MDBs are generally exempt from U.S. law. The President has delegated the authority to manage and instruct U.S. participation in the MDBs to the Secretary of the Treasury. Within the Treasury Department, the Office of International Affairs has the lead role in managing day-to-day U.S. participation in the MDBs. The President appoints the U.S. Governors and Executive Directors, and their alternates, with the advice and consent of the Senate. Thus, the Senate can exercise oversight through the confirmation process. Over the years, Congress has played a major role in U.S. policy toward the MDBs. In addition to congressional hearings on the MDBs, Congress has enacted a substantial number of legislative mandates that oversee and regulate U.S. participation in the MDBs. These mandates generally fall into one of four major types. More than one type of mandate may be used on a given issue area. First, some legislative mandates direct how the U.S. representatives at the MDBs can vote on various policies. Examples include mandates that require the U.S. Executive Directors to oppose (a) financial assistance to specific countries, such as Burma, until sufficient progress is made on human rights and implementing a democratic government; (b) financial assistance to broad categories of countries, such as major producers of illicit drugs; and (c) financial assistance for specific projects, such as the production of palm oil, sugar, or citrus crops for export if the financial assistance would cause injury to United States producers. Some legislative mandates require the U.S. Executive Directors to support, rather than oppose, financial assistance. For example, a current mandate allows the Treasury Secretary to instruct the U.S. Executive Directors to vote in favor of financial assistance to countries that have contributed to U.S. efforts to deter and prevent international terrorism. Second, legislative mandates direct the U.S. representatives at the MDBs to advocate for policies within the MDBs. One example is a mandate that instructs the U.S. Executive Director to urge the IBRD to support an increase in loans that support population, health, and nutrition programs. Another example is a mandate that requires the U.S. Executive Directors to take all possible steps to communicate potential procurement opportunities for U.S. firms to the Secretary of the Treasury, the Secretary of State, the Secretary of Commerce, and the business community. Mandates that call for the U.S. Executive Director to both vote and advocate for a particular policy are often called "voice and vote" mandates. Third, Congress has also passed legislation requiring the Treasury Secretary to submit reports on various MDB issues (reporting requirements). Some legislative mandates call for one-off reports; other mandates call for reports on a regular basis, typically annually. For example, current legislation requires the Treasury Secretary to submit an annual report to the appropriate congressional committees on the actions taken by countries that have borrowed from the MDBs to strengthen governance and reduce the opportunity for bribery and corruption. Fourth, Congress has also attempted to influence policies at the MDBs through "power of the purse," that is, withholding funding from the MDBs or attaching stipulations on the MDBs' use of funds. For example, the FY2010 Consolidated Appropriations Act stipulates that 10% of the funds appropriated to the AsDF will be withheld until the Treasury Secretary can verify that the AsDB has taken steps to implement specific reforms aimed at combating corruption. The United States has historically played a strong leadership role at the MDBs, including key roles in creating the institutions and shaping their policies and lending to developing countries. Under a number of Administrations, the MDBs have been viewed as critical to promoting U.S. foreign policy , economic interests, and national security interests abroad, although various Administrations have had different views on the appropriate level of U.S. funding for the MDBs and policy reforms to improve the effectiveness of the MDBs. There are a number of MDB policy issues that Congress may consider during the 115 th Congress, particularly as it considers U.S. funding levels for the MDBs and confirmations for U.S. Governors and Executive Directors at the MDBs. Some of these issues are discussed below. U.S. funding for the MDBs may shift under President Trump, who campaigned on an "America First" platform and has signaled a reorientation of U.S. foreign policy. In March 2017, the Trump Administration proposed cutting $650 million over three years compared to the commitments made under the Obama Administration. In the FY2019 budget request, the Trump Administration requested a 20% cut ($354 million) from Treasury's international programs, which includes the multilateral development banks, compared to the amount enacted in FY2017. The bulk of the Treasury international programs request (over 90%) would fund U.S. commitments to concessional lending facilities at the MDBs. The request would provide $1.1 billion to IDA, compared to $1.2 billion in FY2017. It would also provide funding $47 million to the AsDF and $171 million to the AfDF, among other funding initiatives. In April 2018, the World Bank members, including the United States, endorsed a capital increase for the IBRD, which would require congressional legislation and appropriations to implement. This commitment is not reflected in the FY2019 budget request, but would require appropriations and authorization to implement. Congress sets U.S. fundi ng for the MDBs as part of the State and Foreign O perations authorization and appropriations process. There is a broad debate about the effectiveness of foreign aid, including the aid provided by the MDBs. Many studies of foreign aid effectiveness examine the effects of total foreign aid provided to developing countries, including both aid given directly by governments to developing countries (bilateral aid) and aid pooled by a multilateral institution from multiple donor countries and provided to developing countries (multilateral aid). The results of these studies are mixed, with conclusions ranging from (a) aid is ineffective at promoting economic growth; (b) aid is effective at promoting economic growth; and (c) aid is effective at promoting growth in some countries under specific circumstances (such as when developing-country policies are strong). The divergent results of these academic studies make it difficult to reach firm conclusions about the overall effectiveness of aid. Critics of the MDBs argue that they are international bureaucracies focused on getting money "out the door" to developing countries, rather than on delivering results in developing countries; that the MDBs emphasize short-term outputs like reports and frameworks but do not engage in long-term activities like the evaluation of projects after they are completed; and that they put enormous administrative demands on developing-country governments. Many of the MDBs were also created when developing countries had little access to private capital markets. With the globalization and the integration of capital markets across countries, some analysts have expressed concerns that MDB financing might "crowd out" private-sector financing, which developing countries now generally have readily accessible. Some analysts have also raised questions about whether there is a clear division of labor among the MDBs. Proponents of the MDBs argue that, despite some flaws, such aid at its core serves vital economic and political functions. With about 767 million people living on less than $1.90 a day in 2013 (most recent estimate available), they argue that not providing assistance is simply not an option; they argue it is the "right" thing to do and part of "the world's shared commitments to human dignity and survival." These proponents typically point to the use of foreign aid to provide basic necessities, such as food supplements, vaccines, nurses, and access to education, to the world's poorest countries, which may not otherwise be financed by private investors. Additionally, proponents of foreign aid argue that, even if foreign aid has not been effective at raising overall levels of economic growth, foreign aid has been successful in dramatically improving health and education in developing countries over the past four decades. Some analysts have also highlighted a number of reforms that they believe could increase the effectiveness of the MDBs. For example, it has been proposed that the MDBs adopt more flexible financing arrangements, for example to allow crisis lending or lending at the subnational level, and more flexibility in providing concessional assistance to address poverty in middle-income countries. There are also arguments that, as countries continue to develop, there need to be clearer guidelines on when countries should "graduate" from receiving concessional and/or non-concessional financial assistance from the MDBs. There has been debate about whether U.S. policymakers should prioritize bilateral or multilateral aid. Bilateral aid gives donors more control over where the money goes and how the money is spent. For example, donor countries may have more flexibility to allocate funds to countries that are of geopolitical strategic importance, but not facing the greatest development needs, than might be possible by providing aid through a multilateral organization. By building a clear link between the donor country and the recipient country, bilateral aid may also garner more goodwill from the recipient country toward the donor than if the funds had been provided through a multilateral organization. Providing aid through multilateral organizations offers different benefits for donor countries. By pooling the resources of several donors, multilateral organizations allow donors to share the cost of development projects (often called burden-sharing). Additionally, donor countries may find it politically sensitive to attach policy reforms to loans or to enforce these policy reforms. Multilateral organizations can usefully serve as a scapegoat for imposing and enforcing conditionality that may be politically sensitive to attach to bilateral loans. Additionally, because MDBs can provide aid on a larger scale than many bilateral agencies, they can generate economies of scale in knowledge and lending. Data from the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) show that in 2017, 14% of U.S. foreign aid disbursed to developing countries with the purpose of promoting economic and social development was provided through multilateral institutions, while 86% was provided bilaterally. In recent years, several countries have taken steps to launch two new multilateral development banks. First, Brazil, Russia, India, China, and South Africa (the BRICS countries) signed an agreement in July 2014 to establish the New Development Bank (NDB), often referred to as the "BRICS Bank." The agreement outlines the bylaws of the bank and a commitment to a capital base of $100 billion. Headquartered in Shanghai, the NDB was formally launched in July 2015. The BRICS leaders have emphasized that the bank's mission is to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies. Second, China has led the creation of the Asian Infrastructure Investment Bank (AIIB). Launched in October 2014, the AIIB focuses on the development of infrastructure and other sectors in Asia, including energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, urban development, and logistics. The AIIB currently has 66 members, and 21 prospective members. Members include several advanced European and Asian economies, such as France, Germany, Italy, the United Kingdom, Australia, New Zealand, and South Korea. The United States and Japan are not members. The AIIB's initial total capital is expected to be $100 billion. These two institutions are the first major MDBs to be created in decades, and there is debate about how they will fit in with existing international financial institutions. Proponents of the new MDBs argue that the infrastructure and financing needs of developing countries are beyond what can be met by existing MDBs and private capital markets, and that new institutions to meet the financing needs of developing institutions should be welcomed. Proponents also argue that the new MDBs address the long-held frustrations of many emerging markets and developing countries that the governance of existing institutions, including the World Bank and the IMF, has not been reformed to reflect their growing importance in the global economy. For example, the NDB has stressed that, unlike the World Bank and the IMF, each participant country will have equivalent voting rates and none of the countries will have veto power. Other analysts and policymakers have been more concerned about what the new MDBs could mean for the existing institutions and whether they will diminish the influence of existing institutions, where the United States for decades has held a powerful leadership. They point to an already crowded landscape of MDBs, and express concerns that new MDBs could exacerbate existing concerns about mission creep and lack of clear division of labor among the MDBs. Some analysts have also raised questions about whether the new institutions will adopt the best practices on transparency, procurement, and environmental and social safeguards of the existing MDBs that have been developed over the past several decades. Some analysts have also raised questions about why many emerging markets are top recipients of non-concessional financial assistance from the World Bank and regional development banks, if they have the resources to capitalize new MDBs. The Obama Administration initially lobbied several key allies to refrain from joining the AIIB. Ultimately, these lobbying efforts were largely unsuccessful, as several key allies in Europe and Asia, including the United Kingdom and South Korea, joined. The tone of the Obama Administration shifted, most notably during Chinese President Xi's visit to Washington in September 2015 when the White House emphasized that "the United States welcomes China's growing contributions to financing development and infrastructure in Asia and beyond." During the visit, Xi also reportedly committed that the AIIB would abide by the highest international environmental and governance standards. Xi also pledged to increase China's financial contributions to the World Bank and regional development banks, signaling its continuing commitment to existing institutions. Congress may want to exercise oversight of the Trump Administration's policy on and engagement with these new MDBs. Billions of dollars of contracts are awarded to private firms each year in order to acquire the goods and services necessary to implement projects financed by the MDBs. MDB contracts are awarded through international competitive bidding processes, although most MDBs allow the borrowing country to give some preference to domestic firms in awarding contracts for MDB-financed projects in order to help spur development. U.S. commercial interest in the MDBs has been and may continue to be a subject of congressional attention, particularly if the banks expand their lending capacity for infrastructure projects through the GCIs. One area of focus may be the Foreign Commercial Service (FCS) representatives to the MDBs, who are responsible for protecting and promoting American commercial interests at the MDBs. Some in the business community are concerned about the impacts of possible budget cuts to the U.S. FCS, particularly if other countries are taking a stronger role in helping their businesses bid on projects financed by the MDBs.
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Multilateral development banks (MDBs) provide financial assistance to developing countries in order to promote economic and social development. The United States is a member, and donor, to five major MDBs: the World Bank and four regional development banks, including the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank. The MDBs primarily fund large infrastructure and other development projects and provide loans tied to policy reforms by the government. The MDBs provide non-concessional financial assistance to middle-income countries and some creditworthy low-income countries on market-based terms. They also provide concessional assistance, including grants and loans at below-market rate interest rates, to low-income countries. The Role of Congress in U.S. Policy at the MDBs Congress plays a critical role in U.S. participation in the MDBs through funding and oversight. Congressional legislation is required for the United States to make financial contributions to the banks. Appropriations for the concessional windows occur regularly, while appropriations for the non-concessional windows are less frequent. Congress exercises oversight over U.S. participation in the MDBs, managed by the Treasury Department, through confirmations of U.S. representatives at the MDBs, hearings, and legislative mandates. For example, legislative mandates direct the U.S. Executive Directors to the MDBs to advocate certain policies and how to vote on various issues at the MDBs. Congress also has issued reporting requirements for the Treasury Department on issues related to MDB activities, and tied MDB funding to specific institutional reforms. Selected Issues for Congress U.S. Funding for the MDBs. U.S. funding for the MDBs may shift under President Trump. In March 2017, the Trump Administration proposed cutting $650 million over three years compared to the commitments made under the Obama Administration. However, in the spring of 2018, the Trump Administration pledged to support an expansion of the World Bank's non-concessional lending facility, the International Bank for Reconstruction and Development (IBRD). Congress sets U.S. funding for the MDBs as part of the annual state and foreign operations authorization and appropriations process. Effectiveness of MDBs. Critics argue that the MDBs focus more on "getting money out the door" than delivering results, are not transparent, and lack a clear division of labor. They also argue that providing aid multilaterally relinquishes U.S. control over where and how the money is spent. Proponents argue that providing assistance to developing countries is the "right" thing to do and has been successful in helping developing countries make strides in health and education over the past four decades. They also argue that the MDBs leverage funds from other donors, promote policy reforms in developing countries, and enhance U.S. leadership. Changing Landscape of the MDBs. Emerging markets have launched two new multilateral development banks: the Chinese-led Asian Infrastructure Investment Bank (AIIB) and the New Development Bank. The first major MDBs created in decades, questions have been raised how they will fit in with existing MDBs.
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Environmental issues have received growing attention in trade liberalization debates as trade agreements have broadened in scope, from primarily involving negotiations to reduce tariffs, to including negotiations on nontariff trade barriers. Congressional interest in addressing environmental concerns in trade agreements has extended to the debate over renewing the President's trade promotion authority (TPA). Trade promotion authority, also referred to as "fast-track" negotiating authority, provides that Congress will consider trade agreements within mandatory deadlines, with limited debate, and without amendment. To maintain its influence on the content of agreements negotiated by the President under TPA, Congress generally includes objectives in such legislation to establish priorities for negotiators and places congressional consultation requirements on the Executive Branch. Congress last provided TPA under the Omnibus Trade and Competitiveness Act of 1988 (OTCA, P.L. 100-418 ). In OTCA, environmental concerns were addressed only in negotiating objectives regarding trade in services and foreign direct investment. These provisions directed U.S. negotiators, in pursuing stated objectives, to take into account legitimate United States domestic objectives including, but not limited to, the protection of legitimate health or safety, essential security, environmental, consumer or employment opportunity interests and the law and regulations related thereto (19 U.S.C. §§ 2901(b)(9), (11)). Agreements entered into under this authority are the NAFTA and the 1994 Uruguay Round Agreements which included the establishment of the World Trade Organization (WTO). Although OTCA lacked specific environmental objectives, some environmental concerns were addressed in the NAFTA, its environmental side agreement, and certain Uruguay Round Agreements and Ministerial Decisions. This authority expired in 1994. Congressional consideration of the relationship between trade and environment has continued to grow. Efforts to renew TPA in the 104 th , 105 th and 106 th Congresses failed in large part because of disagreement over the inclusion of environmental and labor issues. The 107 th Congress gave unprecedented consideration to these issues, as the successful passage of TPA legislation became dependent in part on the treatment of environmental and labor issues. (For more information, see CRS Issue Brief 10084, Trade Promotion Authority (Fast-track Authority for Trade Agreements): Background and Developments in the 107 th Congress. ) The Trade Act of 2002 ( P.L. 107-210 , Title XXI) renews the President's Trade Promotion Authority. The Act covers trade agreements reached by June 1, 2005, with a two-year extension possible. The law lists overall and principal objectives in trade negotiations and priorities the President must promote to maintain U.S. competitiveness. Under provisions of the Act, agreements would have to make progress in meeting the negotiating objectives, and the President would have to satisfy the consultation and assessment requirements. The Trade Act also establishes a new congressional advisory body on trade negotiations called the Congressional Oversight Group. The 2002 Trade Act contains several environmental objectives and related provisions, and, overall, gives substantially greater consideration to environmental matters than did the Omnibus Trade and Competitiveness Act of 1988, under which fast-track procedures were last approved. The environment-related negotiating objectives and priorities included in the new law are discussed below. The law includes two overall negotiating objectives on environment. The first objective is "to ensure that trade and environmental policies are mutually supportive and to seek to protect and preserve the environment and enhance the international means of doing so, while optimizing the use of the world's resources." The second overall negotiating objective is to seek provisions in agreements under which parties "strive to ensure that they do not weaken or reduce the protections afforded in domestic environmental and labor laws as an encouragement for trade"(Sections 2102(a)(5) and (7)). This objective parallels language in the U.S.-Jordan Free Trade Agreement (FTA) and NAFTA (Chapter 11, Investment). Both of these trade agreements assert that it is inappropriate to encourage trade by relaxing domestic environmental laws and generally state that a party should not waive or otherwise derogate from such measures to attract investment. NAFTA, Article 1114, further provides that a party may request consultations if it considers that another party has done so. Environmental advocates had argued for such a trade negotiating objective to deter countries from weakening their environmental standards to promote a trade advantage. They further called for making such actions subject to dispute settlement procedures. Those who opposed this proposal expressed concern that, if this approach were taken, legitimate changes in domestic environmental measures could be subject to challenge by U.S. trading partners. Under the Trade Act, the overall negotiating objectives are not subject to dispute settlement procedures. The 2002 Trade Act also includes several principal negotiating objectives on environment (Section 2102(b)(11)). In contrast to the overall negotiating objectives, the principal negotiating objectives are subject to dispute settlement procedures. Perhaps most notably, the new law states that it is a principal negotiating objective "to ensure that a party to a trade agreement with the United States does not fail to effectively enforce its environmental or labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the United States and that party ... ." A related objective is to recognize that parties retain the right to exercise discretion with respect to prosecutorial, regulatory and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other environmental matters determined to have higher priorities. These two negotiating objectives mirror provisions contained in the U.S.-Jordan FTA and the NAFTA environmental side agreement. However, this latter objective goes further than the U.S.-Jordan FTA to clarify the rights of a government to establish its own levels of environmental protection by adding, "no retaliation may be authorized based on the exercise of these rights or the right to establish domestic labor standards and levels of environmental protection." Other principal negotiating objectives on environment contained in both bills and the final law include: (1) strengthening trading partners' capacity to protect the environment through the promotion of sustainable development; (2) reducing or eliminating government practices or policies that unduly threaten sustainable development; (3) seeking market access for U.S. environmental technologies, goods, and services; and (4) ensuring that environmental, health or safety policies or practices of the parties do not arbitrarily discriminate against U.S. exports or serve as disguised barriers to trade. The 2002 Trade Act sets forth other principal negotiating objectives that have implications for environmental laws and related disputes under trade agreements. These include the objectives on dispute settlement, foreign investment, transparency, and regulatory practices. The effectiveness of trade agreement obligations is related to the strength of an agreement's dispute settlement process. Environmental interests argued that environmental obligations should be included within trade agreements and that disputes involving these obligations should be treated the same as commercial disputes, including using the same remedies. Business interests and others favored flexibility in addressing various kinds of disputes. The Act parallels the U.S.-Jordan FTA and goes beyond NAFTA by calling for the inclusion within the texts of trade agreements of an obligation for parties to enforce their environmental laws. The dispute settlement objectives (Section 2102(b)(12)) direct negotiators to seek provisions that treat all U.S. principal negotiating objectives equally with respect to the ability to resort to dispute settlement, and to have available equivalent dispute settlement procedures and remedies. Thus, the law seeks to make all disputes equally subject to dispute settlement, but it provides flexibility in procedures and remedies. Investment provisions have become an environmental issue because of the types of claims that have been brought under the NAFTA investment provisions allowing foreign investors to arbitrate disputes with NAFTA parties. In some cases, foreign investors have sought compensation for the negative impacts of government environmental regulations, claiming that the government action is a form of "indirect expropriation" or is "tantamount to expropriation." NAFTA provides that compensation must be equal to the fair market value of the expropriated investment. These NAFTA provisions and related claims have prompted concerns by states and environmental groups that this language may dampen the enforcement of environmental regulations in signatory countries, and that foreign investors may have greater rights under the NAFTA with respect to expropriations by federal, state, or local government in the United States than domestic investors have under the Fifth Amendment Takings Clause. The new TPA provisions appear to address this concern to some degree. The principal negotiating objectives for investment (Section 2102(b)(3)) seek to reduce: trade-distorting barriers to foreign investment, while ensuring that foreign investors in the United States are not accorded greater substantive rights with respect to investment protections than United States investors in the United States, and to secure for investors important rights comparable to those that would be available under United States legal principles and practice. The investment objective calls for achieving these goals by seeking the establishment of "standards for expropriation and compensation for expropriation, consistent with United States legal principles and practice" and by "seeking to establish standards for fair and equitable treatment consistent with United States legal principles and practice, including the principle of due process." The Trade Act further calls for negotiators to seek to improve mechanisms used to resolve disputes between an investor and a government through: mechanisms to eliminate frivolous claims; procedures to enhance opportunities for public input into the formulation of government positions; and the establishment of an appellate body to "provide coherence to the interpretations of investment provisions in trade agreements." It calls for negotiators to ensure the "fullest measure of transparency" in investment disputes by: ensuring that requests for dispute settlement are made public promptly, ensuring that proceedings, submissions, findings and decisions are made public; and establishing a mechanism for accepting amicus curiae submissions from businesses, unions, and nongovernmental organizations. A provision in the Senate-passed bill, that was dropped in conference, would have directed the President to negotiate an amendment to Chapter 11 of the NAFTA to increase the transparency of Chapter 11 proceedings in specified ways, and would have required the U.S. Trade Representative to certify to the Congress within one year of enactment that the President has fulfilled these requirements. Environmental groups favored adding language in the investment objectives that would direct negotiators to seek provisions in trade agreements to limit expropriation provisions and otherwise protect legitimate environmental measures from challenge by foreign investors. Other stakeholders wanted to ensure checks are maintained against the potential for disguised or unfair barriers to foreign investment. Neither the House nor Senate bill called for negotiators to seek exceptions for environmental measures in the investment-related obligations of trade agreements. An amendment was offered in the Senate to require agreements to limit expropriation provisions, "including by ensuring that payment of compensation is not required for regulatory measures that cause a mere diminution in the value of private property" and to provide that environmental and health protection measures are generally consistent with an agreement. The failure of this and related proposals resulted in reduced support for the Trade Act by some in Congress. Various interests, including the Administration, environmental groups and others, have put a priority on increasing transparency (i.e., openness) in trade matters and increasing public access to the dispute resolution process. Environmental and business interests agree that greater openness would allow increased awareness of the possible impacts of trade decisions relevant to their concerns. The House and Senate bills contained identical provisions to increase public participation in trade matters, compared to current practice. Section 2102(b)(5) provides that a principal negotiating objective is to obtain wider application of the principle of transparency through: increased and more timely public access to information on trade issues and activities of international trade institutions; increased openness in the WTO and other trade fora, including with regard to dispute settlement and investment; and increased and more timely public access to all notifications and supporting documentation submitted by WTO parties. The law contains additional transparency provisions for the principal negotiating objective on investment. Further, with respect to transparency, the Trade Act includes a principal negotiating objective on regulatory practices, addressing the use of government practices to provide a competitive advantage for domestic producers, service providers, or investors. The goal of this provision is to lessen the use of regulations for the purpose of reducing market access for U.S. goods, services or investments. This objective calls for U.S. negotiators "to achieve increased transparency and opportunity for the participation of affected parties in the development of regulations" (Section 2102(b)(8)). Such an approach seemingly would benefit both environmental interests and U.S. business. Additionally, the objective is "to require that proposed regulations be based on sound science, cost-benefit analyses, risk assessment, or other objective evidence." The inclusion of this objective drew some criticism from environmental groups that called for language that would protect the ability of federal, state, and local governments to take precautionary measures against risks in cases where scientific or other knowledge may be suggestive but incomplete. However, proponents of the objective argued that, on the other hand, without such disciplines, regulations can too easily be used to create barriers to trade. In addition to negotiating objectives, the Trade Act requires the President to promote certain priorities "in order to address and maintain U.S. competitiveness in the global economy" (Section 2102(c)). The Senate Finance Committee report accompanying H.R. 3005 ( S.Rept. 107-139 ), explained that the priorities are not negotiating objectives themselves, but that they "should inform trade negotiations or be pursued parallel to trade negotiations." Among these priorities, the Act contains several environment-relevant provisions. Specifically, the President must: (1) seek to establish consultative mechanisms to strengthen U.S. trading partners' capacity to develop and implement standards for protecting the environment and human health based on sound science, and to report to the House Committee on Ways and Means and the Senate Committee on Finance; (2) conduct environmental reviews of trade and investment agreements, consistent with Executive Order 13141, and report to the House Committee on Ways and Means and the Senate Committee on Finance; (3) take into account other legitimate U.S. domestic objectives including the protection of legitimate health or safety interests and related laws and regulations; and (4) continue to promote consideration of multilateral environmental agreements (MEAs) and consult with parties to MEAs regarding the consistency of an MEA containing trade measures with existing environmental exceptions under the GATT. In general, the trade negotiating authority provided under the 2002 Trade Act addresses environmental concerns to an unprecedented degree, reflecting the evolving attention to the potential interconnections between trade liberalization and environmental quality and protection efforts. Nonetheless, the Act falls short of the environmental objectives that some Members and interest groups sought. While it is uncertain how the new environment-related objectives may inform trade negotiations during the next several years, it seems likely that the debate on how to address environmental issues in trade negotiations and TPA legislation will continue. Outcomes of investor-state disputes involving challenges to environmental measures may be particularly informative for future TPA deliberations.
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During the past decade, environmental issues have received increased attention in trade liberalization negotiations, and the question of how to address such concerns in trade agreements became a key issue in the debate over renewing the President's trade promotion authority (TPA). Under this authority, Congress agrees to consider trade agreements using expedited procedures and to vote up or down, with no amendments. With the Trade Act of 2002 (P.L. 107-210), Congress renewed the President's trade promotion authority. The Act includes more environment-related provisions than previous TPA legislation, and generally follows language contained in the North American Free Trade Agreement (NAFTA), its environmental side agreement, and the U.S.-Jordan Free Trade Agreement. The Act includes negotiating objectives that call for negotiators to ensure that parties do not fail to effectively enforce their environmental laws in a manner affecting trade, and to make such failures subject to dispute settlement. Another objective seeks language in trade agreements committing parties not to weaken environmental laws to attract trade. The Act also calls for greater openness in proceedings related to trade disputes. It does not include an objective to protect environmental measures from challenge by foreign investors, and consequently, the Act lost some support in Congress and from environmental groups. This report discusses the environment-related provisions of the new law. It will be updated as events warrant.
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Credit unions engage in financial intermediation , or facilitating transfers of funds back and forth between savers (via accepting deposits) and borrowers (via loans). Although other institutions (e.g., depository banks, insurance companies, pension funds, hedge funds) also engage in the financial intermediation matching process, this report focuses on issues facing the credit union industry. The original concept of a credit union was of a membership-owned cooperative organization formed for the purpose of promoting thrift among its members and providing them with a low-cost source of credit. Congress passed the Federal Credit Union Act of 1934 (FCU Act; 48 Stat. 1216) to create a class of federally chartered financial institutions for the purpose of "promoting thrift among its members and creating a source of credit for provident or productive purposes." Given the numerous bank failures and runs that occurred during the Great Depression, Congress wanted to enhance the ability of these cooperative organizations to meet the credit needs of their memberships, who were unable to obtain bank credit. The credit union industry has evolved with marketplace changes so that many of the financial services that credit unions provide are similar to those offered by banks and savings associations. Credit union charters are granted by federal or state governments on the basis of a "common bond." There are three types of charters: (1) a single common bond (occupation or association based); (2) multiple common bonds (more than one group each having a common bond of occupation or association); and (3) a community-based (geographically defined) common bond. Individual credit unions are owned by their memberships. The members of a credit union elect a board of directors from their institution's membership (one member, one vote). Given that credit unions are financial cooperatives that return profits to their memberships, members' savings are referred to as "shares" that earn "dividends" instead of interest. Credit union loan and investment powers are more restricted than those of commercial banks. Credit unions can only make loans to their members, to other credit unions, and to credit union organizations. The investment authority of federal credit unions is limited by statute to loans, government securities, deposits in other financial institutions, and certain other limited investments. The National Credit Union Administration (NCUA), an independent federal agency, is the federal regulator and share deposit insurer for credit unions. Typically, the Office of the Comptroller of the Currency (OCC) charters and supervises national depository (commercial) banks; the Federal Deposit Insurance Corporation (FDIC) provides deposit insurance and liquidates failed banks; and the Federal Reserve provides lender-of-last-resort liquidity to solvent banks via its discount window. The NCUA, by comparison, serves all three functions for federally regulated credit unions. The NCUA also manages the National Credit Union Share Insurance Fund (NCUSIF), which is the federal deposit insurance fund for credit unions. Numerous financial entities experienced distress during the 2007-2009 recession, including the credit union system. In response, the NCUA has adopted enhanced capital requirements for credit unions, which is intended to increase the resiliency of the credit union system to insolvency (failure) risk and to minimize possible losses to the NCUSIF and ultimately taxpayers. Some credit unions may need to curtail lending until they fully adjust to the increased requirements. In addition, Congress is considering legislation (e.g., H.R. 1188 and S. 2028 , the Credit Union Small Business Jobs Creation Act; H.R. 989 , the Capital Access for Small Business and Jobs Act) to enhance the lending ability of the credit union industry as part of its efforts to spur economic growth. H.R. 1422 and S. 1440 , the Credit Union Residential Credit Union Loan Parity Act, would amend the FCU Act to revise the statutory definition of member business loans, further enhancing the capacity of credit unions (satisfying the net worth capitalization requirements) to make more member business and commercial loans. These policies are discussed in this report. The balance sheet terminology defined in the box below will be used throughout this discussion. The credit union system, which largely facilitates residential and consumer lending, inherently faces financial risks, some of which were realized in the recent financial crisis. For example, the NCUA reported that the corporate credit unions faced liquidity pressures and placed five of them into conservatorship in 2008. Corporate credit unions operate as wholesale credit unions, meaning that they provide financing, investment, and clearing services for natural person (retail) credit unions, which interface directly with customers. The corporates accept deposits from, as well as provide liquidity and correspondent lending services to, retail credit unions. This reduces the costs that smaller institutions would bear individually to perform various financial transactions for members. Given that retail credit unions are cooperative owners of corporate credit unions, they are also federally insured by the NCUA. The NCUA chairman reported that the five corporates under conservatorship had represented approximately 70% of the entire corporate system's assets and 98.6% of the investment losses within the system at that time. A Temporary Corporate Credit Union Stabilization Fund (TCCUSF) was established by Congress in May 2009 to accrue and recover losses from the corporate credit unions. The TCCUSF borrowed from Treasury to help cover the costs of conservatorship, and the NCUA also raised assessments on all federally insured credit unions, including those that did not avail themselves of corporate credit union services. Credit unions, like all financial institutions, are susceptible to the usual risks associated with lending or the financial intermediation process. Safety and soundness regulation includes the requirement to hold sufficient capital reserves, which is intended to reduce the insolvency (failure) risk of financial institutions. Although higher capital requirements may not prevent adverse financial risk events from occurring, more capital enhances the ability of financial firms to absorb greater losses associated with potential loan defaults. The enhanced absorption capacity may strengthen public confidence in the soundness of these financial institutions and increase their ability to function during periods of financial stress. In May 2012, the NCUA issued a Supervisory Letter regarding large concentrations of 30-year traditional fixed rate mortgage loans held in portfolio by some credit unions, which could develop into an adverse financial event in the future. Credit unions that made large amounts of mortgage loans during the current low interest rate environment could find themselves receiving lower amounts of revenue relative to what may be necessary to pay share depositors if interest rates increase in the future. Furthermore, the interest rate risk may grow into a systemically important crisis or "too many to fail" event if numerous credit unions simultaneously became insolvent. The NCUA guidance requires vulnerable credit unions to submit plans outlining the measures that will be taken to reduce or manage interest rate risks. On January 23, 2014, the NCUA announced increases in capital requirements for a subset of natural person credit unions that will be designated as complex . A complex credit union was initially defined by NCUA to have at least $50 million in assets. On January 27, 2015, the NCUA revised the initial proposed rule, amending the definition of a complex credit union as having at least $100 million in assets. On October 29, 2015, the NCUA finalized the risk-based capital rule. Some of the specific requirements of the rule include the following: A new asset risk-weighting system is introduced and would apply to complex credit unions, and it will be more consistent with the methodology used for U.S. federally insured banking institutions. A new risk-based capital ratio (defined using the narrower risk-based capital measure in the numerator and total risk-weighted assets, which are computed using the new risk-weighting system, in the denominator) of 10% is now required for complex credit unions to be well-capitalized under the prompt corrective action supervisory framework. The risk-based capital ratio is designed to be more consistent with the capital adequacy requirements commonly applied to depository (banking) institutions worldwide. Complex credit unions must comply with the risk-based capital ratio requirements as well as the existing statutory 7% net-worth asset net worth ratio by January 1, 2019, to avoid NCUA supervisory enforcement actions. Non-complex credit unions with assets below $100 million would not be required to comply with the new risk-weighting system, and they would no longer be required to risk-weight their assets. Instead, non-complex credit unions must comply with the existing statutory 7% net-worth asset ratio. According to the NCUA, 1,455 credit unions (or 22% of all credit unions) reported having at least $100 million in total assets as of December 31, 2013, representing 89% of all assets held in the credit union system; 19 of those institutions would need to raise capital to avoid being undercapitalized. The ability of undercapitalized credit unions to continue lending would arguably be constrained until they become compliant with the higher capital buffer requirements. There was no commercial lending cap on the amount of member business loans that credit unions could make until 1998. In response to a Supreme Court decision, Congress passed the Credit Union Membership Access Act of 1998 (CUMAA; P.L. 105-219 ), which among other provisions, established a commercial lending cap. First, the CUMAA codified the definition of a credit union member business loan (MBL). An MBL is any loan, line of credit, or letter of credit used for an agricultural purpose or for a commercial, corporate, or other business investment property or venture. Second, the CUMAA limited the aggregate amount of outstanding business loans to one member or group of associated members to a maximum of 15% of the credit union's net worth or $100,000, whichever is greater. Third, the CUMAA limited the aggregate amount of MBLs made by a credit union to the lesser of 1.75 times the credit union's actual net worth or 1.75 times the minimum net worth amount required to be well-capitalized under the prompt corrective action supervisory framework. Finally, three exceptions to the credit union aggregate MBL limit were authorized for (1) credit unions that have low-income designations or participate in the Community Development Financial Institutions program; (2) credit unions chartered for the purpose of making business loans (as determined by the NCUA); and (3) credit unions with a history of primarily making such loans (as determined by the NCUA). Legislation has been introduced in the 114 th Congress that would allow credit unions to enhance their member business lending activities. H.R. 1188 , the Credit Union Small Business Jobs Creation Act, was introduced on March 2, 2015; the companion bill, S. 2028 , was introduced on September 10, 2015. H.R. 1188 and S. 2028 , would amend the Federal Credit Union Act (particularly 12 U.S.C. 1757) to gradually increase the current business lending cap to 27.5% of the total assets of the credit union from the current 1.75 times of the actual net worth or 12.25% of the total assets, whichever is less. The bills would also require credit unions that make MBLs to have net worth and risk-based capital ratios that satisfy the requirements to be well capitalized . In addition, a credit union would need to demonstrate a minimum of five years of experience of sound underwriting and servicing of member business loans. Although the volume of credit union member business lending has increased over time, member business loans continue to account for a small share of lending in the credit union system. In other words, the total amount of MBLs provided by the credit union system may be constrained by the current cap. Credit unions collectively provided a total of $43.42 billion of MBLs in 2013, which equaled 4.08% of total credit union assets; approximately 85% of MBLs were secured by real estate, with some credit unions heavily concentrated in agricultural loans. If the MBL cap were raised, smaller credit unions attempting to originate and increase their holdings of MBLs in portfolio would have to increase their net worth holdings substantially, which arguably would be challenging if the membership base is small. Small credit unions typically offer a limited range of services, such as a few savings products and specialized consumer lending products such as (subprime) personal and automobile loans. These credit unions would be unlikely to increase their presence in the commercial lending market substantially because it would not be cost effective for them to invest in the necessary underwriting systems for the volume of commercial lending that they would feasibly be able to do. Hence, credit unions with assets under $10 million would be less likely to become more substantial providers of MBLs. By contrast, increasing the MBL cap would benefit credit unions that already enjoy a presence in the commercial lending market or a sufficiently large asset base. Lifting the MBL cap would allow credit unions already operating close to the current statutory limit to increase their presence in the commercial lending market. These credit unions may also already have the capacity to offer a broader range of consumer financial products and services. Some of the larger credit unions, therefore, could become more important competitors with small community banks as well as some midsize and regional banks. Although the ability to originate and keep large loans in portfolio until fully repaid is highly dependent upon the size of a credit union, the credit union system as a whole can support increased member business lending by increasing its use of participation (syndicated) loans . Loan participations are used by financial institutions to provide credit jointly. A loan originator, who often structures the loan participation arrangement, typically retains the largest share of the loan and sells smaller portions to other institutions. This practice allows the originator to maintain control of the customer relationship (including the loan servicing) and overcome funding limitations. In addition, all of the institutions involved in the participation loan use their individual portions of the loan to diversify their asset (loan) portfolios, which can be a cost-effective financial risk management tool. Only credit unions with MBL programs are allowed to enter into MBL loan participations given that all participants must have the ability to and are responsible for performing underwriting due diligence. Since 2007, the number of credit unions purchasing loan participations increased 15%, and the dollar value of loan participations on credit unions' balance sheets grew by more than 40%. If the MBL cap is raised, then both small and large institutions may purchase portions of these loans and distribute the risk throughout the system, similar in practice to how the banking industry distributes its risks. The credit union system could, therefore, become a more prominent competitor with the banking system in commercial lending markets. Proceeds from the National Credit Union Share Insurance Fund are used to pay share depositors if member institutions fail. In the event of many simultaneous credit union failures, the risk of insolvency of the NCUSIF increases and may require congressional action to replenish the fund. Credit unions can be particularly vulnerable to failure, given that their membership affiliations are restricted to a particular industry or geographical area that could be disproportionately affected by an adverse economic event. For example, an increase in unemployment that is concentrated in a particular industry or geographical location may trigger numerous loan defaults if such an event adversely affects the majority of a credit union's membership. Increasing the lending cap arguably may allow the credit union system to increase its MBL holdings, possibly resulting in more diversification. If, however, participation lending were to become a more customary practice used to finance MBLs, then losses on loan participations could also pose a "too many (small institutions) to fail" risk to the NCUSIF, given that multiple credit unions are involved in the lending arrangements. The NCUA also reported that participation loan charge-offs increased by more than 160% over the same period that credit unions increased their purchases of participation loans. The NCUA has subsequently provided more rules for participation loans to mitigate risks to the NCUSIF while still attempting to maintain the viability of this diversification tool for individual credit unions. On July 1, 2015, the NCUA proposed updates to the MBL rules to remove "prescriptive" requirements and adopt "principles" based approach. The prescriptive approach required credit unions that wanted to originate MBLs to submit waivers to NCUA for approval, among other requirements. The NCUA reported that the prescriptive approach took significant time and resources from both credit unions and NCUA, resulting in delays in processing MBL applications. The principles approach, by contrast, is intended to streamline the MBL underwriting process by granting credit unions more flexibility and individual autonomy. Credit unions are still expected to comply with prudential underwriting practices and commensurate net worth requirements. Furthermore, credit unions with a concentration in commercial lending in access of 50% of their total assets will be required to hold higher amounts of net worth to abate the higher levels of concentration risk. In light of the greater autonomy associated with the principles based approach, the NCUA also provided more detailed guidance for distinguishing between commercial loans and MBLs to help credit unions better determine which loans to count toward the MBL cap. Despite the distinguishing features, the net worth requirements for both commercial and MBLs would still be identical. H.R. 1422 and S. 1440 , the Credit Union Residential Credit Union Loan Parity Act, would amend the FCU Act to revise the statutory definition of MBLs, further enhancing the capacity of credit unions (satisfying the net worth capitalization requirements) to make more MBLs and commercial loans. The MBL cap is not the only policy tool that can be used to influence the lending ability of the credit union industry. From an economics perspective, a lending cap imposes an arbitrary limit that may be too high for some credit unions and too low for others, thus resulting in MBL shortages in the latter situations. For those credit unions that provide very few or no MBLs, a cap is irrelevant. Those credit unions facing an active MBL market must abruptly cease this type of lending when the volume of activity reaches the cap, which some may argue is set "too low," given that they can no longer satisfy the financial needs of their memberships. Hence, a lending cap is arguably a blunt instrument to the extent that it imposes the same requirement on all institutions without taking into account differences in asset size and market purview. Policy tools with a greater focus on the costs to originate MBLs would still impose restraints on credit unions without directly capping their lending ability. For example, increasing the asset risk weights for MBLs imposes costs without resulting in an abrupt discontinuation of this activity for those credit unions approaching the cap. As previously discussed, the NCUA has narrowed the definition of net worth and introduced a risk-weighting system, which is more consistent with the capital adequacy requirements used by the banking system. Another policy tool having a similar effect would subject the net income derived from member business lending activities (particularly for credit unions over a certain asset size) to unrelated business income tax (UBIT) for tax-exempt organizations. In short, policy tools that operate through cost disincentives instead of quantity restrictions (at a fixed level) may still allow those credit unions with a presence in this market to increase their member business lending activity. In addition to revising policies associated with member business lending, other legislative actions have been introduced in the 114 th Congress to facilitate credit union lending, discussed below. Because credit unions do not issue common stock equity, they do not have access to capital sources beyond retained earnings. Hence, if alternative sources of capital, referred to as supplemental capital, can be used in addition to retained earnings (net worth), then credit unions would be able to increase their lending while remaining in compliance with their safety and soundness net worth requirements. An NCUA working group has developed three general sources of supplemental capital, all of which would be repaid in the event of the liquidation of an insolvent credit union and after reimbursement of the NCUSIF. Credit unions could raise voluntary patronage capital (VPC) if (non-institutional) members of a credit union were to purchase "equity shares" in the organization. VPC equity shares would pay dividends; however, a VPC investor would not obtain any additional voting rights, and no investment would be allowed to exceed 5% of a credit union's net worth. mandatory membership capital (MMC) if a member pays what may be conceptually analogous to a membership fee. MMC capital would still be considered equity for the credit union but, unlike VPC, it would not accrue any dividends. subordinate debt (SD) from external and institutional investors. SD investors would have no voting rights or involvement in the management affairs of a credit union. SD would function as a hybrid debt-equity instrument, meaning that the investor would simply be a creditor with no equity share in the credit union while it is solvent and would not be repaid principal or interest should the credit union become insolvent. SD investors must make a minimum five-year investment with no option for early redemption. Net worth for credit unions is defined in statute; therefore, Congress would need to take legislative action to permit other forms of supplemental capital to count toward their net worth requirements. H.R. 989 , the Capital Access for Small Business and Jobs Act, referred to the House Committee on Financial Services on February 13, 2015, would redefine net worth for credit unions to include additional sources of supplemental capital in a manner consistent with the three forms discussed in the NCUA white paper. H.R. 989 may arguably complement bills H.R. 1188 and S. 2028 , but these bills are not dependent upon concurrent enactment. H.R. 989 would allow credit unions to increase all types of lending (including MBLs) as long as overall net worth, which would then be able to include supplemental capital, grows proportionately. The Federal Home Loan Bank (FHLB) System provides secured loans to banks, credit unions, and insurance companies engaged in housing finance as well as in agricultural and small business lending. Membership in the FLHB System generally requires institutions to hold at least 10% of their total assets in mortgage-related assets. Co mmunity financial institutions , however, are exempt from this eligibility requirement. According to the Federal Home Loan Bank Act (FHLB Act; P.L. 72-304, 47 Stat.128), community financial institutions are defined as having less than $1 billion in assets and deposits insured by the Federal Deposit Insurance Corporation (FDIC). This definition allows for some small banks, particularly those designated by the U.S. Treasury as Community Development Financial Institutions (CDFI), to qualify for the exemption; but it excludes NCUA-insured credit unions. H.R. 2642 and its companion, S. 1491 , the Community Lender Regulatory Relief and Consumer Protection Act of 2015, along with H.R. 299 , the Capital Access for Small Community Financial Institutions Act of 2015, would amend the FHLB Act to require the treatment of a state-chartered credit unions as insured depository institutions, among other things; thus making it possible to harmonize FHLB membership requirements for small banks and credit unions. In addition, H.R. 2473 , Preserving Capital Access and Mortgage Liquidity Act of 2015, would redefine community financial institution to include either a federal or state credit union. The House passed H.R. 299 on April 13, 2015, and its language was included in an amendment to H.R. 22 , the Surface Transportation Reauthorization and Reform Act of 2015, which was passed in the House on November 5, 2015. S. 1484 , the Financial Regulatory Improvement Act of 2015, and S. 1910 , the Financial Services and General Government Appropriations Act, 2016, also contain language similar to H.R. 299 . Community banks, which are commonly defined as financial institutions that hold less than $1 billion in assets, are arguably similar to credit unions with respect to their business models. For example, community banks and credit unions engage in "relationship banking," which involves developing close familiarity with their respective customer bases. Community banks typically provide financial services within a circumscribed geographical area. The development of close relationships helps community banks understand idiosyncratic lending risks in their local areas that may not be easily understood using a computerized underwriting methodology. Similarly, credit unions provide financial services to their restricted memberships. The development of close relationships helps credit unions tailor product offerings to their unique memberships. Both credit unions and community banks also rely primarily upon deposits to fund their assets (loans). In other words, community banks and credit unions borrow primarily from their depositors to obtain the funds necessary to provide customer loans rather than from the short-term financial markets that the larger banking institutions access more frequently. This section discusses some similarities among and differences between credit unions and community banks. Both industries serve similar types of consumer markets, and larger institutions appear to enjoy some advantages relative to their smaller counterparts. There are some regulatory differences in fair lending and taxation between credit unions and banks. These differences may be less important for small credit unions and small banks that operate in very narrowly defined markets, as discussed below. By contrast, both the credit union and banking industries are experiencing similar consolidation trends. Membership size and the ability to offer a full range of financial services may ultimately explain any comparative advantages that large credit unions (and large banks) enjoy relative to small credit unions and small banks. These issues are examined below. Differences in Fair Lending Requirements Congress enacted the Community Reinvestment Act of 1977 (CRA; P.L. 95-128 ) in reaction to perceptions that banks were not sufficiently addressing the credit needs of low- and moderate-income (LMI) neighborhoods. The CRA requires that federal banking regulatory agencies evaluate how regulated institutions meet the credit needs of their entire communities. No statutorily set rules are imposed; banking institutions, however, typically receive CRA credits after providing LMI loans (subject to existing federal prudential regulations for safety and soundness) or other financial retail services in their communities. CRA credits become important when a bank seeks permission from its regulator to move offices or to merge with another financial institution. Credit unions are not subject to the CRA. Given that banks may accept deposits from all individuals in a community, CRA provides them with a reciprocal obligation to meet credit needs, as much as possible, of their communities at large. CRA credits are useful to banks when they apply for charters, branches, mergers, acquisitions, and other applications that require approval from their regulators. By contrast, credit unions are not awarded credits that would allow them to expand beyond the common bonds defined in their membership charters. Instead, a credit union may add an underserved area in its field of membership and provide financial services in that designated area. If, however, the CRA did apply to credit unions, some of them may enjoy a competitive advantage in terms of achieving its policy goals, particularly if their membership consists predominately of minority groups and the credit unions' financial services can be tailored to these groups. Not-for-profit institutions generally may enjoy a cost advantage providing higher risk, unsecured loans at lower rates and fees relative to for-profit banks. In other words, credit unions seek to make enough money to continue operating their organizations, but they are not necessarily incentivized to make a return for equity investors. For example, a credit union affiliated with a faith-based organization that specializes in small-dollar lending may find it less costly (relative to banks or larger credit unions) to devote resources to monitor the repayment patterns of a small group of borrowers that might otherwise remain unbanked or underbanked. Low-cost payday lending to individuals and micro-business lending, which is the granting of small loans between $500 and $35,000 to small businesses with 5 or fewer employees, have been viable businesses for some credit unions. Thus, smaller financial institutions generally may enjoy cost advantages to provide services to riskier consumer markets, and such advantages may be even greater for small not-for-profit credit unions. As of 2012, there were 180 banking institutions with minority ownership; 150 of them would be considered community banks with assets less than $1 billion. In contrast, there were 809 credit unions with over 50% minority membership as of 2012. Differences in Tax Treatment Given that credit unions are not-for-profit financial cooperatives, the institutions are exempt from federal income tax. Share deposit holders pay taxes at individual tax rates when they receive interest (referred to as "dividends") on their share deposits, as do bank equity shareholders; but the credit union does not pay taxes at the corporate level. Some credit unions, however, may still pay unrelated business income tax (UBIT) for tax-exempt organizations. For example, if a credit union were to provide financial services (e.g., check-cashing) to non-members, any revenue generated from those activities would be subject to UBIT. Community banks are for-profit financial institutions that may accept deposits and provide lending services without any restrictions on their customer base. Community banks generally are publicly owned and issue common equity shares, so their depositors do not necessarily have to be equity shareholders. Community banks generally pay taxes at the corporate level and the shareholders pay taxes on their equity dividends at the individual tax rates; thus, the corporate profits are taxed twice. In 1997, however, small banks meeting eligibility requirements were allowed to become "S corporations," meaning that their income is taxed only once (at the individual income tax rates). As of 2013, the FDIC reported that 2,210 insured banking institutions were organized as S corporations; thus, these institutions are taxed in a manner similar to credit unions. Small banks organized as S corporations would not experience a tax disadvantage relative to credit unions. The difficulty of converting to an S corporation increases for larger banks if much of their equity is held in Individual Retirement Accounts, which are not allowed to hold equity in S corporations. The difference in tax treatments of credit unions and banks that are not organized as S corporations would need to be determined on a case-by-case basis. As previously noted, a necessary first step would be to determine the nature of competition. For example, the difference in the tax treatment of a faith-based credit union offering a very limited range of financial services is likely to have a negligible impact on the activities of a nearby community bank. A large credit union able to offer a full range of financial services to a regional or national market, however, may arguably benefit from the difference in tax treatment relative to banking institutions of similar sizes that serve similar markets. The nature of competition in terms of size and market, therefore, determines whether a cost advantage exists. Similarities in Consolidation Trends Using data from the NCUA, Figure 1 illustrates the total number and total asset holdings of U.S. credit unions over the 2003 to 2012 period. Total credit union assets have risen while the total number of credit unions has been shrinking over time. Credit union assets increased from $610.1 billion in 2003 to $1,021.7 billion by 2012. The total number of credit unions, however, declined from 9,369 to 6,819 over the same period. Furthermore, industry assets are not evenly distributed. The largest 197 credit unions with over $1 billion in assets held 51.2% of total industry assets in 2012 compared with the 29.4% share held in 2003. Loan and membership growth rates were positive for credit unions with assets exceeding $100 million; the highest growth rates were observed for institutions with $500 million or more in assets. By contrast, institutions with $100 million or less in assets saw negative loan growth; institutions with less than $10 million in assets also saw negative membership growth. These trends are similar to the consolidation trends observed in the depository banking system. For the sake of comparison, Figure 1 also includes the total number and assets of community banks. As of 2012, there were approximately the same number of community banks and credit unions, 6,421 and 6,819, respectively. The community banks, however, collectively had approximately $400 billion or 37.3% more in assets than the credit union industry. When compared with credit unions of similar size (less than $1 billion in total assets), community banks collectively have approximately $904 billion or 181.7% more in assets. Hence, the assets of most credit unions are on average much less than the assets of most community banks. Although community banks collectively have more aggregate assets relative to the entire credit union industry, total credit union assets in Figure 1 appear to have slightly greater trend growth relative to the total assets of community banks. This trend is driven by growth of the large credit unions, which are holding a greater share of industry assets over time. On November 5, 2011, which became known as Bank Transfer Day, thousands of consumers moved their (deposit) accounts to credit unions due to their frustration with large bank fees. Based upon the trends in asset and membership growth, the migration of customers from (large) banks appears to have benefitted larger credit unions able to offer more financial services relative to small credit unions or small banks (with less than $1 billion in assets). Regulatory differences that are unrelated to safety and soundness may also present comparative advantages, particularly for smaller institutions. For example, recent restrictions placed on the amount of debit interchange fees that can be collected by large banks and credit unions may reduce revenues that could be used to cross subsidize some of the costs associated with providing other financial services, thus creating a competitive advantage for institutions not covered by the regulation. Differences in the reporting requirements related to consumer protection regulations may create cost advantages for smaller financial institutions, especially those that provide services to financially riskier customers. By contrast, compliance with various or a multitude of regulations may place a higher cost burden on small institutions relative to those with size and transaction volume advantages, which generate substantial fee revenue for larger institutions. Hence, regulations that provide cost advantages for one set of financial firms may be offset by cost advantages generated by other regulations that favor another set of financial institutions.
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Credit unions make loans to their members, to other credit unions, and to corporate credit unions that provide financial services to individual credit unions. There are statutory restrictions on their business lending activities, which the credit union industry has long advocated should be lifted. Specific restrictions on business lending include an aggregate limit on an individual credit union's member business loan balances and on the amount that can be loaned to one member. Industry spokespersons have argued that easing the restrictions on member business lending could increase the available pool of credit for small businesses. Credit unions also lack sources of capital beyond retained earnings, and alternative supplemental capital sources would allow them to increase their lending while remaining in compliance with safety and soundness regulatory requirements. Community bankers, who often compete with credit unions, argue that policies such as raising the business lending cap would allow credit unions to expand beyond their congressionally mandated mission and could pose a threat to financial stability. Members of the 114th Congress have introduced legislation that would allow credit unions to expand their lending activities. H.R. 989, the Capital Access for Small Business and Jobs Act, was introduced and referred to the House Committee on Financial Services on February 13, 2015. H.R. 989 would redefine net worth for credit unions to include additional sources of supplemental capital. In addition, H.R. 1188 and its companion bill, S. 2028, the Credit Union Small Business Jobs Creation Act, would raise the current member business lending cap. H.R. 1422 and S. 1440, the Credit Union Residential Credit Union Loan Parity Act, would amend the FCU Act to revise the statutory definition of member business loans, further enhancing the capacity of credit unions (satisfying the net worth capitalization requirements) to make more member business and commercial loans. On April 13, 2015, the House-passed H.R. 299, the Capital Access for Small Community Financial Institutions Act of 2015, would amend the Federal Home Loan Bank (FHLB) Act to require the treatment of state-chartered credit unions as insured depository institutions, among other things; thus making it possible to harmonize FHLB-membership requirements for small banks and credit unions. The House included the language of H.R. 299 in an amendment to H.R. 22, the Surface Transportation Reauthorization and Reform Act of 2015, as passed on November 5, 2015. S. 1484, the Financial Regulatory Improvement Act of 2015, and S. 1910, the Financial Services and General Government Appropriations Act, 2016, also contain language similar to H.R. 299. Small memberships limit the range of financial services that small credit unions can offer as well as their ability to accumulate enough retained earnings (capital) to substantially increase their commercial lending activities. Thus, the benefits to credit unions from legislative actions to enhance their lending ability may be greater for larger institutions. Larger credit unions, with the resources to offer a wide array of financial services to members, would also be expected to become more significant competitors with community banks operating in similar lending markets. Competition between credit unions and commercial banks, particularly those with over $1 billion in assets, would be expected to intensify. Although total assets and membership in the credit union industry have risen over the past decade, the total number of credit unions has declined. The industry's assets are not evenly distributed. Some differences in credit union and bank regulation are unlikely to account for the competitive advantages that large credit unions enjoy relative to their smaller counterparts. These observations mirror the consolidation trends observed in the depository banking industry and are discussed in greater detail in the Appendix.
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A patent is an intellectual property right granted by the federal government to an inventor to exclude others from making, using, or selling the invention for a limited time, in exchange for public disclosure of the invention. Article I, Section 8, clause 8 of the U.S. Constitution grants Congress the authority to offer this protection to patent holders. Patent infringement is the unauthorized making, using, offering for sale, selling, and importing of a patented invention. The patent provides the patent holder with the right to protect against such infringement by suing for relief in the appropriate federal court. Such relief may include an injunction to halt the patent infringement or an award of damages to compensate for any harm. Because patents are exclusively governed by federal law, federal district courts have original jurisdiction in all civil cases relating to patents. The U.S. Court of Appeals for the Federal Circuit has jurisdiction over appeals from district court decisions. The amount of patent infringement litigation has substantially increased during the last decade. Some commentators believe that the possibility of a large financial award together with the minimal information required to bring a patent infringement claim has encouraged abuses of the patent system in courts by "patent trolls." However, others believe that the information required by the patent infringement complaint is sufficient to provide notice to the defendant of the pending claims, reserving the disclosure of more detailed information for the discovery stage of litigation. Recently introduced patent reform legislation seeks to minimize abuses with, among other provisions, changes to pleading requirements for a patent infringement claim. This report will discuss the rules and procedure for initiating a patent infringement claim in federal court. The discussion will focus on the level of detail necessary for a patent infringement complaint. The report will then conclude with several legislative proposals during the 112 th and 113 th Congresses addressing patent infringement pleadings and litigation by "patent trolls." Patent infringement cases begin with the filing of a complaint by a party seeking relief in federal court. Federal courts follow the Federal Rules of Civil Procedure, which dictate the different steps parties must complete in order to move through the litigation process. Rule 8 of the Federal Rules of Civil Procedure requires a complaint to contain a statement showing a claim for relief and the grounds for the court's jurisdiction. The complaint must also contain sufficient information to satisfy Rule 12(b)(6). This rule permits defendants to make a motion to dismiss a case if the plaintiff has failed to state a claim, for which relief could be granted, in the complaint. Because litigation is a costly and lengthy process, courts need the ability, in the beginning of the process, to dismiss any frivolous claims that do not have the possibility of resulting in any relief for either party. For assistance in satisfying these rules, attorneys often rely on the sample forms provided in the appendix of the Federal Rules of Civil Procedure as models for their complaints. Form 18 provides a model for a "Complaint of Patent Infringement." According to this form, a complaint for patent infringement must include four statements asserting jurisdiction, patent ownership, patent infringement by the defendant, and demand for relief. Form 18 does not demand a specific level of particularity for these statements. Courts have interpreted Rule 8 to require complaints to include only "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests" rather than fully developed allegations at this stage of the pleadings. This approach is described as the "notice pleading" standard, emphasizing the primary purpose of complaints as notifying parties of the general issues of the case. In 2007 and 2009 decisions, the U.S. Supreme Court articulated a higher standard of particularity for complaints: the plausibility standard. In Bell Atlantic Corporation v. Twombly and Ashcroft v. Iqbal , the U.S. Supreme Court held that federal courts must evaluate the "plausibility of claims" made at the pleading stage when determining whether a civil complaint should survive a motion to dismiss for failure to state a claim. In Bell Atlantic Corporation v. Twombly, the plaintiffs' complaint alleged that the defendants violated the Sherman Antitrust Act. The complaint included only circumstantial evidence from which anti-competitive behavior could be inferred but not any details supporting an actual conspiracy in violation of the act. The defendants brought a Rule 12(b)(6) motion to dismiss the plaintiffs' complaint for failure to state a claim. The defendants alleged that the facts in the complaint addressed only one piece of evidence and not the entire claim of violating Section 1 of the Sherman Antitrust Act. The U.S. Supreme Court held that an antitrust complaint must provide "enough factual matter (taken as true) to suggest that an agreement was made" in violation of the Sherman Antitrust Act. This holding introduced a plausibility standard, for at least antitrust complaints, requiring the complaint to allege sufficient facts so that the claim appears "plausible." After Twombly , lower federal courts disagreed as to whether this decision applied the heightened pleading standard, the plausibility standard, to all complaints. However, the U.S. Supreme Court in a 2009 decision, Ashcroft v. Iqbal, clarified and affirmed that the plausibility standard applied to all civil complaints. In this case, the defendants also made a Rule 12(b)(6) motion to dismiss the claim. The plaintiff's complaint outlined facts intending to show unlawful discrimination by high-ranking government officers. However, the U.S. Supreme Court held that the plaintiff failed to plead sufficient facts to state a claim for unlawful discrimination as a recitation of the facts does not show that the defendants' policy was plausibly discriminatory. In its opinion, the U.S. Supreme Court reasserted the heightened "plausibility" pleading. According to the Court, "to survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face.'" Despite the Twombly and Iqbal holdings, the level of particularity regarding information in the patent complaint, specifically Form 18, is a frequent issue before the courts. Some courts and commentators have assumed that that the heightened plausibility pleading standard applies to all federal civil cases. However, others have argued that the heightened pleading standard does not apply to patent infringement claims. Defendants in patent infringement cases can file a motion to dismiss the entire case by alleging that the complaint does not provide sufficient information to state a valid claim for patent infringement. However, two recent Federal Circuit cases have held that Form 18 requires sufficient information to survive a Rule 12(b)(6) motion to dismiss for failure to state a claim. In McZeal v. Spring Nextel Corp., the defendant argued that the patent infringement complaint failed to explain how its product infringed the plaintiff's patent. The complaint named the patent and the allegedly infringing defendant's device but did not explain how that device operated to infringe the patent. The Federal Circuit, however, found that a patent infringement complaint is not required to describe the relationship between each element of the claim and the infringing device. Specific information such as this "is something to be determined through discovery." In a more recent case, K-Tech Telecommunications v. Time Warner Cable, the defendants moved to dismiss the patent infringement complaint on the grounds that it did not sufficiently state a claim under the Federal Rules of Civil Procedure and the Twombly and Iqbal standards. The defendants claimed that the plaintiff failed to identify the allegedly infringing device used by the defendant and to connect any allegedly infringing activity to the patents. The Federal Circuit again held that the information required by Form 18 alone is sufficient for pleading a patent infringement claim as the form states a plausible claim and places the alleged infringer on notice. Form 18 also does not require a plaintiff to identify the accused device. Moreover, the court added that Form 18 controls to the extent that any conflict exists between the Twombly plausibility standard and the Federal Rules of Civil Procedure forms. A "patent troll" is a pejorative term for a "non-practicing entity" (NPE) or a "patent assertion entity" (PAE). These entities are people or companies that do not develop, manufacture, or sell any product covered by the patents they own. The business model of a PAE instead focuses on buying and asserting patents against companies that have already begun using and developing the patent, often without knowledge of the PAE's ownership of the patent. Critics of PAEs argue that these patent-holders extort the patent system through litigation by extracting licensing fees or damage awards from companies that cannot afford the cost of litigation. Critics also argue that "patent trolling" deters innovation and discourages companies from seeking patents, and thus delivering new products to the market. However, defendants of PAEs view this practice as encouraging investment in undercapitalized projects. Commentators have linked PAEs together with the current patent pleading requirements for a patent infringement claim. They argue that the minimal information required in a patent infringement complaint encourages PAEs to initiate "frivolous" lawsuits that otherwise would not survive the initial pleading stage under a more stringent standard. Even though many of the PAE infringement lawsuits are ultimately unsuccessful, the costly discovery stages of the lawsuit contribute to the financial burden carried by the defendants of these claims. Moreover, with the threat of costly litigation, defendants are more likely to settle or to enter into an agreement to pay licensing fees. The 112 th Congress passed the Leahy-Smith America Invents Act of 2011 (AIA), which sought to address the proliferation of PAEs. The debate leading to the AIA demonstrated growing congressional concern over the high costs of litigation patent disputes initiated by PAEs and their enforcement of patents. The AIA does not include specific reforms relating to patent pleadings and PAEs. However, Section 34 of the AIA instructs the Government Accountability Office (GAO) to study the costs, benefits, and consequences of litigation by "non-practicing entities" and "patent assertion entities." The GAO report, released in August 2013, analyzes the trends in patent infringement litigation and recommends changes to discovery, such as an e-discovery model to reduce costs, and additional oversight by the U.S. Patent Office in gathering data about patent enforcement. During the 113 th Congress, Congress has introduced several different legislative proposals relating to patent reform. The following bills specifically target patent troll litigation to curb their prevalence in court. The Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act of 2013, H.R. 845 , proposes a financial deterrence to PAEs from filing patent infringement complaints. The SHIELD Act would require a court, in an action involving infringement of a patent, to award full litigation costs including attorney's fees to the prevailing party asserting that the patent is not infringed. The court would award these fees if it determines that the party alleging infringement does not meet one or more of the following conditions: 1. The party is the inventor, joint inventor, or the original assignee of the patent; 2. The party can provide evidence of substantial investment made by the party in the exploitation of the patent through production or sale of an item covered by the patent; or 3. The party is an institution of higher education or is a technology transfer organization whose primary purpose is to facilitate commercialization of technology developed by such institution. These conditions mirror a "negative definition" of a PAE. Therefore, a party that does not satisfy any one of the conditions listed above (i.e., is a "PAE") would be liable to the alleged infringer for full litigation costs, if the PAE loses the lawsuit. Representative Chaffetz, who introduced the bill, explained that this legislation "will curb future abuse by requiring trolls to bear the financial responsibility for failed claims." However, some have criticized that the SHIELD Act's description of the conditions is too broad and thus does not sufficiently curb PAE patent infringement litigation. One commentator notes that a PAE could try to meet any of the conditions to avoid paying litigation costs by becoming a distributor of products. The Innovation Act of 2013, H.R. 3309 , proposes changes to the patent pleading requirements specifically. The co-sponsors intend the bill to "eliminate the abuses of our patent system [and] discourage frivolous patent litigation" by providing heightened initial pleading requirements for an infringement claim. Under these new requirements, the complaint of a patent infringement would need to: identify each patent allegedly infringed; identify each claim of each patent that is allegedly infringed; identify the accused instrumentality that is allegedly infringing with specific name or model number; describe where each element of each claim is identified within the accused instrumentality and how it corresponds to the functionality of the accused instrumentality; and describe the direct infringement, person(s) involved, and the acts of that person(s) involved in inducing that infringement. These proposed requirements would demand more specific information from the plaintiff than Form 18. Instead of simply identifying the patent and stating a claim of relief, these proposed changes would require the plaintiff to scrutinize and show the relationship between the elements of the patent and the accused instrumentality to demonstrate infringement. This heightened standard would require the plaintiff to research and provide more information of the alleged infringement that otherwise would have occurred later in the litigation process. The act also proposes a limitation on discovery beyond the core documents needed for evidence. These changes would shift the costs to the requesting party as a measure to limit the high costs of discovery for patent infringement claims. Co-sponsors of the bill hope that the heightened pleading requirements would force a plaintiff to consider the alleged infringing instrumentality more carefully and decide whether infringement has occurred before filing the suit. The changes would also allow courts to dismiss suits prior to expensive discovery. However, some commentators believe that the heightened pleading requirements would render patent enforcement impractical. The plaintiff may not have this information available at this stage of litigation as the discovery process typically reveals the information necessary to build a successful infringement claim. The Patent Abuse Reduction Act of 2013, S. 1013 , proposes changes to pleading requirements in patent infringement cases. This bill also intends to deter patent infringement litigation by PAEs with heightened pleading requirements in addition to awarding costs and expenses to the prevailing party. The bill seeks to curb patent litigation abuse by "deter[ring] patent litigation abusers without prejudicing the rights of responsible intellectual property holders." The proposed pleading changes are very similar to those outlined in the Innovation Act. However, the Patent Abuse Reduction Act also would direct the U.S. Supreme Court to review and amend Form 18 to ensure that it is consistent with the proposed pleading requirements. The U.S. Constitution provides Congress with the authority to reform the patent system. The Constitution also specifically grants Congress the power to create federal courts, other than the Supreme Court, and to determine their jurisdiction. Pursuant to this power, Congress has the authority to enact changes to judicial processes and procedures. Congress has delegated this authority through such legislation as the Rules Enabling Act of 1934. This act authorizes the U.S. Supreme Court to promulgate rules of procedure, including the Federal Rules of Civil Procedure, for federal courts. However, Congress still retains the authority to make any changes to judicial procedural rules such as patent infringement pleadings. However, members of the judicial branch have raised objections to the patent pleading reforms and have suggested potential separation of powers issues triggered by these proposed changes. Federal Circuit Judge Kathleen O'Malley has stated that the patent reform bills "go way beyond where anyone should want Congress to tread" by "breaking down the division between the branches of government." In a letter to Representative Conyers, the Judicial Conference objected to the proposed reforms in the Innovation Act as undermining "the development of sound rules and practices." Because of Congress's constitutional authority to change judicial rules, these objections reveal more prudential concerns about Congress bypassing the "deliberative process Congress established in the Rules Enabling Act" and the Judicial Conference's involvement in the process. Representative Goodlatte responded to these objections in an Innovation Act hearing by emphasizing congressional authority to legislate rules of judicial procedure. He stressed that the "Constitution grants Congress the power to create federal courts," therefore congressional authority includes "the prescription of court procedure," including the Innovation Act's heightened pleading standards.
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Patent infringement is the unauthorized making, using, offering for sale, selling, and importing of a patented invention. The patent provides the patent holder with the right to protect against such infringement by suing for relief in the appropriate federal court. Litigation of a patent infringement claim begins with the filing of a complaint in federal court. Form 18 in the appendix of the Federal Rules of Civil Procedure provides a model for a patent infringement complaint. This form requires four statements asserting jurisdiction, patent ownership, patent infringement by the defendant, and demand for relief. Commentators, legal practitioners, and patent holders disagree as to whether Form 18 requires a sufficient level of detail in the patent infringement complaint to meet the standards outlined in the Federal Rules of Civil Procedure and by the U.S. Supreme Court. Despite two recent Supreme Court rulings concerning the appropriate pleading standard, the level of particularity regarding information in the patent complaint, specifically Form 18, is a frequent issue before the courts. Patent infringement litigation has increased over the last decade. Commentators have linked the current patent pleading requirements and the minimal level of information required to patent assertion entities (PAE), colloquially known as "patent trolls." According to "patent troll" critics, the minimal information required in a patent infringement complaint encourages PAEs to initiate frivolous lawsuits that otherwise would not survive the initial pleading stage under a more stringent standard. Congress has recently proposed several bills offering patent reform in this area. The recently introduced Innovation Act, H.R. 3309, and the Patent Abuse Reduction Act, S. 1013, both offer changes to the patent pleading system. These bills would provide for, among other things, heightened initial pleading requirements demanding more specific information in the complaint than required by Form 18 alone. Sponsors of the bills intend these more rigorous pleading requirements to deter "patent trolls" from filing what they deem as frivolous lawsuits. However, some commentators believe that the heightened pleading requirements would render patent enforcement impractical. Additionally, some members of the judicial branch have commented that these proposed changes trigger constitutional issues by potentially violating the separation of powers doctrine.
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Preventing the domestic workforce from being undermined by the employment of foreign workers and protecting foreign workers from exploitation have shaped federal law governing the hiring and employment of foreign workers by U.S. employers. In the United States, there are three main sources of labor protections for foreign workers: (1) the conditions imposed on employers hiring foreign workers through the DOL labor certification/attestation and DHS petition process; (2) federal labor laws stipulating that employers adhere to certain requirements governing wages and other conditions; and (3) private causes of action that foreign workers may have under state and local laws regarding labor, contracts, and torts. With a view towards clarifying the framework for foreign workers protections under federal laws, this report will briefly survey current federal laws related to foreign workers' rights, including immigration-related labor conditions and federal labor laws. In addition, this report will take note of private causes of action that foreign workers may have under various state and local laws. Finally, this report will examine immigration-related legislative proposals S. 744 , H.R. 2131 , and H.R. 1773 pending before the 113 th Congress. Protections for foreign workers are generally provided pursuant to the Immigration and Nationality Act (INA) and are strongest for nonimmigrant (i.e., temporary) workers in visa categories generally associated with lower-skilled occupations, such as H-2A agricultural workers and H-2B forestry/logging workers, since such workers are perceived as more vulnerable to exploitation and less likely to have sufficient resources to enforce their rights effectively. In particular, nonimmigrant foreign workers may find themselves subject to deportation in the event of a job loss. Foreign workers who are admitted into the United States as immigrants or adjusted to lawful permanent resident status come within the statutory definition of U nited States worker and are not vulnerable to losing their immigration status in the event of a job termination by a specific employer. Employers who desire to hire foreign workers who are not already authorized to work in the United States, in either immigrant or nonimmigrant employment-based visa classes, must follow a two-step process. First, the employer must acquire from the DOL a labor certification or attestation that certain labor conditions required to hire foreign workers have been satisfied. In the second step, the employer must petition the DHS for nonimmigrant workers and submit to DHS the DOL labor certification or attestation. Under the first step, the employer generally must show that there are not enough qualified U.S. workers available to meet the employer's needs and that the employment of foreign workers will not adversely affect the working conditions of U.S. workers. The former may be shown by the employer's recruitment efforts or by the DOL classifying the occupation as having a labor shortage. Depending on the visa category, the latter may be shown by the employer adhering to certain wage requirements or job offer or contract content requirements. The labor conditions that must be satisfied are established by the INA and DOL regulations and differ according to the nonimmigrant worker or employment-based immigration classification. Generally, temporary agricultural guest workers have received the strongest protections through explicit statutory provisions that are implemented by DOL through its regulations. Under the two-step process, the DOL and the DHS have jurisdiction over the labor certification and the visa petition, respectively, and related enforcement responsibilities. Both agencies have authority to impose civil penalties on and/or debar employers who violate labor conditions for foreign workers, at either the labor certification/attestation stage or the worker petition stage. Debarment is notification to an employer who has substantially violated obligations under a nonimmigrant worker program that DOL and the DHS will not accept or will deny any labor certification applications and/or visa petitions submitted by the employer. These agency actions are the sole avenue to enforce the labor condition requirements linked to certain employment-based immigrant or guest worker nonimmigrant programs. Individual workers do not have private causes of action under federal immigration laws against employers who violate conditions of the labor certification or attestation. However, as discussed below, such remedies may be available and constitute a significant enforcement mechanism under some federal labor laws and state labor, contract, or tort laws. Responsible for administering and approving labor certification applications/attestations submitted by employers, the DOL generally has authority over non-compliance with labor certifications. The Office of Foreign Labor Certification (OFLC) of the Employment and Training Administration (ETA) in the DOL administers the labor certification program, which includes processing certification applications and auditing certifications, for the various employment-based visas. The OFLC bases its non-compliance actions on investigations conducted by the Wage and Hour Division (WHD) in the Employment Standards Administration (ESA) of the DOL. The WHD is responsible for ensuring compliance with laws governing wages and working conditions, including the employment eligibility provisions of the Immigration and Nationality Act (INA) as well as labor standards laws, and for investigating violations of such laws. The Office of the Inspector General (OIG) within the DOL, which is responsible for investigating fraud in DOL programs, may become involved in alleged labor certifications/attestation violations if there is an element of fraud. In addition, according to the DOL regulations, it appears that allegations of fraud may, in some instances, be referred to DHS rather than OIG. Where investigative responsibilities overlap, federal agencies may cooperate in joint investigations. Within the DHS, the U.S. Citizenship and Immigration Services (USCIS) is responsible for adjudicating the visa petition submitted by the employer with the labor certification received from the DOL. The U.S. Immigration and Customs Enforcement (ICE) within the DHS has jurisdiction over non-compliance with other conditions (i.e., conditions other than labor certification conditions) of temporary work visas that have been granted to aliens who are in the United States. For example, ICE may investigate whether aliens have violated their visa status by terminating employment for which the visa was granted and remaining in the United States. ICE is also responsible for investigating violations of immigration laws related to unlawful employment of aliens. For example, ICE conducts traditional worksite enforcement by investigating and bringing criminal charges against employers that intentionally violate the law and knowingly hire illegal aliens. In 1984, the U.S. Supreme Court concluded that the National Labor Relations Act (NLRA) protects undocumented workers and their right to organize and engage in collective bargaining. Since the Court's decision in Sure-Tan, Inc. v. National Labor Relations Board , the Fair Labor Standards Act (FLSA) has also been construed to apply to undocumented workers. In general, courts have premised their decisions on the NLRA and FLSA's broad definitions of the term "employee." For example, because the FLSA defines an employee simply as "any individual employed by an employer," courts have declined to limit the term to American workers and those who are certified for employment in the United States. In Sure-Tan , a group of undocumented workers were terminated after they voted in a union election that was opposed by their employer, a leather processing company. Following the election, Sure-Tan asked the Immigration and Naturalization Service (INS), the precursor to the DHS immigration divisions, to investigate the immigration status of some of the employees who voted in the election. After an INS investigation of all of Sure-Tan's Spanish-speaking workers, five employees accepted the agency's grant of voluntary departure. The Acting Regional Director for the National Labor Relations Board (NLRB) later alleged that Sure-Tan's actions constituted an unfair labor practice in violation of the NLRA. The Supreme Court found that the NLRA's terms and policies support the statute's application to undocumented workers. The NLRA indicates that "[t]he term 'employee' shall include any employee," subject only to certain specified exceptions. Noting that undocumented aliens are not among the groups of workers expressly exempted, the Court reasoned that "they plainly come within the broad statutory definition of 'employee.'" The Court further maintained that the coverage of undocumented workers by the NLRA is consistent with the statute's "avowed purpose of encouraging and protecting the collective-bargaining process." If undocumented workers could not participate in union activities, a subclass of workers would be created. The Court believed that this subclass would erode the unity of all employees and impede effective collective bargaining because the group would not have a comparable stake in the collective goals of their co-workers. Although the Sure-Tan Court determined that the company violated the NLRA, it nevertheless reversed a remedial order for six months of backpay for each of the affected employees. The Court maintained that the backpay award was not sufficiently tailored to the actual, compensable injuries suffered by the discharged workers. The Court explained that the imposition of the award without regard to the workers' circumstances "constitute[d] pure speculation and [did] not comport with the general reparative policies of the NLRA." In particular, the Court noted that the relevant employees should have been "deemed 'unavailable' for work ... during any period when they were not lawfully entitled to be present and employed in the United States." An award of six months of backpay did not reflect the employees' actual economic losses or legal availability for work. The Court revisited the issue of backpay awards in Hoffman Plastic Compounds, Inc. v. National Labor Relations Board , a 2002 case involving the termination of undocumented workers who supported a union organizing campaign. In Hoffman , the Court held that the NLRB's ability to award backpay to an undocumented worker is foreclosed by federal immigration policy, as expressed in the Immigration Reform and Control Act of 1986 (IRCA). The Court explained that the employee verification system established by IRCA made combating the employment of undocumented aliens central to the policy of immigration law. If an employer unknowingly hires an undocumented alien or an alien becomes unauthorized while employed, the employer is required by IRCA to terminate the worker or be subject to civil penalties. According to the Court, a backpay award to an undocumented alien would run counter to the policies established by the IRCA. The Court maintained: "[A]warding backpay in a case like this not only trivializes the immigration laws, it also condones and encourages future violations." The Hoffman Court insisted that other sanctions were available to remedy the company's unfair labor practices. The Court cited the NLRB's issuance of cease and desist orders against Hoffman, and the agency's requirement that the company post a notice identifying the rights provided by the NLRA. The Court noted that such "traditional remedies" are "sufficient to effectuate national labor policy regardless of whether the 'spur and catalyst' of backpay accompanies them." Whether the FLSA protects undocumented workers was considered by the U.S. Court of Appeals for the Eleventh Circuit in 1988. In Patel v. Quality Inn South , a hotel employee alleged violations of the FLSA and sought unpaid wage payments. The defendants argued that the employee was not protected by the statute because he was an undocumented alien. Based on the text of the FLSA and its legislative history, the Eleventh Circuit concluded that undocumented workers are covered by the statute. Like the NLRA, the FLSA broadly defines the term "employee" to mean "any individual employed by an employer." Although specific exceptions to this broad definition are identified, undocumented workers are not among them. The Eleventh Circuit observed: This definitional framework—a broad general definition followed by several specific exceptions—strongly suggests that Congress intended an all encompassing definition of the term "employee" that would include all workers not specifically excepted. The legislative history of the FLSA confirmed that a broad definition was intended by the measure's chief sponsor in the Senate. Unlike the Supreme Court, which viewed the awarding of backpay for NLRA violations as inconsistent with the IRCA, the Eleventh Circuit concluded in Patel that the FLSA's full range of remedies should be available without regard to immigration status. The Eleventh Circuit distinguished Patel from the workers in Sure-Tan , noting that Patel was seeking to recover wages for work already performed: Patel is not attempting to recover back pay for being unlawfully deprived of a job. Rather he simply seeks to recover unpaid minimum wages and overtime for work already performed. Under these circumstances the rationale the Supreme Court used in Sure-Tan to limit the availability of back pay under the NLRA to periods when the employee was lawfully present in the United States is inapplicable. It would make little sense to consider Patel "unavailable" for work during a period of time when he was actually working. Patel has been followed by other courts. In Lucas v. Jerusalem Cafe , the U.S. Court of Appeals for the Eighth Circuit maintained that the "FLSA's sweeping definitions of 'employer' and 'employee' unambiguously encompass unauthorized aliens." Moreover, the Eighth Circuit found that allowing undocumented workers to recover damages for work actually performed is consistent with the IRCA. The Eighth Circuit noted that the FLSA and the IRCA "together promote dignified employment conditions for those working in the country, regardless of immigration status, while firmly discouraging the employment of individuals who lack work authorization." In a 2008 fact sheet, the WHD of the DOL emphasized that it would continue to enforce the FLSA without regard to whether an employee is undocumented. The WHD sought to distinguish the Court's decision in Hoffman from actions brought by undocumented workers under the FLSA. The WHD maintained that claims brought under the FLSA seek backpay for hours actually worked, and that the Supreme Court's concern with awarding backpay under the NLRA did not apply to work actually performed. Although the INA and the NLRA rely on enforcement by federal administrative agencies or bodies, private remedies are available under the FLSA and some state laws. Unlike the FLSA, the Migrant Seasonal and Agricultural Workers Protection Act (MSAWPA) excludes H-2A agricultural workers from its coverage, but it does not exclude other categories of nonimmigrant workers who may be performing some types of agricultural work. As a consequence, H-2B forestry workers have brought claims under the MSAWPA private cause of action. Also, foreign guest workers have sued employers for claims under state laws regarding tort and breach of contract in addition to state labor laws paralleling federal laws on wages and other working conditions. Some breach of contract claims are based on violations of federal immigration laws establishing worker conditions that must be included in a job contract/offer. Generally, Legal Services Corporation (LSC), an independent corporation created by Congress to provide access to legal services for low-income Americans by awarding grants to legal services providers, is governed by federal laws that have not permitted it to provide legal representation to nonimmigrant workers, except to H-2A nonimmigrant agricultural workers to litigate employer violations of contracts or labor conditions/certifications for the purpose of preserving the integrity of the H-2A program. A recent proposed rulemaking would revise the LSC rules to extend services to H-2B forestry workers to implement recent statutory changes. Legislation in the 113 th Congress would reform foreign guest worker visa categories to strengthen worker protections while increasing flexibility and responsiveness to employer needs. S. 744 , Border Security, Economic Opportunity, and Immigration Modernization Act, among other things, would reverse the effect of Hoffman by permitting all workplace remedies to apply regardless of immigration status and would thereby make reinstatement available for those authorized to work; create new nonimmigrant worker categories, including two that would replace the H-2A category; establish whistleblower protections; and extend coverage of the MSAWPA to include all nonimmigrant agricultural workers. H.R. 2131 , the Supplying Knowledge-based Immigrants and Lifting Levels of STEM Visas Act or SKILLS Visa Act, among other things, would specify employment protections, such as wages, working conditions, contract requirements, for various high-skilled, professional visa categories that currently do not have such protections; require verification of foreign degrees; increase H-1B numerical limits; authorize streamlined certification procedures for employers filing multiple petitions for workers in certain visa categories; and authorize the Secretary of Labor to subpoena employers of H-1B, H-1B1, and E-3 nonimmigrant workers. H.R. 1773 would establish a new H-2C agricultural worker visa category, which, however, would be excluded from coverage by the MSAWPA.
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One challenge of immigration law has been to balance the interests of the domestic workforce with employer interests in hiring foreign workers who are not already authorized to work in the United States while preventing the exploitation of foreign workers. There are three main sources of labor protections for foreign workers in the United States: (1) the conditions imposed on employers hiring foreign workers through the Department of Labor (DOL) labor certification/attestation and DHS petition process; (2) federal labor laws stipulating that employers adhere to certain requirements governing wages and other conditions; and (3) worker rights under state and local laws regarding labor, contracts, and torts. Streamlining and easing certain labor and immigration requirements that are perceived as unnecessarily onerous and insufficiently flexible may benefit certain employers with immediate labor needs. On the other hand, stronger protections for foreign workers may not only guard those workers from exploitation and abuse but may also serve to protect the interests of the domestic workforce by reducing to some employers the attractiveness of hiring foreign workers who are not already authorized to work in the United States. Legislative proposals to reform employment-based visa programs in the current Congress reflect some of these tensions. This report will discuss the DOL labor certification/attestation and Department of Homeland Security (DHS) petition process as well as aspects of the applicability of federal labor laws to foreign workers. It will also briefly address state and local laws regarding labor, contract, and torts that sometimes provide foreign workers with additional rights. Federal labor laws that apply regardless of immigration status, including those concerning health and safety and employment discrimination, as well as state occupational certification and licensing requirements are outside the scope of this report. For a comprehensive look at employment-based immigration and related federal labor policies and programs, see CRS Report RL33977, Immigration of Foreign Workers: Labor Market Tests and Protections, by [author name scrubbed]; CRS Report RL32044, Immigration: Policy Considerations Related to Guest Worker Programs, by [author name scrubbed]; CRS Report R42434, Immigration of Temporary Lower-Skilled Workers: Current Policy and Related Issues, by [author name scrubbed]; CRS Report R43161, Agricultural Guest Workers: Legislative Activity in the 113th Congress, by [author name scrubbed]; CRS Report RL34739, Temporary Farm Labor: The H-2A Program and the U.S. Department of Labor's Proposed Changes in the Adverse Effect Wage Rate (AEWR), by [author name scrubbed]; and CRS Report RS21186, Hoffman Plastic Compounds v. NLRB and Backpay Awards to Undocumented Aliens, by [author name scrubbed]. (pdf)
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T he official unemployment rate has been in decline over the past several years, peaking at 10% shortly after the 2007-2009 recession before falling to 5% in January 2016. A falling unemployment rate is gene rally a cause for celebration as more individuals are able to find jobs; however, the current low unemployment rate has been increasingly cited as a reason to begin rolling back expansionary monetary and fiscal policy. After citing "considerable improvement in labor market conditions," in December 2015 for the first time in seven years, the Federal Reserve increased its federal funds target rate, reducing the expansionary power of its monetary policy. Labor market conditions have certainly improved since the depths of the financial crisis and 2007-2009 recession, but an unemployment rate of around 5% means that nearly 8 million people are still searching for jobs and are unable to find them. So why is the Federal Reserve reducing the amount of stimulus entering the economy when so many people are still looking for work? The answer involves the relationship between the two parts of the Federal Reserve's dual mandate—maximum employment and stable prices. In general, economists have observed an inverse relationship between the unemployment rate and the inflation rate, i.e., the rate at which prices rise. This trade-off between unemployment and inflation become particularly pronounced (i.e., small changes in unemployment result in relatively large price swings) when the unemployment rate drops below a certain level, referred to by economists as the "natural unemployment rate." Alternatively, when the unemployment rate rises above the natural rate, inflation will tend to decelerate. In response to the financial crisis and subsequent recession, the Federal Reserve began employing expansionary monetary policy to spur economic growth and improve labor market conditions. Recently, the unemployment rate has fallen to a level consistent with many estimates of the natural rate of unemployment, between 4.6% and 5.0%. If the unemployment rate were to continue falling, it would likely fall below the natural rate of unemployment and cause accelerating inflation, violating the Federal Reserve's mandate of stable prices. This report discusses the relationship between unemployment and inflation, the general economic theory surrounding this topic, the relationship since the financial crisis, and its use in policymaking. A relationship between the unemployment rate and prices was first prominently established in the late 1950s. This early research focused on the relationship between the unemployment rate and the rate of wage inflation. Economist A. W. Phillips found that between 1861 and 1957, there was a negative relationship between the unemployment rate and the rate of change in wages in the United Kingdom, showing wages tended to grow faster when the unemployment rate was lower, and vice versa. His work was then replicated using U.S. data between 1934 and 1958, discovering a similar negative relationship between unemployment and wage growth. Economists reasoned that this relationship existed due to simple supply and demand within the labor market. As the unemployment rate decreases, the supply of unemployed workers decreases, thus employers must offer higher wages to attract additional employees from other firms. This body of research was expanded, shifting the focus from wage growth to changes in the price level more generally. The negative relationship between unemployment and inflation was dubbed the Phillips curve, due to Phillips's seminal work on the issue. Many interpreted the early research around the Phillips curve to mean that a stable relationship existed between unemployment and inflation. This suggested that policymakers could choose among a schedule of unemployment and inflation rates; in other words, policymakers could achieve and maintain a lower unemployment rate if they were willing to accept a higher inflation rate and vice versa. This rationale was prominent in the 1960s, and both the Kennedy and Johnson Administrations considered this framework when designing economic policy. During the 1960s, economists began challenging the Phillips curve concept, suggesting that the model was too simplistic and the relationship would break down in the presence of persistent positive inflation. These critics claimed that the static relationship between the unemployment rate and inflation could only persist if individuals never adjusted their expectations around inflation, which would be at odds with the fundamental economic principle that individuals act rationally. But, if individuals adjusted their expectations around inflation, any effort to maintain an unemployment rate below the natural rate of unemployment would result in continually rising inflation, rather than a one-time increase in the inflation rate. This rebuttal to the original Phillips curve model is now commonly known as the natural rate model. The natural rate model suggests that there is a certain level of unemployment that is consistent with a stable inflation rate, known as the natural rate of unemployment. The natural rate of unemployment is often referred to as the non-accelerating inflation rate of unemployment (NAIRU). When the unemployment rate falls below the natural rate of unemployment, referred to as a negative unemployment gap, the inflation rate is expected to accelerate. When the unemployment rate exceeds the natural rate of unemployment, referred to as a positive unemployment gap, inflation is expected to decelerate. The natural rate model gained support as 1970s' events showed that the stable tradeoff between unemployment and inflation as suggested by the Phillips curve appeared to break down. A series of negative oil supply shocks in the 1970s resulted in high unemployment and high inflation, known as stagflation, with core inflation and the unemployment rate both rising above 9% in 1975. The economy's ability to produce goods and services, or potential output, is dependent on three main factors in the long run: (1) the amount of capital (machines, factories, etc.), (2) the number and quality of workers, and (3) the level of technology. Although these factors largely govern the economy's potential output, the economy's actual output is largely governed by demand for goods and services, which can rise above or below potential output. The economy is most stable when actual output equals potential output; the economy is said to be in equilibrium because the demand for goods and services is matched by the economy's ability to supply those goods and services. In other words, certain characteristics and features of the economy (capital, labor, and technology) determine how much the economy can sustainably produce at a given time, but demand for goods and services is what actually determines how much is produced in the economy. As actual output diverges from potential output, inflation will tend to become less stable. All else equal, when actual output exceeds the economy's potential output, a positive output gap is created, and inflation will tend to accelerate. When actual output is below potential output, a negative output gap is generated, and inflation will tend to decelerate. Within the natural rate model, the natural rate of unemployment is the level of unemployment consistent with actual output equaling potential output, and therefore stable inflation. During an economic expansion, total demand for goods and services within the economy can grow to exceed the economy's potential output, and a positive output gap is created. As demand grows, firms rush to increase their output to meet this new demand. In the short term though, firms have limited options to increase their output. It often takes too long to build a new factory, or order and install additional machinery, so instead firms hire additional employees. As the number of available workers decreases, workers can bargain for higher wages, and firms are willing to pay higher wages to capitalize on the increased demand for their goods and services. However, as wages increase, upward pressure is placed on the price of all goods and services because labor costs make up a large portion of the total cost of goods and services. Over time, the average price of goods and services rises to reflect the increased cost of wages. The opposite tends to occur when actual output within the economy is lower than the economy's potential output, and a negative output gap is created. During an economic downturn, total demand within the economy shrinks. In response to decreased demand, firms reduce hiring, or lay off employees, and the unemployment rate rises. As the unemployment rate rises, workers have less bargaining power when seeking higher wages because they become easier to replace. Firms can hold off on increasing prices as the cost of one of their major inputs—wages—becomes less expensive. This results in a decrease in the rate of inflation. The natural rate of unemployment is not constant. As discussed earlier, the natural rate of unemployment is the rate that is consistent with sustainable economic growth, or when actual output is equal to potential output. It is therefore expected that changes within the economy can change the natural unemployment rate. Four main features of the economy affect the natural unemployment rate: 1. Labor market composition, 2. Labor market institutions and public policy, 3. Productivity growth, and 4. Long-term—that is, longer than 26 weeks—unemployment rates. As the characteristics of the labor force change—for example, with respect to age, educational attainment, and work experience—and alter the productive capacity of the economy, the natural rate is also expected to shift. Individual worker's characteristics affect the likelihood that a worker will become unemployed and the speed (or ease) at which he or she can find work. For example, younger workers tend to have less experience and therefore have higher levels of unemployment on average. Consequently, if young workers form a significant portion of the labor force, the natural rate of unemployment will be higher. Alternatively, individuals with higher levels of educational attainment generally find it easier to find work; therefore, as the average level of educational attainment of workers rises, the natural rate of unemployment will tend to decrease. Labor market institutions and public policies in place within an economy can also impact the natural rate of unemployment by improving individuals' ability to find and obtain work. For example, apprenticeship programs provide individuals additional work experience and help them find work faster, which can decrease the natural rate of unemployment. Alternatively, ample unemployment insurance benefits may increase the natural rate of unemployment, as unemployed individuals will spend longer periods looking for work. The rate of productivity growth also impacts the natural unemployment rate. According to economic theory, employee compensation can grow at the same speed as productivity without increasing inflation. Individuals become accustomed to compensation growth at this speed and come to expect similar increases in their compensation year over year based on the previous growth in productivity. A decrease in the rate of productivity growth would eventually result in a decrease in the growth of compensation; however, workers are likely to resist this decrease in the pace of wage growth and bargain for compensation growth above the growth rate of productivity. This above average compensation growth will erode firms' profits and they will begin to lay off employees to cut down on costs, leading to a higher natural rate of unemployment. The opposite occurs with an increase in productivity growth, businesses are able to increase their profits and hire additional workers simultaneously, resulting in a lower natural rate of unemployment. Lastly, the contemporaneous and previous level of long-term unemployment in an economy can shift the natural rate of unemployment. Individuals who are unemployed for longer periods of time tend to forget certain skills and become less productive, and are therefore less attractive to employers. In addition, some employers may interpret long breaks from employment as a signal of low labor market commitment or worker quality, further reducing job offers to this group. As the proportion of long-term unemployed individuals increases, the natural rate of unemployment will also increase. Understanding the relationship between the current unemployment rate and the natural rate is important when designing economic policy, and the fact that the natural rate can shift over time further complicates the design of economic policy. As shown in Figure 1 , the estimated natural rate of unemployment has been relatively stable over time, shifting from a high of 6.3% in the late 1970s to about 4.8% in 2016, a spread of only 1.5 percentage points. The major inflection points seen in the natural rate over time are largely the result of changes in the makeup of the labor force and changes in productivity growth over time. As shown in Figure 1 , the estimated natural rate slowly increased in the late 1950s, 1960s and the early 1970s. Several economists have suggested that much of this increase in the natural rate, from about 5.4% to close to 6.3%, was due to the large number of inexperienced workers entering the labor force as members of the baby-boomer generation began looking for their first jobs. The natural rate began to decrease in the 1980s, with a period of relatively rapid decline in the early 1990s (see Figure 1 ). A portion of this decrease in the 1980s is likely due to baby boomers becoming more experienced and productive workers. The sharp decrease in the 1990s has been largely explained by an increase in the rate of productivity growth in the economy. Productivity growth, total output per hour of labor, was about 1.5% between 1975 and 1989, but rose to about 2.2% between 1990 and 2000 largely due to the rise of computers and the Internet. Beginning in 2008, the natural rate began to increase sharply, as shown in Figure 1 . The rapid increase in the natural rate after 2007 can largely be explained by changes in the makeup of the labor force and changes in government policy. As shown in Figure 4 , the number of individuals who were unemployed for more than 26 weeks increased dramatically after the 2007-2009 recession. Individuals who are unemployed for longer durations tend to have more difficulty finding new jobs, and after the recession, the long-term unemployed made up a significant portion of the labor force, which increased the natural rate of unemployment. In addition, some research has suggested the extension of unemployment benefits may also increase the natural rate of unemployment. Additionally, some portion of the increase in the natural unemployment rate may be due to the decrease in productivity, as productivity growth fell to 0.7% between the third quarter of 2009 and the second quarter of 2016. The rate of inflation is not determined exclusively by the unemployment gap. Two prominent factors that also impact the rate of inflation are (1) expected inflation and (2) supply shocks. Individuals and businesses form expectations about the expected rate of inflation in the future, and make economic choices based on these expectations. For example, if individuals expect 2% inflation over the next year, they will seek a 2% increase in their nominal salary to preserve their real purchasing power. Firms will also incorporate inflation expectations when setting prices to keep the real price of their goods constant. An increase in the expected rate of inflation will be translated into an actual increase in the rate of inflation as wages and prices are set by individuals within the economy. Economic events that impact the supply of goods or services within the economy, known as supply shocks, can also impact the rate of inflation. The classic example of a supply shock is a reduction in the supply of available oil. As the supply of oil decreases, the price of oil, and any good that uses oil in its production process, increases. This leads to a spike in the overall price level in the economy, namely, inflation. Policymakers generally focus on negative supply shocks, which reduce the supply of a good or service, but positive supply shocks, which increase the supply of a good or service, can also occur. Positive supply shocks generally reduce inflation. Events following the 2007-2009 recession have again called into question how well economists understand the relationship between the unemployment gap and inflation. As a result of the global financial crisis and the U.S. 2007-2009 recession, the unemployment rate rose above 10% and remained significantly elevated compared with estimates of the natural rate of unemployment for multiple years, as shown in Figure 1 . The natural rate model suggests that this significant and prolonged unemployment gap should have resulted in decelerating inflation during that period. Actual inflation did decline modestly during that period, decreasing from an average rate of about 2% between 2003 and 2007 to about 1.4% on average between 2008 and mid-2015. However, based on previous experience with unemployment gaps of this size and inflation forecasts based on the natural rate model, many economists anticipated a more drastic decrease in the inflation rate, with some predicting negative inflation (or deflation) rates reaching 4% during that period. The movements of the unemployment rate and inflation rate after the financial crisis are displayed in Figure 2 . Numerous competing hypotheses exist for why a significant decrease in the inflation rate failed to materialize. The following sections describe the prominent hypotheses and discuss the available evidence for these hypotheses. Over the previous several decades, the U.S. economy has become more integrated with the global economy as trade has become a larger portion of economic activity. Economists have suggested that as economies increase their openness to the global economy, global economic forces will begin to play a larger role in domestic inflation dynamics. This suggests that inflation may be determined by labor market slack and the output gap (the difference between actual output and potential output) on a global level rather than a domestic level. Since the 1980s, trade (as measured by the sum of imports and exports) has expanded significantly in the United States, increasing from less than 20% of GDP to more than 30% of GDP between 2011 and 2013. According to the International Monetary Fund, the average output gap following the 2007-2009 recession among all advanced economies was smaller than the output gap in the United States, as shown in Table 1 . In 2009, the actual output among all advanced economies was about 4% below potential output, whereas the actual output in the United States was about 5% below potential output. If increased trade openness has subdued the impact of the domestic output gap on inflation in favor of the global output gap, the smaller output gap among other advanced economies may help to explain the unexpectedly modest decrease in inflation after the 2007-2009 recession. The empirical evidence surrounding the growing impact of the global output gap on domestic inflation, which focused on the time period before the 2007-2009, is mixed. A number of researchers have found that the global output gap has some impact on domestic inflation dynamics; however, others have found no relationship between the global output gap and domestic inflation. Researchers who contend that the global output gap is influential with respect to domestic inflation have then attempted to determine if the strength of this influence has grown alongside increases in trade openness. When the global output gap influences domestic inflation, however, the strength of this impact seems to be unrelated to changes in trade openness. Based on this evidence, it appears unlikely that changes in trade openness over recent decades and the smaller output gap abroad resulted in the unexpectedly modest decrease in inflation after the 2007-2009 recession. Alternative explanations for the lack of deflation after the 2007-2009 recession cite the global financial crisis and decreased access to external financing for businesses. Typically, during a recession, as demand for goods and services decreases, the price of those goods and services also tends to decrease. However, some economists have argued that the financial crisis decreased the supply of external financing (i.e., equity issues, bank loans) available for businesses, which increased borrowing costs. In the face of increased borrowing costs, some businesses, especially liquidity constrained businesses with so-called sticky customer bases, would have opted to raise prices to remain solvent until the costs of borrowing decreased as the financial sector recovered. Limited empirical work has found evidence of this behavior by businesses during the 2007-2009 recession, and therefore may help to explain the unexpectedly modest decrease in inflation following the recession. Changes in how individuals form inflation expectations, as a result of broad changes in how the Federal Reserve conducts monetary policy, may also help to explain the unexpectedly moderate decrease in the rate of inflation after the 2007-2009 recession. After the high inflation of the late 1970s and 1980s, the Federal Reserve became more concerned with maintaining a stable rate of inflation in the face of economic shocks. Previously, the Federal Reserve accommodated changes in inflation that resulted from economic shocks. Under the previous policy regime, an economic shock that raised inflation would also increase inflation expectations, which would further increase inflation. As seen in Figure 3 , before the 1980s, the fluctuations in inflation were more volatile, with a spread of multiple percentage points from year to year. However, under the new policy regime, economic actors were less likely to shift inflation expectations as a result of an economic shock because they believed the Federal Reserve would stabilize any changes in inflation due to economic shocks. This change in how economic actors formed inflation expectations is thought to have reduced the volatility of changes in the rate of inflation during economic shocks. The decreased volatility can be seen in Figure 3 as the spread seen in core inflation decreases significantly after the early 1980s. Beginning in the 1990s, the Federal Reserve appeared to make another change in how it was conducting monetary policy. Not only was the Federal Reserve working to stabilize changes in inflation that resulted from economic shocks, but it appeared to be targeting a specific inflation rate of 2.5% core inflation per year. Economists suggested that if the Federal Reserve maintained a consistent inflation target over time then economic actors' inflation expectations would become anchored at the Federal Reserve's target inflation rate. A number of researchers have found that inflation expectations have indeed become anchored around the Federal Reserve's inflation target, and that the strength of this anchoring effect has increased since the 1990s. The increase inflation anchoring can be seen in Figure 3 , as core inflation begins hovering around 2% beginning shortly after the early 1990s. As discussed earlier, actual inflation is heavily influenced by inflation expectations. As inflation expectations become anchored at a specific rate, these expectations place pressure on actual inflation to remain at that specific rate, acting as a positive feedback loop, which pushes actual inflation back to the inflation anchor after any shock pushes actual inflation away from the anchored rate. The increased level of inflation anchoring helps to explain the lack of deflationary pressure after the 2007-2009 recession. An increase in the degree to which inflation becomes anchored may have important implications for future policymaking. As expected inflation becomes more anchored, policymakers may be able to use monetary and fiscal policy more generously without impacting the actual inflation rate. However, if individuals begin to lose confidence in the Federal Reserve's ability to maintain their target inflation rate because the Federal Reserve pursues policies incompatible with price stability, inflation expectations can become unanchored resulting in a more volatile inflation rate as a result of shifting inflation expectations. The global financial crisis and subsequent recession in the United States was unique in many ways, including the outsized increase in the proportion of individuals who were unemployed for longer than 26 weeks. As shown in Figure 4 , the percentage of unemployed individuals who had been jobless for more than 26 weeks rose to over 45% after the 2007-2008 recession, significantly higher than during any other period in the post-WWII era. The sharp rise of the long-term unemployed has been offered as another potential explanation for the missing deflation after the 2007-2009 recession. Some economists argue that inflation dynamics are driven specifically by the short-term unemployment rate, rather than the total unemployment rate (which includes short-term and long-term unemployment). Employers tend to favor the short-term unemployed so strongly over the long-term unemployed that the long-term unemployed are essentially removed from contention for employment opportunities. Employers tend to avoid hiring the long-term unemployed for a number of reasons, as discussed in the " Time Varying Natural Rate of Unemployment " section. Because the long-term unemployed are essentially removed from the labor pool, from the perspective of employers, the numbers of long-term unemployed individuals have very little impact on wage-setting decisions compared with the short-term unemployed. As a result, the long-term unemployed impact inflation to a lesser degree than the short-term unemployed. The total unemployment rate remained elevated above estimates of the NAIRU for about seven and a half years following the 2007-2009 recession, but this was largely due to the unprecedented increase in the level of long-term unemployed. The short-term unemployment rate spiked, but fell to pre-recession levels relatively quickly after the end of the recession compared with long-term unemployment, as shown in Figure 5 . Compared with the persistent unemployment gap for total unemployment after the 2007-2009 recession, the unemployment gap for the short-term unemployed dissipated much faster and therefore would have resulted in a more moderate decrease in the inflation rate. Using the short-term unemployment gap rather than the total unemployment gap to forecast inflation following the 2007-2009 recession, recent research has produced significantly more accurate inflation forecasts and has accounted for much of the missing deflation forecasted by others. Results of this research suggest that when considering the effects of monetary or fiscal policy on inflation, policymakers would benefit from using a measure of the unemployment gap that weights the unemployment rate for the short-term unemployed more heavily than the long-term unemployed. Still others have suggested that the failure of natural rate model to accurately estimate inflation following the financial crisis is evidence that the natural rate model may be incorrect or inadequate for forecasting inflation. In response to the perceived failure of the model, some researchers are searching for other potential indicators that can better explain and predict changes in inflation. The unemployment gap is used as a measure of overall economic slack to help explain changes in inflation; however, it may not be the best measure currently. One recent article has suggested that an alternative measure of economic slack based on recent minimum unemployment rates may offer an improved measure for forecasting inflation. The new measure consists of the difference between the current unemployment rate and the minimum unemployment rate seen over the current and previous 11 quarters. As the current unemployment rate rises above the minimum unemployment seen in previous quarters, inflation tends to decrease, and vice versa. This relationship appears to be relatively stable over time and, more importantly, improves on some other inflation forecasts for periods during and shortly after the 2007-2009 recession. After the 2007-2009 recession, actual unemployment rose above CBO's estimated natural rate of unemployment for 31 consecutive quarters. Average core inflation declined, as predicted, but only modestly, from about 2.0% per year between 2003 and 2007 to about 1.4% per year between 2008 and mid-2015. This modest decrease in the rate of inflation called into question the validity of the natural rate model. In response, researchers began investigating potential reasons for the unexpectedly mild decrease in inflation. A number of explanations have been offered to explain the missing deflation, ranging from increased financing costs due to crippled financial markets following the global financial crisis, to changes in the formation of inflation expectations since the 1990s, to the unprecedented level of long-term unemployment that resulted from the recession. Researchers have found a degree of empirical evidence to support all of these claims, suggesting it may have been a confluence of factors that resulted in the unexpectedly modest inflation after the recession. The natural rate model has implications for the design and implementation of economic policy, specifically limitations to fiscal and monetary policies and alternative policies to affect economic growth without potentially accelerating inflation. The natural rate model suggests that government's ability to spur higher employment through fiscal and monetary policies is limited in important ways. Expansionary fiscal and monetary policies can be used to boost gross domestic product (GDP) growth and reduce unemployment, by increasing demand for goods and services, but doing so comes at a cost. According to the natural rate model, if government attempts to maintain an unemployment rate below the natural rate of unemployment, inflation will increase and continuously rise until unemployment returns to its natural rate. As a result, growth will be more volatile than if policymakers had attempted to maintain the unemployment rate at the natural rate of unemployment. As higher levels of inflation tend to hurt economic growth, expansionary economic policy can actually end up limiting economic growth in the long run by causing accelerating inflation. The impact of inflation on economic growth is discussed in the " Inflation's Impact on Economic Growth " section below. As discussed earlier, the relationship of unemployment to the natural rate of unemployment is used as a benchmark to determine when there is either a positive or negative output gap (i.e., actual output differs from potential output). Alternative measures could be used to indicate an output gap, however, the literature surrounding this topic has largely found using the unemployment gap to be a reliable measure of the overall output gap. In general, policymakers avoid pursuing an unemployment target below the natural rate of unemployment because accelerating inflation imposes costs on businesses, individuals, and the economy as a whole. Inflation tends to interfere with pricing mechanisms in the economy, resulting in individuals and businesses making less than optimal spending, saving, and investment decisions. Additionally, economic actors (e.g., workers, firms, and investors) often take action to protect themselves from the negative impacts of inflation, but in doing so divert resources from other more productive activities. For example, to guard against inflation firms will shy from long-term investments, favoring short-term investments even if they offer a lower rate of return. Inflation's impact on economic growth is especially pronounced at higher levels of inflation than the United States has experienced in recent decades. Ultimately these inefficient decisions reduce incomes, economic growth, and living standards. For these reasons, it is generally accepted that inflation should be kept low to minimize these distortions in the economy. Some would argue that an inflation rate of zero is optimal; however, a target of zero inflation makes a period of accidental deflation more likely, and deflation is thought to be even more costly than inflation. Deflation is thought to be especially damaging as decreasing prices provide a strong incentive for consumers to abstain from purchasing goods and services, as their dollars will be worth more in the future, decreasing aggregate demand. In an effort to balance these two risks, policymakers, including the Federal Reserve, often target a positive, but low, inflation rate, generally around 2%, which reduces inefficiencies within the economy while protecting against deflation. The unexpectedly mild decrease in the rate of inflation following the sustained unemployment gap after the 2007-2009 recession suggested a weakening of the relationship between the unemployment gap and inflation, and evidence of a weakened relationship persists several years into the current economic expansion. Expansionary monetary and fiscal policies have been in place for the better part of a decade. The unemployment rate is approximating estimates of the natural rate of unemployment, and yet the inflation rate has yet to rise to the Federal Reserve's long-term target of 2% per year. The current state of the economy suggests that either the subdued relationship seen between the unemployment gap and inflation during the depths of the economic downturn appears to be persisting even as economic conditions improve, or the unemployment gap may no longer act as an accurate measure of the output gap. If the relationship between inflation and the unemployment rate has indeed weakened, it would have important implications for economic policy. On the one hand, it may allow policymakers to employ fiscal and monetary policies more aggressively without accelerating inflation at the same rate as would have been previously expected. On the other hand, however, a weakened relationship would also suggest that if inflation were to begin accelerating, a larger and more sustained period of elevated unemployment may be necessary to stabilize inflation than otherwise anticipated. Further research and time is necessary to determine if the weakened relationship seen after the recession is a temporary phenomenon specific to the financial crisis and subsequent events, or if it is a more enduring shift in the strength of the dynamic between unemployment and inflation. Alternatively, the Federal Reserve's inability to meet their inflation target despite the unemployment rate falling to levels consistent with the natural rate of unemployment, may suggest that the unemployment gap is no longer an accurate proxy for the output gap. In the second quarter of 2016, the unemployment rate was about 4.9%, consistent with estimates of the natural rate of unemployment (4.6%-5.0%), but the CBO still estimated an output gap of about 2% during the same period. The difference between the unemployment gap and output gap may be due to persistent slack in the labor market as a result of the 2007-2009 recession, which is not captured by the official unemployment rate. Alternative measures of labor market underutilization show that some of the weakness in labor markets that resulted from the recession still persists. For example, following the recession, the labor force participation rate decreased from about 66% to less than 63%. Some of this decrease is due to an aging population but some is due to individuals giving up on finding work due to poor economic conditions. The unemployment rate does not account for individuals who stopped looking for work, and therefore may understate the actual amount of slack left in the economy. This could help explain why the CBO estimates a current output gap, while the unemployment gap seems to have disappeared. Following the significant damage to the labor market as a result of the 2007-2009 recession, it is likely beneficial to use multiple measures of labor market underutilization in addition to the official unemployment rate to judge the potential size of the unemployment and output gap. In addition to fiscal and monetary policies, alternative economic policies could be used to target higher economic output without the risk of accelerating inflation by lowering the natural rate of unemployment. As discussed in the " Time Varying Natural Rate of Unemployment " section, four main factors determine the natural rate of unemployment, (1) the makeup of the labor force, (2) labor market institutions and public policy, (3) growth in productivity, and (4) contemporaneous and previous levels of long-term unemployment. Policies to improve the labor force, by either making employees more desirable to employers or improving the efficiency of the matching process between employees and employers, would drive down the natural rate of unemployment. In addition, changes to labor market institutions and public policy that ease the process of finding and hiring qualified employees, such as increased job training or apprenticeship programs, could also help lower the natural unemployment rate. A wide range of policies have been suggested that may increase the growth rate of productivity and therefore decrease the natural rate of unemployment, such as increasing government investment in infrastructure, reducing government regulation of industry, and increasing incentives for research and development. In addition, more aggressive policy interventions to help individuals find work during economic downturns may help to prevent spikes in long-term unemployment and avoid increases in the natural rate of unemployment.
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The unemployment rate is a vital measure of economic performance. A falling unemployment rate generally occurs alongside rising gross domestic product (GDP), higher wages, and higher industrial production. The government can generally achieve a lower unemployment rate using expansionary fiscal or monetary policy, so it might be assumed that policymakers would consistently target a lower unemployment rate using these policies. Part of the reason policymakers do not revolves around the relationship between the unemployment rate and the inflation rate. In general, economists have found that when the unemployment rate drops below a certain level, referred to as the natural rate, the inflation rate will tend to increase and continue to rise until the unemployment rate returns to its natural rate. Alternatively, when the unemployment rate rises above the natural rate, the inflation rate will tend to decelerate. The natural rate of unemployment is the level of unemployment consistent with sustainable economic growth. An unemployment rate below the natural rate suggests that the economy is growing faster than its maximum sustainable rate, which places upward pressure on wages and prices in general leading to increased inflation. The opposite is true if the unemployment rate rises above the natural rate, downward pressure is placed on wages and prices in general leading to decreased inflation. Wages make up a significant portion of the costs of goods and services, therefore upward or downward pressure on wages pushes average prices in the same direction. Two other sources of variation in the rate of inflation are inflation expectations and unexpected changes in the supply of goods and services. Inflation expectations play a significant role in the actual level of inflation, because individuals incorporate their inflation expectations when making price-setting decisions or when bargaining for wages. A change in the availability of goods and services used as inputs in the production process (e.g., oil) generally impacts the final price of goods and services in the economy, and therefore changing the rate of inflation. The natural rate of unemployment is not immutable and fluctuates alongside changes within the economy. For example, the natural rate of unemployment is affected by changes in the demographics, educational attainment, and work experience of the labor force; institutions (e.g., apprenticeship programs) and public policies (e.g., unemployment insurance); changes in productivity growth; and contemporaneous and previous level of long-term unemployment. Following the 2007-2009 recession, the actual unemployment rate remained significantly elevated compared with estimates of the natural rate of unemployment for multiple years. However, the average inflation rate decreased by less than one percentage point during this period despite predictions of negative inflation rates based on the natural rate model. Likewise, inflation has recently shown no sign of accelerating as unemployment has approached the natural rate. Some economists have used this as evidence to abandon the concept of a natural rate of unemployment in favor of other alternative indicators to explain fluctuations in inflation. Some researchers have largely upheld the natural rate model while looking at broader changes in the economy and the specific consequences of the 2007-2009 recession to explain the modest decrease in inflation after the recession. One potential explanation involves the limited supply of financing available to businesses after the breakdown of the financial sector. Another explanation cites changes in how inflation expectations are formed following changes in how the Federal Reserve responds to economic shocks and the establishment of an unofficial inflation target. Others researchers have cited the unprecedented increase in long-term unemployment that followed the recession, which significantly decreased bargaining power among workers.
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On May 21, 2008, the Genetic Information Nondiscrimination Act of 2008 (GINA), referred to by its sponsors as the first civil rights act of the 21 st century, was enacted. GINA, P.L. 110-233 , prohibits discrimination based on genetic information by health insurers and employers. In April 2003, the sequence of the human genome was deposited into public databases. Scientists involved in the Human Genome Project (HGP) reported that the finished sequence consists of overlapping fragments covering 99% of the coding regions of the human genome, with an accuracy of 99.999%. These rapid advances provided resources for determining the causes of, and potentially the cures for, many common, complex diseases such as diabetes, heart disease, Parkinson's disease, bipolar disorder, and asthma. Specifically, scientists hoped that the data generated by the HGP would facilitate the identification of multiple genetic factors that influence a single disease or condition. Although the sequence information was expected to help identify the genetic variants underlying disease and create a foundation for the development of genetic therapies, this scientific accomplishment raised certain considerations. For instance, the presence of a specific genetic variation may indicate a predisposition to disease but does not guarantee that the disease will manifest. An employer or health insurer could decide to take adverse action based on a genetic predisposition, and situations have arisen where discriminatory action based on this type of genetic information did occur. In addition, the fear of this occurring could deter individuals both from seeking genetic testing and services, as well as from participating in genetic research. GINA was enacted to remedy this potential situation. This report provides background on genetic research, considerations with the use and misuse of genetic information, and relevant law at the time of GINA's enactment. It also discusses the statutory provisions of GINA as enacted, the Department of Health and Human Services' (HHS's) regulations on health insurance, and the Equal Employment Opportunity Commission's (EEOC's) regulations on employment. Almost all diseases have a genetic component and, therefore, genomic research has the potential to reduce the collective burden of diseases in the general population. Clinical genetic tests are becoming available at a rapid rate; in addition, private insurers are beginning to include some clinical genetic tests in their health insurance benefits packages as evidence of the tests' clinical validity and utility accumulates. Most recently, genetic research has focused on precision medicine—a relatively new term for what has traditionally been called personalized medicine—the idea of providing health care to individuals based on specific patient characteristics, including genomic information. Researchers hope to combine genetic, environmental, clinical, behavioral, and other data to facilitate precision medicine. Precision medicine is a priority for the National Institutes of Health (NIH), which is carrying out a Precision Medicine Initiative. Part of this Initiative is the development of a national research cohort, composed of 1 million or more volunteers, whose health, genetic, environmental, and other data would be collected and used in research studies to identify novel therapeutics and prevention strategies. The HGP provided the foundational underpinnings for precision medicine. In congressional testimony, Dr. Francis Collins, then Director of the National Human Genome Research Institute (NHGRI) at the NIH, described the potential that the information generated by the HGP would likely have for clinical medicine and public health. He stated that [T]he human genome sequence provides foundational information that now will allow development of a comprehensive catalog of all of the genome's components, determination of the function of all human genes, and deciphering of how genes and proteins work together in pathways and networks. Completion of the human genome sequence offers a unique opportunity to understand the role of genetic factors in health and disease, and to apply that understanding rapidly to prevention, diagnosis, and treatment. This opportunity will be realized through such genomics-based approaches as identification of genes and pathways and determining how they interact with environmental factors in health and disease, more precise prediction of disease susceptibility and drug response, early detection of illness, and development of entirely new therapeutic approaches. As Dr. Collins stated, with the completion of the human genome sequence, scientists turned their focus to better understanding the clinical and public health implications of the sequence information. These scientific advances in genetic research, while promising, highlight the potential for misuse of the genetic information that such research generates. This concern, among other ethical, social, and legal implications of genetic research, was considered to be of enough import that a fixed portion of the total funds for the Human Genome Project were set aside to support the analysis and research of these issues. As scientific knowledge about genetics was increasing leading up to the publication of the human genome sequence, researchers and commentators expressed concern about how this information may be used when it became available. In congressional testimony, Dr. Collins stated [W]hile genetic information and genetic technology hold great promise for improving human health, they can also be used in ways that are fundamentally unjust. Genetic information can be used as the basis for insidious discrimination.... The misuse of genetic information has the potential to be a very serious problem, both in terms of people's access to employment and health insurance and the continued ability to undertake important genetic research. In the years before GINA was enacted, legal cases involving genetic discrimination were few. However, studies have shown that public fear of discrimination existed prior to and after the enactment of GINA, and that it negatively influences the uptake of genetic testing and the use of genetic information by consumers and health professionals. The Secretary's Advisory Committee on Genetics, Health and Society (SACGHS) learned that 68% of Americans are concerned about who would have access to their personal genetic information; 31% state this concern would prevent them from having a genetic test; and 68% agree that insurers would do everything possible to use genetic information to deny health coverage. A 2010 survey found that Americans are increasingly concerned about access to their genetic information; specifically, this survey found that 71% of Americans are concerned about storage of, and access to, their information, with the same percentage concerned specifically about access by health insurers. In addition, SACGHS as well as its predecessor committee, the Secretary's Advisory Committee on Genetic Testing (SACGT), sponsored two public forums in 2000 and 2004 to gather perspectives on genetic discrimination. Many comments were received from patients, consumers, health professionals, scientists, genetic test developers, educators, industry representatives, policymakers, lawyers, students, and others representing a wide range of diverse ethnic and racial groups. The comments and testimony revealed several anecdotal cases of discrimination. SACGT sent a letter to the Secretary of HHS after hearing about these cases from members of the public: During consultations with the public SACGT heard from many Americans who are concerned about the misuse of genetic information by third parties, such as health insurers and employers, and the potential for discrimination based on that information. Many stated that fear of genetic discrimination would dissuade them from undergoing a genetic test or participating in genetic research studies. Others stated that they would pay out of pocket for a genetic test to prevent the results from being placed in their medical record. Such concerns are a deterrent to advances in the field of genetic testing and may limit the realization of the benefits of genetic testing. A joint report by the Department of Labor, the Department of Health and Human Services, the Equal Employment Opportunity Commission (EEOC), and the Department of Justice (DOJ) summarized the various studies on discrimination based on genetic information. The report stated that "genetic predisposition or conditions can lead to workplace discrimination, even in cases where workers are healthy and unlikely to develop disease or where the genetic condition has no effect on the ability to perform work" and that "because an individual's genetic information has implications for his or her family members and future generations, misuse of genetic information could have intergenerational effects that are far broader than any individual incident of misuse." The National Council on Disability (NCD), an independent federal agency that advises the President and Congress on issues affecting individuals with disabilities, published a position paper on March 4, 2002 on genetic discrimination. The NCD stated that recent advances in genetic research have brought an increasing potential for genetic discrimination; that genetic discrimination is a historical and current reality; that genetic discrimination undermines the purposes of genetic research and testing; that genetic test information has little value for purposes of making employment decisions and insurance decisions; and that current law at the time was insufficient to protect individuals from genetic discrimination. Title I of GINA extended the HIPAA protections against discrimination—by group health plans and issuers of health insurance in both the group and individual markets—as they were at the time GINA was enacted. At the time of GINA's enactment, HIPAA prohibited a group health plan or issuer of a group health plan from using genetic information to establish rules for eligibility or continued eligibility and provided that genetic information shall not be treated as a preexisting condition in the absence of the diagnosis of the condition related to such information. HIPAA also prohibited a group health plan or issuer of a group health plan from using genetic information in setting a premium contribution. These protections applied to individuals within the group plans; however, they did not apply to the coverage of the whole group or to the premiums set for the group. Thus, HIPAA prohibited group health plans or issuers of group health plans from charging an individual a higher premium than a similarly situated individual; however, the law did not prevent an entire group from being charged more. The HIPAA nondiscrimination provisions did not apply to individual health insurance policies, and genetic information was able to be used to set premiums for individual policies (although HIPAA established both guaranteed issue for individuals who lose group coverage and guaranteed renewal for those with existing individual coverage). HIPAA also did not prevent group health plans or issuers of health plans from excluding coverage for a particular condition or imposing lifetime caps on all benefits, or on specific benefits. At the time of GINA's enactment, HIPAA did not prohibit group health plans or issuers of group health plans from requiring or requesting genetic information or testing. Under the HIPAA Privacy Rule at the time of GINA's enactment, health plans and insurers were able to use or disclose health information for payment and other health care operations. These included underwriting, premium rating, and other activities related to the creation, renewal, or replacement of an insurance contract. The Americans with Disabilities Act (ADA) prohibits discrimination against an individual with a disability in employment, public services, public accommodations, and communications. The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. The ADA, as amended by the ADA Amendments Act of 2008, defines the term disability with respect to an individual as having "(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment (as described in paragraph (3))." Although the statutory language of the ADA does not reference genetic traits, there was a discussion of the issue during congressional debate of the original legislation. Prior to GINA's enactment, there appears to have been no judicial decisions specifically dealing with genetic predisposition to disease and the ADA, but one case was brought by the EEOC and settled. In another case, an individual filed with the EEOC alleging genetic discrimination and received a determination that the EEOC's investigation supported her allegation of discrimination under the ADA. Prior to the enactment of the ADA Amendments Act, the ADA's definition of "disability" had been interpreted by the EEOC to apply to individuals "who are subjected to discrimination on the basis of genetic information relating to illness, disease, or other disorders." The legislative history was cited by the EEOC in its guidance to the definition of disability for its compliance manual. In this guidance, the EEOC examined the definition of disability under the ADA and concluded that the third prong—being regarded as having an impairment—prohibited discrimination based on genetic information relating to illness, disease, or other disorders. Although this EEOC interpretation was widely heralded as a significant step for the protection of rights for individuals whose genes indicate an increased susceptibility to illness, disease, or other disorders, it was limited in its application and was further narrowed by Supreme Court decisions on the definition of disability. However, at Senate hearings in 2002, EEOC Commissioner Paul Miller stated that the ADA "can be interpreted to prohibit employment discrimination based on genetic information. Nonetheless, the ADA does not explicitly address the issue and its protections are limited and uncertain." In addition, Commissioner Miller observed that even if the ADA were found to cover genetic discrimination, the requirements of the ADA may not protect workers from all types of genetic discrimination. He stated, "for example, the ADA does not protect workers from requirements or requests to provide genetic information to their employers.... In addition, once the applicant is hired, the employer may request that the employee take a medical exam, such as a genetic test, if the employer can demonstrate that the information from that test is job related and consistent with business necessity." Although the combination of the ADA's legislative history and the EEOC's guidance raised the possibility that the ADA would cover genetic discrimination, this possibility remained uncertain since there had been no reported cases holding that the ADA prohibited genetic discrimination. This uncertainty increased after Supreme Court decisions on the definition of disability under the ADA, although the Supreme Court's decisions did not directly address ADA coverage of genetic discrimination. The ADA Amendments Act rejected the Supreme Court's limited interpretation of the definition of disability and amended the ADA to provide for broader coverage. However, the ADA Amendments Act does not specifically mention genetic discrimination although the expanded definition would increase the likelihood of coverage. Thus, even if the ADA were found to cover genetic discrimination, GINA's protections are more targeted to protecting genetic information. Executive Order 13145 currently prohibits discrimination against federal employees based on protected genetic information. The executive order defines "protected genetic information" as "(A) information about an individual's genetic tests; (B) information about the genetic tests of an individual's family members; or (C) information about the occurrence of a disease; or medical condition or disorder in family members of the individual." Current health status information would not be protected under this executive order unless it was derived from the information described above. The EEOC has issued guidance on the executive order. GINA contains a statement of findings which discusses the significance of the sequencing of the human genome, the history of discrimination based on genetics, and the inadequacy of current federal and state laws. The statute is then divided into three titles: Title I, which prohibits genetic discrimination in health insurance; Title II, which prohibits genetic discrimination in employment; and Title III, which contains miscellaneous provisions on severability and child labor protections. One of the most discussed provisions of GINA was the definition of genetic information. Discussions were focused on decisions that would impact the term's scope, centering largely on the exclusions for the definition (i.e., basic demographic information that implies genetic information, such as sex) as well as how to incorporate the concept of family history. Specifically, the definition of genetic information relies on three terms, two defined in the law—"genetic test" and "family member"—and one added through regulation, "manifestation" or "manifested." Together, these terms serve to delineate the scope of the law's protections. Both Title I and Title II contain a definition of genetic information which states the following (key terms are in bold, emphasis added) GENETIC INFORMATION-(A) IN GENERAL -The term 'genetic information' means, with respect to any individual, information about—(i) such individual's genetic tests , (ii) the genetic tests of family members of such individual, and (iii) the manifestation of a disease or disorder in family members of such individual.(B) INCLUSION OF GENETIC SERVICES AND PARTICIPATION IN GENETIC RESEARCH -Such term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by such individual or any family member of such individual. (C) EXCLUSIONS -The term 'genetic information' shall not include information about the sex or age of any individual. Regulations have been promulgated implementing both titles of GINA. The Departments of Health and Human Services, Treasury, and Labor jointly issued interim final regulations with request for comments implementing Sections 101 through 103 of Title I of GINA, excluding Section 104 ("Amendments to title XVIII of the Social Security Act relating to medigap") and Section 105 ("Privacy and confidentiality"). The Department of Health and Human Services, Office for Civil Rights, issued a final rule to implement Section 105, and Section 104 incorporates, by reference to the Social Security Act, Section 1882, provisions of a model National Association of Insurance Commissioners (NAIC) regulation which addresses Medigap issuers. Additionally, the Equal Employment Opportunity Commission (EEOC) has issued regulations for Title II of GINA. All of these regulations follow the statutory definition for "genetic information." The EEOC regulations clarify that neither race nor ethnicity (if this information is not derived from genetic tests) are considered to be genetic information. As is the case with the definition for the term genetic information, the definition of genetic test is also of pivotal importance to defining the scope, and ultimately determining the impact, of the nondiscrimination protections in GINA. Importantly, this definition is different in Title I and Title II of the act. The Title I definition exempts genetic tests that are "an analysis of proteins or metabolites that [are] directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved." Title II defines genetic test as (A) IN GENERAL.—The term "genetic test" means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detects genotypes, mutations, or chromosomal changes. (B) Exceptions.—The term "genetic test" does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes. While Title II does not include the exception regarding manifested diseases contained in Title I, it does contain Section 210, which states, An employer, employment agency, labor organization, or joint labor-management committee shall not be considered to be in violation of this title based on the use, acquisition, or disclosure of medical information that is not genetic information about a manifested disease, disorder, or pathological condition of an employee or member, including a manifested disease, disorder, or pathological condition that has or may have a genetic basis. The interim final regulations follow the statutory language with respect to the definition of genetic test except that they provide specific examples of genetic and non-genetic tests to illustrate the definition's scope. The EEOC's final regulations also mirror the statutory language except that the regulations provide specific examples of genetic tests and of tests or procedures that are not genetic tests. For example, a genetic test includes a test to determine whether an individual has a BRCA1 or BRCA2 variant, which would indicate a predisposition to breast cancer, and would also include preimplantation genetic diagnosis on embryos. One of the examples given in the regulations of a test that is not a genetic test is a test for cholesterol levels, since a cholesterol test does not detect mutations. Similarly, testing for the presence of alcohol or illegal drugs is also not considered a genetic test since it is not an analysis of DNA or RNA; however, a test to determine whether an individual has a genetic predisposition for alcoholism or drug use is a genetic test. Title I of GINA strengthens and clarifies existing HIPAA nondiscrimination and portability provisions through amendments to the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act (PHSA), and the Internal Revenue Code (IRC), as well as to the Social Security Act (SSA). In this way, group plans under ERISA, group and individual plans under the PHSA, Church Plans under the IRC, and Medigap plans under the SSA are all brought under the jurisdiction of the law. The complexity of the health care financing system required this approach to extend protection to all covered individuals, regardless of their insurance situation. The HHS interim final regulations implement Sections 101, 102, and 103 of Title I of GINA; as mentioned above, they do not address the application of GINA to Medigap issuers nor do they implement Section 105 of the title. Broadly, GINA prohibits health insurers from engaging in three practices: (1) using genetic information about an individual to adjust a group plan's premiums, or, in the case of individual plans, to deny coverage, adjust premiums, or impose a preexisting condition exclusion; (2) requiring or requesting genetic testing; and (3) requesting, requiring, or purchasing genetic information for underwriting purposes. Each of these provisions is discussed below in more detail, and where applicable, modifications made by the regulations are noted. GINA prohibits health plans, group and individual health insurers and issuers, and issuers of Medicare supplemental policies from adjusting a group or individual's premium based on genetic information about an individual in the group, an individual seeking individual coverage, or an individual's family members. It also prohibits individual insurers from conditioning eligibility or continuing eligibility on genetic information, and prohibits individual insurers from treating genetic information as a preexisting condition. Issuers of supplemental Medicare policies may not deny or condition the issuance of a policy based on genetic information (and may not impose a preexisting condition exclusion based on genetic information). GINA prohibits health plans, group and individual health insurers and issuers, and issuers of Medicare supplemental policies from requesting or requiring that individuals or their family members undergo a genetic test. This prohibition does not limit the authority of a health care professional to request that an individual undergo genetic testing as part of his or her course of health care. The act provides for a research exception to this provision, by allowing a group or individual insurance issuer to request, but not require, an individual to undergo genetic testing if specific conditions are met. GINA prohibits health plans, group and individual health insurers and issuers, and issuers of Medicare supplemental policies from requesting, requiring, or purchasing genetic information for the purposes of underwriting prior to an individual's enrollment or in connection with enrollment. "Incidental collection" of genetic information would not be considered a violation. The HHS final interim rules clarify that "purposes of underwriting" does not include a request for family history or other genetic information to make a determination whether a benefit is medically appropriate for purposes of payment. Title I of the act clarifies that genetic discrimination based on the genetic information of either the fetus of a pregnant woman or an embryo legally held by an individual or family member is prohibited. The HHS interim final regulations do not modify this provision. GINA provides clearly that nothing in the act should be construed to preclude the use of information about a manifested disease or disorder in an individual (or an individual's family member) by health plans, group and individual health insurers and issuers, and issuers of Medicare supplemental policies to establish premiums or conditions of eligibility. The HHS interim final regulations additionally clarify that insurers may not utilize the manifestation of a disease in an individual in a group as genetic information about other group members in determining the premium (for example, in the case of family members covered under the same policy, where the manifestation of a disease or condition in an individual might be relevant to the other family members' risk of manifesting that same disease or condition). In addition, nothing in the act should be construed to prohibit health plans, group and individual health insurers and issuers, and issuers of Medicare supplemental policies from obtaining or using the results of genetic tests to determine payment. However, only the minimum amount of information required to achieve this purpose may be requested. HHS's interim final regulations clarify that where the appropriateness of a treatment depends on the patient's genetic makeup, an insurer may condition payment on the results of a genetic test or may deny payment for the treatment in the absence of the genetic test. A double mastectomy, for example, might be indicated for an individual without a personal history of breast cancer only in the presence of a positive BRCA1/2 genetic test result; an insurer might not cover the surgical procedure only in the presence of family history of disease but in the absence of a confirmatory genetic test. However, the rules explain that in a case like this, the use of the genetic information to determine payment would not be a violation of GINA. GINA directs the Secretary of Health and Human Services to revise the HIPAA Privacy Rule to reflect that genetic information shall be treated as health information and the use or disclosure by a covered entity of protected health information (i.e., genetic information) for the purposes of underwriting shall not be a permitted use or disclosure. The Secretary, in consultation with the Secretaries of Labor and the Treasury, had 12 months after enactment of the act to issue final regulations to carry out these revisions. On January 25, 2013, the Department of Health and Human Services, Office for Civil Rights, published a final rule to implement Section 105 of GINA. Among other things, the final rule modified the HIPAA Privacy Rule to prohibit all health plans that are covered entities under the HIPAA Privacy Rule from using or disclosing protected health information, which is genetic information, for purposes of underwriting. The HIPAA Privacy Rule defines as covered entities several types of "health plans" to which GINA does not expressly apply, including (1) long-term care policies; (2) employee welfare benefit plans; (3) certain high risk pools; (4) certain public benefit programs, such as Medicare Part A and B, Medicaid, and the Indian Health Service (IHS); and (5) any other individual or group plan, that provides or pays for the cost of medical care. The final rule clarifies that despite the statutory language of GINA only referencing those covered entities that are group health plans, a group and individual health insurance issuers, or an issuer of a Medicare supplemental policy, the prohibition on using or disclosing genetic information for underwriting purposes extends to all of the additional entities in the HIPAA Privacy Rule's definition of "health plan" except for issuers of long-term care policies. Additionally, under the terms of the final rule, the use of an individual's genetic information for underwriting purposes is barred even if authorized by an individual, and requires health plans that perform underwriting to include in their Notice of Privacy Practices (NPPs) that they are prohibited from using health information, that is genetic information, for purposes of underwriting. For group health plans and health insurance issuers offering group health insurance in the large and small group markets, GINA permits the imposition of penalties for failures to comply with the nondiscrimination requirements relating to genetic information in GINA (see " Prohibited Health Insurer Practices "). GINA authorized the Secretary to impose a penalty of $100 per day per beneficiary or participant to whom the failure relates during a period of noncompliance with the provisions in Title I. Where willful neglect was found, GINA establishes a minimum penalty of $2,500, or $15,000 for more severe or prolonged violations. There are three limitations to the penalties that may be imposed by the Secretary. First, the penalty does not apply if the Secretary determines that the person otherwise liable for the penalty did not know (and, exercising reasonable diligence, would not have known) that the noncompliance occurred. Second, the penalty does not apply to failures corrected within 30 days (in cases not due to willful neglect). Finally, a limit to the total penalty for certain unintentional failures must not exceed the lesser of $500,000 or 10% of the aggregate amount paid or incurred by the plan sponsor during the preceding year for group health plans. The statute also provides the Secretary with waiver authority, if the penalty is deemed excessive relative to the failure involved. The HHS interim final regulations are silent on the HHS and DOL secretarial enforcement authorities regarding the use of genetic information that were added under GINA; these will be addressed through future regulatory guidance. GINA prohibits discrimination in employment because of genetic information and, with certain exceptions, prohibits an employer from requesting, requiring, or purchasing genetic information. The law prohibits the use of genetic information in employment decisions, including hiring; firing; job assignments; and promotions by employers, unions, employment agencies, and labor-management training programs. The EEOC has issued regulations for Title II that generally track the statutory language. GINA defines employees and employers as those defined in Title VII of the Civil Rights Act of 1964, a state employee or employer as defined in Section 304(a) of the Government Employee Rights Act of 1991, and a covered employee or employing office as defined in Section 101 of the Congressional Accountability Act. Generally, this includes employees and applicants working in the private sector for an employer who employs 15 or more employees, federal and state governments, as well as congressional employees. The corresponding employers of these individuals, as well as employment agencies, labor organizations, and training programs, also are covered by the law. The EEOC's regulations echo the statutory language regarding employees and also include former employees. As noted previously, GINA prohibits the use of genetic information in employment decisions, including hiring, firing, job assignments, and promotions by employers, labor unions, employment agencies, and labor-management training programs. In addition, an employer, employment agency, labor union, or training program may not "request, require or purchase genetic information" with respect to the employee, individual, union member, or family member. There are statutory exceptions to the prohibition on the acquisition of genetic information for employers, employment agencies, labor unions, and training programs. However, GINA provides that, even if an exception applies, genetic information may not be used in a manner that violates nondiscrimination or confidentiality requirements. The first exception applies when one of these entities inadvertently requests or requires family medical history of the employee, individual, union member, or a family member. The House Education and Labor Report noted that this exception "addresses the so-called 'water cooler' problem, in which an employer unwittingly receives otherwise protected genetic information in the form of family medical history through casual conversations with a worker." Family medical history is not defined in the statute but the EEOC regulations define the term as meaning "information about the manifestation of disease or disorder in family members of the individual." The second exception is for health or genetic services offered by the entity as part of a wellness program. To qualify for the exception the employee, individual or union member must provide prior, knowing, voluntary, and written authorization; only the employee, individual, union member, or family member and the licensed health care professional or board certified genetic counselor involved in providing such services can receive individually identifiable information concerning the results of the services; and any individually identifiable genetic information is only available for such services and shall not be disclosed to the employer except in aggregate terms that do not identify individuals. The EEOC regulations reiterate the exception and its requirements but also provide that inducements may be offered to encourage individuals to participate in wellness programs. However, these inducements may not be offered to provide genetic information. The EEOC provides the following example in the regulations as a situation that does not violate GINA: A covered entity offers $150 to employees who complete a health risk assessment with 100 questions, the last 20 of them concerning family medical history and other genetic information. The instructions for completing the health risk assessment make clear that the inducement will be provided to all employees who respond to the first 80 questions, whether or not the remaining 20 questions concerning family medical history and other genetic information are answered. In contrast, if the health risk assessment does not make clear which questions must be answered, it would violate GINA. The regulations also provide that they do not limit the rights or protections available under the ADA, other civil rights laws, or HIPAA. For example, an employer must make reasonable accommodations, as required under the ADA to enable a person with a disability to participate in a wellness program. Finally, it is important to note that several provisions in the Patient Protection and Affordable Care Act of 2010 (ACA, P.L. 111-148 , as amended) address wellness programs. Although the EEOC has indicated that it eventually intends to issue regulations on the subject, it is currently unclear how these provisions interact with the wellness provisions in GINA. In the meantime, the EEOC recently sued a company based on allegations that its wellness program violated the statute's prohibition against genetic information discrimination. Although the case has not yet been decided, the court noted in a preliminary ruling that "great uncertainty persists in regard to how the ACA, ADA and other federal statutes such as GINA are intended to interact." The third statutory exception is for information necessary for certification procedures under federal and state family and medical leave laws. This exception was described as "eliminat[ing] the potential for conflict with existing laws." The EEOC regulations track the statutory provisions. The fourth exception, like the first, concerns the inadvertent acquisition of genetic information by the purchase of documents, such as newspapers, that are commercially and publicly available and that include family medical history. This exception was intended to address the concern that GINA could be violated by such actions as the purchase of a newspaper "containing the obituary of an employee's parent who died of breast cancer." The EEOC's regulations include electronic media, such as the Internet, television, and movies, as potential sources of genetic information. In its discussion of this exception, the EEOC examines the factors used in deciding whether a document is commercially or publicly available and determines that the key criterion is "whether access requires permission of an individual or is limited to individuals in a particular group, not whether the source is categorized as a social networking site, personal Web site, or blog." The EEOC also notes that the exception does not apply to genetic information gathered by actively searching for genetic information from commercially and publicly available sources, or to the acquisition of genetic information from a source likely to contain such information, such as a website that focuses on genetic testing. The fifth exception applies when the information involved is to be used for genetic monitoring of the biological effects of toxic substances in the workplace. However, in order for this exception to apply the employer, employment agency, labor union, or training program must provide written notice of the genetic monitoring to the employee; the employee, individual, or union member must provide prior, knowing, voluntary, and written authorization; or the genetic monitoring is required by federal or state law; the employee, individual, or union member must be informed of individual monitoring results; the monitoring must be in compliance with federal genetic monitoring regulations, or state genetic monitoring regulations; and the employer, employment agency, labor union, or training program, excluding any licensed health care professional or board certified genetic counselor, must receive the results only in aggregate terms that do not disclose the identity of specific employees. There is a sixth exception for employers and training programs but not for employment agencies or labor unions. This exception allows employers and training programs that conduct DNA analysis for law enforcement purposes as a forensic laboratory or for purposes of human remains identification to request or require genetic information from their employees, but only when it is used for analysis of DNA identification markers for quality control to detect sample contamination. The EEOC notes that this is a very limited exception. Generally, GINA requires that genetic information shall be maintained on separate forms and in separate medical files and be treated as a confidential medical record. The statute also prohibits employers, employment agencies, labor unions, and joint labor-management committees from disclosing genetic information. These entities are considered to be in compliance with the maintenance of information requirements if the genetic information is treated as a confidential record under the ADA. However, the general prohibition on disclosure is subject to six exceptions. Genetic information may be disclosed to the employee or member of a labor union (or family member receiving genetic services) at the written request of the employee or member; to an occupational or other health researcher if the research is conducted in compliance with 45 C.F.R. Part 46, which provides for protection of human research subjects; in response to a court order except that only the genetic information expressly authorized by the order shall be disclosed; if the court order was obtained without the knowledge of the employee or member to whom the information refers, the employee or member shall be informed of the court order and the information may be disclosed; to government officials who are investigating compliance with Title II of GINA, if the information is relevant; where such disclosure is made in connection with the certification provisions of the Family and Medical Leave Act or state family and medical leave laws; or to a federal, state, or local public health agency regarding a contagious disease that presents an imminent hazard of death or life-threatening illness, and there is notification. GINA also contains a provision concerning the relationship of the confidentiality provisions with the HIPAA Privacy Rule. GINA does not prohibit an entity covered under HIPAA "from any use or disclosure of health information that is authorized for the covered entity under such regulations." The EEOC final regulations track the legislative language. The EEOC in its discussion of the final regulations addresses several concerns raised by commenters. For example, the EEOC states that genetic information that had been placed in a personnel file prior to the effective date of GINA, need not be removed and its existence does not create a violation of GINA. However, disclosing such information to a third party would violate the law. Generally, GINA uses the remedies and enforcement mechanisms available under Title VII of the Civil Rights Act of 1964, although for employees covered by the Government Employee Rights Act of 1991, the Congressional Accountability Act of 1995, chapter 5 of Title 3 of the U.S. Code, or Section 717 of the Civil Rights Act of 1964, the remedies and procedures track those Acts and statutory provisions. These remedies include compensatory and punitive damages, reasonable attorney's fees, including expert fees, and injunctive relief, including reinstatement and hiring, back pay, and other equitable remedies. In general, individuals who believe they are the victims of employment discrimination based on genetic information must file a complaint with the EEOC, which is responsible for enforcing individual Title VII claims against private employers. If the EEOC declines to take action or if the agency's efforts to reach a voluntary settlement with the employer fail, an individual may file suit in federal court. The EEOC may also independently file a lawsuit against an employer. According to the EEOC, the agency received 88,778 complaints of employment discrimination in FY2014. Of those, only 333 were claims based on GINA. As a result, it appears there have been only a limited number of cases that have reached federal court. Meanwhile, the EEOC has independently pursued several cases against employers. Under Title VII, an employee may file a disparate impact claim if he believes that a neutral employment policy or practice has had a disparate impact based on race, color, religion, sex, or national origin. In contrast, GINA specifically provides that such disparate impact does not create a cause of action under its provisions. However, GINA requires that a commission be established six years after the date of enactment to review the science of genetics and make recommendations to Congress regarding whether to provide a disparate impact cause of action under GINA. Section 209 of GINA contains several rules of construction, including a provision concerning the relationship between Title I and Title II of the act. GINA provides that nothing in Title II is to be construed to limit the rights or protections of an individual under any federal or state statute that provides equal or greater protection. In addition, nothing in Title II is to limit the rights or protections of an individual to bring an action, or provide for enforcement of, or penalties for, any violation under Title I of GINA, certain sections of ERISA, the Public Health Service Act, and the Internal Revenue Code. This provision has been referred to as a "firewall" between Titles I and II, and has been described as clarifying "that employers are not liable for health insurance violations under civil rights laws unless the employer has separately violated a provision of Title II governing employers." GINA also states that it does not apply to the Armed Forces repository of specimen samples for the identification of remains; limit or expand the protections, rights, or obligations of employees or employers under applicable workers' compensation laws; limit the authority of a federal department or agency to conduct or sponsor health research conducted in compliance with rules for research on human subjects; limit the statutory or regulatory authority of the Occupational Safety and Health Administration or the Mine Safety and Health Administration regarding workplace safety and health laws and regulations; or require any specific benefit for an employee or member or a family member under any group health plan. Section 209 also specifies that any reference in Title II to genetic information concerning an individual or family member also includes the genetic information of any fetus carried by a pregnant woman. In addition, genetic information on any embryo legally held by the individual or family member would also be included in the reference to genetic information. Finally, Section 209 provides that Title II does not prohibit the activity of a group health plan or health insurance issuer offering group health insurance coverage that is authorized by Title I, and certain sections of ERISA, the Public Health Service Act, and the Internal Revenue Code. Section 210 of GINA clarifies that the act does not cover medical information that is not genetic information about a manifested disease, disorder, or pathological condition, including a manifested disease, disorder, or pathological condition that has or may have a genetic basis. The final EEOC regulations elaborate on the statutory language, specifically stating that "the acquisition, use, and disclosure of medical information that is not genetic information about a manifested disease, disorder, or pathological condition is subject to applicable limitations" under the ADA. In its discussion of the final regulations, the EEOC notes that one commenter had expressed concern that individuals who have a manifested genetic disease that is not yet substantially limiting may not be covered under either law. The EEOC declined to address this issue, stating that it had no authority to expand the coverage of GINA. However, the EEOC observed that with the enactment of the ADA Amendments Act (ADAAA), which expanded the definition of disability under the ADA, it is less likely that there would be a significant number of individuals who would not be covered by either Act. Both the EEOC rules and the HHS interim final rules add a definition for the terms "manifestation" and "manifested." Specifically, the rules define these terms to mean a disease, disorder, or pathological condition that has been or could "reasonably be diagnosed by a health care professional with appropriate training and expertise in the field of medicine involved." The rules add further that a "disease, disorder, or pathological condition is not manifested if a diagnosis is based principally on genetic information." The addition of these definitions may address the above concern regarding those individuals with a manifested genetic disease that is not yet substantially limiting. The definitions have the effect of expanding the applicability of the protections under both titles by further delimiting their exception through the exclusion of individuals with a manifested disease diagnosed principally on genetic information. This implies that the diagnosis was not carried out in the context of, or made based on, the existence of signs or symptoms of the disease or disorder, and appears likely to include those individuals with a manifested (i.e., diagnosed) genetic disease that is not yet substantially limiting (i.e., no substantial signs or symptoms). Such sums as may be necessary are authorized to be appropriated. The effective date of GINA was eighteen months after the date of enactment. GINA includes a severability provision. If any provision of the act is declared unconstitutional, the remainder of the act is not to be affected. Title III also amended section 16(e) of the Fair Labor Standards Act regarding child labor protections. The enactment of GINA continues to raise some issues for consideration. Educating the public and health care providers about the scope and application of GINA is important as implementation of the law continues. Recent data indicate that awareness of the law amongst the public is limited. A 2008 survey reported that, "only 16 percent of respondents to the survey knew that there were laws that protect the privacy of genetic information, and only one-quarter of those felt that protections were sufficient." A similar survey conducted in 2010 found that awareness of laws protecting privacy held steady at 16%, with 77% of Americans unsure whether they are protected by law. Educational efforts are particularly relevant because there are several limitations to the scope of the law of which the public and practitioners should be made aware in order to avoid confusion or misunderstanding. Importantly, the scope of the law is limited to the settings of health insurance and employment. It does not cover the following: long term care insurance; life insurance; short-term disability insurance; or long-term disability insurance. Moving forward, this distinction may need to be presented clearly to the public, so there is not an expectation of blanket protection from genetic discrimination in all settings where genetic information may be disclosed, requested, required or used. The HHS final rule implementing Section 105 ("Privacy and confidentiality") of Title I extended certain of GINA's protections to additional types of health plans, as defined under the HIPAA Privacy Rule, to which GINA did not expressly apply. This expansion of GINA's applicability is limited to the prohibition on the use of health information, that is genetic information, for underwriting purposes, as required by Section105, and does not act to extend the protections established in Sections 101-104 of Title I to these additional health plan types. Additionally, the final rule does not apply this prohibition to issuers of long-term care insurance, although they are in the HIPAA Privacy Rule's definition of "health plan"; the final rule clarifies that this is due to a lack of evidence of the effect that prohibiting the use of genetic information in underwriting may have on long-term care insurance issuers. In addition, GINA does not necessarily extend protections against discrimination in health insurance and employment to individuals with manifested diseases or disorders, genetic or otherwise. Specific provisions in Titles I and II clarify that health insurers and employers will not be in violation of GINA if they use specified information about, or knowledge of, a manifested disease or disorder to establish premiums, set enrollment eligibility or preexisting exclusion requirements, or make employment decisions (this is affected by passage of the ACA; see below). Again, educational efforts may be useful in ensuring that the public is aware of relevant limitations in the scope of the law. Finally, the passage of the ACA appears to affect GINA, and Title I provisions in particular. The ACA established a number of reforms to the private health insurance market, limiting insurers' ability in many cases to use health status or factors to discriminate in the issuance or renewal of policies. In addition, provisions in the ACA address employer wellness programs, and the information that such programs may collect from employees. This intersects with GINA in that family history or other genetic information may be requested by the employer in the context of such programs.
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On May 21, 2008, the Genetic Information Nondiscrimination Act of 2008 (GINA), referred to by its sponsors as the first civil rights act of the 21st century, was enacted. GINA, P.L. 110-233, prohibits discrimination based on genetic information by health insurers and employers. The sequencing of the human genome and subsequent advances raise hope for genetic therapies to cure disease, but this scientific accomplishment is not without potential problems. An employer or health insurer could decide to take adverse action based on a genetic predisposition to disease, and situations have arisen where discriminatory action based on genetic information did occur. In addition, there is evidence that the fear of genetic discrimination has an adverse effect on those seeking genetic testing, as well as on participation in genetic research. GINA was enacted to remedy this situation. GINA is divided into two main parts: Title I, which prohibits discrimination based on genetic information by health insurers; and Title II, which prohibits discrimination in employment based on genetic information. Title I of GINA amends the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act (PHSA), and the Internal Revenue Code (IRC), through the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as the Social Security Act, to prohibit health insurers from engaging in genetic discrimination. Title II of GINA prohibits discrimination in employment because of genetic information and, with certain exceptions, prohibits an employer from requesting, requiring, or purchasing genetic information. The law prohibits the use of genetic information in employment decisions—including hiring, firing, job assignments, and promotions—by employers, unions, employment agencies, and labor-management training programs. This report provides background on genetic information, legal implications regarding the use of this information, and relevant laws. It also discusses the statutory provisions of GINA and the regulations regarding both health insurance and employment.
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The Consumer Price Index (CPI) is probably the most widely used measure of inflation. A number of federal government programs, such as Social Security benefits and civil service retirement, are tied to increases in the CPI. In addition, the personal income tax rate schedule is indexed to the CPI. Economists use the CPI to calculate constant-dollar estimates of other economic indicators, such as retail sales and hourly earnings, which allow analysis of changes in these variables excluding the effect of changes in the price level. Each year, the CPI is used to update the income levels that determine the poverty rate. Periodic increases in many union wage and other contracts are also tied to increases in the CPI. Thus, the behavior of the CPI has major consequences for a significant portion of the population; but many may be unfamiliar with the details of its calculation. The CPI is published by the Department of Labor's Bureau of Labor Statistics (BLS). There is no specific legislation authorizing or requiring BLS to calculate and publish the CPI. Neither has legislation ever been enacted to require BLS to adopt any particular methodology in calculating the CPI. When the Bureau of Labor was first created in 1888, its task was, among other duties, to "acquire and diffuse among the people of the United States useful information on subjects connected with labor, in the most general and comprehensive sense of the word.... " In 1913, the Bureau of Labor was transferred to the newly created Department of Labor and renamed the Bureau of Labor Statistics. BLS was given slightly more specific instructions: The Bureau of Labor Statistics, under the direction of the Secretary of Labor, shall collect, collate, and report at least once each year, or oftener if necessary, full and complete statistics of the conditions of labor and the products and distribution of the products of the same ... and said Secretary of Labor may collate, arrange, and publish such statistical information so obtained in such manner as to him may seem wise. Two CPIs are published by the BLS, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and the Consumer Price Index for All Urban Consumers (CPI-U). The CPI-W is based on the purchasing patterns of only those in the population who earn more than half of their income from clerical or wage occupations, and were employed at least 37 weeks in the previous year. The CPI-W population makes up about 32% of the total population. Prior to 1978, the CPI-W was the only CPI published. Beginning in 1978, the CPI-U was introduced so that a broader share of the population would be represented in estimates of changes in the price level. The CPI-U is based on the expenditure patterns of all urban consumers and covers about 87% of the population. The CPI-U is usually the more publicized of the two price indexes. Although the CPI-U and CPI-W are slightly different indexes, the numerical difference between the two measures is typically small. Between 1989 and 2009, the CPI-U increased, overall, by 73.0% compared with an increase of 71.0% for the CPI-W. Over the same period, that translates into an average annual rate of change of 2.8% for the CPI-U and 2.7% for the CPI-W. Both the CPI-W and the CPI-U are used for inflation indexing by the federal government. One advantage to using the CPI in indexing is that the CPI is rarely revised. Definitions, the index base year, the goods and services accounted for, and the methodology used to calculate the CPI may change from time to time, but, once published, the actual index number is final. Using other measures of the price level, such as one of the price indexes associated with Gross Domestic Product, for indexing purposes poses the problem of which number to use, the preliminary estimate or one of many subsequent revisions. Since the release of January 2007 data, the CPI and all of its component indexes have been published rounded to three decimal places rather than one. The change was not meant to imply any increase in the accuracy of the CPI. Instead it is being done to maintain precision in published estimates of percentage changes. Prior to 2007, when BLS published the CPI rounded to only one decimal place, it based published figures of percentage change in the CPI on those rounded numbers so that they could be replicated by users of published CPI data. But doing that meant that some precision in the published percent change data was lost. The effect of the change was expected to be small. Both CPIs are based on retail market prices. These prices, for more than 80,000 separate items, are collected in 87 urban areas across the country from thousands of outlets, such as grocery and department stores, gasoline service stations, and hospitals, among others. BLS selects these retail establishments based on a survey showing where people do their shopping. Actual prices (except those for food) are not published because they are collected on a confidential basis. Price indexes are available in considerable detail. Examples of items for which CPI data are available include white bread, men's shirts, automobile tires, haircuts, funerals, automobile repair, and bedroom furniture. The "all-items" CPI is the index most often referred to and it is a composite index, a weighted average, based on the indexes for all of the goods and services whose prices are collected. The all-items CPI measures the price change of a fixed market basket of goods and services over time. The mix of goods and services making up the market basket is based on spending patterns established by the Consumer Expenditure Survey (CES). Based on the CES, weights are assigned to each of the goods and services that make up the market basket. These weights determine how much the price change for a given good will affect the all-items measure. For any given interval, the total price change, as measured by the all-items CPI, is the weighted average of the price changes of all of the components. With the release of data for January 2010, the CPI market basket is based on purchasing patterns described by the CES in 2007 and 2008. BLS updates the expenditure weights every two years. Table 1 shows the major expenditure categories included in the CPI and their relative importance in the CPI-U as of December 2009. Relative importance reflects both the expenditure weights and changes in relative prices. Either a larger expenditure weight, or an increase in the price of a good relative to prices for other goods may cause the relative importance to increase, and vice versa. Based on the measures of relative importance shown here, some might be concerned that medical care costs have too small a weight in the all-items index. In particular, the elderly typically spend a relatively larger share of their outlays on medical care. In calculating the CPI, however, the share of the market basket accounted for by medical care is based on "out-of-pocket" costs. This includes direct out-of pocket costs for medical care as well as indirect out-of-pocket costs for health insurance. An increasing share of medical costs are paid for by employers and government, so that out-of-pocket expenses on medical care are not as great as total outlays on medical care. It is also important to appreciate that there is considerable variation among consumers (and among elderly consumers as well) in the demand for medical care, and the relative importance of medical care in the CPI is based on an average. No single price index can accurately describe the inflation experience of every single person. Different population groups (e.g., the elderly) tend to have different purchasing patterns, and individuals' purchases vary significantly within those groups. Although many elderly may spend more on medical care than is taken into account in the CPI, there are also some elderly who spend less. For those who spend less, if medical care costs rise more rapidly than do the prices of other goods and services, the CPI will tend to overstate increases in the cost of living, other things being equal. BLS is currently investigating the behavior of an experimental CPI for the elderly population. This experimental CPI for Americans aged 62 and older rose by an average of 2.9% per year between December 1989 and December 2009. During the same period, both the CPI-U and CPI-W rose at an annual rate of 2.7%. Considerable effort is made to ensure that the CPI is a meaningful, reliable measure of changes in the price level. But it does not necessarily reflect the inflation experience of each individual consumer. To the extent that individuals spend relatively more on those goods and services whose prices are rising faster than average, they may experience a higher inflation rate than that measured by the CPI. Similarly, those who spend relatively less on goods and services whose prices are rising faster than average, may experience a lower inflation rate than that measured by the CPI. If purchasing patterns change significantly, then in the short run the CPI may tend to overstate the inflation rate. The CPI is a fixed-weight index and does not immediately take into account changes in spending patterns due to changes in relative prices. There may also be a tendency for the CPI to overstate the inflation rate because some price increases reflect improvements in the quality of goods and services. Taking quality changes into account in a price index is difficult, but BLS does attempt to make some adjustments to the CPI for quality improvements in a number of areas, including automobiles, apparel, and a number of consumer electronic goods, personal computers in particular. Home ownership costs in the CPI are treated in a special way. Prior to 1983, the home ownership component of the CPI measured changes in the cost of purchasing a new home. Since 1983 for the CPI-U and 1985 for the CPI-W, changes in the cost of home ownership have been based on the concept of "rental equivalence." Rather than measuring changes in the cost of buying a house in each period, which would include finance charges, the CPI attempts to estimate the rental value of owner-occupied housing. Thus, the CPI measures changes in the consumption aspect of housing costs and not changes in the investment value of owner-occupied housing. In addition to the all-items CPIs, BLS also publishes an index which excludes the effects of both food and energy prices. Increases in the CPI less food and energy are also referred to as the "core" inflation rate. The reason for excluding food and energy prices is that, at times, they may be more volatile than other prices and thus mask the underlying trend rate of inflation. That can be useful for policymakers to whom inflation is an important variable. The "core" rate is often mentioned prominently in press reports covering the monthly releases of CPI data. This seems to be an occasional source of confusion, leading some to conclude that food and energy prices are not taken into account in calculating Social Security cost-of-living adjustments. In fact, food and energy prices are taken into account. The all-items CPI is used to make cost-of-living adjustments, not the core index. In December 1996, a special commission chaired by economist Michael Boskin reported to the Senate Finance Committee that the CPI tended to overstate the actual rate of inflation by about 1.1% per year. Although a number of specific recommendations were made in the report, Congress took no legislative steps to require any changes in the way BLS calculates the CPI. But the methodology of calculating the CPI has changed much since it was first published and is likely to continue to do so. BLS continues to look at methods that might lead to a more accurate measure of the cost of living. As part of that process, with the release of data for July 2002, BLS introduced an alternative CPI that makes use of "chain-weights." This index is referred to as the C-CPI-U. The expenditure weights for the C-CPI-U are updated more frequently than either the CPI-U or the CPI-W, and the index itself is subject to revision. The C-CPI-U has not replaced either the CPI-U or the CPI-W, and they will continue to be used for indexing. The CPI is currently published for 26 metropolitan areas. For most of these cities, however, indexes are not published on a monthly basis. These metropolitan area indexes are only intended to compare inflation rates between cities. The metropolitan area CPIs may not be used to compare the actual cost of living between cities. Table 2 shows the metropolitan areas for which the CPI is published as well as the publication frequency. BLS has set up an Internet home page for the CPI where visitors can get a copy of the most recent CPI press release, as well as up-to-date information regarding the CPI program. The Internet address for this page is http://www.bls.gov/cpi/ . Detailed CPI data are also readily available. BLS has set up a number of ways on their website, http://www.bls.gov/cpi/#data , to obtain CPI data. By making selections from each of a succession of menus, users of BLS's website may specify the particular data they want. There is also a link to an "inflation calculator," allowing users to make their own inflation adjustments to dollar amounts. BLS has published estimates of the CPI going back as far as 1800, which makes it the longest, continuous price index series available. These data are shown in Table 3 . Data for 1800 through 1912 were derived by splicing price indexes collected in three separate, nongovernmental, studies. Prior to 1978, there was only one CPI available. For 1978 and after, the data in Table 3 correspond to the CPI-U. Given that the accuracy of the CPI remains a topic of discussion, the data for the early years of this series should be considered to be fairly crude estimates. The long series allows a noteworthy observation. Between 1800 and 1945, there was no long-term trend in the price level. During that period prices tended to fall as often as they rose. Since 1945, however, there has been a decided upward trend in the level of prices with the price level having fallen in only a few years. The decline in 2009 was the first since 1955. The figures in Table 3 show year-over-year changes in the CPI, and the index numbers for each year are the average of the monthly data for that year. Changes in the CPI are sometimes published on a December-over-December basis. That number can vary significantly from the year-over-year number depending on how the monthly changes are distributed over the period. In 2009, for example, the year-over-year change was -0.4% whereas the change from December 2008 to December 2009 was 2.7%. The CPI is an indicator of changes in the price level. At present, those changes are expressed relative to the average level of prices in the years 1982, 1983, and 1984. Thus, the average of all of the monthly CPI numbers for those three years is equal to 100. Determining the change in consumer prices between any two years is a simple percent change calculation using the formula: percentage change in the CPI = (( CPI 2 ÷ CPI 1 ) - 1 ) x 100. For example, in 2009, the CPI-U was 214.537, and in 1989 the CPI-U was 124.0. The total percentage change in the CPI-U between 1989 and 2009 was: (( 214.537 ÷ 124.0 ) - 1 ) x 100 = 73.0 percent. Calculating the percentage change between any two years at an annual rate is slightly more complicated, and requires the formula: annual rate of change in the CPI = (( CPI 2 ÷ CPI 1 ) 1/n - 1 ) x 100, where n is the number of years covered in the interval. To calculate the average annual rate of change in the CPI-U between 1989 and 2009, we use an n of 20 and the same CPI-U values as in the previous example. The average annual rate of change in the CPI-U between 1989 and 2009 was: (( 214.537 ÷ 124.0 ) 1/20 - 1 ) x 100 = 2.8 percent. Another common use of the CPI is to adjust dollar amounts for inflation, so that amounts from different years can be compared in terms of dollars of the same purchasing power. Suppose the question is how much money would have been required in 2009 to buy the same quantity of goods and services as $100 bought in 1989. To get such an estimate, the 1989 dollar value needs to be adjusted to account for the increase in consumer prices between 1989 and 2009. That requires the formula: equivalent purchasing power in period 2 = ( CPI 2 ÷ CPI 1 ) x dollar amount in period 1. For example, using the same CPI values as in the above examples, the equivalent purchasing power in 2009 of $100 in 1989 is: ( 214.537 ÷ 124.0 ) x $100 = $173.01. This same calculation can be reversed to find the purchasing power in an earlier period of a dollar amount of a more recent vintage. To do this use the formula: equivalent purchasing power in period 1 = ( CPI 1 ÷ CPI 2 ) x dollar amount in period 2. For example, using the same CPI values as in the above examples, the equivalent purchasing power in 1989 of $100 in 2009 is: ( 124.0 ÷ 214.537 ) x $100 = $57.80. Using these formulae, dollar values of constant purchasing power can be compared for any two periods for which CPI data are available. Constant dollar values are always compared in terms of the dollar's purchasing power in a particular year, known as the base year. When comparing dollars of constant purchasing power, it is important to specify the base year.
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The Consumer Price Index (CPI) is perhaps the most widely reported measure of inflation. A number of federal government programs are regularly adjusted to account for changes in the CPI, such as Social Security benefits and the personal income tax rate schedule. Thus, the behavior of the CPI has important consequences for a large number of people. Many, however, may be unfamiliar with how the CPI is estimated. For Congress, the CPI is of particular interest because of its significant effect on the federal budget. Changes in the CPI can have substantial effects on both revenues and outlays, and those changes may either reflect underlying economic conditions or result from methodological changes in the way the CPI is calculated. The CPI is based on a number of sample surveys. One of these surveys estimates the purchasing patterns of the "typical" household to determine how that household spends its money. Another survey determines where those households shop, and a third survey collects prices on the goods and services purchased by those households. The CPI measures the price level relative to a particular period. Currently, the CPI number for each month is a measure of the price level relative to what it was between 1982 and 1984. The CPI is available for a number of metropolitan areas but it does not allow comparisons of the cost of living in different cities.
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Many Members of Congress have become increasingly concerned about what can be done to address student bullying. Congressional interest is in response to high-profile incidents of bullying and their negative consequences, as well as to an increasing body of research documenting the detrimental effects of school bullying. This has spurred interest in ensuring that schools are safe, secure places for students, so that they can receive the full benefits of their education. Several bills that address school bullying have been introduced in the 113 th Congress, although none as of the date of this report have been enacted. However, currently 49 states have anti-bullying laws, although there is considerable variation in the content of these laws. This report begins with working definitions of bullying and cyber-bullying that were developed by a federal interagency working group. It provides a brief overview of research on the prevalence and impact of bullying, and it reviews research on what can be done to reduce student bullying. It discusses the responsibility of schools regarding bullying behavior; and it reviews the status of state laws that have been adopted to address student bullying. In addition, it discusses federal interagency initiatives intended to prevent bullying, and includes an appendix that summarizes many additional federal initiatives that permit some funding to be used for anti-bullying efforts. Finally, it discusses the legal issues and recent case law that define the parameters schools must consider in developing anti-bullying policies. The Centers for Disease Control and Prevention (CDC) is leading an effort to develop a consensus definition of bullying that can be used throughout the school bullying research field. A consensus definition is key to obtaining consistent and comparable data on bullying. According to CDC health scientist Alana Vivolo-Kantor: "The lack of a uniform definition hinders our ability to understand the true magnitude, scope, and impact of bullying and track trends over time. Consistent terminology with standardized definitions is necessary to improve public health surveillance of bullying and inform efforts to address bullying." For the present, a federal working group has published working definitions of bullying and cyber-bullying (see text box below). Although this report focuses on bullying of students in grades K-12, it is worth noting that elementary and secondary students are not the only potential victims of bullying. Bullying also occurs at institutions of higher education (IHEs) and at workplaces, as well as other locations. Students may be exposed to bullying at school for many reasons. Research indicates that although no single factor can explain bullying behavior, certain individuals are more vulnerable to being bullied, for example, those who have low self-esteem and are unpopular, friendless, or rejected. In addition, studies indicate that some students, including those with disabilities and those who are GLBT, are disproportionately subjected to bullying behavior. However, because bullying can happen to any student, some experts recommend that a school policy that enumerates groups protected by its anti-bullying policy also make clear that the requirements of the policy are not limited to those enumerated groups. The number of research studies on student bullying has significantly increased in recent years. However, most studies on the prevalence and/or impact of bullying are not directly comparable for several reasons: the definition of bullying is not consistent across studies; the age range of surveyed students varies; the time period for the analysis varies (e.g., bullying behavior in the last two months versus bullying behavior over a school year or lifetime exposure); the survey methodology varies; and some studies provide an overall prevalence rate for bullying, while other studies separate bullying by type (e.g., physical, emotional, or electronic). In addition, when negative outcomes are found to be associated with bullying, it is difficult to discern the extent to which the bullying behavior is responsible. One study on bullying states that it is not entirely clear whether the connections between bullying, victimization, and psychosocial difficulties reflect causes, consequences, or merely concomitant correlates of bullying and/or victimization. A Government Accountability Office (GAO) study examined four federal agency sponsored nationally representative surveys that include questions on student bullying: the National Youth Risk Behavior Survey (2011, YRBSS); the School Crime Supplement to the National Crime Victimization Survey (2012, SCS/NCVS); Health Behavior in School-aged Children (2005/2006, HBSC); and the National Survey of Children's Exposure to Violence (2008, NatSCEV). Due to differences across the surveys in definitions, the age of students surveyed, and the time frame of the studies, among other things, each survey obtained different estimates for the prevalence of bullying and cyber-bullying (or electronic bullying). Three of the surveys included an overall measure of the prevalence of bullying behavior. The overall prevalence of bullying varied across the three surveys—from a low of 20.1% to a high of 27.8%. YRBSS estimated that 20.1% of surveyed youth reported being bullied; HBSC estimated that 27% of surveyed youth reported being bullied; and SCS/NCVS estimated that 27.8% of surveyed youth reported being bullied. In addition, all of the surveys included some measure of electronic bullying. The overall prevalence of electronic bullying varied across the four surveys—from a low of 1.8% to a high of 16.2%. NatSCEV estimated that 1.8% of surveyed youth reported Internet harassment; HBSC estimated that 8.1% of surveyed youth reported having been bullied using a computer or e-mail messages or pictures, and 5.7% reported having been bullied using a cell phone; SCS/NCVS estimated that 9% of surveyed youth reported being cyber-bullied; and YRBSS estimated that 16.2% of surveyed youth reported being electronically bullied. The surveys did not obtain consistent results on whether bullying was greater for one sex, race, or ethnic group. The surveys also varied in the extent to which they collected data on additional demographic characteristics on youth who were bullied. Many researchers who focus on student bullying believe that a variety of factors interact to influence bullying behavior, including "families, schools, peer groups, teacher-student relationships, neighborhoods, and cultural expectations." The interaction of these factors can have a positive influence on reducing bullying—if a positive school environment with involved, supportive adults and teachers is created, a positive peer culture is established, and school connectedness is reinforced. Researchers also note that bullying generally occurs with the physical or virtual presence of an audience of peers. These bystanders can play an important role in reinforcing bullying behavior through laughter or other encouragement, or in curbing it by speaking out against the behavior. A 2010 meta-analysis of 153 studies evaluating predictors of being a bully, a victim, or bully-victim found some predictors were shared by both bullies and victims of bullying, including family environment, school climate, community factors, and poor social problem-solving skills. However, the authors found some factors to be more associated with one group than another. For example, bullies were more likely to have externalizing behaviors, poor academic performance, and negative thoughts or beliefs about others, and to be negatively influenced by their peers. Victims were more likely to have internalizing behaviors and negative thoughts about themselves, and to be rejected and isolated. Although both had deficits in social competence, bullies were generally more socially competent than victims. In addition, some students engage in bullying behavior and are also a victim of bullying, either simultaneously, or by switching roles over time. These so called "bully-victims" were found to be the most at risk—containing risk factors associated with both of the other two groups: That is, bully victims appeared to resemble victims by being rejected and isolated by their peers and to resemble bullies by being negatively influenced by the peers with whom they do interact. As discussed above, both victims of bullying and those who engage in bullying behavior can experience psychological difficulties and social relationship problems. Additionally, a GAO literature review of seven meta-analyses on the impact of bullying on victims indicates that bullying may result in psychological, physical, academic, and behavioral issues. Recent high profile suicides following incidents of bullying have heightened concerns about bullying behavior. The American Foundation for Suicide Prevention (AFSP) states that "Elevated rates of depression, suicidal ideation and suicide attempts have been found in youth who are bullied and also in those who bully others." However, AFSP indicates that no single factor is responsible for suicide. The factors that are correlated with suicide are multidimensional—for example, mental and developmental disorders, early life adverse events, and personality traits, among others. In addition, AFSP notes that "Suicidal ideation and suicide attempts occur in a small percentage of youth involved in bullying." Some of the research on anti-bullying programs has found mixed success from anti-bullying programs, particularly in the United States. However, a cross-national meta-analysis of 44 evaluations identified particular characteristics of school-based bullying programs that may help reduce bullying. The study found that on average, school-based anti-bullying programs decreased bullying behavior by 20%-23% and victimization by bullies by 17%-20%. This study found the intensity and duration of a program, as well as the number of program elements, to be linked with effectiveness. Other elements found important to effectiveness were parent training, parent meetings, firm disciplinary methods, classroom rules, classroom management, and improved playground supervision. The study did not find evidence that working with peers was effective. The authors also recommended that a system of accreditation for anti-bullying programs be established to help ensure that programs being adopted by schools include the elements that have been found to be effective. Another study pointed out the importance of addressing peer norms in anti-bullying programs. In peer groups where bullying is the norm, the authors of the study argue that "Until these peer norms are modified, it is likely that bullying behaviors will remain intractable in our schools." Resources for states and schools on effective anti-bullying programs are becoming more widely available. There has been an increased focus in recent years on the importance of school climate to preventing bullying and improving a variety of other school indicators. The National School Climate Center has published a resource that addresses the implementation of positive school climate practices as they relate to a variety of issues important for schools, including school bullying. In August 2008, ED published a document to assist schools in evaluating anti-bullying policies and practices titled Effective Evidence-based Practices for Preventing and Addressing Bullying . In addition, several federal agencies maintain websites that include extensive information on anti-bullying programs that have proved effective or are promising. As of the date of this report, 49 states have at least one anti-bullying law, although the content of these laws varies considerably. The majority of these laws direct school districts to adopt anti-bullying policies. However, the requirements placed on schools by these laws are quite varied. In 2010, ED issued an in-depth report focused on state bullying laws. The report noted the surge in state legislation addressing bullying in recent years, with 120 bills or amendments to existing legislation introduced between 1999 and 2010. According to the report, the landscape of state legislation has been changing as new bills (or amendments to existing laws) that address student bullying have been introduced that reflect: the rapidly evolving political and policy environment surrounding bullying in schools, where lawmakers are continually refining legislative expectations for schools in response to the new problem dimensions (e.g., the growth of cyber-bullying), and to emerging research concerning effective policy strategies for combating student bullying. The report's evaluation of the content and expansiveness of these laws highlighted the tremendous variation in these laws. The report was based on the 46 states that had bullying laws in place prior to the study. According to the report all but three of these states included definitions of what behaviors were prohibited. All but one of the 46 states required school districts in the state to adopt bullying policies. Forty-one of these states had developed model bullying policies, and 36 states included a prohibition on cyber-bullying or bullying using electronic media. In addition, 13 states included a provision stating that schools could address bullying that occurs outside of school grounds if it creates a hostile school environment. The report delineated 11 key components of a comprehensive state anti-bullying statute. The topics addressed by these 11 key components include the following: Purpose Statement Statement of Scope Specification of Prohibited Conduct Enumeration of Specific Characteristics Development and Implementation of Local Policies Review of Local Policies Communication Plan Training and Prevention Education Transparency and Monitoring Statement of Rights to Other Legal Recourse The report classified each state's legislation into one of three categories for each key component on a continuum from least to most expansive and scored them from 0-2. Key components in more expansive state laws were usually more inclusive and more prescriptive, used less discretionary language, or established stronger measures of accountability. There was considerable variation across states in the number of the 11 key components included in state law, and in the level of detail and scope in the components that were included. The report indicates that it did not include an analysis of how effectively school districts and individual schools are implementing these anti-bullying polices. A second phase of the study will address implementation in a sample of school districts and schools: While this report focuses on documenting and profiling policy across the states, these policies may not benefit schools or students unless they can be successfully implemented. For example, legislation that defines prohibited bullying behaviors, and specifies graduated and substantial sanctions, will often require extensive implementation procedures for the implementing of the sanction (e.g., expulsion). Whether these necessary actions are feasible within resource constraints cannot be determined through a policy review alone. Schools must balance a variety of factors in developing policies to address bullying. Among other things, they must meet state, federal, and local regulations and statutory requirements. Although resources on factors to consider in developing a comprehensive school anti-bullying policy are becoming more widely available, developing and implementing comprehensive and effective bullying policies can be challenging for schools. As more schools adopt anti-bullying policies, a variety of potential policy issues have arisen—including the wide variation in the coverage provided by these policies, the potential difficulty in ensuring civil rights laws are not violated while simultaneously ensuring that constitutional protections on free speech are not impinged upon, and the particular difficulties of developing policies to address the rising phenomenon of cyber-bullying. Although cyber-bullying frequently occurs off school grounds, it can have negative effects that are felt at school. Developing policies that address cyber-bullying can be a particular challenge for schools. School districts must deal with evolving case law on issues related to cyber-bullying that may cause uncertainty regarding a school's legal responsibility or potential culpability. For example, in some instances courts have prohibited disciplining a student for out of school speech. (See discussion of the Tinker standard under " Legal Issues .") Cyber-bullying experts Sameer Hinduja and Justin Patchin recommend that schools ensure that their current policies on harassment and bullying permit disciplining students for cyber-bullying: They note that "If their policy covers it, cyber-bullying incidents that occur at school—or that originate off campus but ultimately result in a substantial disruption of the learning environment—are well within a school's legal authority to intervene." The authors further note that Even though the vast majority of these incidents can be handled informally (calling parents, counseling the bully and target, expressing condemnation of the behavior), there may be occasions where formal response from the school is warranted. This is particularly the case in incidents involving serious threats toward another student, if the target no longer feels comfortable coming to school, or if cyber-bullying behaviors continue after informal attempts to stop it have failed. In these cases, the authors suggest that detention, suspension, changes of placement, or even expulsion may be necessary. If these extreme measures are required, it is important that educators are able to clearly demonstrate the link to school and present evidence that supports their action. In December of 2010, the U.S. Department of Education issued a Dear Colleague Letter (DCL) that provided guidance on schools' responsibilities regarding bullying, in particular how some forms of bullying could rise to the level of discriminatory harassment, and as a consequence, might violate civil rights statutes. Several civil rights statutes explicitly protect against harassment based on race, color, national origin, sex, and disability. (See discussion of " Legal Issues .") Several of these laws are enforced by ED's Office for Civil Rights (OCR). If a school or Institution of Higher Education fails to adequately address harassment of a student that falls under one of these protected categories, it has not met its statutory obligations to protect the student according to the DCL: Harassment creates a hostile environment when the conduct is sufficiently severe, pervasive, or persistent so as to interfere with or limit a student's ability to participate in or benefit from the services, activities, or opportunities offered by a school. When such harassment is based on race, color, national origin, sex, or disability, it violates the civil rights laws that OCR enforces…. A school is responsible for addressing harassment incidents about which it knows or reasonably should have known. Furthermore, according to the DCL, addressing the discriminatory harassment through a school's anti-bullying policy is not sufficient: If an investigation reveals that discriminatory harassment has occurred, a school must take prompt and effective steps reasonably calculated to end the harassment, eliminate any hostile environment and its effects, and prevent the harassment from recurring. These duties are a school's responsibility even if the misconduct also is covered by an anti-bullying policy, and regardless of whether a student has complained, asked the school to take action, or identified the harassment as a form of discrimination. It is important to note that students with disabilities who are victims of bullying may be able to file a complaint under Section 504 of the Rehabilitation Act (Section 504), Title II of the American with Disabilities Act (Title II), and the Individuals with Disabilities Education Act (IDEA) in addition to pursuing redress through state anti-bullying laws, state civil rights legislation, other state laws, or in some circumstances through other federal civil rights legislation. This issue is addressed in an ED Dear Colleague letter issued on July 25, 2000. According to ED, state and school districts are required by Section 504, Title II, and IDEA to: ensure that a free appropriate public education (FAPE) is made available to eligible students with disabilities. Disability harassment may result in a denial of FAPE under these statutes. Parents may initiate administrative due process procedures under IDEA, Section 504, or Title II to address a denial of FAPE.... In addition, an individual or organization may file a complaint alleging a violation of IDEA under separate procedures with the state educational agency. A recent ED DCL provided more detailed guidance on the responsibility of schools to address bullying of students with disabilities: Whether or not the bullying is related to the student's disability, any bullying of a student with a disability that results in the student not receiving meaningful educational benefit constitutes a denial of FAPE under IDEA and must be remedied. The DCL also made clear that care must be taken in considering changing the placement of a student with a disability who is being bullied (i.e., the school must ensure that the student remains in the least restrictive educational environment in order to provide the student a FAPE). Some groups have raised concerns about the guidance ED provided in its December 2010 Dear Colleague Letter. The National School Boards Association (NSBA) submitted a letter to ED stating that the guidance would place too broad an obligation on schools. According to the NSBA's letter: our fear is that absent clarification, the Department's expansive reading of the law as stated in the DCL will invite misguided litigation that needlessly drains precious school resources and creates adversarial climates that distract schools from their educational mission. In addition, the American Jewish Committee and the Religious Freedom Education Project/First Amendment Center issued proposed guidelines for school administrators intended to address bullying while also protecting students' freedom of speech and expression. Fifteen additional organizations signed on to these guidelines. The guidelines note that schools must balance safety concerns and free expression. They argue that unless student speech causes a substantial disruption at school it should not be censored. In response to these proposed guidelines the Anti-Defamation League (ADL) submitted a letter to ED calling them "ill-conceived, unnecessary, deeply flawed, and counterproductive to confronting the growing and serious problem of bullying and cyber-bullying." Furthermore, the ADL letter notes that Bullying situations very rarely erupt as conflicts over political or religious speech.... Instead, they much more often involve the intentional targeting of an individual with less physical or social standing for physical or verbal abuse. Targeted students are in a very different power position than those who are doing the bullying. The aggressor's objective is not to convince his/her target of the rightness of a policy position—it is, rather, to cause physical or emotional harm. There are currently several federal initiatives that address student bullying. However, many of these initiatives are not solely or primarily focused on student bullying, but permit some funds to be used for this purpose. This section of the report summarizes interagency efforts to address student bullying. In addition, this report includes an Appendix that briefly summarizes selected federal bullying initiatives that may allow funding to be used to address school bullying. The Appendix focuses on some of the initiatives that have been undertaken by the three federal agencies that are most involved in addressing this issue: The U.S. Department of Education (ED), the U.S. Department of Health and Human Services (HHS), and the U.S. Department of Justice (DOJ). Note that bullying is often a small, optional part of the initiatives included in the Appendix. The initiatives that are included should not be viewed as an exhaustive list of federal initiatives that may address school bullying. Representatives from the U.S. Departments of Agriculture, Defense, Education, Health and Human Services, the Interior, and Justice; the Federal Trade Commission; and the White House Initiative on Asian Americans and Pacific Islanders have formed a Federal Partners in Bullying Prevention Steering Committee. The Federal Partners work to coordinate policy, research, and communications on bullying topics. The Federal Partners have created a website, http://www.stopbullying.gov , which provides extensive resources on bullying, including information on how schools can address bullying. In addition, with leadership from the U.S. Department of Education (ED), the Federal Partners have sponsored three anti-bullying summits attended by education practitioners, policymakers, researchers, and federal officials. With ED and HHS, the CDC is currently leading an effort to develop a consensus definition of bullying that is intended to provide a consistent definition that will enhance comparability of data across studies and consequently lead to better measurement and tracking of bullying, as well as to improved prevention and responses to bullying. Three agencies currently collaborate on a program called Safe Schools/Healthy Students (SS/HS). SS/HS is funded jointly by ED and HHS's Substance Abuse and Mental Health Services Administration (SAMHSA). The program is administered by ED, SAMHSA, and DOJ. Although SS/HS is not primarily an anti-bullying program, grantees may use program funds to include an anti-bullying component as part of their overall comprehensive plan of activities, programs, and services focusing on healthy childhood development and the prevention of violence and alcohol and drug abuse. SS/HS grants are awarded competitively to local educational agencies (LEAs). LEAs that receive a grant are required to establish partnerships with local law enforcement, public mental health, and juvenile justice agencies/entities. Additionally, six agencies collaborated (U.S. Department of Education, U.S. Department of Health and Human Services, U.S. Department of Homeland Security, U.S. Department of Justice, Federal Bureau of Investigation, and the Federal Emergency Management Agency) to develop and publish comprehensive guides for developing high-quality emergency operations plans. Three separate guides were published; each was targeted to a different audience—elementary and secondary schools, institutions of higher education, and houses of worship. Currently, there are no federal statutes that explicitly prohibit student bullying or cyber-bullying. Under some circumstances, however, bullying in schools may be prohibited by certain federal civil rights laws. In contrast, many states have laws that explicitly prohibit bullying. In addition, bullying may, in some instances, constitute a violation of state criminal or tort law. The federal and state laws that govern traditional forms of bullying are described below, followed by a separate section that discusses federal and state laws that may pertain to cyber-bullying. Under certain circumstances, federal civil rights statutes may be used to combat bullying in schools. The applicable federal civil rights statutes that prohibit discrimination in schools include Title VI of the Civil Rights Act of 1964 (CRA), which prohibits discrimination on the basis of race, color, or national origin in federal funded programs or activities; Title IX of the Education Amendments of 1972, which prohibits discrimination on the basis of sex in federally funded education programs or activities; Section 504 of the Rehabilitation Act of 1973, which prohibits discrimination on the basis of disability in federally funded programs or activities; Title II of the Americans with Disabilities Act of 1990, which prohibits discrimination on the basis of disability by state or local governments; Title IV of the CRA, which bars discrimination in public schools on the basis of race, color, sex, religion, or national origin; and the Equal Educational Opportunities Act, which prohibits states from denying equal educational opportunities based on race, color, sex, or national origin. The latter two statutes were largely designed to combat segregation in public schools. Discriminatory conduct under these statutes includes peer harassment if such harassment is sufficiently serious that it creates a hostile environment and if such harassment is encouraged, tolerated, not adequately addressed, or ignored by school employees. If the bullying conduct in question involved discrimination or harassment on the basis of race, color, national origin, sex, or disability under the above statutes, then it is prohibited by federal law. However, bullying that does not constitute discrimination on these grounds is not covered. In 2010, ED issued guidance that discusses when student bullying or harassment may violate federal education anti-discrimination laws and that clarifies a school's obligation to combat such bullying or harassment. The guidance includes a discussion of when bullying or harassment that targets lesbian, gay, bisexual, or transgender students may be a form of sex discrimination that violates Title IX, as well as a section that describes when bullying or harassment of students who share a particular religion may constitute national origin discrimination in violation of Title VI. Although none of these civil rights statutes explicitly prohibits discrimination on the basis of sexual orientation or gender identity, there may, as ED's guidance notes, be instances in which such discrimination may also be a form of sex discrimination that violates Title IX. In the employment context, the Supreme Court has recognized that sex discrimination may encompass same-sex sexual harassment, meaning that sex discrimination is prohibited even if the harasser and victim are members of the same sex. The Court has also ruled that gender stereotyping is a form of discrimination on the basis of sex. Therefore, if a student who is gay or transgender is being harassed because of a failure to conform to gender stereotypes, such harassment is prohibited by Title IX. It is important to note, however, that Title IX prohibits sexual orientation or gender identity discrimination only when it constitutes a form of sex discrimination. Thus, the statute does not prohibit all forms of sexual orientation or gender identity discrimination or harassment of students. Likewise, although none of the civil rights statutes described above explicitly prohibits discrimination on the basis of religion, there may be instances in which such discrimination may also be a form of national origin discrimination that violates Title VI. According to ED, "harassment against students who are members of any religious group triggers a school's Title VI responsibilities when the harassment is based on the group's actual or perceived shared ancestry or ethnic characteristics, rather than solely on its members' religious practices." Thus, for example, Jewish, Muslim, or Sikh students who share a religious identity may be victims of national origin discrimination if they are being bullied or harassed due to actual or perceived ancestry or ethnicity. State laws also offer some protection to victims of bullying. Indeed, some states have statutes that explicitly prohibit bullying, while all states have general criminal and tort laws that may, under certain circumstances, provide remedies to victims of bullying. For example, certain forms of bullying are likely to violate a state's general laws against criminal assault and battery or other infractions such as disorderly conduct. Thus, bullies may incur penalties in states without explicit anti-bullying statutes and may even incur stiffer penalties under assault and battery statutes in states that also have anti-bullying laws. Furthermore, tort law remedies, which allow bullying victims to sue on their own behalf, are available in all states. Tort law, which is created by both court decisions and statutory enactments, is generally intended to provide a mechanism by which individuals who have been injured can sue to recover damages. Tort law also serves as a deterrent to prevent similar injurious activities in the future. With regard to bullying, typical tort actions include intentional tort claims or negligent tort claims. Lawsuits based on an intentional tort theory typically involve claims that fall into two categories: assault and/or battery. In general, assault claims involve fear of harmful or offensive touching, while battery claims involve actual harmful or offensive touching. Lawsuits based on a negligent tort theory generally involve claims against schools for failure to reasonably supervise students or employees or for failure to anticipate the wrongful conduct of such third parties. In order to succeed in such claims, plaintiffs must establish that the school owed them a duty of supervision, that the school breached that duty, that the breach was a foreseeable cause of an injury, and that an actual injury resulted. Finally, it is important to note that many school districts and individual schools have anti-bullying policies that may be applicable. Cyber-bullying, which generally refers to harassment occurring among school-aged children through the use of the Internet, may or may not overlap with bullying that occurs in schools. Depending on the circumstances, some or all of the federal and state laws discussed above may apply to cyber-bullying. In addition, several states have passed legislation to prohibit cyber-bulling. In many cases, such legislation requires or authorizes school districts to adopt cyber-bullying policies. It is important to note that the types of laws that may be invoked to combat cyber-bullying will vary depending on the circumstances of the particular case and thus may not be limited to the statutes cited above. For more information on legal protections for victims of cyber-bullying, see CRS Report RL34651, Protection of Children Online: Federal and State Laws Addressing Cyberstalking, Cyberharassment, and Cyberbullying , by [author name scrubbed]. As noted above, there may be constitutional principles that limit the authority of federal, state, or local governments or schools from enacting anti-bullying laws and policies. These constitutional considerations primarily involve the First and Fourteenth Amendments. The First Amendment declares that "Congress shall make no law ... abridging the freedom of speech." The Fourteenth Amendment's due process clause imposes the same restriction upon the states, many of whose constitutions have a comparable limitation on state legislative action. Although the First Amendment guarantees free speech, the right is not absolute. Governments impose limitations on many types of speech, and courts frequently distinguish between constitutionally protected speech and other less socially valuable categories of speech. One such example of unprotected speech is speech that constitutes a true threat. The Supreme Court has decided several "true threat" cases that provide the constitutional parameters that states or localities must meet when seeking to establish anti-bullying laws or policies. In Watts v. United States , the Court held that only "true threats" are outside the scope of the First Amendment. In Watts , the defendant attended a political rally and made the statement, "I have already received my draft classification ... I am not going. If they ever make me carry a rifle the first man I want to get in my sights is [President] L.B.J." The defendant was arrested and charged with violating 18 U.S.C. Section 871(a) for "knowingly and willfully ... [making a] threat to take the life of or to inflict bodily harm upon the President of the United States." The Court held that, although the federal statute was not unconstitutionally overbroad, the defendant's statement was protected because it was not a "true threat." The Court found that the content of Watts's statement, the context in which the statement was made, and the audience's reaction to the statement were all supportive of Watts's claim that he engaged in protected "political hyperbole." The Court recognized that "true threats" should not be afforded First Amendment protection, and stated, "What is a threat must be distinguished from what is constitutionally protected speech." Watts did not establish a bright-line test for distinguishing a true threat from protected speech. As such, lower courts have created varying tests for determining whether speech rises to the level of a true threat. The main point of contention among the appellate courts is whether the focus of a "true threat" test should be on the speaker or the listener. Some courts evaluate the existence of a threat by determining whether the speaker should reasonably have foreseen his words to be threatening, while others rest the determination on whether a reasonable recipient would be threatened by the statement. Based on these principles, it is possible that anti-bullying laws or policies could be deemed constitutionally deficient if the prohibited behavior does not rise to the level of a "true threat" under most circumstances. This analysis, however, may differ depending on whether the challenged language is contained in a state statute or school policy. In the school context, school officials who use anti-bullying policies to take disciplinary action against students may face legal challenges based on the First Amendment. While students generally retain the protections of the First Amendment, these protections may not always mirror the constitutional protections afforded in other contexts. For example, in Tinker v. Des Moines Independent Community School District , the Court held that student expression may be regulated only if it would substantially disrupt school operations or interfere with the rights of others. In Tinker , students wore black armbands to school to protest the United States' involvement in Vietnam, despite knowledge that such action was in violation of school policy. The students were asked to remove the armbands, and upon their refusal were suspended until they came to school without the armbands. The Court held that the wearing of armbands for the purpose of expressing different viewpoints is the type of symbolic act within the protection of the First Amendment. Specifically, the Court ruled that "First Amendment rights, applied in light of the special characteristics of the school environment, are available to teachers and students. It can hardly be argued that either students or teachers shed their constitutional rights to freedom of expression at the schoolhouse gate." The Court subsequently refined the Tinker rationale as it applies to verbal expression or "pure speech." In Bethel School District 403 v. Fraser , the Court ruled that school officials had the authority to discipline a student for violating school rules by delivering a lewd speech at a school assembly. Shifting its focus from the students' rights articulated in Tinker , the Court instead emphasized the school's duty to inculcate habits and manners of civility and teach students the boundaries of socially appropriate behavior. In addition, the Court noted the importance of protecting minors from vulgar, lewd, or indecent language. As such, the Court concluded that the nomination speech had a disruptive effect on the education process, and that it was up to school officials to determine what manner of speech in the classroom or in school assembly is appropriate. While it is undisputed that the First Amendment does not protect "offensive" speech while on school grounds, courts are less clear when the speech occurs off school premises. For example, in J.S. v. Bethlehem Area School District , an 8 th grader created a website that contained derogatory remarks regarding a math teacher and a principal. Most of the website was devoted to ridiculing the math teacher, comparing her to Adolph Hitler and making fun of her physical appearance. In addition, the site contained a solicitation for contributions to pay for a "hit man." School officials subsequently expelled the student, citing the extreme emotional distress suffered by the math teacher and the disruption the website caused at the school. The student argued that his website was protected speech. In reviewing the case, the Pennsylvania Supreme Court decided two issues: (1) whether the student's speech constituted a true threat; and (2) whether the Tinker and Fraser standards permit a school district to discipline a student for off-campus speech. In addressing the "true threat" issue, the court determined that, although the website was in extremely poor taste, it was not a "true threat." Specifically, the court stated that "[w]e believe that the [w]ebsite, taken as a whole, was a sophomoric, crude, highly offensive and perhaps misguided attempt at humor or parody. However, it did not reflect a serious expression of intent to inflict harm," as the site focused primarily on the teacher's physical appearance, utilizing cartoons, hand drawings, and a reference to Adolph Hitler. The court then addressed whether First Amendment jurisprudence permitted the school to discipline a student for off-campus speech. It dismissed the argument that the website was off-campus speech beyond the school's jurisdiction. Specifically, the court stated that "[w]e find there is a sufficient nexus between the [w]ebsite and the school campus to consider the speech as occurring on-campus." The court made this determination because the student had accessed the site at school, showed it to a fellow student, and informed other students about the site. The court then reasoned that school officials could punish the student under the Tinker or Fraser standard —under the Fraser standard because the speech on the website was vulgar and highly offensive, and under the Tinker standard inasmuch as the website caused a substantial disruption of school activities. Ultimately, court rulings in this area tend to depend on the circumstances that arise in a given case, with courts sometimes upholding a school's disciplinary actions and other times ruling in favor of a student's right to free speech. Another constitutional constraint that legislators and school administrators may face when drafting legislation or school policies aimed at curtailing bullying is the Fourteenth Amendment. The Fourteenth Amendment's due process clause provides that "[n]o State shall ... deprive any person of life, liberty, or property, without due process of law.... " Under the due process clause, criminal statutes that lack sufficient definiteness or specificity may be held "void for vagueness." A governmental regulation or statute may be declared void if it fails to give a person adequate warning that his or her conduct is prohibited or if it fails to set out adequate standards to prevent arbitrary and/or discriminatory enforcement. Indeed, a statute may be so vague or threatening to constitutionally protected activity that it can be pronounced unconstitutional on its face. For example, in Papachristou v. City of Jacksonville , a unanimous Court struck down as facially invalid a vagrancy ordinance that punished: dissolute persons who go about begging, ... common night walkers, ... common railers and brawlers, persons wandering or strolling around from place to place without any lawful purpose or object, habitual loafers, ... persons neglecting all lawful business and habitually spending their time by frequenting houses of ill fame, gaming houses, or places where alcoholic beverages are sold or served, persons able to work but habitually living upon the earnings of their wives or minor children. The Court found the statute facially invalid, as it failed to provide fair notice or require specific intent to commit an unlawful act. The Court concluded that the statute permitted arbitrary and erratic arrests and convictions, provided police officers too much discretion, and criminalized activities that are normally innocent. When evaluating the constitutionality of anti-bullying laws or policies, the courts may apply these due process principles. For example, in Flaherty v. Keystone Oaks School District , a student filed a lawsuit after being disciplined for posting on an online message board devoted to high school volleyball. A federal district court held that the breadth of student handbook policies pertaining to discipline and technology was overreaching, thus violating students' free speech rights. In addition, the court held that the policies were unconstitutionally vague in definition and as applied. The court found the school policies unconstitutionally overbroad for several reasons. First, the policies were not referred to or incorporated in the student handbook. In addition, the policy "authorizes discipline where a student's expression that is abusive, offending, harassing, or inappropriate, interferes with the educational program of the schools." This standard, concluded the court, did not comply with the Tinker requirement that discipline should be reserved for those circumstances that cause a substantial disruption to school operations. Finally, the court noted that even if it did not find the policy overbroad, it would find the student handbook policies unconstitutionally vague, as the terms "abuse, offend, harassment, and inappropriate" were not defined in any significant manner. In addition, the court found the policies not only vague in definition but also in application. The court noted that school personnel had varying interpretations of the policies. As such, the court concluded that the policies were vague enough to result in arbitrary enforcement. Therefore, the court concluded that the student handbook policies did not provide the student with adequate warning of proscribed conduct. Ultimately, when drafting legislation or school policies to combat student bullying, legislators and school administrators must consider the constitutional constraints imposed by the First and Fourteenth Amendments. Specifically, such officials must ensure that statutes and school policies are narrow enough not to infringe upon protected speech and specific enough not to be found unconstitutionally vague.
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Many Members of Congress have become increasingly concerned about what can be done to address student bullying. This concern has arisen in response to high-profile bullying incidents that have occurred in recent years, and due to a growing body of research on the negative consequences of school bullying. Congress is interested in ensuring that schools are safe, secure places for students, so that they can receive the full benefits of their education. Several bills that address school bullying have already been introduced in the 113th Congress, although none has been enacted as of the date of this report. Some of the research on anti-bullying programs has found mixed success, particularly in the United States. However, a meta-analysis of 44 evaluations identified particular characteristics of school-based bullying programs that may help reduce bullying. This study found the intensity and duration of a program, as well as the number of program elements, to be linked with effectiveness. Other factors found to be important to effectiveness were parent training, parent meetings, firm disciplinary methods, classroom rules, classroom management, and improved playground supervision. Currently, there is no federal statute that explicitly prohibits student bullying or cyber-bullying. Under some circumstances, however, bullying may be prohibited by certain federal civil rights laws. In addition, bullying may, in some instances, constitute a violation of state criminal or tort law. There are several federal initiatives that are specifically focused on student bullying, including interagency initiatives. In addition, there are a variety of federal initiatives that are not solely or primarily focused on student bullying, but permit some funds to be used for this purpose. Representatives from the U.S. Departments of Agriculture, Defense, Education, Health and Human Services, the Interior, and Justice, as well as the Federal Trade Commission and the White House Initiative on Asian Americans and Pacific Islanders, have formed a Federal Partners in Bullying Prevention Steering Committee. The Federal Partners work to coordinate policy, research, and communications on bullying topics. The Federal Partners have created a website, http://www.stopbullying.gov, which provides extensive resources on bullying, including information on how schools can address bullying. Although there is currently no federal anti-bullying statute, there has been a surge in state legislation in recent years. A Department of Education (ED) study found that between 1999 and 2010, 120 bills and amendments to existing bills were introduced by states. Currently, 49 states have passed anti-bullying legislation. The majority of these laws direct school districts to adopt anti-bullying policies. However, the requirements placed on schools by these laws are quite varied. In addition, many of these laws do not contain all the key components of anti-bullying legislation that the U.S. Department of Education identified as important in a document it distributed to school districts.
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This report discusses the concept of resilience in the context of critical infrastructure and homeland security. It also identifies and discusses issues related to the evolution of policy and programs at the Department of Homeland Security (DHS) that are meant to, or could, promote the resiliency of the nation's critical infrastructure. The purpose of the report is to aid Congress in its oversight of critical infrastructure programs and activities at DHS. The U.S. PATRIOT Act ( P.L. 107-56 , Sec. 1016(e)) defined critical infrastructure as: systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters. DHS has identified 18 sectors of the economy that they believe possess such systems and assets. Among these are electric power generation and distribution, drinking water, communications and information systems, oil and gas production and distribution, transportation systems, and banking and finance. DHS's 2009 National Infrastructure Protection Plan defined resilience as "the ability to resist, absorb, recover from, or successfully adapt to adversity or a change in conditions." In a homeland security context, a change of conditions implies a terrorist attack, a natural hazard, such as hurricane or earthquake, or a technological failure, such as a dam collapse or a serious accident at a nuclear power plant. Reducing the potential risks associated with the loss of critical infrastructure resulting from a terrorist, natural hazard, or technological disaster (hereinafter referred to collectively as all-hazard events) is a key element in the nation's homeland security strategy and a topic of continued interest in Congress. To the extent that resilience can contribute to reducing that risk, Congressional interest extends to the policies and programs associated with promoting resilience. This report focuses on the resilience of critical infrastructure. The resilience of a community, a region, or the nation as a whole is also important to homeland security, and depends in part on the resilience of critical infrastructure, but also involves a broader range of elements, behaviors, and social-economic relationships that are beyond the scope of this report. The Merriam-Webster dictionary defines resilience as "the ability to recover from or adjust easily to misfortune or change." Researchers in different fields, including psychology, economics, ecology, and highly complex engineering systems have sought to apply this concept to the systems they study. Beginning in the 1990s, researchers and policymakers studying earthquakes and earthquake policy began applying the term to communities and their vital infrastructures (water, electricity, transportation, etc., also referred to as lifelines) as they looked for ways to mitigate the impact from earthquakes. Moved by efforts to look at homeland security from an all-hazard perspective, and informed largely by the modeling ideas from the earthquake community, researchers and policy analysts are now considering the concept in terms of reducing the risks associated with the disruption of critical infrastructure operations resulting from terrorist attacks. There are almost as many definitions of resilience as there are people defining it. Most definitions, if not all, assume a change in the system's normal operating environment that has the potential, if not the effect, of disrupting normal system performance. Many definitions of resilience assume a momentary disruption or loss in performance followed by a quick recovery to normal system performance. Some definitions also include the ability of a system to continue operating during changing conditions, if only at a diminished level, or where system performance drops gradually as opposed to precipitously. Still other definitions include the ability of a system to adapt to changed conditions. In other words, the change in the operating environment may be long lasting and the system has adapted to perform at an acceptable or sustainable level. Resilience can be depicted as in the following figures. Figure 1 depicts the normal operation of, say, System A. System A could be a community's public drinking water system, a regional electric power grid, or, perhaps, the national railroad system. Performance can be measured in many different ways. For example, it could be measured in terms of the number of households beings served, the power being generated within an electric grid, the tonnage of freight moving through the rail system, or the revenue generated by normal system operations. Time can be measured in terms of seconds, or less; years, or longer. For illustrative purposes, the performance of System A in Figure 1 is measured in dimensionless units over some dimensionless time period. In this case, System A performs at a constant 100 units over the entire time period during normal operations. The darker area in Figure 2 depicts the performance of System A resulting from a disrupting event, say a flood, at Time = 2. Performance drops steadily over time, levels off at 60 units, and then, say through recovery efforts, regains normal performance of 100 by Time = 7. The lighter area represents the loss of operations during that time. Figure 3 could depict the performance of System A resulting from a different disrupting event, say an earthquake or terrorist truck bomb, or it could represent the reaction of a different system, System B, to the same event assumed in Figure 2 . In either case, the system fails abruptly, performance drops to 0, gradually recovers some of its performance, but does not return to the original performance level in the time recorded. By most definitions, the system in scenario B ( Figure 3 ) would be considered less resilient than the system in scenario A ( Figure 2 ). Just as there is no standard definition of resilience, there is no standard measure of resilience. One measure could be the amount of time it takes to recover fully to normal operations. The quicker the recovery, the more resilient the system. Another measure could be in terms of total loss of performance. For example, in Figures 2 and 3, the difference between normal operations and the interrupted performance equals the loss of performance during the disruption. Reducing the total loss of performance increases resilience. This approach not only captures the amount of time it takes to recover, but also the initial reaction to the disrupting event, including whether the initial reaction was a precipitous drop in performance or a gradual one, and whether the system continued to function at some level or was put out of operation completely. How one measures resilience may depend on what policymakers consider most relevant to their decisionmaking. If monetary losses are important, it may be more appropriate to measure the total (or net) loss of revenue associated with the disruption. If, however, policymakers are more concerned about how long it takes to get their constituents' power back on, then simply measuring time to full recovery may be appropriate. The resilience of an asset or system can be improved in a number of ways. Adding redundancies to the asset or system can improve resilience by being able to reroute production or process flows through one or more parallel components or subsystems. The internet is resilient because information packets can reach their destination by any number of routes: lose the use of a few routers, and messages continue to flow; lose a lot of routers and information may still continue to flow, albeit at a slower rate. Another simple example might be a firm or a sector (e.g. oil refining) that has multiple production facilities. If one or more of those production facilities were to shut down, firms may be able to increase production at the others. Having back-up components available can also improve resilience by being able to quickly replace a component or asset whose function is disrupted. A prime example are mobile communication assets that can be driven to locations where fixed assets have been lost or disrupted. A key strategy for improving the resilience of electric power distribution is to have sufficiently sized and available back-up transformers that can be transported where needed. Substitution can improve resilience by allowing a process to switch from one input or component to another, perhaps with slightly different properties but without major impact on the final product or process. For example, some industrial burners used to produce heat, may be able to switch from one fuel to another, or one grade of fuel to another. Materials often can be substituted for one another. For example, various copper and aluminum alloys can sometimes be used to make similar products. Products and processes can also be redesigned to reduce or eliminate their vulnerabilities to specific threats. For example, new construction in earthquake-prone regions are increasingly using designs that can dampen the forces induced by earthquakes and improve the chances of those assets or facilities to remain standing or even functional. In some cases, processes could be redesigned to use less hazardous inputs to reduce the potential of hazardous releases of those substances during a terrorist attack or natural event. Resilience may also depend on the ability to improvise during a disruptive event, perhaps by re-engineering processes in real-time or making do with materials and assets at hand. The specific actions one might take may be difficult to plan for ahead of time. However, having a detailed understanding of how an asset or system operates, and perhaps conducting exercises where improvising is practiced, could improve the ability to respond creatively to unique situations. The resilience of a critical infrastructure asset could also be enhanced by giving it priority access to scarce critical resources, thereby maintaining its services or getting its services back on-line more quickly to aid in a more general community recovery. Many discussions regarding resilience of critical infrastructure stress the importance of modeling system operations, including the system's interdependencies with other systems beyond the immediate control of operators, assessing vulnerabilities, and contingency planning. Planning (i.e., preparedness) is particularly important if one is using back-up systems or substitution to help respond to events. Knowing what and where back-up systems are located and how to transport them to the needed locations, or identifying and having ready alternate sources of materials is important. Applying these various options may cost money and may not provide the best efficiencies under normal circumstances. However, in some cases they may add efficiencies to normal operations. To a large extent, the financial feasibility of these various resiliency enhancing options depends on the risks a firm, or community, or the nation is willing to accept. According to the 2010 Quadrennial Homeland Security Review Report , "Ultimately homeland security is about effectively managing risks to the Nation's security." DHS defines risk as: The potential for an unwanted outcome resulting from an incident, event, or occurrence, as determined by its likelihood and the associated consequences. Put another way, risk can be thought of as the consequences associated with an event, discounted by the probability of that event occurring. The 2009 National Infrastructure Protection Plan provides a framework for assessing and managing the risk associated with the loss of critical infrastructure. According to the NIPP, Risk is influenced by the nature and magnitude of a threat, the vulnerabilities to that threat, and the consequences that could result. Put into a general formula, risk is a function of threat (t), vulnerability (v), and consequences (c): Risk = f (t,v,c) To reduce risk, the nation can try to reduce any one, any combination, or all three of the variables. Improving resiliency reduces risk primarily by reducing the vulnerability to and potential consequences of an attack or natural event. A building or overpass designed or modified to absorb the physical displacements caused by an earthquake may prevent the asset from falling, reducing loss of nearby property and life. Building a house on stilts and having access to some sort of water craft might allow residents more time to evacuate or even to stay in their homes during a flood, resulting in less loss of life and property. Stockpiling materials or food in safe locations may speed recovery and reduce the total consequences associated with an all-hazards event. According to Homeland Security Presidential Direction 7 (HSPD 7), It is the policy of the United States to enhance the protection of our Nation's critical infrastructure.... In January 2006, the Critical Infrastructure Task Force of the Homeland Security Council published a report that concluded: Given the diverse spectrum of potential threats [to the nation's critical infrastructure], coupled with the reality that resources are limited, policies and strategies focusing on achieving resilience would be more robust than current guidance, which focuses primarily on protection. Among the Task Force recommendations were the following: promulgate critical infrastructure resilience as the top-level strategic objective … to drive national policy and planning … [and] … align policy and implementation directives for risk-based decisionmaking with the critical infrastructure resilience objective.… The Task Force pointed out that HSPD 7 and other high level DHS strategy and guidance documents concerning critical infrastructure repeatedly identified "protection" as the key factor driving the national effort. Citing the Merriam-Webster dictionary definition of "protect" as: "to cover or shield from exposure, injury, or destruction," and HSPD-7, which stated that "to protect means reducing the vulnerability of critical infrastructure … in order to deter, mitigate, or neutralize terrorist attack," the Task Force concluded that the strategy and guidance biased action toward defensive measures. The Task Force asserted, however, that it would not be possible to protect all possible targets against every conceivable threat, nor would it be possible to eliminate all vulnerabilities. The Task Force concluded that a strategy based on protection, in isolation, would be brittle and insufficient. The Task Force proposed that a strategy based on resilience would foster consideration of a broader range of options to help reduce the risks associated with the loss of critical infrastructure. The Task Force did not suggest that resilience replace protection efforts, but that resilience offered an overarching strategy that included protection, preparedness, and efforts to prevent attacks from happening. The Task Force also argued that owners and operators of critical infrastructure could make a better business case for investing in resilience, measured in terms of the amount of time and effort needed to restore operations, than trying to justify investments to increase protection or reduce vulnerabilities, which, according to the Task Force, are more difficult to quantify. Other organizations and individuals followed with similar statements calling for a greater emphasis on resilience in addressing both critical infrastructure security and/or, more broadly, homeland security. The Reform Institute stated: The simple fact is that not all hazards can be averted … devastating incidents will occur. What is within our power … is to better prepare our nation and its critical infrastructure to absorb the blows of catastrophe in order to prevent them from seriously disrupting critical activities.… Placing resilience at the heart of our homeland security policy will bring much-needed overarching focus to the work of government agencies.… James Carafano struck similar themes: The U.S. government must shift from unrealistic strategies that emphasize protecting infrastructure to strategies that focus on resiliency. Spending billions to protect infrastructure still leaves the nation vulnerable. Resiliency promises to sustain society in the face of known threats and unexpected disasters. Brian Jackson at RAND discussed the weaknesses associated with a strategy based solely on traditional "preventive" efforts. According to Jackson, traditional preventive efforts include detecting and halting or disrupting an attack, before damage can be done (similar to the Task Force's discussion of "protection"). Jackson argued that there are inherent uncertainties associated with terrorist attacks that present particular problems for preventative efforts. Uncertainties include identifying which individuals are threats, what types of weapons to look for, and which assets the terrorist group may target. The adversary can also take countermeasures to avoid defenses put in place. Jackson also argued that addressing threats in a preventative manner can lead to a layering of security measures for each new realized threat. Jackson asserted that such layering cannot be sustained indefinitely and that failure of such preventative measures undermines public confidence. Resilience, on the other hand, according to Jackson, offers a way to reduce the consequences should an attack prevail and offers to broaden the range of ways to reduce risks. Jackson also noted, however, that as the scale of a potential attack increases, traditional preventative measures can look more attractive than having to rely on resilience to survive the attack. In a September 2009 report, the National Infrastructure Advisory Council (NIAC) found the "current policy framework fundamentally sound but could be improved to better reflect principles of resilience.…" The report also recommended that DHS: expand programs to allow funding for programmatic and grant funding of resilience efforts; encourage each sector to set resiliency goals; and assist in building resilience in the next generation of infrastructure. The report also noted the importance of repair and maintenance on resilience. Early high level government policy documents rarely mentioned resilience. Neither the first National Homeland Security Strategy (2002) nor Homeland Security Presidential Directive 7 (2003) mention resilience at all. Both acknowledged that it would be impossible to protect all targets or eliminate all vulnerabilities. Both focused on the impact strategic investments in protection and security could have on deterring and deflecting terrorist attacks against the most critical assets and could help mitigate the effects of terrorist attacks by forcing terrorists to consider targets with lesser consequences. The extent to which resilience was alluded to at all focused primarily on the need to recover rapidly from an incident after it occurred. The National Strategy for the Physical Protection of Critical Infrastructure and Key Resources (2002) did cite resilience as an issue. In discussing one of the eight principles guiding the nation's protection efforts, the document mentioned making infrastructure more "robust" through such measures as redundancy, hardening, and dispersal and more "resilient" through effective protection and response planning. The debate started by the Task Force appeared to have had some immediate impact on DHS and the development of the 2006 National Infrastructure Protection Plan , which DHS was in the process of producing at the time of the Task Force's report. Whether in response to the Critical Infrastructure Task Force, or by coincidence, DHS used the words resilient, resilience, or resiliency, twice as much in the final version of its 2006 National Infrastructure Protection Plan (NIPP), released after the Task Force's report, than in the Plan's earlier draft, released for comment in November 2005. Perhaps more telling, the early draft did not define resiliency in its glossary of terms, whereas the final version did. The final 2006 version of the NIPP seemed to put resilience on par with protection, talking about building a "more secure and resilient nation," "improving protection and resilience," and "managing protection and resiliency approaches." The NIPP also discussed research and development goals that included work in self-healing systems (which one could consider to be a resiliency measure). However, the NIPP still considered resiliency to be part of a protective strategy. For example, among its list of "protective actions," alongside such efforts as perimeter hardening, enhanced buffer zones, fencing, and enhanced police and security officer presence (typical protective measures), were developing redundancies and back-up systems (resiliency enhancing measures). The NIPP did not include a separate comparable list of actions that could increase resiliency. In May 2008, in hearings before the House Committee on Homeland Security, Robert Stephan, then Assistant Secretary for Infrastructure Protection at DHS, testified that the department fully embraced the concept of resilience and that it was "built into practically everything" that the department was doing. He noted that it was important to achieve the proper balance between protection and resilience. He went on to state the "more extreme advocates of the resiliency construct dismiss the importance" of prevention and protection in certain cases, stating, "We cannot afford to protect everything, but we cannot simply stand by and protect nothing." Turning the Task Force's construct around, the Assistant Secretary reiterated the NIPP assertion that "protection" served as an overarching strategic concept which could include resiliency measures. Protection can include … hardening facilities, building resiliency, redundancy, incorporating hazard resistance into facility or system or network design, initiating active or passive countermeasures, installing security systems, promoting workforce security programs, and implementing cyber measures, among other various precautions. Notwithstanding Assistant Secretary Stephan's assertion that the department's critical infrastructure efforts already fully embraced resilience, subsequent policy documents made increasing mention of resilience. The 2009 update of the NIPP included resiliency in its title ( National Infrastructure Protection Plan: Partnering to enhance protection and resiliency ) and used the terms resilience, resilient, or resiliency more frequently throughout the document than the plan's first release. However, the use of the term resilience was due primarily to repetitive references to "protective programs and resiliency strategies" in places where the earlier 2006 version only made reference to "protective programs." According to the Government Accountability Office (GAO), one of the objectives in updating the NIPP in 2009 was to increase the Plan's emphasis on resilience as a risk reduction approach. However, it was not meant to signal a major shift in policy. The NIPP Program Office also informed the GAO that it was providing additional guidance to the agencies charged with developing Sector Specific Plans to better incorporate resilience in their plans. Indicative of the evolving integration of resilience into homeland security policy, the incoming Obama Administration established a Directorate for Critical Infrastructure Protection and Resiliency Policy in the reorganized National Security Staff. Also in 2009, the Homeland Security Studies and Analysis Institute began a series of reports to develop a framework for incorporating resilience into the nation's critical infrastructure effort. The Quadrennial Homeland Security Review (QHSR), released in February 2010, made frequent direct and indirect references to resiliency. The QSHR stated three concepts that are essential to, and form the foundation for, a comprehensive approach to homeland security: security, resilience, and customs and exchange (i.e., facilitating the normal daily activities of society). It went on to state that preventing a terrorist attack remains the cornerstone of homeland security ... [but] despite our best efforts, some attacks, accidents, and disasters will occur. Therefore the challenge is to foster a society that is robust, adaptable, and has the capacity for rapid recovery. In this context, individuals, families, and communities-and the systems that sustain them-must be ... prepared to withstand disruptions, absorb or tolerate disturbances, ... adapt to changing conditions, and grow stronger over time. The QHSR identified five core missions. Mission 1 was Preventing terrorism and enhancing security . Goal 1.3 of that mission was: Manage Risks to Critical Infrastructure, Key Leadership, and Events. Two of the four objectives under that goal were (1) protect critical infrastructure (prevent high consequence events by securing critical assets, systems, networks, or function from attacks or disruptions), and (2) make critical infrastructure resilient (enhance the ability of critical infrastructure systems, networks, and functions to withstand and rapidly recover from damage and disruption and adapt to changing conditions). The significance here is the separation of protection and resilience as two distinct options. Mission 5 was Ensuring Resilience to Disasters . Goals under this mission included (1) mitigating hazards, (2) enhancing preparedness, (3) ensuring effective emergency response, and (4) rapid recovery. Objectives under these goals included mitigating risks to communities by improving community capacity to withstand disasters by mitigating known and anticipated hazards, and ensuring continuity of essential services and functions. All of these goals and objectives could be considered resiliency-enhancing efforts. The National Security Strategy , released May 2010, also included the concept of resilience. One element of the strategy called for strengthening security and resilience at home. The strategy reaffirmed the notion that not all threats can be deterred or prevented and that resilience is also required. The strategy called for strengthening public-private partnerships to improve resilience by developing incentives to design structures and systems that can withstand disruptions and mitigate consequences; ensuring redundant systems are available where necessary to maintain the ability to operate; decentralizing critical operations to reduce vulnerability to single points of disruption; developing and testing continuity of operations plans; and investing in improvements and maintenance of existing infrastructure. In March 2011, the Obama administration issued a new Presidential Decision Directive (PDD) 8, National Preparedness (replacing the Bush-era Homeland Security Presidential Directive of the same name and number). The PDD seeks to strengthen "the security and resilience of the United States through systematic preparation for the threats that pose the greatest risk.…" The PDD called for the development of a National Preparedness Goal that identifies the core capabililties judged necessary for national preparedness in each of five mission areas. The five mission areas are prevention, protection, mitigation, response, and recovery. Adding mitigation to the mission areas was a primary modification to previous guiding documents. For each core capability, capability targets also are to be identified. The first edition of the National Preparedness Goal was published in September 2011. As might be expected, the concept of resilient critical infrastructure is touched upon in the mitigation, response, and recovery mission. Elaborating on one of the seven mitigation core capabilities, the NPG states that long-term vulnerability reduction should build and sustain resilient systems, communities, and critical infrastructure lifelines, so as to reduce vulnerability and lessen adverse consequences. The Response and Recovery missions both include an Infrastructure Systems core capability that calls for the stabilization of critical infrastructure functions. In Recovery, the core capability includes a target of developing plans to redevelop community infrastructure to contribute to (future) resilience. To some, the debate whether to promote protection or resilience as the overarching strategic vision for the nation may appear to be a debate over semantics. And, to some extent, arguing whether protection incorporates resilience or resilience incorporates protection may obscure the very real difference between the two. Reducing risks by building higher fences and deploying more guards around a particular facility or asset (protection) is very different than reducing risks by building a second facility or asset somewhere else or strategically stockpiling replacement equipment that can get the facility or asset up and running again quickly (resilience). Perhaps a more useful way of making the distinction between protection and resilience is that protection focuses on the threat and resilience focuses on the consequences (see risk equation above). DHS has made an effort to incorporate resiliency into its more recent guiding documents. While it does not go so far as the Task Force recommendation, this evolution does seem to acknowledge that protection and resilience represent two ends of the spectrum of possible risk reduction efforts and that both need to be considered when assessing the best options for reducing risks. As policymakers (in Congress and the Executive branch) deliberate on the best options, it may be helpful to recognize that while protection may be a preferred option under certain scenarios, it is not always possible. If one accepts that DHS has made progress in incorporating resilience into its policies and goals, a subsequent question could be "What is DHS doing programmatically to improve the resilience of critical infrastructures?" As cited earlier, Assistant Secretary Robert Stephan stated that "it is fair to say that there is resilience built into practically everything that the Department of Homeland Security does." The Assistant Secretary proceeded to mention more than a dozen activities including forums (e.g., the National Communications System's Route Diversity Forum), various communication protocols (e.g., the water sector's Water/Wastewater Agency Response Network, or WARN), planning guides, exercises, site assistance visits, and analytical products from the National Infrastructure Simulation and Analysis Center and DHS's Homeland Infrastructure Threat and Risk Analysis Center, all of which he asserted contribute in some way to DHS's concept of resilience. One can also argue that the department programs to help owner/operators of critical infrastructure identify threats, assess the vulnerability of their assets and operations to those threats, and assess the possible consequences from those threats, are necessary before one can identify and implement protective or resilient options for reducing those risks. These programs include the development and refinement of the National Infrastructure Protection Plan (NIPP), training for owners/operators on how to participate in and implement the NIPP, development and support of information sharing networks like the Homeland Security Information Network, support for partnership meetings and cooperation, cataloging critical infrastructure assets, etc. Nevertheless, in its report Critical Infrastructure Resilience, Final Report and Recommendations , released September 8, 2009, the National Infrastructure Advisory Council found that "while there are government programs that address resilience tangentially, government lacks a cohesive set of programs and activities that directly address CIKR [critical infrastructure and key resources] resilience." Similar conclusions were reached by the Community Resilience Task Force of the Homeland Security Advisory Council in June 2011. The Task Force stated that "many relevant activities are already underway, particularly those in fostering development of preparedness capabilities, but [the Task Force] observes that those activities are rarely linked explicitly to resilience." The Task Force went on to find that "resilience is not well understood by key homeland security stakeholders; it therefore had not been treated as an integral element of plans and programs to date," and "there are no policies, national objectives, or promulgation of the specific means required to actually assess, achieve, or sustain resilience." Despite this somewhat amorphous depiction of department efforts to support resiliency, a few programs do explicitly take resilience into consideration. The Government Accountability Office, in its 2010 report, Critical Infrastructure Protection: DHS Efforts to Assess and Promote Resiliency Are Evolving but Program Management Could Be Strengthened , concluded that DHS had made some progress in integrating resiliency concepts into some of its programs and analytical tools. In particular, the report examined the department's Site Assistance Visits (SAVs), Enhanced Critical Infrastructure Protection Security Survey (ECIP), and the Regional Resiliency Assessment Program (RRAP). In addition, the report noted that the department had begun training its Protective Services Agents (PSAs) on incorporating resiliency concepts into their interactions with the owners and operators of critical infrastructure assets. One of the PSAs' responsibilities include facilitating SAVs. The ECIP survey is a web-based tool that is used during a site visit to collect and analyze mostly security-related information (e.g., physical security measures such as fences, gates, etc., security force status such as security patrols and command and control, security management, information sharing, and protective measures). It uses this information to develop a set of metrics (Protective Measure Indexes) by which an owner/operator can compare the security of his facility with other similar facilities. The survey also characterizes dependencies on other infrastructures (e.g., electrical and water services, transportation) and contingency plans associated with the facility. These latter components contribute to the development of a Resiliency Index, similar to the protective Measure Indexes. The survey also contains a "dashboard" that displays the various indexes and allows the owner/operator to make changes in the elements to see what effect they would have on overall protection and resilience. In developing a resilience index, the ECIP considers three elements—robustness, resourcefulness, and recovery—and, assesses such factors as redundancies and substitutions, the existence of comprehensive emergency actions plans, and the existence of priority agreements with local utility providers. Robustness refers to the ability to maintain critical operations and functions in the face of a crisis. Resourcefulness refers to the ability to respond to and manage a crisis. Recovery refers to the ability to return to normal operations as quickly and efficiently as possible. Each of these factors are scored and weighted, based on expert opinion, then added and averaged, resulting in the index. Therefore, the index is an indicator, but not an actual measure of resilience. In other words, it does not measure either the amount of time it would take to recover or the costs associated with a loss or disruption of operations. The Regional Resiliency Assessment Program (RRAP) essentially expands and integrates a number of ECIPs across all the critical assets in a given region. For example, while an individual ECIP might consider the existence of contingency plans for reconstituting water service to a facility, the RRAP would look more closely at the potential vulnerabilities to the supply of water within the region and how a given facility might respond to a situation that exploits those vulnerabilities. For example, a facility's water supply contingency plan might rely on the delivery of water by truck, but a broader regional assessment might indicate that the delivery is dependent on a bridge whose traffic might be vulnerable to the same events as the facility. The RRAP is particularly useful in analyzing natural disasters, which tend to affect larger areas and number of assets than perhaps a terrorist event. At the time of its report, the GAO noted that while DHS had made some progress in incorporating resiliency into these programs and tools, it had not yet developed the ability to track what if any resiliency measures were actually being taken by critical infrastructure owners/operators. Also, while DHS stated that it was training its PSAs on resiliency concepts, PSA guidance documents had not yet included resiliency concepts. The Federal Emergency Management Agency (FEMA) administers a number of grant programs. Most focus on planning and developing the capabilities needed to respond and recover from an all-hazard event, addressing primarily community and regional resilience. However, some also touch upon critical infrastructure resilience, directly or indirectly. For example, the State Homeland Security Grant Program (SHSGP) and the Urban Areas Security Initiative (UASI), which primarily support the preparedness activities of states and local communities, take into consideration the presence of critical infrastructure in the state or urban area when allocating the annual grant budget. These grants can support public expenditures for overtime personnel costs associated with protecting critical infrastructure assets. The grants also can support vulnerability assessments of critical infrastructure assets and the development of security plans. The grants can also support citizen preparedness through the development and support of Citizen Corps Councils which include both public and private owner/operators of critical infrastructure assets. Although no longer specifically mentioned in the context of critical infrastructure, grants can also be used by government entities to purchase certain equipment, including surveillance equipment, barriers, access-controls, etc., that could be used at critical infrastructure sites. Nearly all of this equipment, however, focuses on protective measures. The grants only support those costs incurred by state and local governments. Any direct impact to critical infrastructure assets would be limited to those assets which the state or local government own/operate or which otherwise costs the government money. The impact on privately owned/operated critical infrastructure assets would appear to be limited to supporting the formation and activities of Citizen Corps Councils or possibly being involved in a vulnerability assessment conducted or paid for by some public entity eligible to receive grant funds. The primary contribution of these two grant programs to resilience (in this case focused primarily on community resilience) is through their support for planning, organizing, and implementing response and recovery efforts following a natural disaster or terrorist event. FEMA also administers a Transit Security Grant Program. This grant program supports public transportation agencies to secure their critical transportation infrastructure and protect their passengers. Transportation infrastructure include intra-city buses, commuter buses, ferries, and all forms of passenger rail. Like SHSG and UASI, allowable activities include planning, operations, equipment, training, and exercises. The FY2012 grant guidelines identified three priorities: operational activities, operational packages, and remediation of assets on the Top Transit Asset List. Operational activities include training, drills and exercises, public awareness, and vulnerability assessments and security planning. Operational packages include canine teams, mobile explosive screening teams, and anti-terrorism teams. The Top Transit Asset List includes those assets that DHS has determined meet the definition of critical at the national level. It includes underwater tunnels, underground stations and tunnels, and high density bridges. Eligible grantees must work from a risk assessment and a security plan. The risk assessment and security plan are to consider, among other items, efforts to provide redundant or back-up assets that would enable the transportation system to continue to operate in the event of an attack or incident. Such a requirement would relate to resilience. Nevertheless, as with SHSG and UASI, many of the supported activities and eligible expenditures could be considered protective in nature: training in behavior recognition and counter-surveillance training, security enhancements such as intrusion detection and visual surveillance with live monitoring, or hardening of control centers. However, the grants can also be used to protect tunnel ventilation and drainage systems and flood gates and plugs, both of which one could say contribute more directly to resilience by mitigating damage associated with an event. The FY2012 grant guidelines for the Port Security Grant program specifically mentions enhancing recovery and resiliency capabilities as one of the FY2012 priorities. Eligible recipients include private sector facility owners/operators along with state and local governments and public entities. Recipients must belong to a port-wide management planning group and participate in a port-wide risk management plan. Recipients also are encouraged, but not required, to develop a business continuity/resumption of trade plan. Although not required, the guidelines noted that priority would be given to the development and implementation of such a plan. Funds can be used for operational activities, planning, equipment, training, and exercises, but also some construction. As with the previously mentioned grants, much of this is protection-oriented. However, specific mention is made regarding equipment or systems for continuity of critical port operations and, under the category of construction, funds can be used to house generators that support risk mitigation. FEMA also supports mitigation grant programs, including Hazard Mitigation and Pre-Disaster Mitigation, which one might think could support activities that increase the resiliency of critical infrastructure. These programs support risk assessments, mitigation plans, and implementation of mitigation measures. Eligible expenses include government expenditures to purchase and clear property and to make structural improvements to buildings (e.g., elevating buildings in flood plains or building ring levees). The grants focus on natural events and do not necessarily focus on critical infrastructure. FEMA also offers courses on how to mitigate risks to buildings against terrorist attacks; for example, Building Design for Homeland Security and Primer for Design of Commercial Buildings to Mitigate Terrorist Attacks. FEMA also publishes guidelines such as Reference Manual to Mitigate Potential Terrorist Attacks Against Buildings , Primer for Design Safe School Projects in Case of Terrorist Attack , and Terrorism Risk Management in Buildings (Insurance, Finance, and Regulation) . These documents mention resilience-oriented measures such as the use of fire-resistive construction techniques, designs that resist progressive collapse, and the consideration of redundancy and alternative sources of fuel, water, air, etc. FEMA manages another program that touches upon resilience. The Voluntary Private Sector Preparedness program (PS-Prep) is not a grant program but a voluntary standards program. Established by Congress in the Implementing Recommendations of the 9/11 Commission Act ( P.L. 110-53 , Sec. 901), PS-Prep has, in cooperation with the private sector, international standard-making bodies, and other stakeholders, developed and adopted a set of standards the private sector can use to help prepare for and respond to emergency situations. While addressing preparedness processes and requirements in general, the standards discuss specifically both protective/preventive options as well as resiliency-related options like alternative work sites, redundancies and diversity in personnel, equipment, information and materials, etc., as ways to mitigate risks. The PS-Prep program has also accredited a number of third-party entities that can be used to certify a firm's compliance with these standards. In March 2012, AT&T became the first firm to receive certification under PS-Prep. Another area in which DHS may help promote resiliency is in research and the development of new understanding and technologies. The Science and Technology Directorate divides its activities into four program areas: Acquisition and Operations Support; Research, Development, and Innovation; Laboratory Facilities; and University Programs. A comprehensive analysis of the Directorate's projects and their relevance to improving resilience is beyond the scope of this report. However, a brief summary analysis of the first two program areas follows, based on the Directorate's FY2013 budget justification document. One of the projects within the Acquisition and Operations Support program supports the activities of the Homeland Security Studies and Analysis Institute. As stated earlier in this report, the Institute produced a series of reports on the fundamental characteristics of resilience and how it applies to homeland security. Infrastructure resilience remains one of the Institute's key mission areas and could contribute to a greater understanding of resilience and how to promote it. Roughly two-thirds of the Directorate's budget goes toward Research, Development, and Innovation. The program supports over 150 individual projects. Many of these are protection-oriented. Projects within the Border Security, the Chemical, Biological, and Explosive Defense, and the Counter Terrorist thrust areas focus on developing new sensor technologies and systems, biometrics, data fusion, behavior prediction, modeling and simulation, etc., in order to improve capabilities in surveillance, detection/screening/tracking and characterizing threats on the ground, in the air, in and under the water, in tunnels, and in cyberspace. It should be noted that some of these detection technologies could also assist in response and recovery or lessening the overall impact of a chemical, biological, or radiological attack by characterizing and tracking affected areas, allowing for targeted and more cost-effective responses. A number of projects, particularly those in the Disaster Resilience thrust area, focus more specifically on incident response and recovery. These include the development of decontamination and disposal techniques and technologies, location technologies, incident management systems, and information sharing systems. There also a few projects that may help improve resilience by reducing the damage caused by an attack, or possibly improving the capability for the affected system to continue functioning during or after an incident. For example, the Resilient Electric Grid project is developing and deploying fault current limiting, high temperature superconducting cable power substations that can be interconnected to share power in a way to prevent cascading effects and thereby improve resilience of the grid. Another example is the Blast Analysis of Complex Structure projects that could facilitate the application of techniques to mitigate the effects of explosive blasts on structures. A number of examples also exist in the Cyber Security thrust, such as the Experimental Research Testbed, the Leap Ahead Technologies, the Moving Target Defense, and the Tailored Trustworthy Spaces projects that focus on techniques that conceivably could keep information networks running while under attack or experiencing disruptions. DHS can be thought of as having always contributed to community resilience in its efforts to improve the ability of communities to respond and recover from incidents through grants and various assistance programs. This has been furthered by more recent emphasis given to mitigation of risks before as well as after an incident. However, many of these efforts focus on public institutions and assets. While some may receive assistance from these programs, many critical infrastructure assets owned and operated by the private sector receive none. To the extent that DHS has sought to help private and public sector owner/operators of critical infrastructure assess their risks associated with various threats, it has also contributed to critical infrastructure resilience. More recently, those efforts have taken into consideration more specifically resilience-oriented risk reduction options. However, to a large extent, taking specific action to facilitate implementation of resilience-oriented corrective measures, including longer-term redesign of systems, has not gone as far as that recommended by the National Infrastructure Advisory Council or the Community Resilience Task Force of the Homeland Security Advisory Council. To some extent, this may be due to the reluctance to use public funds to help reduce the risks to privately owned assets. However, the National Infrastructure Advisory Council cautioned that it is not clear that market incentives are sufficient to drive such investments. To date, Congress has taken primarily an oversight role in regard to critical infrastructure resilience, holding hearings and requesting reports from its congressional support agencies. However, it has been two years since GAO reported that DHS had not yet developed the ability to measure the extent to which owners and operators of critical infrastructure assets had taken resilience-enhancing actions. Congress may choose to continue its oversight of the progress being made in the area of metrics. Congress also may revisit the PS-Prep program. Congress gave DHS the responsibility to establish a voluntary preparedness standard for the private sector in 2007. DHS adopted three such standards in 2010, and the first firm received certification under the program in 2012. Congress may opt to examine the status of that program and identify impediments, if any, to its implementation. Updating the latest metrics on the extent to which firms are adopting resiliency measures or the extent to which firms are seeking certification through the voluntary PS-Prep program could provide insight into the need, if any, for additional incentives beyond those provided by the market. If additional incentives are warranted, Congress could consider expanding its preparedness and mitigation grant programs to include more private sector owner and operators of critical infrastructure. This could be accompanied with additional funding. To do so, however, may require the reallocation of funds in the current budget-constrained environment. Alternatively, Congress could consider making the voluntary standards mandatory, at least for those assets and systems judged to pose the greatest risks. However, the recent inability of Congress to find consensus on cybersecurity standards for privately held critical infrastructure would indicate such an effort would also raise significant debate.
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In 2006, the Critical Infrastructure Task Force of the Homeland Security Advisory Council initiated a public policy debate arguing that the government's critical infrastructure policies were focused too much on protecting assets from terrorist attacks and not focused enough on improving the resilience of assets against a variety of threats. According to the Task Force, such a defensive posture was "brittle." Not all possible targets could be protected and adversaries could find ways to defeat defenses, still leaving the nation having to deal with the consequences. The Task Force advocated that greater encouragement for resilience would broaden the range of risk reduction options and should be the overarching policy framework for reducing risks associated with all threats to critical infrastructure. Others in the homeland security community agreed. Critical infrastructure are those assets the loss of which would result in great harm to the nation's security, economy, health and safety, and morale. They include assets necessary to generate and distribute such basic goods and services such as electricity, drinking water, telecommunications, banking and finance, etc. Resilience refers to the ability of a system to resist, absorb, recover from, or successfully adapt to a change in environment or conditions. The Task Force argued that government policies encouraged employing greater defenses such as surveillance equipment, guards, etc., around these assets but did less to encourage efforts that would allow assets to continue operating at some level, or quickly return to full operation, if attacked. Such efforts might include increasing redundancies (such as having multiple backup power generation capability) or designing more robust systems for the future (such as using more hardened concrete for stronger fixed facilities). In 2008, as part of its oversight function, the House Committee on Homeland Security held a series of hearings addressing resilience. At those hearings, the Department of Homeland Security (DHS) argued that government policies and actions did encourage resilience as well as protection. Even so, subsequent policy documents made greater reference to resilience. At first those references were relatively superficial, but later they became more substantive. Policy has evolved to the point that resilience and protection of critical infrastructure assets are recognized as distinct options to be equally considered when seeking to reduce the risks associated with potential attacks on critical infrastructures. As policy has evolved, programs have also evolved somewhat, to support efforts at improving critical infrastructure resiliency. The Office of Infrastructure Protection within the DHS conducts risk assessments at the asset and regional level that now include a resilience index along with a protection index. The program allows asset owners/operators to compare their level of resilience to other similar assets and allows them to analyze how certain improvements might contribute to better resilience. Also, the DHS Science and Technology Directorate supports some resilience-oriented research and development projects. In addition to projects developing better technologies to aid in response and recovery, the Directorate also supports projects that are developing technologies for structures to withstand blasts or large physical displacements or systems which can self-heal after being damaged. The Federal Emergency Management Agency within DHS provides grants, primarily to state and local governments or public authorities, that largely support resilience by improving the ability to respond to and recover from incidents. Mitigation grants, which allow communities to reduce the potential consequences of an incident before it happens, offer limited support for improving the resilience of critical infrastructures. There is relatively little direct government support or incentives for private sector owners/operators to implement resilience-oriented (or protective-oriented) measures. It is not clear if market incentives are sufficient to drive such investments. Congress may choose to consider the adequacy of private investments in resilience, whether the private market provides sufficient incentives, and options for government action if markets do not.
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The U.S. Commission on Ocean Policy and the Pew Oceans Commission have made numerous recommendations for changing U.S. ocean policy and management. To address the findings and recommendations of the ocean commissions and the President's response, Congress may consider comprehensive bills encompassing a broad array of cross-cutting concerns, including federal organization and administrative structure, regional approaches to ecosystem management, and funding strategies. On the other hand, Congress may continue to act on specific issues, as it has for fisheries, ocean exploration, ocean mapping, marine debris, ocean acidification, and others. Congress has shown interest in ocean affairs in recent decades, examining components of the federal ocean programs, enacting legislation creating new ocean programs, and taking steps to define a national ocean policy. The Marine Resources and Engineering Development Act of 1966 (P.L. 89-454) established a National Council on Marine Resources and Engineering Development in the White House and initiated work by a presidential bipartisan Commission on Marine Science, Engineering, and Resources. Dr. Julius Stratton, then recently retired president of the Massachusetts Institute of Technology and, at the time, Chairman of the Board of the Ford Foundation, was appointed commission chairman by President Lyndon Johnson. The commission, composed of 15 members, was often referred to as the Stratton Commission. In 1969, the commission completed its final report, Our Nation and the Sea: A Plan for National Action , and its more than 120 formal recommendations provided what many considered to be the most comprehensive statement of federal policy for exploration and development of ocean resources. The study was instrumental in defining the structure, if not all the substance, of what a national ocean policy could or should look like. Furthermore, new ocean-oriented programs were initiated and existing ones were strengthened in the years following the commission's report, through a number of laws enacted by Congress. Recommendations of the Stratton Commission led directly, within the following decade, to forming the National Sea Grant College Program, to creating the National Advisory Committee on Oceans and Atmosphere (NACOA), and to reorganizing federal ocean programs under the newly established National Oceanic and Atmospheric Administration (NOAA). Subsequent legislation on estuarine reserves, national marine sanctuaries, marine mammal protection, coastal zone management, fishery conservation and management, ocean pollution, and seabed mining also reflected commission recommendations. Efforts sprang up within the federal government and among various interagency and federal advisory committees to flesh out how best to implement a truly comprehensive and forward-looking national ocean policy, most notably articulated in the 1978 Department of Commerce report U.S. Ocean Policy in the 1970s: Status and Issues . Since 1980, with concerns about limiting federal expenditures and streamlining government, there have been fewer ocean initiatives, and a number of ocean programs, particularly those of NOAA, have been consolidated and reduced. However, the programs begun in the 1970s generally have been reauthorized and have matured. By the late 1980s, there appeared to be a broad consensus among those conversant in ocean affairs that a need existed to redefine or, at the very least, better define national ocean policy. Two stimuli for this renewed interest were the 1983 proclamation by President Reagan establishing a 200-nautical-mile U.S. Exclusive Economic Zone (EEZ) and the 1988 extension of the U.S. territorial sea from 3 to 12 nautical miles, both of which came in the aftermath of the President's decision that the United States would not sign the U.N. Convention on the Law of the Sea. Legislation creating an oceans commission and/or a national ocean council to review U.S. ocean policy was introduced and hearings were held in the 98 th , 99 th , 100 th , and 105 th Congresses. Legislation did pass the House in October 1983, September 1987, and again in October 1988, but was not acted on by the Senate in any of those instances. In the 105 th Congress, legislation creating both a national ocean council and a commission on ocean policy passed the Senate in November 1997, and in 1998 the House passed a bill creating a commission on ocean policy. However, Congress adjourned in 1998 before differences between these two measures could be reconciled. It was not until the 106 th Congress in 2000 that legislation was enacted to establish a 16-member U.S. Commission on Ocean Policy ( P.L. 106-256 ). The commission's charge was to make recommendations for a coordinated and comprehensive national ocean policy for a broad range of ocean issues. The enactment rode a crest of interest generated largely by a National Ocean Conference convened by the White House in June 1998, in Monterey, CA, and attended by President Clinton and Vice President Gore, against a background of media and public attention surrounding the declaration by the United Nations of 1998 as the International Year of the Ocean. Momentum was added by the September 1999 release of a post-Monterey conference report, ordered by the President and prepared by members of his Cabinet, entitled Turning to the Sea: America ' s Ocean Future , in which recommendations were offered for a coordinated, disciplined, long-term federal ocean policy. Also in 2000, partially in response to that rekindled interest and partially in response to congressional legislation having failed final passage in 1998, the Pew Charitable Trusts established the Pew Oceans Commission, an independent group of 18 American experts in their respective fields. The Pew Commission's charge was to conduct a national dialogue on the policies needed to restore and protect living marine resources in U.S. waters. Pew proceeded with their effort after failing to persuade key Members of Congress to introduce legislation to establish a public/private, nongovernmental oceans commission. The Oceans Act of 2000 ( P.L. 106-256 ) mandated a U.S. Commission on Ocean Policy. Appointed by the President, the commission was required to issue findings and make recommendations to the President and Congress for a coordinated and comprehensive national ocean policy. The new policy was to address a broad range of issues, from the stewardship of marine resources and pollution prevention to enhancement and support of marine science, commerce, and transportation. The 16 members of the commission were appointed by President Bush on July 3, 2001. Those appointments were based on a process that included nominations by Congress and appointment by the President. The commission convened its inaugural meeting on September 17-18, 2001, in Washington, DC, and commissioners selected Admiral James D. Watkins, U.S. Navy (retired) as chair. Through several sessions, the commission established four working groups to address issues in the areas of (1) governance; (2) research, education, and marine operations; (3) stewardship; and (4) investment and implementation. The working groups were charged with reviewing and analyzing issues within their specific areas of focus and reporting their findings to the full commission. The Oceans Act of 2000 specifically directed the commission to establish a Science Advisory Panel to assist in preparing the report and to ensure that the scientific information considered by the commission and each of its working groups was the best available. The composition of the Science Advisory Panel was determined by the commissioners; members were recruited in consultation with the Ocean Studies Board of the National Research Council at the National Academy of Sciences and reflected the breadth of issues before the commission. The commission divided the members of the Science Advisory Panel into four working groups, consistent with the full commission's structure. The commission began its work by launching a series of public meetings to gather information about the most pressing issues that the Nation faced regarding the use and stewardship of the oceans. The working groups played an important role in determining the effectiveness of the regional public meetings and in identifying key issues to be addressed by the commission. In each region visited, the commission heard presentations on a wide-ranging set of topics judged to be necessary to ultimately address the requirements in the Oceans Act of 2000. Based on the information gathered at the public meetings, the working groups identified and reviewed key issues, outlined options for addressing those issues, and determined the need for white papers providing more detailed information on specific topics. The deliberations of each working group were shared with the other groups throughout the process to better coordinate development of the final commission report and recommendations. After hearing 440 presenters at 15 public meetings in 10 cities during 11 months and conducting 17 additional site visits around the country, the commission completed its information-gathering phase in October 2002. The commission began deliberations in November 2002, and the last meeting dedicated to open public discussion of policy options—the sixteenth public commission meeting—was held April 2-3, 2003, in Washington, DC. Examples of supporting documents, working papers, and publications either produced for or generated by the commission include Draft Policy Option Documents , Working Table of Contents , Governing the Oceans , Elements Document , and Law of the Sea Resolution . These documents are available in pdf format on the commission's website at http://www.oceancommission.gov/documents/welcome.html . The commission published its final report in two stages. First, on April 20, 2004, the commission released a Preliminary Report , which was available for a 30-day period of review and comment by the nation's governors and interested stakeholders. That Preliminary Report was built on information presented at the public meetings and site visits, combined with scientific and technical information on oceans and coasts from hundreds of experts. The findings and policy recommendations in the Preliminary Report reflected a consensus of commission members and presented what the commissioners believed to be a balanced approach to protecting the ocean environment while sustaining the vital role oceans and coasts play in the national economy. After the public comment period closed, stage two of the process commenced when the commission began reviewing the comments and modifying the preliminary report in response to gubernatorial or other stakeholder input. At its 17 th public meeting on July 22, 2004, the U.S. Commission on Ocean Policy approved changes to its Preliminary Report and directed staff to prepare the final report, bearing the official title An Ocean Blueprint for the 21 st Century. That report, with its recommendations on a coordinated and comprehensive national ocean policy, was delivered to the President and Congress on September 20, 2004, in ceremonies at the White House and on Capitol Hill. The commission presented 212 recommendations throughout An Ocean Blueprint ; of these recommendations, 13 "critical" actions recommended by the commission can be summarized as follows: 1. Establish a National Ocean Council in the Executive Office of the President, chaired by an Assistant to the President. 2. Create a President's Council of Advisors on Ocean Policy. 3. Strengthen NOAA and improve the federal agency structure. 4. Develop a flexible and voluntary process for creating regional ocean councils, facilitated and supported by the National Ocean Council. 5. Double the nation's investment in ocean research. 6. Implement the national Integrated Ocean Observing System. 7. Increase attention to ocean education through coordinated and effective formal and informal programs. 8. Strengthen the link between coastal and watershed management. 9. Create a coordinated management regime for federal waters. 10. Create measurable water pollution reduction goals, particularly for nonpoint sources, and strengthen incentives, technical assistance, and other management tools to reach those goals. 11. Reform fisheries management by separating assessment and allocation, improving the Regional Fishery Management Council system, and exploring the use of dedicated access privileges. 12. Accede to the U.N. Convention on the Law of the Sea. 13. Establish an Ocean Policy Trust Fund based on revenue from offshore oil and gas development and other new and emerging offshore uses to pay for implementing the recommendations. At its meeting on July 22, 2004, the commission unanimously approved numerous changes to the recommendations and text in the commission's Preliminary Report , which were included in the final report, An Ocean Blueprint . Those modifications were based on more than 600 pages of comments from 37 governors and 5 tribal leaders; responses from more than 800 public commenters, stakeholders, and other experts and advisers; as well as technical corrections provided by federal agencies. There were, however, no changes to the 13 critical actions listed above. A detailed summary of specific changes appearing in An Ocean Blueprint is available on the commission's website. Changes of an overall general nature in the final report include the following: The report was revised to further emphasize the important role of states, and to clarify that the commission favors a balanced, not a "top down," approach of shared responsibility for ocean and coastal issues; The report clarified the commission's intent to embrace all coastal areas and decision-makers, including the Great Lakes, U.S. territories, and tribes; Many sections of the report were revised to address the issue of climate change and its impacts on the oceans and coasts; The importance of cultural heritage in connection with the ocean was more fully recognized and addressed; and Discussions about the funding needed to implement recommendations were consolidated into an expanded Chapter 30 ("Funding Needs and Possible Sources"). The governors' and tribal leaders' comments on the commission's Preliminary Report were generally favorable. Most of the 37 governors and 5 tribal leaders highlighted the report's comprehensive treatment of ocean and coastal issues, the economic importance of oceans and coasts, and the need to take immediate action to protect and enhance the health of these resources. Their primary concerns related to funding issues; the participation of states, territories, and tribes in national policy development; and the need for flexibility in the implementation of such policies. Public comments were received from private citizens (including school children), non-governmental organizations, trade associations, governmental and quasi-governmental organizations (e.g., regional fishery management councils), academicians, scientists, and lawyers. The vast majority of public commenters praised the report as comprehensive and balanced, and voiced their support for implementation of the recommendations. Although many supported the report's major themes and recommendations, a significant number of commenters highlighted areas of particular concern, including national and regional governance, federal organization, offshore management regimes, funding for science and research and for implementation of commission recommendations, ecosystem-based management, regulation and enforcement, and living marine resources. Furthermore, there were numerous additional comments on a suite of issues, including cruise ships, climate change, atmospheric deposition, invasive species, bottom-trawling, bycatch, wind energy, coastal development, international ocean policy, and seafood safety. Soon after the release of the commission's preliminary report, several Members of Congress commented on the report and its recommendations. These members generally supported the basic thrust of the report, but specific issues such as the level of proposed funding increases, creation of a specific oceans structure in the White House, and the transfer of other agencies' functions to NOAA were questioned. Articles and editorials in regional media generally focused on selected local issues, while interest groups highlighted specific issues. Some states made their comments publically available. Some commenters criticized the report and its recommendations as further contributing to excessive government control. The Pew Oceans Commission, an independent group of 18 authorities in ocean-related issues and government, was established in April 2000 and funded by a $5.5 million grant from the Pew Charitable Trusts to conduct a national dialogue on the policies needed to restore and protect living marine resources in U.S. waters. This commission released its final report, America ' s Living Oceans: Charting a Course for Sea Change , on June 4, 2003, outlining a national agenda for protecting and restoring the oceans. In addition, during this process, nine "science reports" were prepared and released. The commission's 26 recommendations, organized within six categories, are summarized in the final report as follows: A. Governance for Sustainable Seas 1. Enact a National Ocean Policy Act to protect, maintain, and restore the health, integrity, resilience, and productivity of the ocean. 2. Establish regional ocean ecosystem councils to develop and implement enforceable regional ocean governance plans. 3. Establish a national system of fully protected marine reserves. 4. Establish an independent national oceans agency. 5. Establish a permanent federal interagency oceans council. B. Restoring America's Fisheries 6. Redefine the principal objective of American marine fishery policy to protect marine ecosystems. 7. Separate conservation and allocation decisions. 8. Implement ecosystem-based planning and marine zoning. 9. Regulate the use of fishing gear that is destructive to marine habitats. 10. Require bycatch monitoring and management plans as a condition of fishing. 11. Require comprehensive access and allocation planning as a condition of fishing. 12. Establish a permanent fishery conservation and management trust fund. C. Preserving Our Coasts 13. Develop an action plan to address non-point source pollution and protect water quality on a watershed basis. 14. Identify and protect from development habitat critical for the functioning of coastal ecosystems. 15. Institute effective mechanisms at all levels of government to manage development and minimize its impact on coastal ecosystems. 16. Redirect government programs and subsidies away from harmful coastal development and toward beneficial activities, including restoration. D. Cleaning Coastal Waters 17. Revise, strengthen, and expand pollution laws to focus on non-point source pollution. 18. Address unabated point sources of pollution, such as concentrated animal feeding operations and cruise ships. 19. Create a flexible framework to address emerging and nontraditional sources of pollution, such as invasive species and noise. 20. Strengthen control over toxic pollution. E. Guiding Sustainable Marine Aquaculture 21. Implement a new national marine aquaculture policy based on sound conservation principles and standards. 22. Set a standard, and provide international leadership, for ecologically sound marine aquaculture practices. F. Science, Education, and Funding 23. Develop and implement a comprehensive national ocean research and monitoring strategy. 24. Double funding for basic ocean science and research. 25. Improve the use of existing scientific information by creating a mechanism or institution that regularly provides independent scientific oversight of ocean and coastal management. 26. Broaden ocean education and awareness through a commitment to teach and learn about the world ocean, at all levels of society. Comments on the commission's work ranged from dismissive to laudatory. Some were concerned that the commission's work was not objective, being overly influenced by the "environmental agenda" of the Pew Charitable Trusts. They perceived the report as an attack on commercial seafood harvesting that ignored other significant issues such as the damaging effects of oil spills in the marine environment. Representative Richard Pombo, then Chair of the House Committee on Resources, issued a press release on June 4, 2003, critical of the Pew Commission report, concluding "we cannot expect such a group to issue non-biased recommendations." Praise for the report came from commission members, who saw the report as a long overdue update of antiquated U.S. ocean policy, offering practical solutions to reverse declining trends. John Flicker, the President of the Audubon Society, referred to this report as a wake-up call to all Americans that the oceans and coastal areas are in real trouble, offering a blueprint for action to protect ecosystems at risk. The Pew Commission report covered only a portion of ocean issues with concentration on the environment, compared with the U.S. Commission on Ocean Policy, which covered a broader cross-section of issues. Beyond the House Resources Committee press release, Congress did not immediately react to the release of the Pew Oceans Commission report. Pew commissioners, including Chairman Leon E. Panetta, testified before the U.S. Commission on several occasions. Within 120 days after receiving the U.S. Ocean Commission's report, the President was required to submit to Congress a statement of proposals to implement or respond to the commission's recommendations for a national policy on ocean and coastal resources. In doing so, the President was directed to consult with state and local governments and non-federal organizations and individuals involved in ocean and coastal activities. On December 17, 2004, President Bush submitted to Congress a U.S. Ocean Action Plan , his formal response to the recommendations of the U.S. Commission. Also on December 17, the President signed Executive Order 13366 establishing, as part of the Council on Environmental Quality, a Committee on Ocean Policy, to be led by the chair of the Council on Environmental Quality. On January 26, 2007, the Committee on Ocean Policy released the U.S. Ocean Action Plan Implementation Update . The original action plan and the update covered progress in six general subject areas: enhancing ocean leadership and coordination; advancing our understanding of the oceans, coasts, and Great Lakes; enhancing the use and conservation of ocean, coastal, and Great Lakes resources; managing coasts and their watersheds; supporting marine transportation; and advancing international ocean policy and science. To support this effort, the Committee on Ocean Policy established an ocean governance structure composed of subsidiary bodies to coordinate existing management: the Interagency Committee on Ocean Science and Resource Management Integration (ICOSRMI) and two subcommittees, established by the National Science and Technology Council (NSTC), the Joint Subcommittee on Ocean Science and Technology (JSOST) and the Subcommittee on Integrated Management of Ocean Resources (SIMOR). In January 2008, the ICOSRMI released the Federal Ocean and Coastal Activities Report to Congress for CY 2006 and 2007 . The report provides an overview of select activities and accomplishments of Ocean Action Plan implementation. On June 12, 2009, President Obama issued a memorandum to the heads of executive departments and agencies to establish an Interagency Ocean Policy Task Force (IOPTF). The IOPTF is composed of senior policy-level officials from executive departments, agencies, and offices represented on the Committee on Ocean Policy and is led by the chair of the Council on Environmental Quality (CEQ). The IOPTF was charged with developing recommendations for a national ocean policy and a framework for coastal and marine spatial planning. On July 19, 2010, the CEQ released the Final Recommendations of the Ocean Pol icy Task Forc e. The recommendations are divided into four main sections that focus on the following areas: a national policy for the ocean, the coasts, and the Great Lakes; a governance structure to provide sustained, high-level, and coordinated attention to ocean, coastal, and Great Lakes issues; a targeted implementation strategy that identifies and prioritizes nine categories for action; and a framework for coastal and marine spatial planning. The IOPTF identified three general policy areas: healthy and resilient ocean, coasts, and Great Lakes; safe and productive ocean, coasts, and Great Lakes; and understood and treasured ocean, coasts, and Great Lakes. The policies would be guided by nine stewardship principles outlined in the framework. Departments and agencies are instructed to identify budgetary, administrative, regulatory, and legislative requirements to implement these elements. The coordination framework and participating agencies would be similar to the committees established under the Bush Administration. The National Ocean Council (NOC) would assume overall responsibility for implementing the national ocean policy. The NOC would be co-chaired by the chair of CEQ and the director of the Office of Science and Technology Policy. The Ocean Resource Management Interagency Policy Committee (ORM-IPC) is the successor to the current SIMOR, and the National Science and Technology Council's JSOST would serve as the Ocean Science and Technology Interagency Policy Committee (OST-IPC). The ORM-IPC would function as the ocean resource management body of the NOC with emphasis on implementing the national policy and priorities defined by the NOC. The OST-IPC would function as the ocean science and technology body of the NOC. The governance structure would also include a steering committee, a governance advisory committee, and an ocean research and resources advisory panel. The third section of the recommendations covers the implementation strategy and proposed national priority objectives. The IOPTF identified four basic areas related to "how we do business" as ways in which the federal government must operate differently to improve stewardship of the ocean, coastal areas, and the Great Lakes. These areas include: ecosystem-based management; coastal and marine spatial planning; informed decisions and improved understanding; and coordination and support. The implementation strategy also includes five areas of special emphasis which represent substantive areas of importance to achieving the national policy. These areas include: resiliency and adaptation to climate change and ocean acidification; regional ecosystem protection and restoration; water quality and sustainable practices on land; changing conditions in the Arctic; and ocean, coastal, and Great Lakes observations and infrastructure. The final main section is the Framework for Effective Coastal and Marine Spatial Planning. The framework defines coastal and marine spatial planning (CMSP) as a comprehensive, adaptive, integrated, ecosystem-based, and transparent spatial planning process based on sound science, for analyzing current and anticipated uses of ocean, coastal, and Great Lakes areas. The framework also provides national CMSP goals and guiding principles, and describes development and implementation of CMSP. On July 19, President Obama also signed an executive order to establish a national policy for stewardship of the oceans, the coasts, and the Great Lakes. The executive order adopts the recommendations of the IOPTF to establish a National Ocean Council and provides for the development of coastal and marine spatial plans. This executive order revokes E.O. 13366, signed by President Bush in 2004. The National Ocean Council plans to hold its first meeting later this summer to begin implementing the national policy. The United Nations Convention on the Law of the Sea (UNCLOS) was agreed to in 1982, but the United States never became a signatory nation. On May 15, 2007, President Bush issued a statement in which he "urged the Senate to act favorably on U.S. accession to UNCLOS during this session [110 th ] of Congress." UNCLOS was reported on December 19, 2007, by the Senate Committee on Foreign Relations (S.Exec.Rept. 110-9), but the Senate did not consider the treaty. In the 111 th Congress, Secretary of State Hillary Clinton, at her confirmation hearing before the Senate Committee on Foreign Affairs on January 13, 2009, acknowledged that U.S. accession to the LOS Convention would be an Obama Administration priority. The final recommendations of the IOPTF included unanimous support for U.S. accession to UNCLOS. The U.S. Commission on Ocean Policy and the Pew Oceans Commission identified complementary recommendations for a number of key areas in their respective reports. A collaborative Joint Ocean Commission Initiative was initiated in early 2005 to maintain the momentum generated by the two commissions. This initiative is guided by a ten-member task force, five of whom served on each commission, and is led by former commission chairs Admiral James D. Watkins and the Honorable Leon E. Panetta. The main objective of the initiative is to maintain progress on ocean policy reform with core priorities that include the need for ecosystem management, ocean governance reforms, improved fisheries management, increased reliance on science in management decisions, and more funding for ocean and coastal programs. On March 16, 2006, a bipartisan group of 10 Senators requested that the Joint Ocean Commission Initiative report on the top 10 steps Congress should take to address the most pressing challenges, the highest funding priorities, and the most important changes to federal laws and the budget process to establish a more effective and integrated ocean policy. In response on June 13, 2006, a national ocean policy action plan for Congress, From Sea to Shining Sea: Priorities for Ocean Policy Reform—A Report to the United States Senate , was delivered to Congress by the Joint Ocean Commission Initiative and was intended to serve as a guide for developing legislation and funding high-priority programs. This action plan responded to the Senators' request to identify the most urgent priorities for congressional action to protect, restore, and maintain the marine ecosystem. According to the plan, the 10 steps are: adopt a statement of national ocean policy; pass an organic act to establish NOAA in law and work with the Administration to identify and act upon opportunities to improve federal agency coordination on ocean and coastal issues; foster ecosystem-based regional governance; reauthorize an improved Magnuson-Stevens Fishery Conservation and Management Act; enact legislation to support innovation and competition in ocean-related research and education consistent with key initiatives in the Bush Administration's Ocean Research Priorities Plan and Implementation Strategy (discussed in the following section on "Administration Response and Implementation"); enact legislation to authorize and fund the Integrated Ocean Observing System (IOOS); accede to the U.N. Convention on the Law of the Sea; establish an Ocean Trust Fund in the U.S. Treasury as a dedicated source of funds for improved management and understanding of ocean and coastal resources by federal and state governments; increase base funding for core ocean and coastal programs and direct development of an integrated ocean budget; and enact ocean and coastal legislation that progressed significantly in the 109 th Congress. The Joint Ocean Commission Initiative remains active in promoting ocean policy reform through reports, press releases, letters to and testimony before Congress, and public speaking engagements. In April 2009, it released its most recent report, titled Changing Oceans, Changing World: Ocean Priorities for the Obama Administration and Congress . The Joint Ocean Commission has expressed support and provided comments for the two IOPTF reports. Additional information about the Joint Ocean Commission Initiative may be found at http://www.jointoceancommission.org/ . The 111 th Congress will continue to consider whether and how to respond to the findings and recommendations of the Pew Oceans Commission report, America ' s Living Oceans: Charting a Course for Sea Change , and the report of the U.S. Commission on Ocean Policy, An Ocean Blueprint for the 21 st Century . Over five years after the release of the U.S. Commission on Ocean Policy's report and more than six years after the release of the Pew Oceans Commission report, some progress on ocean policy reform has been made. However, hundreds of recommendations suggested by the two commissions have not been addressed. The 109 th Congress reauthorized the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA) ( P.L. 109-479 ), incorporating provisions reflecting many recommendations made by both commissions. These provisions address a broad array of topics, including dedicated access privileges, overfishing, and fish stock rebuilding as well as issues of concern to specific fisheries and regions. After its passage, the Joint Ocean Commission Initiative highlighted provisions related to enhancing the role of science, establishing sustainable harvest levels, authorizing the use of market-based approaches, and setting a clear deadline for ending overfishing. The Administration also emphasized provisions authorizing market-based limited access privilege programs, as well as language strengthening fisheries enforcement, developing ecosystem pilot programs, establishing community-based restoration programs, and creating a regionally-based registry for recreational fishermen. The 109 th Congress also considered bills on specific ocean topics, including ocean exploration; ocean and coastal observing systems; marine debris research, prevention, and reduction; and ocean and coastal mapping integration. Related issues considered whether to (1) provide additional funds for ocean-related research; (2) replace a fragmented administrative structure with a more coherent federal organization; or (3) adopt new approaches for managing marine resources, such as setting aside large reserves from some or all uses. Only one bill was enacted, the Marine Debris Research, Prevention, and Reduction Act ( P.L. 109-449 ). This legislation established a program within NOAA and the U.S. Coast Guard to help identify, determine sources of, assess, reduce, and prevent marine debris and its damage to the marine environment and navigation safety, in coordination with non-federal entities. A variety of legislation has been introduced during the 111 th Congress and bills related to specific topics have been enacted. The Omnibus Public Land Management Act of 2009 ( P.L. 111-11 ) included several ocean-related bills that were considered during previous Congresses. Title XII includes sections that address ocean exploration, ocean and coastal mapping, ocean and coastal integrated observation, ocean acidification research and monitoring, and coastal and estuarine land conservation. Early in the 111 th Congress, H.R. 21 , the Oceans, Conservation, Education, and National Strategy for the 21 st Century Act, and a similar bill, S. 858 , the National Oceans Protection Act of 2009, were introduced. H.R. 21 , first introduced in the 108 th Congress, would implement many recommendations of the Pew and U.S. Commission reports, by establishing a comprehensive national ocean policy for the management of U.S. coasts, oceans, and Great Lakes. The legislation would: establish a national ocean policy with emphasis on conservation of marine ecosystems; authorize NOAA; strengthen and formalize regional coordination by promoting a regional governance structure; and create an Ocean and Great Lakes Trust Fund. On June 18, 2009, the House Natural Resources Subcommittee in Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 21 . Supporters of these bills have pointed to the need to improve ocean conservation because of damage to marine ecosystems caused by pollution, habitat destruction, invasive species, and overfishing. They believe that a defined ocean policy, better coordination among agencies, and more investment are needed to reflect the importance of oceans to our economy and well-being. However, others are concerned that H.R. 21 would increase the ocean-related bureaucracy by establishing numerous layers of additional laws, regulations, advisors, committees, and partnerships. At a hearing during the 110 th Congress, a coalition of Alaska fishing industry groups expressed concerns that H.R. 21 would duplicate efforts, lead to more bureaucracy, conflict with other legal mandates, and result in confusion and litigation. They would rather see greater focus on funding and implementation of current laws, such as the MSFCMA. It remains an open question whether the 111 th Congress will act on this comprehensive approach to ocean policy or concentrate on specific subjects or issues. On November 4, 2009, the Senate Commerce, Science, and Transportation Committee's Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard held a hearing concerning the future of ocean governance that focused on IOPTF activities. In addition to comprehensive ocean approaches, over 70 bills related to ocean and Great Lakes management, climate change, fisheries, coastal conservation, marine animals, marine sanctuaries, research, education, and transportation have been introduced. For example, on September 24, 2009, the Ocean, Coastal, and Watershed Education Act ( H.R. 3644 ) was introduced, and on January 19, 2010, it was passed by the House. This bill would direct NOAA to further develop regional education and watershed programs and to establish a competitive national grant program to advance environmental literacy. Administration action, or inaction, is likely to continue to receive congressional oversight during the 111 th Congress.
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In 2003 and 2004, the U.S. Commission on Ocean Policy and the Pew Oceans Commission made numerous recommendations for changing U.S. ocean policy and management. The 109th Congress reauthorized the Magnuson-Stevens Fishery Conservation and Management Act (P.L. 109-479), incorporating provisions recommended by both commissions, and authorized the Marine Debris Research, Prevention, and Reduction Act (P.L. 109-449). Several bills encompassing a broad array of cross-cutting concerns such as ocean exploration; ocean and coastal observing systems; federal organization and administrative structure; and ocean and coastal mapping were considered, but not acted on during the 110th Congress. Identification of the need for a comprehensive national ocean policy can be traced back to 1966, when a presidential Commission on Marine Science, Engineering, and Resources was established (called the Stratton Commission). In 1969, the commission provided recommendations that led to reorganizing federal ocean programs and establishing the National Oceanic and Atmospheric Administration (NOAA). By the late 1980s, a number of influential voices had concluded that U.S. ocean management remained fragmented and was characterized by a confusing array of laws, regulations, and practices. After repeated attempts, the 106th Congress enacted legislation to establish a U.S. Commission on Ocean Policy (P.L. 106-256). Earlier in 2000, the Pew Oceans Commission, an independent group, was established by the Pew Charitable Trusts to conduct a national dialogue on restoring and protecting living marine resources in U.S. waters. In June 2003, the Pew Commission released its final report, America's Living Oceans: Charting a Course for Sea Change, outlining a national agenda for protecting and restoring the oceans. In September 2004, the U.S. Commission published, An Ocean Blueprint for the 21st Century, its final report with 212 recommendations on a coordinated and comprehensive national ocean policy. On December 17, 2004, the Bush Administration submitted to Congress the U.S. Ocean Action Plan, its formal response to the recommendations of the U.S. Commission on Ocean Policy. The U.S. Commission on Ocean Policy and the Pew Oceans Commission established the Joint Ocean Commission Initiative in early 2005 to collaborate on a number of key recommendations of both reports. The Joint Ocean Commission has remained active in advancing these recommendations to Congress and the Administration. In June 2009, the Obama Administration established an Ocean Policy Task Force to develop a national ocean policy. On September 10, 2009, the task force released the Interim Report of the Interagency Ocean Policy Task Force, which includes national ocean policy priorities, a governance structure for interagency coordination, and an implementation strategy. On December 9, 2009, the task force released the Interim Framework for Effective Coastal and Marine Spatial Planning, which recommends a regional approach to marine spatial planning. The 111th Congress is continuing to consider ocean policy and management recommendations of the two commission reports. Comprehensive changes in ocean governance and administrative structure are proposed in the Oceans Conservation, Education, and National Strategy for the 21st Century Act (H.R. 21) and the National Oceans Protection Act of 2009 (S. 858). However, most congressional activity has focused on specific topics. Title XII of the Omnibus Public Land Management Act of 2009 (P.L. 111-11) included subtitles that address ocean exploration, ocean and coastal mapping, ocean and coastal integrated observation, ocean acidification research and monitoring, and coastal and estuarine land conservation.
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The Supreme Court in recent years has accepted for argument only about 70 to 80 cases each term, so it is a matter of some note when several of them fall into a single area. Such was the situation in the Court's 2006-2007 term, with the Court accepting for oral argument five environmental cases out of 72 altogether. This interest in environmental cases continues a pattern of several years' duration; indeed, the Court also decided five environmental cases in its 2003-2004 term. The five environmental cases in the 2006-2007 term were a varied lot: two involving the Clean Air Act, one the Superfund Act, one the relationship between the Clean Water Act and Endangered Species Act, and one the federal constitutional limits on local solid-waste "flow control." The Court's decisions in these cases were equally varied, ranging from two unanimous decisions ( Duke Energy and Atlantic Research ) to two that were 5-4 ( Massachusetts and National Association of Home Builders ). In both of the 5-4 decisions, Justice Kennedy was the decisive fifth vote. Massachusetts v. EPA , 127 S. Ct. 1438 (Apr. 2, 2007) This case marks the debut of global warming in the Supreme Court. It arose from a petition asking EPA to regulate emissions from new motor vehicles under the Clean Air Act (CAA) on a novel ground: their status as greenhouse gases (GHGs) promoting global warming. In 2003, EPA denied the petition, arguing principally that CAA section 202 does not authorize EPA to regulate vehicle emissions on that basis. Twelve states and several environmental groups then challenged the denial in the D.C. Circuit. In 2005, the D.C. Circuit rejected 2-1 the challenge to EPA's denial. The two judges voting to reject did so for different reasons, however. One judge agreed with EPA that the section 202 phrase "in his judgment" allows the agency to inject policy considerations into its decision whether to regulate vehicle emissions—for example, the Administration's preference for economic incentives over regulatory mandates. The other judge held that petitioners had not suffered the injury requisite for federal-court standing, a ubiquitous issue in global warming litigation. The Supreme Court decided 5-4 in favor of the petitioner states and environmental groups, reversing the court below. At the outset, the majority opinion by Justice Stevens held that petitioners had standing, explaining that the required "injury in fact" for standing was provided by Massachusetts's loss of shoreland through global-warming-induced sea level rise, and that states seeking to establish standing in federal court are entitled to "special solicitude." On the merits, the Court held that CAA section 202 empowers EPA to regulate emissions from new motor vehicles based on their global warming impacts, the statute being "unambiguous" on this score. Also, EPA may not inject policy considerations into its decision to reject regulating such emissions, as the agency had done. The section 202 phrase "in his judgment" was not "a roving license to ignore the statutory text"; EPA's judgment must relate to whether an air pollutant might endanger public health and welfare. In two four-justice dissents, Chief Justice Roberts rejected standing and Justice Scalia denied that EPA had the requisite authority under the CAA. The Court's ruling is likely to have several effects. Most obviously, EPA may find it difficult to avoid regulating GHGs from new vehicles. According to the Court, "EPA can avoid taking further action only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion." Section 202 says that once EPA makes the "judgment" that a pollutant might endanger public health or welfare, it must issue regulations. Beyond the implications for new vehicles, the Court's decision pressures EPA to move against GHG emissions from stationary sources, under Title I of the CAA. (Indeed, a lawsuit seeking to compel just that was stayed by the D.C. Circuit pending the Supreme Court's decision in Massachusetts v. EPA .) The decision also could influence Congress to act on global warming, partly because the default regulatory structure of the CAA does not easily accommodate a global phenomenon like climate change. In the courts, the decision could affect many GHG-related cases now pending, as by supporting a finding of standing, and could encourage new suits to be brought. Environmental Defense v. Duke Energy Corp ., 127 S. Ct. 1423 (Apr. 2, 2007) This case arises from a CAA enforcement action brought by EPA against Duke Energy, charging it with carrying out 29 "modifications" to its coal-fired power plants without obtaining Prevention of Significant Deterioration (PSD) permits required for "new sources" under the act. Environmental groups, including Environmental Defense, intervened as plaintiffs. The dispute centers on how to measure the emissions from a stationary source of emissions so as to determine whether a physical or operational change in that source "increases the amount," in the CAA's words, of emissions. The existence of such an emissions increase is pivotal, since it brands the physical or operational change as a "modification" and the modified source, in turn, as a "new source" requiring a PSD permit and state-of-the-art pollution controls. In the district court, the United States argued that Duke's refurbishment of its aging plants would allow them to operate more of the time, resulting in increases in annual emissions and triggering, under EPA's PSD regulations, new source requirements. However, the district court held that those regulations impose an hourly standard. Under an hourly standard, a project modification allowing a plant to operate for more hours but without increasing emissions per hour, as Duke Energy had done, would not count as an increase in emissions, and so would not trigger new source requirements. The Fourth Circuit affirmed, explaining that since the CAA states that "modification" for PSD purposes means the same as for New Source Performance Standards (NSPS) purposes, EPA regulations elaborating on the statutory definitions also had to be the same. Thus, it read the agency's PSD regulations as turning on hourly emissions, just as the earlier-promulgated NSPS regulations had done. Environmental Defense—but not EPA—filed a petition for certiorari. Indeed, the United States opposed the petition, presumably because EPA had adopted the hourly standard in the Fourth Circuit ruling in its new PSD regulations (70 Fed. Reg . 61081). Then, too, the Bush Administration had long been unenthusiastic about the PSD enforcement effort against utilities set in motion in the prior administration. In any event, the Supreme Court took the case over the United States' opposition, one of the very few times the Court has accepted a case solely at the request of an environmental group. As with its global warming decision handed down the same day, the Supreme Court ruled for the "environmental" side—this time unanimously. The Court concluded that just because the CAA states that "modification" under PSD means the same as under NSPS does not require that EPA regulations , in elaborating on the statutory definition, also have to be identical. Thus the Fourth Circuit's effort to stretch the meaning of the PSD rules to conform them with the earlier NSPS rule was misguided. The wording of the PSD rule, said the Supreme Court, does not support an hourly-rate reading. Accordingly, the Court vacated the Fourth Circuit decision and remanded the case to the Circuit. United States v. Atlantic Research Corp. , 127 S. Ct. 2331 (June 11, 2007) The Superfund Act—more formally, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)—imposes liability for cleanup costs on a wide range of persons connected with a contaminated site. Two scenarios may occur. In the first scenario, there is government compulsion : a liable party (such as the site owner) waits for EPA to clean up the site and then demand reimbursement, or EPA orders the liable party to do the cleanup itself. In either case, the liable party, if made to pay more than its fair share, may turn around and sue other parties made liable by CERCLA in a "contribution" action. In the second scenario, the liable party cleans up voluntarily —that is, without waiting for a government cleanup order or cost-recovery effort—and then seeks reimbursement from other CERCLA-liable parties. Two CERCLA provisions authorize, or arguably authorize, such actions, and their relationship has been heavily litigated. CERCLA section 113(f)(1) authorizes liable parties to seek contribution from other liable parties "during or following" an EPA action seeking a cleanup or reimbursement order. CERCLA section 107(a)(B) makes liable parties responsible for necessary costs of response incurred by private entities. The majority view in the lower-court decisions is that liable parties may invoke only section 113(f)(1), while innocent parties must use section 107(a)(B). In Cooper Industries, Inc. v. Aviall Services, Inc ., 543 U.S. 157 (2004), the Supreme Court held that contribution actions by liable parties under section 113(f)(1) may be brought only once EPA has filed a civil action against the liable party (ordering cleanup or seeking reimbursement) . However, the Court expressly reserved the question of whether a liable party, such as one barred from using 113(f)(1), may sue instead under section 107(a)(B). The question is fundamental to the Superfund program: obviously owners of contaminated sites are more willing to clean up without waiting for EPA attention if they can get reimbursement for cleanup costs they incur beyond their fair share. Because it is typical that a contaminated site never receives EPA attention, given the large number of such sites, this point is particularly important. The Eighth Circuit decision held that a private party that voluntarily undertakes a cleanup for which it may be held liable under CERCLA, thus barring it from seeking contribution under section 113(f)(1), may seek contribution from another liable party under section 107(a)(B). In an opinion by Justice Thomas, the Supreme Court unanimously affirmed. The availability of section 107(a)(B) actions to liable parties, said the Court, is dictated by the provision's lack of any express qualifiers to its reach. Nor does making section 107(a)(B) available to liable parties render section 113(f) redundant (courts avoid readings of statutory language that make other statutory language "mere surplusage"). Rather, said the Court, the two remedies complement each other: "Section 113(f)(1) authorizes a contribution action to [liable parties] with common liability stemming from an [EPA] action instituted under §106 or §107(a). And §107(a) permits cost recovery (as distinct from contribution) by a private party that has itself incurred cleanup costs." National Association of Home Builders v. Defenders of Wildlife , 2007 Westlaw 1801745 (U.S. June 25, 2007) (No. 06-340) This case arises from the conflict between the literal commands of Clean Water Act (CWA) section 402(b) and the later-enacted Endangered Species Act (ESA) section 7(a)(2). CWA section 402 is the heart of the CWA: it imposes a permit requirement for point-source discharges into waters of the United States. This permit program is initially administered within a state by EPA, until EPA, on the state's request, approves delegation of the program to the state. Section 402(b) states that EPA "shall approve" such delegation if the state satisfies nine criteria, which generally seek to establish that the state has the legal authority in place to administer as effective a program as EPA's. At the same time, however, ESA section 7(a)(2) requires "[e]ach Federal agency" to consult with the Fish and Wildlife Service (or, for marine species, NOAA Fisheries) in order to insure that any agency action is not likely to jeopardize endangered and threatened species or adversely affect designated critical habitat. The question is, does the ESA consultation requirement act as a tenth precondition for permit-program delegation, even though CWA section 402(b) on its face mandates delegation if the nine criteria stated there are met. This case arose from EPA's ultimate position, in connection with Arizona's request for delegation of the permit program, that EPA's decision was not subject to ESA consultation. The immediate concern is whether an Arizona permitting program, and state permitting programs generally, are as effective in protecting federally designated endangered and threatened species as the EPA-administered permit program, given that only EPA-issued permits are subject to ESA consultation. More broadly, how much contraction in the scope of ESA consultation would occur if other federal programs using nondiscretionary language are exempt from ESA consultation? The Ninth Circuit held that ESA section 7(a)(2) stated an independent criterion that had to be met. 420 F.3d 946 (9 th Cir. 2005). By 5-4, the Supreme Court reversed. Justice Alito, writing for the majority, recognized that in CWA section 402(b) and ESA section 7(a)(2), the Court faced "a clash of seemingly categorical—and at first glance, irreconcilable—legislative commands." To set up ESA section 7(a)(2) as an independent criterion for permit-program delegations, however, would be to countenance a repeal by implication of the mandatory "shall" in CWA section 402(b). Repeals by implication are disfavored by courts. Moreover, the agencies charged with implementing the ESA—again, the Fish and Wildlife Service and NOAA Fisheries—had resolved the tension between the two statutes through a regulation stating that section 7(a)(2) "appl[ies] to all actions in which there is discretionary Federal involvement or control." (Emphasis added.) Because the conflicting commands of sections 7(a)(2) and 402(b) create a genuine ambiguity, said the Court, and because the regulation's limitation to discretionary acts is a reasonable resolution, it is entitled to deference. Thus, concluded the Court, EPA may approve state delegations of section 404 permitting authority without ESA consultation. We are now likely to see federal government briefs filed in litigation over other nondiscretionary federal authorities, arguing that on the basis of National Association of Home Builders , no ESA consultation is required. United Haulers Ass ' n v. Oneida-Herkimer Solid Waste Management Authority , 127 S. Ct. 1786 (Apr. 30, 2007) State and local restrictions on the interstate flow of municipal solid waste have long interested the courts, which have repeatedly struck them down as incompatible with the "dormant commerce clause." The dormant commerce clause, held to be implicit in the Constitution's Commerce Clause (Art. I, sec. 8, cl. 3), addresses state and local laws that either (a) expressly discriminate against interstate commerce, which are tested under a "strict scrutiny" test and almost always struck down; or (b) burden interstate commerce in a nondiscriminatory fashion, which are tested under a lenient, balancing test and often sustained. The interstate-waste court decisions, including five from the Supreme Court, have applied strict scrutiny to invalidate state and local restrictions on both import of solid waste from other states and export of waste to other states—the latter called "flow control." Flow control ordinances typically require that all waste generated within a locality be taken to a locally designated transfer or disposal facility. United Haulers concerns flow control. The case arose against the backdrop of a 1994 Supreme Court decision striking down a town flow control ordinance, applying the strict scrutiny test. C&A Carbone, Inc. v. Town of Clarkstown , 511 U.S. 383 (1994). The designated transfer facility in Carbone was privately owned, while the designated facilities in United Haulers were public. The question was, does this public-private distinction make a difference to the dormant commerce clause analysis? The district court found the county flow control laws at issue here unconstitutional under Carbone , reading that decision to require strict scrutiny and reject nearly all flow control laws. The Second Circuit reversed, finding the public-private distinction to be dispositive—thus allowing flow control in this case. By 6-3, the Supreme Court affirmed. Writing for the majority, Chief Justice Roberts pronounced that flow control ordinances benefitting public facilities, while treating all private companies the same, do not discriminate against interstate commerce for purposes of the dormant commerce clause—and thus do not trigger strict scrutiny. Treating public and private facilities differently under the clause makes sense, the majority explained, for several reasons. First, public and private facilities have very different objectives—only government has a duty to protect the health, safety, and welfare of its citizens. Given this difference, laws favoring local government facilities are less likely to be motivated by economic protectionism than those favoring private entities. Second, treating public facilities the same as private ones under the dormant commerce clause would lead to "unbounded interference by the courts with local government." And third, waste disposal has long been a traditional function of local government, suggesting that federal courts should be "particularly hesitant" to interfere. Since strict scrutiny did not apply, the Court moved on to the lenient, balancing test for nondiscriminatory burdens on interstate commerce, and found the test satisfied. Thus, the flow control ordinances were upheld.
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The Supreme Court decided five environmental cases during its 2006-2007 term, a significant proportion of the 72 cases it heard. Two decisions involve the Clean Air Act: one ruling that the act allows the Environmental Protection Agency (EPA) to regulate vehicle emissions based on their global warming impacts; the other, that EPA regulations validly impose an annual, as opposed to hourly, emissions change test in determining whether a modification of a stationary source makes it a "new source" requiring a permit. A Superfund Act decision held that liable parties who incur cleanup costs beyond their fair share may sue for reimbursement, despite another provision in the act restricting contribution actions. Another case dealt with the relationship between the Clean Water Act and Endangered Species Act, holding that the former's mandate that EPA "shall" delegate a permitting program to a state when statutory criteria are met is not subject to the equally unqualified command in the latter that consultation with federal wildlife-protection agencies occur. The remaining case involves a constitutional issue. It held that two counties' "flow control" laws, requiring that solid waste generated within the counties be taken to processing facilities within the counties, did not offend the Constitution's "dormant commerce clause" because the facilities were publicly owned.
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In response to problems raised by the 2007-2009 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) was enacted on July 21, 2010. Since enactment, there has been congressional debate over whether—and how much—the act should be amended. Proponents believe that Dodd-Frank has successfully created a more stable financial system and better protected consumers and investors, while opponents believe that the act is partly to blame for restricted credit availability and the sluggish economic recovery that, in some ways, persists to this day. It should be noted that while Dodd-Frank is the largest source of new financial regulations since the crisis, it is not the only one. This report provides a brief summary of the major provisions of the Dodd-Frank Act and how they relate to the financial crisis. It begins with a table ( Table 1 ) listing the financial regulators discussed in the report, followed by a summary of the act's legislative history and the financial crisis. The 111 th Congress considered several proposals to reorganize financial regulators and to reform the regulation of financial markets and financial institutions. Following House committee markups on various bills addressing specific issues, then-Chairman Barney Frank of the House Committee on Financial Services introduced the Wall Street Reform and Consumer Protection Act of 2009 ( H.R. 4173 ), incorporating elements of numerous previous bills. After two days of floor consideration, the House passed H.R. 4173 on December 11, 2009, on a vote of 232-202. Then-Chairman Christopher Dodd of the Senate Committee on Banking, Housing, and Urban Affairs issued a single comprehensive committee print on November 16, 2009, the Restoring American Financial Stability Act of 2009. This proposal was revised over the following months, and the Restoring American Financial Stability Act of 2010 was marked up in committee on March 22, 2010, and reported as S. 3217 on April 15, 2010. The full Senate took up S. 3217 and amended it several times, finishing consideration on May 20, 2010, when it substituted the text of S. 3217 into H.R. 4173 . The Senate then passed its version of H.R. 4173 on a vote of 59-39. Following a conference committee, the House on June 30, 2010, agreed to the H.R. 4173 conference report by a vote of 237-192. The Senate agreed to the report on July 15, 2010, by a vote of 60-39. The legislation was signed into law on July 21, 2010, as P.L. 111-203 . In addition to Chairman Dodd's and Chairman Frank's bills, other proposals were made but not scheduled for markup. For example, then-House Financial Services Committee Ranking Member Spencer Bachus introduced a comprehensive reform proposal, the Consumer Protection and Regulatory Enhancement Act ( H.R. 3310 ), and offered a similar amendment ( H.Amdt. 539 ) during House consideration of H.R. 4173 . In March 2008, then-Treasury Secretary Hank Paulson issued a "Blueprint for a Modernized Financial Regulatory Structure." The Obama Administration released "Financial Regulatory Reform: A New Foundation" in June 2009, and followed this with specific legislative language that provided a base text for congressional consideration. Understanding the fabric of financial reform proposals requires some analysis both of financial disruptions that peaked in September 2008, as well as of more enduring concerns about risks in the financial system. The financial crisis focused policy attention on systemic risk, which had previously been a subject of interest to academics and central bankers, but was not seen as a significant threat to economic stability. The last major systemic risk episode was sparked by bank runs in the Great Depression, and the main elements of the current bank regulatory regime and federal safety net were put in place to prevent a similar recurrence. Between the end of the Great Depression and the early 2000s, the financial system weathered numerous shocks, failures, and crashes, with limited spillover into the real economy. Typically, the Federal Reserve (Fed) would announce that it stood ready to provide liquidity to the system, and that proved sufficient to stem panic. The idea that a financial shock could cause the entire system to spin out of control and collapse, and that the flow of credit might stop altogether, seemed to be a remote prospect. De facto policy was to rely on the Fed to deal with crises after the fact. The events of 2007 and 2008 caused a sharp reassessment of the robustness and the self-stabilizing capacity of the financial system. As then-Treasury Secretary Timothy Geithner noted in written testimony delivered to the House Financial Services Committee on September 23, 2009, "The job of a financial system … is to efficiently allocate savings and risk. Last fall, our financial system failed to do its job, and came precariously close to failing altogether." A number of discrete failures in individual markets and institutions led to global financial panic. Notably, many of these failures were not banks, seen historically as the primary source of systemic risk. U.S. financial firms suffered heavy losses in 2007 and 2008, primarily because of declines in the value of mortgage-related assets. During September 2008, Fannie Mae and Freddie Mac were placed in government conservatorship. Merrill Lynch was sold in distress to Bank of America in a deal supported by the Fed and Treasury. The Fed and Treasury failed to find a buyer for Lehman Brothers, which subsequently filed for bankruptcy, disrupting financial markets. A money market mutual fund (the Reserve Primary Fund) that held debt issued by Lehman Brothers announced losses, triggering a run on other money market funds, and Treasury responded with a guarantee for money market funds. The American International Group (AIG), an insurance conglomerate with a securities subsidiary that specialized in financial derivatives, including credit default swaps, was unable to post collateral related to its derivatives and securities lending activities. The Fed intervened with an $85 billion loan to prevent bankruptcy and to ensure full payment to AIG's counterparties. In response to the general panic, Congress approved the $700 billion Troubled Asset Relief Program (TARP); the Fed introduced several lending facilities to provide liquidity to different parts of the financial system; and the Federal Deposit Insurance Corporation (FDIC) introduced a debt guarantee program for banks. The panic largely subsided through the latter part of 2008, although confidence in the financial system returned very slowly. It was widely understood that the panic had its roots in the subprime mortgage market, in which years of double-digit housing price increases had fed a bubble mentality and caused lenders to relax underwriting standards. That the housing market would cool, as it began to do in 2006, was not a great surprise. What was generally unexpected was the way losses caused by rising foreclosures and bad loans rippled through the system. Major financial institutions had constructed highly leveraged speculative positions that magnified the subprime shock, so that a setback in a $1 trillion segment of the U.S. housing market generated many times that amount in financial losses. Giant financial institutions were shown to be vulnerable to liquidity runs, and many failed or had to be rescued as short-term credit dried up. The value of complex financial instruments created through securitization became completely uncertain, and market participants lost confidence in each other's creditworthiness. Risks that were thought to be unrelated became highly correlated; a negative spiral that showed all financial risk taking to be interconnected and all declines to be self-reinforcing took hold. Doubts about counterparty exposure were magnified by opacity in derivatives markets. Disruption to the financial system exacerbated recessionary forces already at work in the economy. Asset prices plunged and consumers suffered sharp losses in their retirement and college savings accounts, as well as in the value of their homes. The financial crisis accelerated declines in consumption and business investment, which in turn made banks' problems worse. Overall, the recession proved to be the deepest and longest since the Great Depression. The Dodd-Frank Act included measures to improve systemic stability, improve policy options for coping with failing financial firms, increase transparency throughout financial markets, and protect consumers and investors. The act included provisions that affected virtually every financial market and that amended existing or granted new authority and responsibility to nearly every federal financial regulatory agency. Under each of the areas treated below, the financial crisis context and the corresponding provisions in the Dodd-Frank Act are included. Systemic risk refers to sources of instability for the financial system as a whole, often through "contagion" or "spillover" effects against which individual firms cannot protect themselves. Although regulators took systemic risk into account before the crisis, and systemic risk can never be entirely eliminated, analysts have pointed to a number of ostensible weaknesses in the precrisis regulatory regime's approach to systemic risk. First, there had been no regulator with overarching responsibility for mitigating systemic risk. Some analysts argue that systemic risk can fester in the gaps in the regulatory system where one regulator's jurisdiction ends and another's begins. Second, the crisis revealed that liquidity crises and runs were not just a problem for depository institutions. Third, the crisis revealed that nonbank, highly leveraged firms, such as Lehman Brothers and AIG, could be a source of systemic risk and "too big (or too interconnected) to fail." Finally, there were concerns that the breakdown of different payment, clearing, and settlement (PCS) systems that make up the "plumbing" of the financial system, which were not regulated consistently, could be another source of systemic risk. Rather than creating a dedicated systemic risk regulator with broad powers to neutralize sources of systemic risk as they arise, Dodd-Frank instead created a Financial Stability Oversight Council (FSOC), composed of the Treasury Secretary as chair along with eight heads of federal regulatory agencies (including the newly created Consumer Financial Protection Bureau) and a presidential appointee with insurance experience as voting members. The act created an Office of Financial Research to support the council. See Table 2 below. The council is authorized to identify and advise its member regulators on sources of systemic risk and "regulatory gap" problems, but has limited rulemaking, examination, or enforcement powers of its own. The council is authorized to identify systemically important financial firms regardless of their legal charter, and the Fed will subject them and all bank holding companies with over $50 billion in assets to stricter prudential oversight and regulation, including counterparty exposure limits set at 25% of total capital, annual stress tests and capital planning requirements, resolution planning ("living wills"), early remediation requirements, and risk management standards. Many large firms were already regulated by the Fed for safety and soundness as bank holding companies; the act prevented most firms from changing their charter in order to escape Fed regulation (known as the "Hotel California" provision). In addition, the Dodd-Frank Act included a 10% liability concentration limit for financial firms and mechanisms by which the Fed would be empowered to curb the growth or reduce the size of large firms if they pose a risk to financial stability. Title VIII also provided for many PCS systems and activities deemed systemically important by the council to be regulated for safety and soundness by (depending on the type) the Fed, the Securities and Exchange Commission (SEC), or the Commodities Futures Trading Commission (CFTC) and to have access to the Fed's discount window in "unusual and exigent circumstances." During the recent financial turmoil, the Fed engaged in unprecedented levels of emergency lending to nonbank financial firms through its authority under Section 13(3) of the Federal Reserve Act. At that time, this statute stated that "in unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not less than five members, may authorize any Federal reserve bank ... to discount for any individual, partnership, or corporation, notes, drafts, and bills of exchange…." Such loans can be made only if secured to the Fed's satisfaction and if the targeted borrower is unable to obtain the needed credit through other banking institutions. In addition to the level of lending, the form of the lending was novel, particularly the creation of a series of liquidity facilities for nonbank financial firms and three limited liability corporations controlled by the Fed, to which the Fed lent a total of $72.6 billion to purchase illiquid assets from Bear Stearns and AIG. The Fed's actions under Section 13(3) generated debate in Congress about whether measures were needed to amend the institution's emergency lending powers. The Dodd-Frank Act included several provisions related to the Federal Reserve's Section 13(3) lending authority. In particular, the act stipulated that, although the Fed may authorize a Federal Reserve Bank to make collateralized loans as part of a broadly available credit facility, it may not authorize a Federal Reserve Bank to lend to only a single and specific individual, partnership, or corporation. When using this emergency authority, the Fed is required to seek approval from the Treasury Secretary. Title XI would also allow the FDIC to set up emergency liquidity programs to guarantee the debt of bank holding companies, similar to the 2008 Temporary Liquidity Guarantee Program. In addition, the Dodd-Frank Act allowed the Government Accountability Office (GAO) to audit the Fed's lending facilities and open market operations for internal controls and risk management, and it called for a GAO audit of the Fed's actions during the crisis. The act required disclosure of Fed borrowers and borrowing terms, but with a time lag. The act prohibited firms regulated by the Fed from participating in the selection of directors of the regional Federal Reserve Banks. The act also created a new presidentially appointed Vice Chair of Supervision on the Board of Governors. Most companies, including many financial companies, that fail in the United States are resolved through a judicial process in accordance with the U.S. Bankruptcy Code. The primary objective of a corporate bankruptcy is to provide the debtor with a "fresh start" by discharging the company's legal obligations to make further payments on existing debts. This generally is accomplished by either (1) liquidating the debtor company's assets so as to maximize returns to creditor classes based on a statutorily defined priority scheme, or (2) reorganizing the company's debts so that creditor classes receive more than they would have through liquidation, while also enabling the debtor to maintain operations as a going concern. However, federal law does not permit every financial company to file for protection under the Bankruptcy Code. For example, depository institutions (i.e., banks and thrifts) that hold FDIC-insured deposits cannot be debtors under the Bankruptcy Code. Instead, these insured depositories are subject to a special resolution regime, called a conservatorship or receivership (C/R), that typically is administered by the FDIC. Unlike the bankruptcy process, this C/R resolution regime is a largely nonjudicial, administrative process through which the FDIC assumes control over a troubled depository for the purpose of either preserving and conserving the institution's assets as conservator or liquidating the institution as receiver. The FDIC, as conservator or receiver, assumes broad and flexible powers, including "all the powers of the members or shareholders, the directors, and the officers of the institution." One of the primary objectives of the FDIC as conservator or receiver is to protect federally insured deposits of the failed institution by either paying them off or transferring them to another institution. This process generally requires significant disbursements from the FDIC's Deposit Insurance Fund and often results in the FDIC being the largest creditor of the failed institution. The FDIC is generally required by statute to choose the "least-cost resolution" strategy that will result in the lowest cost to the Deposit Insurance Fund. However, the FDIC may waive the least-cost resolution requirement under certain circumstances to "avoid serious adverse effects on economic conditions or financial stability." The financial turmoil at the end of the last decade that resulted from the Lehman Brothers bankruptcy and the federal government's provision of ad hoc emergency financial assistance to prevent the bankruptcies of AIG, Bear Stearns, and others focused congressional attention on options for resolving large, complex financial companies while maintaining the stability of the U.S. financial system. More specifically, policymakers questioned whether the Bankruptcy Code, as it was structured at the time of the financial crisis, could effectuate the resolution of large, complex financial companies without undermining financial stability. Some believed that establishing a special resolution regime for large, complex financial companies modeled after the nonjudicial C/R process for resolving failed depositories would reduce the likelihood that the federal government would need to provide taxpayer-backed financial assistance to reduce the potential systemic disruptions of one or more financial companies entering bankruptcy. Opponents argued that the establishment of a special resolution regime would enable policymakers to provide beneficial treatment to favored creditors and counterparties of failing firms. Rather than establishing a new administrative resolution regime, some policymakers argued that these systemic risk concerns could be effectively addressed through amendments to the Bankruptcy Code. Ultimately, Congress can be seen to have chosen a path somewhat in the middle of these policy proposals. Title II of the Dodd-Frank Act establishes a new resolution regime for certain financial companies, called the "Orderly Liquidation Authority" (OLA). OLA is an administrative process modeled after the C/R regime for failed depository institutions. However, OLA is statutorily structured as a fallback alternative to the normally applicable Bankruptcy Code that is to be utilized only under extraordinary circumstances. Under normal circumstances, failed financial companies would be resolved under the Bankruptcy Code. OLA, on the other hand, may be utilized only if, at the time when an eligible financial company is in default or in danger of default, various federal regulators determine that the company's resolution under the Bankruptcy Code would pose dangers to the U.S. financial system. OLA is largely modeled after the C/R regime for failed depository institutions described above, but with some notable distinguishing characteristics. Like the C/R regime for depositories, OLA is a largely nonjudicial, administrative process that typically would be administered by the FDIC. Additionally, the FDIC's powers under OLA are similar to those assumed by the FDIC under the C/R regime for depositories. Unlike the C/R regime, which is limited to depository institutions and their subsidiaries, OLA is available to a broad array of financial companies, including bank holding companies, thrift holding companies, and insurance holding companies, as well as many of their subsidiaries. However, depository institutions continue to be resolved under the C/R regime, and insurance companies and certain securities broker-dealers are subject to distinct resolution requirements. While the chief objective of the C/R regime is to protect federally insured deposits and minimize the cost to the Deposit Insurance Fund, the primary objective of the OLA is "to provide the necessary authority to liquidate failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard." To further this objective, OLA authorizes only receiverships, not conservatorships. The Dodd-Frank Act states that "[a]ll financial companies put into receivership under this title shall be liquidated and no taxpayer funds shall be used to prevent the liquidation of any financial company under this title." The funding mechanism for resolutions under the OLA also differs from the C/R regime for depositories. Whereas the Deposit Insurance Fund is prefunded based on assessments against insured depositories, the Orderly Liquidation Fund established for funding resolutions under the OLA is not prefunded. Instead, the FDIC is authorized to borrow from the Treasury as necessary to fund a specific OLA receivership, subject to explicit caps based on the value of the failed company's consolidated assets. If the failed companies' assets are insufficient to repay fully what was borrowed from the Treasury, then the FDIC is empowered to recover the shortfall from the financial industry. Securitization is the process of turning mortgages, credit card loans, and other debt into securities that can be purchased by investors. Securitizers acquire and pool many loans from lenders and then issue new securities based on the flow of payments from the underlying loans. Banks can reduce the risk of their retained portfolios by securitizing the loans they hold, spreading risks to other types of investors more willing to bear them. If the risks are adequately managed and understood, this can enhance financial stability. Also, securitization is a source of funding for nonbank lenders, and thus can increase the total amount of credit available to businesses and consumers. Securitization risks were not properly managed leading up to the crisis, contributing in part to the housing bubble and financial turmoil. Lenders collect origination fees, but if they sell their loans they are not exposed to loan losses if borrowers default. This creates an incentive to originate loans without appropriate underwriting. Prior to the crisis, these incentives likely led to deteriorating underwriting standards, and certain lenders may have been indifferent to whether loans would be repaid. Private securitization was especially prevalent in the subprime mortgage market, the nonconforming mortgage market, and in regions where loan defaults were particularly severe. Losses and illiquidity in the mortgage-backed securities (MBS) market led to wider problems in the crisis, including a lack of confidence in financial firms because of uncertainty about their exposure to potential MBS losses, through their holdings of MBS or off-balance sheet support to securitizers. One approach to address incentives in securitization is to require loan securitizers to retain a portion of the long-term default risk. An advantage of this "skin in the game" requirement is that it may help preserve underwriting standards among lenders funded by securitization. Another advantage is that securitizers would share in the risks faced by the investors to whom they market their securities. A possible disadvantage is that if each step of the securitization chain must retain a portion of risk, then less risk may be shifted out to a broader sector of investors willing and able to bear it, raising the cost of credit. Concentrating risk in certain financial sectors could increase financial instability. The Dodd-Frank Act generally required securitizers to retain some of the risk if they issue asset-backed securities. The amount of risk required to be retained depends in part on the quality and type of the underlying assets. Regulators are instructed to write risk retention rules requiring less than 5% retained risk if the securitized assets meet prescribed underwriting standards. For assets that do not meet these standards, regulators were instructed to require not less than 5% retention of risk. Securitizers were prohibited from hedging the retained credit risk. In the case of residential mortgages that are securitized, the Dodd-Frank Act allowed for a complete exemption from risk retention if all of the mortgages in the securitization meet the standards of a "Qualified Residential Mortgage." Subsequently, regulators decided to use the same definition for a "Qualified Residential Mortgage" and a "Qualified Mortgage." The act exempted certain government-guaranteed securities. The act required securitizers to perform due diligence on the underlying assets of the securitization and to disclose the nature of the due diligence. In addition, investors in asset-backed securities are to receive more information about the underlying assets. During the crisis, banks and their parent companies, called bank-holding companies (BHC), came under significant stress, and over 500 banks would eventually fail, presenting an opportunity to reexamine bank regulation. Areas of concern that emerged included capital requirements; debit interchange fees; regulatory fragmentation; federal deposit insurance; and risky activities by banks. Capital Requirements. Bank organizations fund themselves with liabilities and capital. Capital can absorb losses while the bank continues to meet its obligations on liabilities, and hence avoid failure. Safety and soundness regulations require banks to hold a certain amount of capital. Following the crisis, some observers asserted that capital requirements should be more stringent, and requirements facing BHCs and certain nonbanks should be at least as stringent as those faced by depositories. Proponents argued that BHCs should be a "source of strength" to support distressed depository subsidiaries. They further claimed that differing requirements allowed banking organizations to take on more risk. Opponents argued that regulators should have discretion over what should be imposed across different company types to allow for differences in business models. They asserted this was especially true of nonbank institutions, with insurance companies in particular arguing those companies have substantially different risk profiles than banks. Interchange Fees . When a debit card is used to make a purchase, the merchant making the sale pays a fee—known as the interchange fee —to the bank that issued the debit card (the issuer). The fee is compensation for services provided by the issuer, including facilitating authorization, clearance, and settlement and fraud prevention. Network providers set the rates for interchange fees, acting as an intermediary between issuers and merchants. Merchants asserted that large network providers and issuing banks exercised market power to charge fees above market prices. Network providers and issuing banks argued that prices are appropriately set and reflected the costs—including fixed and card reward program costs overlooked by critics—of facilitating the transactions. Proponents of fee limits asserted the measures would eliminate anticompetitive pricing and benefit merchants and consumers. Opponents asserted that price restrictions would lead to inaccurate prices that created economic distortions and costs in other parts of the system. Regulatory Consolidation. Commercial banks and similar institutions are subject to regulatory examination for safety and soundness. Prior to the crisis, these institutions—depending on their charter type—may have been examined by the Federal Reserve, OCC, the FDIC, the Office of Thrift Supervision (OTS), the National Credit Union Administration, or a state authority. The system of multiple bank regulators was believed to have problems, some of which could be mitigated by consolidation. Consistent enforcement may be difficult across multiple regulators. To the extent that regulations are applied inconsistently, institutions may have an incentive to choose the regulator that they feel will be the least intrusive. While depositories of all types failed in the crisis, shortcomings in the OTS's supervision of large and complex institutions under its purview received particular criticism. An argument against consolidation is that regulatory consolidation could change the traditional U.S. dual banking system in ways that could put smaller banks at a disadvantage. Another argument for maintaining the current system is interaction between regulators monitoring different types of institutions may allow one regulator to alert others if it identifies emerging risks or regulatory weakness. Federal Deposit Insurance . The Federal Deposit Insurance Corporation (FDIC) insures deposits, guaranteeing that (up to a certain account limit) depositors will not lose any deposits. FDIC funding comes from charging banks premiums—called assessments —which are used to maintain the Deposit Insurance Fund (DIF). The ratio of the value of the DIF to domestic deposits is called the reserve ratio . At the onset of the crisis, the FDIC insured up to $100,000 per account, and was required to maintain a reserve ratio between 1.15% and 1.5%. During this crisis, the FDIC temporarily raised the maximum insured deposit amount to $250,000, because many depositors held accounts larger than $100,000. Also, the rapid increase in bank failures depleted the DIF. Observers argued that the FDIC needed greater latitude to collect assessments and maintain a higher reserve ratio. Risky Activities. Crisis-related bank failures led some to call for new limits on risky activity. Paul Volcker, former Chair of the Federal Reserve (Fed) and former Chair of President Obama's Economic Recovery Advisory Board, argued that "adding further layers of risk to the inherent risks of essential commercial bank functions doesn't make sense, not when those risks arise from more speculative activities far better suited for other areas of the financial markets." While proprietary trading and hedge fund sponsorship pose risks, it is not clear whether they pose greater risks to bank solvency and financial stability than "traditional" banking activities, such as mortgage lending. They could be viewed as posing additional risks that might make banks more likely to fail, but alternatively those risks might better diversify a bank's risks, making it less likely to fail. Critics argue that banning proprietary trading or hedge fund sponsorship is "a solution in search of a problem—it seeks to address activities that had nothing to do with the financial crisis, and its practical effect has been to undermine financial stability rather than preserve it." Capital Requirements. Section 171 in Title I of Dodd-Frank—also known as the Collins Amendment—directed federal banking agencies to establish minimum capital requirements for insured depository institutions (except federal home loan banks), BHCs, and Federal Reserve supervised nonbank financial companies. The requirements on BHCs and certain nonbank companies generally cannot be less stringent than requirements on depositories. Small institutions received grandfathering, phase-ins, and exemption from parts or all of its requirements. Interchange Fees . Section 1075 in Title X of Dodd-Frank—also known as the Durbin Amendment—authorized the Federal Reserve Board to prescribe regulations to ensure that any interchange transaction fee received by a debit card issuer is reasonable and proportional to the cost incurred. Debit card issuers with less than $10 billion in assets were exempted by statute from the regulation. In addition, network providers and debit card issuers are prohibited from imposing restrictions on a merchant's choice of the network provider through which to route transactions. Regulatory Consolidation. Title III of Dodd-Frank did not effect a complete consolidation of banking agencies, but did eliminate the Office of Thrift Supervision as an independent agency and reassigns responsibility for regulating thrifts to the FDIC, the OCC, and to the Federal Reserve (see Figure 1 ). Federal Deposit Insurance . Title III also made changes to federal deposit insurance. A new assessment formula is based on the total assets minus the average tangible equity of the depository, rather than on deposits. The minimum DIF reserve ratio was raised to 1.35% from 1.15%, and the 1.5% percent maximum was eliminated. The insured deposit limit was permanently raised to $250,000 from $100,000. Risky Activities. Section 619 of the Dodd-Frank Act—also known as the Volcker Rule—has two main parts. It prohibits banks from proprietary trading of "risky" assets and from "certain relationships" with risky investment funds; banks may not "acquire or retain any equity, partnership, or other ownership interest in or sponsor a hedge fund or a private equity fund." The statute carves out exemptions from the rule for trading activities that Congress viewed as legitimate for banks to participate in, such as risk-mitigating hedging and market-making related to broker-dealer activities. It also exempts certain securities, including those issued by the federal government, government agencies, states, and municipalities, from the ban on proprietary trading. Before Title X of the Dodd-Frank Act (entitled the Consumer Financial Protection Act) went into effect, federal consumer financial protection regulatory authority was split between five banking agencies—the OCC, Fed, FDIC, NCUA, and OTS —as well as the FTC and HUD. These seven agencies shared (1) the authority to write rules to implement most federal consumer financial protection laws; (2) the power to enforce those laws; and (3) supervisory authority over the individuals and companies offering and selling consumer financial products and services. The jurisdictions of these agencies varied based on the type of institution involved and, in some cases, based on the type of financial activities in which institutions engaged. The regulatory authority of the banking agencies varied by depository charter. The OCC regulated depository institutions with a national bank charter. The Fed regulated the domestic operations of foreign banks and state-chartered banks that were members of the Federal Reserve System (FRS). The FDIC regulated state-chartered banks and other state-chartered depository institutions that were not members of the FRS. The NCUA regulated federally insured credit unions, and the OTS regulated institutions with a federal thrift charter. The banking agencies were charged with a two-pronged mandate to regulate depository institutions within their jurisdiction for safety and soundness, as well as consumer compliance. The focus of safety and soundness regulation is ensuring that institutions are managed in a safe and sound manner so as to maintain profitability and avoid failure. The focus of consumer compliance regulation is ensuring that institutions abide by applicable consumer protection and fair lending laws. To reach these ends, the banking agencies held broad authority to subject depository institutions to upfront supervisory standards, including the authority to conduct regular, if not continuous, on-site examinations of depository institutions. They also had flexible enforcement powers to redress consumer harm, as well as to rectify proactively compliance issues found in the course of examinations and the exercise of their other supervisory powers, potentially before consumers suffered harm. The FTC was the primary federal regulator for nondepository financial companies, such as payday lenders and mortgage brokers. Unlike the federal banking agencies, the FTC had little upfront supervisory or enforcement authority. For instance, the FTC did not have the statutory authority to examine nondepository financial companies regularly or impose reporting requirements on them as a way proactively to ensure they were complying with consumer protection laws. Instead, the FTC's powers generally were limited to enforcing federal consumer laws. However, because the FTC lacked supervisory powers, it generally initiated enforcement actions in response to consumer complaints, private litigation, or similar "triggering events [that] postdate injury to the consumer." Additionally, both depository institutions and nondepository financial companies were subject to federal consumer financial protection laws. Together, these federal laws establish consumer protections for a broad and diverse set of activities and services, including consumer credit transactions, third-party debt collection, and credit reporting. Before the Dodd-Frank Act went into effect, the rulemaking authority to implement federal consumer financial protection laws was largely held by the Fed. However, the authority to enforce federal consumer financial protection laws and regulations was spread among all of the banking agencies, the FTC, and HUD. Some scholars and consumer advocates argued that the complex, fragmented federal consumer financial protection regulatory system in place before the Dodd-Frank Act was enacted failed to protect consumers adequately and created market inefficiencies to the detriment of both financial companies and consumers. Some argued that these problems could be corrected if federal consumer financial regulatory powers were strengthened and consolidated in a single regulator with a consumer-centric mission and supervisory, rulemaking, and enforcement powers akin to those held by the banking agencies. The Dodd-Frank Act establishes the Bureau of Consumer Financial Protection (CFPB, or Bureau) as an independent agency within the Federal Reserve System. The CFPB is headed by a single Director and funded primarily by a transfer of nonappropriated funds from the Federal Reserve System's combined earnings in an amount "determined by the Director to be reasonably necessary to carry out the authorities of the Bureau," subject to specified caps. The CFPB has rulemaking, enforcement, and supervisory powers over many consumer financial products and services, as well as the entities that sell them. The Dodd-Frank Act explicitly exempts certain industries from CFPB regulation, however. The Dodd-Frank Act significantly enhances federal consumer protection regulatory authority over nondepository financial companies, for instance, by providing the CFPB with supervisory and examination authority over certain nondepository financial companies akin to those powers long held by the banking agencies over depository institutions. Although the Dodd-Frank Act consolidates in the CFPB much of the federal consumer financial protection authority, as shown in Figure 2 , at least six other agencies—the OCC, Fed, FDIC, NCUA, HUD, and FTC—retain some powers in this field. The Dodd-Frank Act transferred from the banking agencies to the bureau primary consumer compliance authority over banks, thrifts, and credit unions with more than $10 billion in assets. However, the banking agencies continue to hold safety and soundness authority over these "larger depositories," as well as both consumer compliance and safety and soundness authority over "smaller depositories" (i.e., bank, thrifts, and credit unions with $10 billion or less in assets). The law also transferred to the bureau the primary rulemaking authority over 19 "enumerated consumer laws," which, with one exception, were enacted prior to the Dodd-Frank Act. Additionally, the CFPB is authorized to prohibit unfair, deceptive, and abusive acts or practices associated with consumer financial products and services that fall under the bureau's general regulatory jurisdiction. The bureau also is authorized to enforce consumer financial protections laws either through the courts or administrative adjudications. The CFPB is authorized by statute to redress violations of consumer financial protection laws through the assessment of civil monetary penalties, restitution orders, and various other forms of legal and equitable relief. Beginning around the middle of 2006, residential mortgage delinquency and foreclosure rates rose sharply in many regions of the United States. In addition to the negative effects on some homeowners, the increase in nonperforming mortgages contributed to the financial crisis by straining the balance sheets of financial firms that held those mortgages. Although all kinds of mortgages experienced increases in delinquency and foreclosure, many poorly performing mortgages exhibited increasingly complex features, such as adjustable interest rates, or nontraditional mortgage features, such as negative amortization. While such nontraditional or complex mortgage features may be appropriate for some borrowers in some circumstances, many were made available more widely. In addition, some observers view certain mortgage features, such as high prepayment penalties, as predatory. Although not all troubled mortgages exhibited these or similar features, and not all loans that exhibited such features became troubled, some observers point to the widespread use of such mortgage terms as having exacerbated the housing "bubble" and its subsequent collapse. The role that nonperforming mortgages played in the financial crisis led some to suggest actions to protect consumers from risky mortgage products and to protect the U.S. financial system from experiencing major losses due to troubled mortgages in the future. One way to minimize mortgage defaults and foreclosures is to limit or prohibit certain mortgage features that are viewed as especially risky. Another would be to require mortgage lenders to offer consumers basic mortgage products with traditional terms alongside any loan with nontraditional features. Although either of these approaches may reduce the chances of widespread mortgage failures, and might help preserve financial stability, both could also limit consumer choice or prevent borrowers from taking out loans with nontraditional features that may be advantageous given their specific circumstances. Some also argue that such approaches could limit financial innovation in mortgage products or reduce competition among lenders. The Dodd-Frank Act amended the Truth in Lending Act (TILA) to set minimum standards for certain residential mortgages. Under the Ability-to-Repay requirements, lenders are required to determine that mortgage borrowers have a reasonable ability to repay the mortgages that they receive, based on the borrowers' verified income and other factors. Certain "Qualified Mortgages" with traditional mortgage terms are presumed to meet these requirements. The CFPB was also directed to issue regulations prohibiting mortgage originators from "steering" consumers to mortgages that (1) those consumers do not have a reasonable ability to repay, (2) exhibit certain features that are determined to be predatory, or (3) meet certain other conditions. It was also directed to issue regulations prohibiting any practices related to residential mortgage lending that it deems to be "abusive, unfair, deceptive, [or] predatory." The act restricted the use of prepayment penalties. Mortgage originators are prohibited from receiving compensation that varies in any way based on the applicable mortgages terms or conditions, other than the principal amount. The act also required increased disclosures to consumers on a range of topics, including disclosures related to how certain features of a mortgage may affect the consumer. New requirements related to "high-cost mortgages" are included in the act, such as limitations on the terms of such mortgages and a requirement that lenders verify that borrowers have received prepurchase counseling before obtaining such a mortgage. Derivatives are financial contracts whose value is linked to some underlying asset price or variable. They fall into three types of instruments—futures, options, and swaps. Some derivatives are traded on organized exchanges with central clearinghouses that guarantee payment on all contracts, while swaps are traded in an over-the-counter (OTC) market, where credit risk is borne by the individual counterparties. The Commodity Futures Modernization Act of 2000 (CFMA) largely exempted swaps and other derivatives in the OTC market from regulation. The collapse of AIG in 2008 illustrated the risks posed by large OTC derivatives positions not backed by collateral or margin (as a central clearinghouse would require). If AIG had been required to post margin on its credit default swap contracts, it would have been unlikely to build such a large position, which could have reduced the threat to systemic stability and the resulting large taxpayer bailout. Further, opacity in the OTC market made it difficult for policymakers and market participants to gauge firms' risk exposures, arguably exacerbating the panic. Such disruptions in markets for financial derivatives during the financial crisis led to calls for changes in derivatives regulation, particularly whether the swap (OTC) markets should adopt features of the regulated markets. Under the Dodd-Frank Act, the Commodities Futures Trading Commission regulates "swaps," which include contracts based on interest rates, currencies, physical commodities, and some credit default swaps, whereas the SEC has authority over a much smaller slice of the market, including "security-based swaps," which are mostly other credit default swaps and equity swaps. The Dodd-Frank Act mandated centralized clearing and exchange-trading of many OTC derivatives, but provided exemptions for certain market participants. In general, swaps that must be cleared must also be traded on an exchange or exchange-like facility that provides price transparency. The regulators were given considerable discretion to define the forms of trading that will meet this requirement. The Dodd-Frank Act included an exemption from the clearing requirement, if desired, if at least one party to the trade is an "end user," defined as parties that are not financial entities and are using the swaps to hedge or mitigate commercial risk. An exempted party must inform the CFTC or SEC (depending on the contract) on how they generally meet their financial obligations when entering into uncleared swaps. The act requires regulators to impose registration and capital requirements on swap dealers and major swaps participants. It requires regulators to impose margin requirements on certain swaps that remain uncleared by any clearinghouse. It also requires reporting of all swaps, including those not subject to or exempt from the clearing requirement, to swap data repositories. Both agencies were given the power to promulgate rules to prevent the evasion of the clearing requirements created by the act. Section 716, which was a widely debated section of the act, prohibited federal assistance to any swaps entity and became known as the "swaps pushout rule." It included an exemption, however, that appeared to address concerns that under previous language large commercial banks would have been unable to hedge their risk without becoming ineligible for federal assistance, including access to the Federal Reserve's discount window or any other Fed credit facility and FDIC insurance. Furthermore, depository institutions were permitted to establish an affiliate that was a swap entity as long as it was supervised by the Fed. P.L. 113-235 , an omnibus appropriations bill, included language narrowing Section 716 of the Dodd-Frank Act. Credit rating agencies provide investors with an evaluation of the creditworthiness of bonds issued by a wide spectrum of entities, including corporations, sovereign nations, and municipalities. The grading of the creditworthiness is typically displayed in a letter hierarchical format: for example, AAA being the safest, with lower grades representing greater risk. Credit rating agencies (CRAs) are typically paid by the issuers of the securities being rated by the agencies, which could be seen as a conflict of interest. In exchange for adhering to various policies and reporting requirements, the SEC can confer on interested CRAs the designation of a Nationally Recognized Statistical Rating Organization (NRSRO). Historically, the designation was especially significant because a host of state and federal laws and regulations referenced or required NRSRO-based credit ratings. In the run-up to the financial crisis, the provision of investment-grade ratings by the three dominant CRAs—Moody's, Standard & Poor's, and Fitch—was a critical part of the process of structuring the residential mortgage-backed securities and collateralized debt obligations that held subprime housing mortgages. Many observers believed that the three leading CRAs fundamentally failed in their rating of these securities, exacerbating the market collapse. During the housing boom preceding the financial crisis, the CRAs often gave top-tier AAA ratings to many structured securities, only to downgrade many of them later to levels often below investment grade status. One argument for the dominant rating agencies' failings was their reliance on a business model in which issuers paid the agencies for their rating services. This issuer-pays model was criticized for potentially creating bias toward providing overly favorable ratings. Criticism of the CRAs, however, was not universal. A common defense of their failings was that their rating missteps could be traced in part to their view that the rising housing prices would be sustained, a perspective also said to be held by a number of respected financial market observers at the time. The Dodd-Frank Act contains provisions that enhanced SEC regulation of credit rating agencies. It established the SEC Office of Credit Ratings; imposed new reporting, disclosure, and examination requirements on NRSROs; established new standards of legal liability; and required the removal of references to NRSRO ratings from federal statutes and regulations. In an attempt to mitigate some of the potential bias in the issuer-pays model, the Dodd-Frank Act directed the SEC to study the feasibility of establishing a public utility/self-regulatory body that would randomly assign NRSROs to provide credit ratings for structured finance products. After completion of the study, unless the SEC "determines an alternative system would better serve the public interest and protection of investors," the agency was required to implement the proposed public utility/self-regulatory organization system. Released in 2012, the study recommended that the SEC convene a roundtable of stakeholders to discuss the merits of several alternative business models for rating structured products . The public utility system has not been adopted to date. Before his arrest in 2008, Bernard Madoff was responsible for the theft of billions of dollars of his client's funds using a massive Ponzi scheme conducted through his securities firm. The firm was a registered broker-dealer subject to oversight by Financial Industry Regulatory Authority (FINRA, the self-regulatory organization for broker-dealers overseen by the SEC) and was also a registered investment adviser subject to SEC oversight. One consequence of the Madoff affair was heightened interest and concern over the adequacy of investor protection in the regulatory realm. The SEC is funded through the congressional appropriation process. It has been argued that the SEC needs similar budgetary independence to other financial regulators to help close the resource gap between the agency and its regulated entities. Through the years, however, a key criticism of proposals for SEC self-funding was that it would undermine agency accountability and oversight provided by the congressional appropriation process. Principally regulated by FINRA, broker-dealers are required to make investment recommendations that are "suitable" to their customers, meaning that they must do what is suitable for an investor, based on that investor's particular circumstances. SEC-registered investment advisers have a "fiduciary duty" to their customers with respect to investment recommendations under the Investment Advisers Act of 1940. It is an obligation to place their client's best interests above their own—a more demanding duty to their clients than the suitability standard. The services provided by broker-dealers and investment advisers, however, often overlap—both can provide investment advice—and there are some concerns that customers may falsely assume that the person advising them has a fiduciary duty to them. The Dodd-Frank Act established an Investor Advisory Committee within the SEC whose purpose is to advise and consult with the SEC on regulatory priorities from an investor protection perspective. The act also created an Office of the Investor Advocate within the SEC. It also enhanced rewards and protection to whistleblowers of securities fraud. The Dodd-Frank Act also required the SEC to produce a study on the effectiveness of the standards of care required of broker-dealers and investment advisers. Released in 2011, the study recommended that the SEC establish a uniform fiduciary standard for broker-dealers and investment advisers when they provided personalized investment advice on securities to retail customers, a standard that should not be any less stringent than the fiduciary standard for investment advisers under the Investment Advisors Act of 1940. To date, the SEC has not acted on this recommendation. The Dodd-Frank Act required financial advisors in municipal securities markets to register with the SEC and permits the Municipal Securities Rulemaking Board to promulgate rules governing their behavior. The Dodd-Frank Act also allows the Public Company Accounting Oversight Board to examine auditors of broker-dealers and exempts small firms from external audit requirements found in Section 404(b) of the Sarbanes-Oxley Act. The Dodd-Frank Act as enacted did not provide for a self-funded SEC. It did, however, give the agency some budgetary autonomy. One such measure was the establishment of a SEC Reserve Fund to be used as the agency "determines is necessary to carry out the functions of the Commission." The SEC was authorized to deposit up to $50 million a year into the Reserve Fund from registration fees collected from SEC registrants, up to a fund balance limit of $100 million. To date, Congress has rescinded $25 million from the fund in two years. The SEC has used the Reserve Fund to help modernize its information technology. The term "hedge fund" is not defined by federal law, but it is generally used to describe a privately organized, pooled investment vehicle not widely available to the public. Some hedge funds can also be distinguished from other investment funds by their pronounced use of leverage, along with hedge funds' use of active trading strategies in which investment positions change frequently. Some potential risks hedge fund investing might pose to the markets as a whole were revealed in 1998 when the hedge fund Long-Term Capital Management (LTCM) teetered on the brink of collapse. Concerns over the systemic implications of LTCM's collapse resulted in the New York Fed engineering a multibillion-dollar private rescue of the fund. Hedge fund failures apparently did not play a prominent role in precipitating or spreading the 2008 financial crisis. Nonetheless, the collapse of LTCM and the systemic issues that it revealed led the 111 th Congress to consider the laws that applied or, more accurately, did not apply to hedge funds and their managers. Prior to the enactment of the Dodd-Frank Act, most hedge funds and their managers were not required to register with the SEC due to a combination of interlocking and commonly used exemptions in the Investment Company Act of 1940 (ICA) and the Investment Advisers Act of 1940 (IAA). Generally, the ICA requires investment companies, broadly defined to include companies that invest in securities and offer their own securities to the public, to register with the SEC and comply with the provisions of the act. Under Section 3(c)(1) of the act, issuers with fewer than 100 beneficial owners that do not make public offerings of their securities are not deemed to be investment companies. Section 3(c)(7) also generally exempts from the act's definition of "investment companies" those companies that sell shares only to "qualified purchasers" and do not make public offerings of their securities. Hedge funds, and other private investment vehicles, typically avail themselves of one of these two exemptions, which means that the ICA, for the most part, does not apply to the funds themselves. Subject to certain exemptions, the IAA defines an "investment adviser" as a person "who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities.... " Investment advisers generally are required to register with the SEC and otherwise comply with the act. However, under the "private adviser" exemption in the IAA that existed prior to the enactment of the Dodd-Frank Act, advisers were not required to register with the SEC if, during the preceding 12 months, they (1) did not hold themselves out to the public as investment advisers, (2) had fewer than 15 clients, and (3) did not act as advisers to an investment company registered under the ICA. Clients, under this exemption, referred to entire investment funds if they were not registered investment companies and not to each individual investor in those funds. Therefore, before the enactment of the Dodd-Frank Act, an adviser could manage up to 14 hedge funds without being required to register as an investment adviser. The Dodd-Frank Act preserved the ICA exemptions from the definition of an "investment company" most often used by hedge funds and other private pooled investment vehicles, and the act also codified a statutory definition for "private fund[s]" based upon whether the funds availed themselves of those exemptions. More importantly, the Dodd-Frank Act eliminated the "private adviser" exemption in the IAA. This modified a regulatory framework that had prevented the government from having access to information about the size and trading strategies of hedge funds, as well as such funds' positions in the market. Access to information of that sort, it was argued by proponents of the act, would be critical to any future government response to a financial crisis. The repeal of the exemption generally required advisers to private funds, including hedge funds, with more than $150 million in assets under management to register with the SEC. Advisers are also required to provide such information about their investment portfolios and strategies to the extent the SEC, in consultation with the FSOC, deems necessary to monitor systemic risk. Advisers to venture capital funds and private funds with assets under management of $150 million or less are exempt from the registration requirement, but must submit reports and information to the SEC as the SEC deems necessary. The Dodd-Frank Act also raised the asset threshold for SEC registration of investment advisers to funds that are not investment companies from $25 million to $100 million. Although some observers have questioned the validity of such links, the financial crisis raised concerns that incentive compensation arrangements (compensation based on an employee's performance) at various financial firms created incentives for executives at those firms to take excessive risks. The Dodd-Frank Act addressed this issue and also contained executive compensation provisions that were not directly linked to the financial crisis and which applied to all public companies. Dodd-Frank required the SEC to issue rules that would affect all companies listed on a stock exchange. These rules would require a company found to be in material noncompliance with financial disclosure requirements in federal securities laws to claw back incentive-based executive officer compensation awarded during the three years before it is required to restate its financials. Dodd-Frank also directed federal financial regulators to adopt new rules to jointly prescribe regulations or guidelines aimed at prohibiting incentive compensation arrangements that might encourage inappropriate risks at financial institutions with a $1 billion or more in assets. The act also required public companies to disclose the ratio of the chief executive officer's (CEO's) compensation to that of their median employee (excluding CEO pay). In addition, at least once every three years, public company shareholders are entitled to cast a nonbinding vote on whether they approve of executive compensation, popularly known as "say on pay." The Dodd-Frank Act also granted the SEC explicit authority to issue rules providing for shareholder proxy access, the ability of shareholders to nominate outsider directors to a company's board. Under the McCarran-Ferguson Act of 1945, insurance regulation is generally left to the individual states. For several years prior to the financial crisis, some Members of Congress introduced legislation to federalize insurance regulation along the lines of the dual regulation of the banking sector. The financial crisis, particularly the problems with insurance giant AIG and the smaller monoline bond insurers, changed the tenor of the debate around insurance regulation with increased emphasis on the systemic importance of some insurance companies. Although it was argued that insurer involvement in the financial crisis demonstrated the need for full-scale federal regulation of insurance, the financial regulatory reform debate generally did not include such a federal system. Instead, such proposals typically included the creation of a somewhat narrower federal office focusing on gathering information on insurance and setting policy on international insurance issues. Proposals relating to consumer protection, investor protection, bank and thrift holding company oversight, and systemic risk also had the potential to affect insurance, absent exemptions. The Dodd-Frank Act created a new Federal Insurance Office within the Treasury Department. In addition to gathering information and advising on insurance issues, this office has limited preemptive power over state insurance laws and regulations. This preemption is limited to cases in which state regulation results in less favorable treatment of non-U.S. insurers and to those covered by an existing international agreement. Insurers were exempted from oversight by the act's new Consumer Financial Protection Bureau. Under the act, systemically important insurers are subject to identification by the Financial Stability Oversight Council and regulation by the Federal Reserve. Insurers also may be subject to resolution by the special authority created by the act at the holding company level, although resolution of state-chartered insurance companies continues to occur under the state insurer insolvency regimes. Consolidation of bank and thrift holding company oversight resulted in several insurers with depository subsidiaries being overseen by the Federal Reserve after abolishment of the Office of Thrift Supervision. The Collins Amendment (addressed above in " Bank Regulation ") could have imposed additional capital requirements on insurers overseen by the Federal Reserve; however, this provision was later amended by P.L. 113-279 to allow flexibility in its implementation. In addition, the Dodd-Frank Act streamlined the state regulation of surplus lines insurance and reinsurance. The Dodd-Frank Act contains several miscellaneous provisions in various titles of the legislation, including the following: Title XII: Improving Access to Mainstream Financial Institutions. This title included provisions to expand access to the banking system for families with low and moderate incomes by (1) authorizing a program to help such individuals open low-cost checking or savings accounts at banks or credit unions; and (2) creating a pool of capital to enable community development financial institutions to provide small, local, retail loan programs. Title XIII: The TARP Pay it Back Act. This title reduced the amount authorized to be outstanding under the TARP to $475 billion; it was originally $700 billion. It also prohibited the Treasury from using repaid TARP funds to make new TARP investments. Title XV: Miscellaneous Provisions. This title required the Administration to assess proposed loans by the International Monetary Fund to middle-income nations. If it determined that the loan recipient's public debt exceeds its annual gross domestic product, it will have to oppose the loan unless it can certify to Congress that the loan is likely to be repaid. The act also stipulated that entities responsible for production processes or manufactured output that depend on minerals originating in the Democratic Republic of Congo and adjoining countries will be required to provide disclosures to the SEC on the measures taken to exercise due diligence with respect to the source and chain of custody of the materials, and products manufactured from them. In addition, companies will be required to disclose (1) payments to foreign governments for mineral extraction rights, and (2) information regarding mine safety violations. The latter provision was repealed by P.L. 115-4 . Section 342: Office of Women and Minority Inclusion. This provision created an office at Treasury offices and each financial regulator to promote equal opportunity, diversity, and increased participation by women-owned and minority-owned businesses.
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Beginning in 2007, U.S. financial conditions deteriorated, leading to the near-collapse of the U.S. financial system in September 2008. Major commercial banks, insurers, government-sponsored enterprises, and investment banks either failed or required hundreds of billions in federal support to continue functioning. Households were hit hard by drops in the prices of real estate and financial assets, and by a sharp rise in unemployment. Congress responded to the crisis by enacting the most comprehensive financial reform legislation since the 1930s. Then-Treasury Secretary Timothy Geithner issued a reform plan in the summer of 2009 that served as a template for legislation in both the House and Senate. After significant congressional revisions, President Obama signed H.R. 4173, now titled the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), into law on July 21, 2010. Perhaps the major issue in the financial reform legislation was how to address the systemic fragility revealed by the crisis. The Dodd-Frank Act created a new regulatory umbrella group chaired by the Treasury Secretary—the Financial Stability Oversight Council (FSOC)—with authority to designate certain financial firms as systemically important and subjecting them and all banks with more than $50 billion in assets to heightened prudential regulation. Financial firms were also subjected to a special resolution process (called "Orderly Liquidation Authority") similar to that used in the past to address failing depository institutions following a finding that their failure would pose systemic risk. The Dodd-Frank Act made other changes to the regulatory structure. It created the Office of Financial Research to support FSOC. The act consolidated consumer protection responsibilities in a new Bureau of Consumer Financial Protection (CFPB). It consolidated bank regulation by reassigning the Office of Thrift Supervision's (OTS's) responsibilities to the other banking regulators. A federal office was created to monitor insurance. The Federal Reserve's emergency authority was amended, and its activities were subjected to greater public disclosure and oversight by the Government Accountability Office (GAO). Other aspects of Dodd-Frank addressed particular sectors of the financial system or selected classes of market participants. Dodd-Frank required more derivatives to be cleared and traded through regulated exchanges, reporting for derivatives that remain in the over-the-counter market, and registration with appropriate regulators for certain derivatives dealers and large traders. Hedge funds were subject to new reporting and registration requirements. Credit rating agencies were subject to greater disclosure and legal liability provisions, and references to credit ratings were required to be removed from statute and regulation. Executive compensation and securitization reforms attempted to reduce incentives to take excessive risks. Securitizers were subject to risk retention requirements, popularly called "skin in the game." It made changes to bank regulation to make bank failures less likely in the future, including prohibitions on certain forms of risky trading (known as the "Volcker Rule"). It created new mortgage standards in response to practices that caused problems in the foreclosure crisis. This report reviews issues related to financial regulation and provides brief descriptions of major provisions of the Dodd-Frank Act, along with links to CRS products going in to greater depth on specific issues. It does not attempt to track the legislative debate in the 115th Congress.
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Representative Frederick Richmond reportedly began forming what became the Congressional Arts Caucus in response to proposals by the Reagan Administration to eliminate funding for the National Endowment for the Arts (NEA) and the National Endowment for the Humanities (NEH), and the defeat of other prominent arts advocates in Congress. Within days, 77 Members of the House of Representatives had joined the caucus, and by the start of the 98 th Congress (January 1983), House membership had grown to 166 Members—reportedly one of the largest caucuses on Capitol Hill at that time. Representative Richmond served as the first chairman and Representative Jim Jeffords as the first vice-chairman. (See Table C-1 for a list of the chairs.) In July 1981, on behalf of the Congressional Arts Caucus, Representative Richmond proposed to the Speaker of the House, Representative Thomas P. O'Neill Jr., a program for encouraging nationwide artistic creativity by high school students through art exhibits in the tunnels connecting the Capitol to the House Office Buildings. In October 1981, Speaker O'Neill, in his role as chair of the House Office Building Commission, indicated no objection to an exhibit as long as it was conducted at no expense to the government. The Speaker further required that the Arts Caucus work with the House Office Building Commission and the Architect of the Capitol (AOC) on the details and to ensure that a jury of qualified people approves the final selection of student art for the exhibit. A detailed proposal for the manner of display of the artwork was also requested. (See Figure A-1 , letter from Speaker O'Neill to Representative Richmond.) In February 1982, the AOC sent a letter to the chairman of the House Office Building Commission in which he submitted the proposal for the National Art Competition program as prepared by the Arts Caucus. In the letter, the AOC expressed his approval and recommended that the House Office Building Commission do the same. (See Figure A-2 , letter from AOC George M. White to Chairman O'Neill.) The letter includes the signatures of all three of the House Office Building Commission members. Subsequently, on February 9, 1982, Speaker O'Neill and several members of the Arts Caucus announced the first annual Congressional Art Competition. Representative Richmond said, about the competition, that "members of Congress would conduct the contest among high school students in their districts. The winning art will line a corridor in the Capitol." No legislation has been introduced to authorize, sanction, or otherwise make permanent the Congressional Art Competition. On July 23, 1991, H.Res. 201 (102 nd Congress, first session) was introduced by the Congressional Art Competition co-chair, Representative Ted Weiss, to recognize the 10 th anniversary of the competition. On November 18, 1991, the resolution was agreed to by voice vote. The only other piece of legislation was H.Res. 1453 (111 th Congress, second session) introduced by the Congressional Art Competition co-chair, Representative Steve Driehaus, to celebrate the 29 th anniversary of the competition. This resolution was introduced on June 17, 2010, and referred to the Committee on House Administration with no further action. Throughout the competition's history, reportedly, a few submitted artworks have been removed as part of a controversy or otherwise. In 2012, an entry submitted to the Illinois Fourth Congressional District for the Congressional Art Competition was the subject of a controversy before being selected as the district winner. A Chicago high school student entered a city-wide competition to determine the next city vehicle sticker. Days before the city was to print 1.2 million new stickers, allegations surfaced on a number of police blogs claiming the design displayed gang signs and other symbols of the Maniac Latin Disciples street gang. The city decided not to use the artwork. It was subsequently entered into the Congressional Art Competition for the IL-04 congressional district. The artwork won the district competition and hung in the Cannon Tunnel for a full year without objection. Prior to the 2016-2017 Congressional Art Competition, the federal government, in a court filing, identified only one other occasion when a piece of art was removed after it was put on display as part of the competition; the work appeared to be a copy of a photograph that had appeared that year in Vogue magazine. In two other identified instances prior to the 2016-2017 competition, when suitability questions arose and the AOC reached out to the sponsoring Member of Congress, the Member agreed to submit another piece. During the 2016-2017 competition, an AOC-convened panel reviewed submissions and identified two works that raised suitability concerns, one titled "Recollection," which depicts a young man with apparent bullet holes in his back, and the other depicting marijuana use by Bob Marley. Consistent with its usual practice, AOC staff contacted the sponsoring Member'' offices regarding these works, and the Members indicated they supported the works' display. Both of these works were displayed. . Artwork for the 2016 Congressional Art Competition went on public exhibit in May 2016. In early December 2016, letters from Members of Congress and the Capitol Police requesting the removal of the winning entry from Missouri's 1 st Congressional District were sent to Speaker Paul Ryan and AOC Stephen T. Ayres. The artwork was viewed by some as violating suitability guidelines in the rules for the competition, as it depicted law enforcement officers as animals abusing protesters. Subsequently, the artwork was repeatedly removed and re-hung in the Cannon Tunnel to the Capitol by various Members of Congress. An administrative decision to prohibit the painting was made by Architect Ayers, which triggered the filing of an injunction in U.S. District Court for the District of Columbia on behalf of the artist, claiming violation of First Amendment rights. In April 2017, a judge in the District Court for the District of Columbia denied the plaintiffs' injunction, ruling that due to the public location of the artwork in a tunnel connecting the U.S. Capitol to a House office building, the art was government speech and that Members of Congress who objected to the content had a right to remove it. The artwork continued to be banned from display until May 2017 when all artwork from that competition year was removed. The House Ethics Manual addresses the issue of the appropriateness of congressional involvement in the Art Competition in the section on "Official and Outside Organizations." House ethics rules generally prohibit endeavors jointly supported by a combination of private resources and official funds. For example, House Rule 24 prohibits the use of private resources for the operation of both congressional Member organizations (CMOs) and Member advisory groups. Yet, the House Ethics Manual goes on to explain that, "Nevertheless, the giving of advice by informal advisory groups to a Member does not constitute the type of private contribution of funds, goods, or in-kind services to the support of congressional operations that is prohibited by House Rule 24." Later the Ethics Manual specifically addresses the Congressional Art Competition in the following: "One instance when cooperation with private groups has been explicitly recognized is the annual competition among high school students in each congressional district to select a work of art to hang in the Capitol, referred to as the Congressional Art Competition. Members may announce their support for the competition in official letters and news releases, staff may provide administrative assistance, a local arts organization or ad hoc committee may select the winner, and a corporation may underwrite costs such as prizes and flying the winner to Washington, D.C. Private involvement with the Congressional Art Competition in this manner is not viewed as a subsidy of normal operations of the congressional office. Members may not solicit on behalf of the arts competition in their district without Standards Committee [now Committee on Ethics] permission unless the organization to which the donation will be directed is qualified under § 170(c) of the Internal Revenue Code." The general guidelines concerning Member solicitations is stated in the Ethics Manual , and solicitation guidelines as related to the Art Competition are addressed in the " Ethics Guidance " document for the 2018 Congressional Art Competition. In their earliest years, the Congressional Arts Caucus and Congressional Art Competition were financially supported by a $300 contribution from the allowances of members of the caucus. The funds were used to pay the salaries of two full-time staff and other operational costs. During the period 1982 to 1994, the caucus used its staff and interns to manage administrative duties related to the competition, such as announcements, guidelines, deadlines, the receipt of completed forms and art, and recordkeeping. These individuals also coordinated the art competition's awards program and reception to honor the winning artists. After 1995, many administrative tasks were undertaken by two Member offices—typically the offices of the co-chairs of the Arts Caucus. From the competition's inception, the AOC curator and the House superintendent have assisted with the moving, arranging, labeling, and hanging of the art works, as well as returning the art to participating Members' offices at the end of a competition—this is done in May of each year just prior to the commencement of a new competition. The curator also arranges the winning artwork alphabetically by state, maintains a tracking system, works with the House carpenters to have the artwork hung in the Cannon House Office Building tunnel, and prepares and attaches the accompanying descriptive labels. In 2005, General Motors, which had provided financial and logistical support to the Art Competition since 1982, asked the Public Governance Institute to assist with logistical support. In 2009, the Congressional Institute, Inc. took over from the Public Governance Institute, providing both advice and logistical support for the competition. According to its website, the Congressional Institute was founded in 1987 and "is a not-for-profit corporation dedicated to helping Members of Congress better serve their constituents and helping their constituents better understand the operations of the national legislature." Currently, each participating House Member solicits entries from high school students for the event and establishes his or her own method of judging the submissions. There is no entry fee for the competition and previous entrants (including winners) may re-enter as long as they are high school students. The winning artwork must conform to strict guidelines and meet all deadlines. By mid-February of each year, the Art Competition guidelines and forms to accompany the submitted art are available to the public on the House of Representatives website at https://www.house.gov/content/educate/art_competition . It is the prerogative of the co-chairs, the House Office Building Commission, the AOC curator, or the Congressional Institute, Inc., to modify the guidelines from year to year. Two sets of guidelines are available: The "2018 Rules and Regulations for Congressional Offices" (shown as Figure B-1 , unavailable electronically). The "2018 Rules and Regulations for Students and Teachers" can be found on the House of Representatives public website at https://www.house.gov/sites/default/files/uploads/documents/2018Rulesfor StudentsandTeachers.pdf (s hown as Figure B-2 ) . The "Student Information & Release Form" is available at https://www.house.gov/sites/default/files/uploads/documents/2018StudentReleaseForm.pdf (shown as Figure B-3 ), and a "2018 Art Submission Checklist" is shown as Figure B-4 (unavailable electronically) . Since 2009, the Congressional Institute, Inc. has assisted and advised Member offices on how to run the competition. The institute responds to questions from participants, collects district winner information, prepares the list of winners, organizes the receipt of the artwork, and shares coordination of the reception honoring the district winners. The institute also photographs the artwork and provides a digital record of each annual competition to the House of Representatives for posting on its public website. It has been the practice for the Congressional Institute to mail the invitations, print the programs, and provide food for the annual reception. The reception, transportation, name tags, T-shirts, photography, event website, and program printing have always been privately sponsored. Recent corporate sponsors have included General Motors and Southwest Airlines. Members of Congress may also obtain the services of local sponsors to assist with transportation and local awards. At the culmination of the annual Art Competition, the winning entries from participating congressional districts are available on the House of Representatives website. The names of the 2018 winners and their artwork are available at https://www.conginst.org/art-competition/?compYear=2018&state=all . The Congressional Art Competition co-chairs generally invite an artist from their respective congressional districts to address the student winners at the reception. Since it began in 1982, "over 650,000 high school students nationwide have been involved with the nation-wide competition." There are no required procedures for selecting the winning entries for participating congressional districts. Any entry that conforms to the general specifications stated in the "Guidelines for Students and Teachers" is eligible to represent a congressional district. Members of Congress may have local art teachers, art gallery owners, civic leaders, local businesses, or Member office staff assist with the judging to select their district winner. Members of Congress may also enlist the participation of businesses in the congressional district to donate plaques, savings bonds, and other prizes, or to sponsor a reception or event to announce the competition's district winner. For example, since 2004, the Savannah College of Art and Design (SCAD) in Savannah, GA, has offered scholarship opportunities to the first-place winners of the district competitions as long as funding is available, according to school sources. The $3,000 scholarship may be renewed annually. Other scholarships are targeted for winning entrants from a specific congressional district. In recent years, these have included scholarships to the High School Summer Institute at Chicago's Columbia College and the Art Institute of Phoenix. Georgia's 13 th congressional district winner may receive a scholarship to the Art Institute of Atlanta, in Pennsylvania, the 15 th congressional district winner is eligible for a full-year scholarship to the Baum School of Art in Allentown, and Tennessee 3 rd congressional district participants are eligible for a $3,000 scholarship to Tennessee Wesleyan University in Athens, TN. Additional prizes that have been awarded include roundtrip airfare to Washington, DC, for the opening of the annual exhibition, gift certificates to local art supply stores, family memberships for a year to an art museum, and cash. Although no congressional or taxpayer funds may be used for prizes or scholarships, corporate sponsorship is allowed. As in past years, Southwest Airlines is providing two roundtrip tickets to winning entrants from any city with scheduled Southwest service to Ronald Reagan Washington National Airport or Baltimore-Washington's Thurgood Marshall International Airport (BWI). Tickets will be issued to a parent or guardian as ePasses and are to be used within the period of two weeks before and two weeks after the Washington, DC, Congressional Art Competition ceremony. Southwest Airlines does not provide hotel accommodations or hotel discounts. Appendix A. Letters Establishing the Congressional Art Competition Appendix B. Congressional Art Competition Sample Forms Appendix C. Congressional Art Competition Leadership
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Sponsored by the Congressional Arts Caucus, and known in recent years as "An Artistic Discovery," the Congressional Art Competition is open to high school students nationwide. Begun in 1982, the competition, based in congressional districts, provides the opportunity for Members of Congress to encourage and recognize the artistic talents of their young constituents. Since its inception, more than 650,000 high school students nationwide have been involved in the program. Each year, the art of one student per participating congressional district is selected to represent the district. The culmination of the competition is the yearlong display of winning artwork in the Cannon House Office Building tunnel as well as on the House of Representatives' website. This report provides a brief history of the Congressional Arts Caucus and the Congressional Art Competition. It also provides a history of sponsorship and support for the caucus and the annual competition. The report includes copies of the original correspondence establishing the competition, a sample competition announcement, sample guidelines and required forms for the competition, and a chronological list of congressional co-chairs.
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The United States has grave concerns about the proliferation threat posed by Iran's pursuit of nuclear, chemical, and biological weapons, ballistic missiles, and advanced conventional weapons. The United States has passed laws and used sanctions to deter countries such as Russia, China, and North Korea from providing related technologies to Iran. The Iran Nonproliferation Act of 2000 (INA, P.L. 106-178 ) added two new provisions to the existing laws: it widened some of the sanctions applicable to foreign persons, and, in Section 6, contained a ban on U.S. government payments to Russia in connection with the International Space Station unless the U.S. president makes a determination that Russia is taking steps to prevent proliferation of weapons of mass destruction (WMD), and ballistic and cruise missiles, to Iran. This provision raised difficulties regarding U.S. access to the International Space Station when President Bush in 2001 cancelled NASA's planned Crew Return Vehicle (CRV), which was to act as a "lifeboat" for the astronauts on the ISS, leaving them dependent on the Soyuz. The President's announcement in 2004 that the space shuttle fleet would be retired in 2010 further increased that dependence. The International Space Station (ISS) is a research laboratory in space being built as a U.S.-led international partnership. Long-duration "Expedition" crews composed of Russian and American astronauts have occupied the ISS since November 2000, rotating on 4-6 month schedules. Europe, Canada, and Japan became partners in NASA's space station program in 1988. The United States invited Russia to join in 1993, motivated in part by nonproliferation concerns. Through the "Gore-Chernomyrdin Commission," the Clinton Administration sought to encourage Russia to abide by the Missile Technology Control Regime (MTCR) to stop sales of ballistic missile technology. On September 2, 1993, Vice President Gore announced that Russia would join the space station program and that Russia had agreed to abide by the MTCR (which it would join formally in 1995). The United States agreed to pay Russia $400 million for space station cooperation. On October 6, 2003, White House Science Adviser John Gibbons told a congressional subcommittee that the initiative "fits into the context of a much larger partnership with Russia," adding that the negotiations "produced a key understanding that Russia is committed to adhere to the guidelines" of the MTCR. Clinton Administration officials reiterated this linkage during the mid-to-late 1990s. While U.S. cooperative programs with Russia were expanding, it also became clear that Russia was a source of sensitive technology to Iran. In 1995, Russia signed an agreement with Iran to finish construction of the Bushehr nuclear power reactor, a transaction worth $800 million or more. In 1996, reports surfaced of Russian entities providing ballistic missile assistance to Iran, including training; testing and laser equipment; materials; guidance, rocket engine, and fuel technology; machine tools; and maintenance manuals. Director of Central Intelligence George Tenet testified to the Senate Intelligence Committee in early 1998 that Iran was further along in its ballistic missile program than previously estimated because of Russian help. The "Rumsfeld Commission" on the ballistic missile threat concluded in 1998 that "Russian assistance has greatly accelerated Iran's ballistic missile program." The report estimated that Iran could have an ICBM capability within five years of a decision to proceed. The 105 th Congress responded with H.R. 2709 , the Iran Missile Proliferation Sanctions Act. Passed by overwhelming margins, the bill required the United States to impose sanctions against countries that proliferated ballistic missile technology to Iran. President Clinton vetoed the bill on June 23, 1998, objecting to low evidentiary thresholds and mandatory sanctions. He forestalled an attempt to override his veto by imposing sanctions on seven Russian entities that Moscow began to investigate in mid-July for alleged illegal exports to Iran. The sanctions were imposed under Executive Order 13094, which expanded the President's authority to ban U.S. trade with, aid to, and procurement from foreign entities assisting WMD programs in Iran or elsewhere. Iran conducted the first test flight of its medium-range Shahab-3 missile that summer, however, and reports of Russian assistance persisted. On May 20, 1999, House International Relations Committee Chairman Gilman introduced H.R. 1883 , the Iran Nonproliferation Act, covering ballistic missiles, WMD, and advanced conventional weapons. According to the committee's report, the bill was "designed to give the Administration additional tools with which to address the problem and the countries that are transferring dangerous weapons technology to Iran powerful new reasons to stop proliferating.... In addition, it seeks to create new incentives for the Russian Space Agency to cooperate in efforts to stem the proliferation of weapons technology to Iran." The bill allowed sanctions, but they were not mandatory as in the previous legislation. The House and Senate each passed the INA unanimously, and it was signed into law on March 14, 2000 ( P.L. 106-178 ). Section 6 of the INA concerns payments by the U.S. Government to Russia in connection with the ISS. On July 29, 1999, during markup of Section 6 by the House Science Committee's Subcommittee on Space and Aeronautics, Science Committee Chairman James Sensenbrenner explained that "Earlier this year, there were publications of the fact that entities of the Russian Space Agency were violating the MTCR. That's why there is Section 6 in this bill." From 1994 to 1998, NASA had paid Russia approximately $800 million through several contracts for space station-related activities. Those payments ended because Section 6 prohibits the U.S. government from making payments in connection with ISS to the Russian space agency, organizations or entities under its control, or any other element of the Russian government, after January 1, 1999. Exceptions are made for payments needed to prevent imminent loss of life by or grievous injury to individuals aboard ISS (the "crew safety" exception), and for various other payments. The prohibition may be lifted if the President makes a determination that Russia's policy was to oppose proliferation to Iran, that Russia was demonstrating a sustained commitment to seek out and prevent the transfer of WMD and missile systems to Iran, and that neither the Russian space agency nor any entity reporting to it had made such transfers for at least one year prior to such determination. Neither President Clinton nor President Bush has made such a determination. On January 14, 2004, President Bush made a major space policy address directing NASA to focus its activities on returning humans to the Moon and eventually sending them to Mars. Inspired in part by the destruction of the space shuttle Columbia the previous year, his "Vision for Space Exploration" included retiring the space shuttle in 2010. The President said the United States would fulfill its commitments to its space station partners to finish construction of the ISS, for which the shuttle was the only vehicle capable. At the time President Bush made his "Vision" speech, the space shuttle fleet was shut down, while a review of the Columbia disaster determined the cause and necessary safety measures to be taken. Transporting astronauts to and from the ISS was carried out only in Russian Soyuz space vehicles until the shuttle Discovery returned to flight in July 2005. In addition, the cancellation of NASA's planned CRV left the ISS dependent on the Soyuz as a "lifeboat" for return of crew members in case of an emergency, since the shuttle could not be permanently attached to the ISS because of power demands. Russia expected to be paid for the Soyuz lifeboat service beginning in 2006. Retirement of the shuttle in 2010 would leave the United States without capability to transport astronauts to the ISS until a new vehicle is developed (as contemplated for the Moon/Mars mission). Transport to and from the ISS will again have to rely on Soyuz in the interim. Because of these developments, NASA applied to the Congress for an exemption from the INA that would allow it to contract with Russian space entities for use of the Soyuz for ISS missions. The response was the Iran Nonproliferation Amendments Act of 2005 ( P.L. 109-112 ). Since the President had not made the required determination under Section 6(b) of the INA, an amendment was needed to continue American access to the ISS. Senator Lugar introduced the amendment as S. 1713 , the Iran Nonproliferation Amendments Act of 2005. A debate in Congress ensued, with critics questioning whether exempting payments for the ISS would encourage Russia to continue alleged proliferation activity. Supporters of the amendment argued that the exemption was strict enough to only allow for ISS-related expenses for a temporary period of time and would not impact nonproliferation policy. P.L. 109-112 , passed on November 22, 2005, gives an exemption to the nonproliferation certification requirement for U.S. government payments made prior to January 1, 2012, related to the ISS. As part of the amendment, the House applied the nonproliferation penalties to such trade with Syria as well as Iran, and the act was renamed the Iran and Syria Nonproliferation Act. This addition was reportedly to strengthen and extend the nonproliferation aspects of the law to counterbalance the weakening of the nonproliferation provisions vis a vis Russia. The Amendment directs the President to submit to the Senate Foreign Relations Committee and the House International Relations Committee a report that identifies each Russian entity or person to whom the United States has, since the enactment of the INA in 2005, made a cash or in-kind payment under the Agreement Concerning Cooperation on the Civil International Space Station, and specifies the content of the report. A further amendment, P.L. 109-353 of October 13, 2006, added North Korea to the act. The act is now known as the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). Following President Bush's "Vision" plan, NASA has begun designing spacecraft for resuming flights to the Moon, and has indicated that such vehicles would also be available for missions to the ISS. It has also continued flights of the space shuttle to the ISS, and plans enough flights to finish the ISS before the shuttle is retired in 2010. Under the exemption provided in P.L. 109-112 , NASA has also contracted with Russian space entities to continue astronaut flights to and from the ISS. However, the exemption runs out in 2012. On April 11, 2008, NASA Administrator Michael Griffin submitted a proposed amendment to INKSNA that would extend the exemption for Soyuz flights for the life of the ISS, or until the Moon flight vehicle, or a commercial crew transport vehicle, is fully operational. The exemption would not be extended for the Russian Progress cargo vehicle. In a letter to Chairman Udall of the Subcommittee on Space and Aeronautics, Committee on Science and Technology, and to Senator Biden, Chairman of the Senate Committee on Foreign Relations, Griffin said that fabrication of Soyuz vehicles requires 36 months, so that NASA must contract with Russian entities in 2008 for vehicles to be available in 2012. Extension of the INKSNA exemptions would have to be enacted before such contracting could take place. On June 9, Senator Biden introduced by request S. 3103 , the International Space Station Payments Act of 2008, incorporating the measures requested by NASA. On September 23, the bill was reported out of the Senate Foreign Relations Committee. On July 24 the House Foreign Affairs and Science and Technology Committees reported by voice vote H.R. 6574 , the United States-Russian Federation Nuclear Cooperation Agreement Act of 2008. Title III of H.R. 6574 , as reported, would extend exemption of payments until July 1, 2016, or until a U.S. flight vehicle is operational. Like S. 3103 , it would not have extended payments for Progress vehicles. The U.S.-Russian civilian nuclear cooperation agreement was withdrawn from congressional consideration by the President on September 8, 2008. On September 25, Representative Tom Feeney introduced bill H.R. 7062 , which was referred to the House Foreign Affairs and House Science and Technology Committees. This bill contains provisions that authorize extraordinary payments to the Russian space agency for use of the Soyuz before July 1, 2016, notwithstanding the INKSNA restrictions. The waiver provisions are included in H.R. 2638 , The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( P.L. 110-329 ). Section 125 of the Act amends P.L. 106-178 to set the date of expiration for waiver authority to July 1, 2016. Continued flights of the space shuttle have been necessary to transport a number of massive components to complete construction of the ISS. The shuttle has also been the main means of carrying and returning astronauts to and from the ISS, although the Russian Soyuz craft has also transported some "Expedition Team" members. In addition, a Soyuz has been attached continuously to the ISS as a "lifeboat" to return ISS astronauts in case of an emergency in the space station. This is a function that the space shuttle cannot fulfil even while it is still operating, because it can only stay aloft for a limited time because of power needs. After the shuttle retires, only the Soyuz will be available for transporting astronauts to and from the ISS until NASA develops new crew and cargo vessels as part of the "Vision" to return to the Moon, now scheduled for 2015 or 2016. In addition to crews, supplies and replacements for ISS components will need transport after the shuttle is retired. The Russian Progress vehicle has been used in the past, and would remain available, but the amendment requested by NASA would not include contracting for the Progress in the exemption extension. NASA has been investing in efforts by private industry to develop and produce transport vehicles that can take equipment and eventually crews to and from the ISS. This Commercial Orbital Transportation Services (COTS) program is still under development. Another option under development is the European Space Agency's Automated Transfer Vehicle (ATV), the first of which was launched March 9, 2008, and carried out docking demonstrations with the ISS in April. Four more ATV's are planned for construction. Japan expects to follow in 2009 with launch of its H-II Transfer Vehicle (HTV). Unlike the space shuttle, but like Soyuz and Progress , neither the ATV or the HTV is a reusable vehicle. Depending on the development of these options, some use of the Russian Progress vehicle may be necessary for transporting U.S. equipment and supplies to the ISS. Contracting such services would also probably require exemption from the INKSNA. As in 2005, an amendment would be needed before payments could be made to Russia since the President has not made a determination pursuant to Section 6(b) of the INKSNA regarding Russian nonproliferation policy or proliferation activities to Iran, North Korea or Syria. This is widely believed to be because the President would be unable to certify an absence of proliferation activities by Russian entities to these countries. The 2006 Director of National Intelligence report to Congress on WMD Acquisition says that "Russian entities have supplied a variety of ballistic missile-related goods and technical know-how to China, Iran, India, and North Korea. Iran's earlier success in gaining technology and materials from Russian entities and continuing assistance by such entities, probably supports Iranian efforts to develop new longer-range missiles and increases Tehran's self-sufficiency in missile production." In the past five years, after details about Iran's clandestine nuclear activities came to light, Russia has stepped up cooperation with the United States and other countries negotiating over Iran's nuclear program. Russia has insisted on IAEA safeguards on any transfers to Iran's civilian nuclear reactor at Bushehr and has delivered fuel to Bushehr beginning in December 2007, on condition that the resulting spent fuel will be returned to Russia. Russia has also invited Iran to participate in its newly established international uranium enrichment center at Angarsk, as an alternative to an indigenous Iranian enrichment capability. The Bush administration has supported this approach and since 2006 no longer objects to Russia's building the Bushehr nuclear power plant in Iran. President Bush, most recently at the April 2008 summit in Sochi, has praised Russian President Putin for his "leadership" in offering a solution to the Iranian nuclear negotiations. Russia has been only reluctantly supportive of U.N. Security Council resolutions imposing penalties, preferring a primarily diplomatic solution to the crisis.
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The Iran Nonproliferation Act of 2000 (INA) was enacted to help stop foreign transfers to Iran of weapons of mass destruction, missile technology, and advanced conventional weapons technology, particularly from Russia. Section 6 of the INA banned U.S. payments to Russia in connection with the International Space Station (ISS) unless the U.S. President determined that Russia was taking steps to prevent such proliferation. When the President in 2004 announced that the Space Shuttle would be retired in 2010, the Russian Soyuz became the only vehicle available after that date to transport astronauts to and from the ISS. In 2005 Congress amended INA to exempt Soyuz flights to the ISS from the Section 6 ban through 2011. It also extended the provisions to Syria and North Korea, and renamed it the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). NASA has asked Congress in 2008 to extend the exemption for the life of the ISS, or until U.S. crew transport vehicles become operational. As in 2005, an exemption would be needed before payments could be made to Russia since the President has not made a determination pursuant to Section 6(b) of the INKSNA regarding Russian nonproliferation policy or proliferation activities to Iran, North Korea or Syria. Since 2005, Russia has stepped up cooperation with the United States and countries over Iran's nuclear program. President Bush has praised Russian President Putin for his "leadership" in offering a solution to the Iranian nuclear negotiations. However, Russian military actions in the Republic of Georgia in August 2008 put into question congressional support to waive the INKSNA requirement. The waiver authority was nevertheless extended until July 1, 2016, in H.R. 2638, The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009. This bill was passed by the House and Senate and signed by the President on September 30 (P.L. 110-329).
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On January 8, 2013, Vice President Nicolás Maduro announced that President Chávez would not be sworn into office on January 10 as planned because he was still recovering from cancer surgery in Cuba, but that he would be sworn into office at a later date, as provided for in Article 231 of the Constitution. A day later, on January 9, 2013, Venezuela's Supreme Court upheld this interpretation of the Constitution, maintaining that Chávez could take the oath of office before the Supreme Court at a later date when his health improves. Some opposition leaders and some Venezuelan legal scholars had argued that the January 10 inauguration date was fixed by Article 231, and that since Chávez could not be sworn in on that date, then the President of the National Assembly should have been sworn in as interim or caretaker President until either a new election was held or Chávez recovered. Opposition leader Henrique Capriles appeared to accept the Supreme Court's interpretation of the Constitution, but maintained that it did not end the uncertainties facing the country. (See " Chávez's Health Status and Political Implications " below.) On December 16, 2012, Venezuela held state elections in which 23 governorships were at stake. Voters delivered a resounding victory to President Chávez and his United Socialist Party of Venezuela (PSUV), which won 20 out of 23 states. Opposition candidates won just three states, including the state of Miranda, where recently defeated opposition presidential candidate Henrique Capriles Radonski was reelected. (See " December 2012 State Elections ") On December 8, 2012, President Chávez announced that his cancer had returned and that he would soon undergo a fourth cancer surgery in Cuba. He also announced his support for Vice President Nicolás Maduro if anything were to happen to him, including support for Maduro in a new election that would be required by the Constitution. (Maduro had been sworn into office on October 13, 2012, and retained his position as foreign minister, which he has held since 2006.) Chávez reportedly faced complications during and after his December 11 surgery, and faced new respiratory complications at year's end. (See " Chávez's Health Status and Political Implications " below.) On October 7, 2012, President Chávez won reelection to another six-year term by a margin of 11%, capturing about 55% of the vote compared to 44% for opposition candidate Henrique Capriles. Most reports indicate that election day was peaceful with only minor irregularities. A White House spokesman, while acknowledging differences with President Chávez, congratulated "the Venezuelan people on the high level of participation, as well as on what was a relatively peaceful process." (For more details, see " Election Results and Implications " below.) On September 18, 2012, Venezuelan security forces captured a major Colombian drug trafficker, Daniel Barrera, who reportedly was based in Venezuela since 2008. (See " Counternarcotics Issues " below.) For developments earlier in 2009-2012, see Appendix B at the end of this report. For more than a decade, Venezuela has experienced significant political changes under the rule of populist President Hugo Chávez, and for a number of years there has been concern about the deterioration of democratic institutions and threats to freedom of expression in the country. With his election as president in December 1998, Hugo Chávez began to transform Venezuela's political system. The watershed election, in which former coup leader Chávez received 56% of the vote (16% more than his closest rival), illustrated Venezuelans' rejection of the country's two traditional parties, Democratic Action (AD) and the Social Christian party (COPEI), which had dominated Venezuelan politics for much of the past 40 years. Elected to a five-year term, Chávez was the candidate of the Patriotic Pole, a left-leaning coalition of 15 parties, with Chávez's own Fifth Republic Movement (MVR) the main party in the coalition. Most observers attribute Chávez's rise to power to Venezuelans' disillusionment with politicians whom they judge to have squandered the country's oil wealth through poor management and endemic corruption. A central theme of his campaign was constitutional reform; Chávez asserted that the system in place allowed a small elite class to dominate Congress and that revenues from the state-run oil company, Petroleos de Venezuela S.A. (PdVSA), had been wasted. Although Venezuela had one of the most stable political systems in Latin America from 1958 until 1989, after that period numerous economic and political challenges plagued the country and the power of the two traditional parties began to erode. Former President Carlos Andres Perez, inaugurated to a five-year term in February 1989, initiated an austerity program that fueled riots and street violence in which several hundred people were killed. In 1992, two attempted military coups threatened the Perez presidency, one led by Chávez himself, who at the time was a lieutenant colonel railing against corruption and poverty. Ultimately the legislature dismissed President Perez from office in May 1993 on charges of misusing public funds, although some observers assert that the president's unpopular economic reform program was the real reason for his ouster. The election of elder statesman and former President Rafael Caldera as president in December 1993 brought a measure of political stability to the country, but the Caldera government soon faced a severe banking crisis that cost the government more than $10 billion. While the macro-economy began to improve in 1997, a rapid decline in the price of oil brought about a deep recession beginning in 1998. In the first several years of President Chávez's rule, Venezuela underwent enormous political changes and even received a new name for the country, the Bolivarian Republic of Venezuela, named after the 19 th century South American liberator Simon Bolivar, whom Chávez often invokes. In 1999, Venezuelans went to the polls on three occasions—to establish a constituent assembly that would draft a new constitution, to elect the membership of the 165-member constituent assembly, and to approve the new constitution—and each time delivered victory to President Chávez. The new document revamped political institutions, including the elimination of the Senate and establishment of a unicameral National Assembly, and expanded the presidential term of office from five to six years, with the possibility of immediate reelection for a second term. Under the new constitution, voters once again went to the polls in July 2000 for a so-called mega-election, in which the president, national legislators, and state and municipal officials were selected. President Chávez easily won election to a new six-year term, capturing about 60% of the vote while his opponent, fellow former coup leader Francisco Arias, received 38%. Chávez's Patriotic Pole coalition also captured 14 of 23 governorships and a majority of seats in the National Assembly. Although President Chávez remained widely popular until mid-2001, his standing eroded after that, amid concerns that he was imposing a leftist agenda on the country and that his government was ineffective in improving living conditions in Venezuela. In April 2002, massive opposition protests and pressure by the military led to the ouster of Chávez from power for less than three days. He ultimately was restored to power by the military, however, after an interim president alienated the military and public by taking hardline measures, including the suspension of the constitution. In the aftermath of Chávez's brief ouster from power, the political opposition continued to press for his removal from office, first through a general strike that resulted in an economic downturn in 2002 and 2003, and then through a recall referendum that ultimately was held in August 2004 and which Chávez won by a substantial margin. In 2004, the Chávez government moved to purge and pack the Supreme Court with its own supporters in a move that dealt a blow to judicial independence. The political opposition boycotted legislative elections in December 2005, which led to domination of the National Assembly by Chávez supporters. The rise in world oil prices beginning in 2004 fueled the rebound of the economy and helped support an array of social programs and services known as "missions" that helped reduce poverty by some 20% by 2007. In large part because of the economic rebound and attention to social programs, Chávez was reelected to another six-year term in December 2006 in a landslide, with almost 63% of the vote compared to almost 37% for opposition candidate Manuel Rosales. After he was reelected, however, even many Chávez supporters became concerned that the government was becoming too radicalized. Chávez's May 2007 closure of a popular Venezuelan television station that was critical of the government, Radio Caracas Television (RCTV), sparked significant protests and worldwide condemnation. Chávez also proposed a far-reaching constitutional amendment package that would have moved Venezuela toward a new model of development known as "socialism in the 21 st century," but this was defeated by a close margin in a December 2007 national referendum. University students took the lead in demonstrations against the closure of RCTV, and also played a major role in defeating the constitutional reform. In 2008, President Chávez moved to unite his supporters into a single party—the United Socialist Party of Venezuela (PSUV)—although several parties that had supported Chávez in the past declined to join. The Venezuelan government also continued to move forward with nationalizations in key industries, including food companies, cement companies, and the country's largest steel maker; these followed the previous nationalization of electricity companies and the country's largest telecommunications company and the conversion of operating agreements and strategic associations with foreign companies in the oil sector to majority Venezuelan government control. State and local elections held in November 2008 revealed a mixed picture of support for the government and the opposition. Pro-Chávez candidates won 17 of the 22 governors' races, while the opposition won governorships in three of the country's most populous states, Zulia, Miranda, and Carabobo, as well as the states of Nueva Esparta and Táchira (see Figure 1 for a map of Venezuela). At the municipal level, pro-Chávez candidates won over 80% of the more than 300 mayoral races, while the opposition won the balance. Among the opposition's mayoral successes were races for the metropolitan mayor of Caracas, four out of the five smaller municipalities that make up Caracas (including the poor municipality of Sucre), and the country's second-largest city, Maracaibo. Leading up to the November elections, President Chávez's PSUV held primary elections around the country on June 1, 2008, to select candidates, although the process was criticized for a lack of transparency. The opposition initially had difficulty in agreeing on a single slate of candidates so as not to split the opposition vote, but by the end of September 2008 had agreed on a unified candidate for most governor races. The opposition includes newer parties such as Primero Justicia (PJ, Justice First), Proyecto Venezuela (Project Venezuela), and Un Nuevo Tempo (UNT, A New Era); leftist parties that defected from the Chavista coalition such as the Movimiento al Socialismo (MAS, Movement toward Socialism) and Por la Democracia, Social ( Podemos , For Social Democracy); and the traditional political parties from the past such as AD and COPEI. One of the major problems for the opposition was that the Venezuelan government's comptroller general disqualified 272 individuals (down from almost 400 originally disqualified) from running for office, purportedly for cases involving the misuse of government funds. There were several challenges to Venezuela's Supreme Court that the comptroller general's action violated the Constitution, but on August 5, 2008, Venezuela's Supreme Court upheld the disqualifications. The Venezuelan government maintained that the majority of those disqualified were from the ranks of its own supporters, while the opposition maintained that a large percentage were from the opposition, including several high-profile opposition candidates. Among those excluded was Leopoldo López, the popular mayor of Chacao, who was seeking to run for mayor of Caracas. In the aftermath of the state and municipal elections in November 2008, President Chávez announced that he would move ahead with plans to seek changes to the constitution that would lift the two-term limit for the office of the presidency. This would allow him to run for reelection in 2012 and beyond. The National Assembly voted on January 14, 2009, to hold a referendum on the constitutional amendment, expanding it further so that the abolition of term limits would apply to all elected government officials. As a result, the proposed amendment pertained to the president, all state and municipal officials, and deputies to the National Assembly. The referendum was scheduled for February 15, 2009, and various polls indicated that the vote would be close. Ultimately, with a participation rate of 70%, Venezuelans approved the constitutional reform with almost 55% voting for it and 45% voting against it. President Chávez proclaimed that the vote was a victory for the Bolivarian Revolution, and virtually promised that he would run for reelection in 2012. The amendment was controversial given the defeat of the government's constitutional reform package in December 2007, which had included an amendment that would have removed the presidential two-term limit. Venezuela's opposition maintained that President Chávez's effort to amend the constitution in 2009 was illegal because the constitution (Article 345) prohibits a constitutional reform that was rejected from being presented again to the National Assembly in the same constitutional period. According to this view, since the next National Assembly would not be elected until late 2010 and take office until early 2011, such an amendment should not have been considered until then. Similar to the campaign against the government's December 2007 constitutional reform package, student groups played a leading role in the opposition to the abolishment of term limits in 2009. During the referendum campaign, Venezuelan security forces used tear gas, plastic bullets, and water cannons to disperse several student protests nationwide, although a massive student demonstration was allowed to take place in Caracas. Opposition parties again united against the referendum, including the democratic socialist Podemos party that had once supported President Chávez. During the campaign, President Chávez argued that the constitutional change would only allow him to run again, but would not mean that he would be reelected or remain in power indefinitely. He maintained that he does not want to be "president for life," but would like to remain in power until 2019 in order to ensure that his revolutionary project continues. Chávez campaigned vigorously for the amendment, and spent hours on state-run television in support of it. The president's support among many poor Venezuelans, who have benefited from increased social spending and programs, was an important factor in the vote. One likely reason that President Chávez moved quickly with the referendum was the economic problems facing Venezuela due to the global financial crisis and the fall in the price of oil. With declining government revenue, his government faced the possibility of losing support if the economic situation deteriorated further, especially if the government was forced to cut back on domestic spending. Such a scenario could have made it more difficult for an amendment on term limits to be approved. Moreover, the National Assembly at the time almost completely dominated by Chávez supporters because the opposition boycotted the 2005 legislative elections. Assuming that the opposition would participate in the next legislative elections in 2010, the next National Assembly would likely include an invigorated opposition that could have made it more difficult for the government to advance a constitutional amendment to abolish term limits. In Venezuela's September 26, 2010, elections for the 165-member National Assembly, pro-Chávez supporters won 98 seats while opposition parties won 67 seats. For the government, President Chávez's United Socialist Party of Venezuela (PSUV) won 94 seats, while other government supporters included one seat for the Communist Party of Venezuela (PCV) and three indigenous representatives. For the opposition, 10 parties of the opposition coalition known as the Democratic Unity Platform (MUD) won 65 seats, while the leftist Homeland for All (PPT) won 2 seats. Nationwide participation in the elections was high, with 66.45% participation (compared to almost 75% participation in the 2006 presidential race). Even though the ruling party won a majority of seats, the result was viewed as a significant defeat for President Chávez because it denied his government the three-fifths majority (99 seats) needed to enact enabling laws that grant the president decree powers. It also denied the government the two-thirds majority (110 seats) needed for a variety of actions to ensure the enactment of the government's agenda, such as introducing or amending organic laws, approving constitutional reforms, and making certain government appointments. The combined opposition (MUD and PPT) also narrowly won the popular vote, capturing 51% of the vote compared to 49% for the ruling PSUV and its ally, the PCV. Nevertheless, the government was able to maintain a majority of seats because rural districts (where the government has strong support) elect a disproportionate number of legislators. In the lead-up to the elections, many observers had expected that the President Chávez's PSUV would retain a majority, but that the opposition coalition would gain substantial representation. The ruling party benefitted from the government's decision last year to redraw electoral districts. The PSUV also benefitted from significant resources, a nation-wide organization and electoral machine, and effective use of social network websites. The PSUV's campaign was dubbed Operation Demolition in light of President Chávez's call "to demolish the opposition." Despite the PSUV's advantages, the legislative elections were held at a difficult time for the Chávez government and the opposition benefited from this. President Chávez's popularity had declined to less than 40% and there were considerable public concerns about the difficult economic situation and high rate of violent crime facing the country. The Venezuelan government did not allow observers from the Organization of American States (OAS), the Carter Center, or other international groups with election monitoring experience, although it did permit each electoral coalition to invite 30 witnesses from abroad for the elections. Four domestic Venezuelan nongovernmental organizations, however, were involved in monitoring the elections, with a total of almost 2,500 observers. Election-day voting appeared to have been conducted peacefully with isolated minor problems. In December 2010, Venezuela's outgoing National Assembly approved several laws that were criticized by human rights organizations and others as threats to free speech, civil society, and democratic governance. The laws were approved ahead of the inauguration of Venezuela's new National Assembly in early January 2011, in which opposition deputies have enough representation to deny the government the two-thirds and three-fifths needed for certain actions. Most significantly, the outgoing Assembly approved an "enabling law" that provided President Chávez with far-reaching decree powers for 18 months. In February 2011, then-Assistant Secretary of State for Western Hemisphere Affairs Arturo Valenzuela described the Assembly's action as "undermining the authority of the new assembly and thereby circumscribing popular will." The Washington Office on Latin America (WOLA) also maintained that the law "constitutes an illegitimate infringement on the new National Assembly's authority, subverting the will of the electorate." Until its expiration in June 2012, the enabling law was used by President Chávez more than 50 times, including decrees to change labor laws and the criminal code, along with a nationalization of the gold industry. Other measures approved by the Assembly included changes to broadcast media laws that, according to Human Rights Watch, introduce sweeping restrictions on Internet traffic, reinforce existing restrictions on radio and television content, and allow the government to terminate broadcasting licenses on arbitrary grounds. Another measure, the Law of the Defense of Political Sovereignty and National Self-Determination, imposes restrictions on Venezuelan human rights groups from receiving international support (also see " Human Rights Concerns " below). The law could have ramifications for U.S. government and other donors' assistance to Venezuelan civil society groups, and potentially could constrain the ability of nongovernmental organizations to operate. With a record turnout of 80.7% of voters, President Chávez won reelection to another six-year term in the October 7, 2012 presidential election, capturing about 55% of the vote, compared to 44% for opposition candidate Henrique Capriles, according to Venezuela's National Electoral Council (CNE). The presidential inauguration is scheduled to take place on January 10, 2013. (For more details, see " Election Results and Implications " below.) Venezuelans approved a constitutional referendum in 2009 abolishing the term limits for elected officials, so President Chávez was once again a candidate for reelection. As described above, he was first elected in 1998, then in 2000 (under a new Constitution), and again in 2006 to a six-year term. Venezuela's 2006 presidential election was characterized as free and fair by international observers with some irregularities, while 2010 national legislative elections were also characterized as free and fair by domestic observers with scattered irregularities, although there was criticism of the electoral law and the government's partisan use of state resources. Venezuela's opposition held a unified primary on February 12, 2012, under the banner of the Mesa de la Unidad Democrática (MUD, Democratic Unity Roundtable) and chose Henrique Capriles Radonski in a landslide with about 62% of the vote in a five-candidate race (the next closest candidate, Pablo Pérez, governor of Zulia, captured about 30% of the vote). A member of the Primero Justicia (PJ, Justice First) party, Capriles is the governor of Miranda, Venezuela's second-most populous state, which includes several municipalities of metropolitan Caracas. Just over 2.9 million Venezuelans voted in the primary—while this only represented about 16% of the 18 million Venezuelans registered to vote, primary organizers had expected far less. During the primary election, Capriles had a message of reconciliation and national unity. He pledged not to dismantle Chávez's social programs, but rather to improve them. Capriles—who turned 40 in July 2012 – also represents a new generation of Venezuelan politicians not belonging to the older traditional parties that have been largely discredited. It was thought that the wide margin of the primary victory for Capriles would give him a boost in the general election race, but for much of the campaign he remained the underdog. President Chávez continued to retain high favorability ratings, and led opinion polls for much of the race, with a lead between 5% and 30%. Just weeks before the election, however, while Chávez still was favored by most polls, ranging from a 2% lead to a 20% lead, at least one poll showed Capriles winning by about 3%. Many observers contended that while Chávez remained favored to win by most polls, Capriles potentially might have pulled off an upset victory. Observers focused on two key factors in the race—how undecided or independent voters would vote and to what extent each side would be able to mobilize their supporters. Capriles ran an energetic campaign traveling throughout the country with multiple campaign rallies each day, while the Chávez campaign reportedly was somewhat disorganized and limited in terms of campaign rallies because of Chávez's health. Nevertheless, Chávez had several distinct advantages in the presidential race. The Venezuelan economy has been growing strongly in 2012, with a forecast of 5% growth for the year, fueled by government spending made possible by high oil prices. Numerous social programs or "missions" of the government helped forged an emotional loyalty among Chávez supporters. This includes a well-publicized public housing program. Critics maintain the program had the purpose of boosting the popularity of the Chávez government for the upcoming election, and will do little to resolve the country's housing shortage. Another significant advantage for Chávez is that his electoral campaign used state resources and state-controlled media for campaign purposes. This included the use of broadcast networks, which are required to air the president's frequent and lengthy political speeches. Observers maintain that the government's predominance in television media is overwhelming. There were several areas of vulnerability for President Chávez, however, that posed challenges to his support. These included Venezuelans' concerns about high rates of crime (including murder and kidnapping) and an economic situation characterized by high inflation and economic mismanagement that has led to periodic shortages of some food and consumer products and electricity outages. Earlier in 2012, a wildcard in the presidential race was Chávez's health status, but in July 2012 Chávez claimed to have bounced back from his second bout of an undisclosed form of cancer since mid2011; his campaign appearances, however, were far more limited than those of Capriles. If Chávez had been unable to run because of his health, many observers maintain that Capriles would have had a good chance at defeating another PSUV presidential candidate. In the lead up to the election, some observers had concerns about the potential reaction of the Venezuelan military in the likelihood of an opposition victory. Before General Henry Rangel became defense minister, he maintained in a November 2010 press interview that military was "wedded to [Venezuela's] socialist political project," and that neither the military nor the public would support an opposition government that would try to overturn the project. The comments raised doubts about whether the military would accept an opposition victory, although after becoming defense minister, then General Rangel said that the military would respect the result of the election whatever the result. Some observers also had expressed concern about potential violence in the case of a close race, with fears centered on potential actions by radical elements on either side of the political divide who might pursue violence if their candidate did not win. Concerns about violence were heightened after two supporters of presidential candidate Henrique Capriles were shot and killed during a campaign event in the western state of Barinas on September 29, 2012. Capriles maintained that the killings reflected rising violence by Chávez supporters while the government maintains that the killings were an isolated event. President Chávez won reelection by a margin of 11%, receiving 55.25% of the vote compared to 44.13% for opposition candidate Henrique Capriles, according to the National Electoral Council (updated results, as of October 11, 2012). Chávez received over 8.1 million votes, about 1.6 million more than Capriles, who received almost 6.5 million votes. President Chávez won all but two of Venezuela's 23 states (with the exception of Táchira and Mérida states), including a very narrow win in Miranda, Capriles's home state (see Figure 1 ). Unlike the last presidential election in 2006, Venezuela did not host international observer missions. Instead, two domestic Venezuelan observer groups monitored the vote. Most reports indicate that election day was peaceful with only minor irregularities. A White House spokesman, while acknowledging differences with President Chávez, congratulated "the Venezuelan people on the high level of participation, as well as on what was a relatively peaceful process." A State Department official added "that the views of the more than 6 million people who voted for the opposition should be taken into account going forward." Credited with running an effective well-organized campaign that increased the strength of a unified opposition, Capriles accepted defeat and congratulated President Chávez, but also maintained that being president entails "working to solve the problems of all Venezuelans." Capriles said that he would continue to serve the Venezuelan people. Soon after, on October 10, 2012, Capriles announced that he would run for reelection as governor of Miranda state in the December 16, 2012 regional elections running against former Vice President Eliás Jaua who stepped down from his position the same day in order to run (see " December 2012 State Elections " below.) For the opposition, the election showed a significant strengthening of support – it received about 2.2 million more votes than in the last presidential election in 2006, and its share of the vote grew from almost 37% in 2006 to 44% in 2012. If Capriles had won the presidency, he would have faced a National Assembly still dominated by Chávez supporters since the country's next legislative elections are not due until September 2015. Without legislative support, he would have faced difficulty in making significant policy changes. For the United States, however, an opposition victory would likely have reduced tensions in bilateral relations and allowed potential progress in the key areas of anti-drug and counterterrorism cooperation. For President Chávez, the election was his fourth presidential victory. It affirmed his longstanding popular support as well as support for his government's array of social programs that have helped raise living standards for many Venezuelans. In his victory speech, President Chávez congratulated the opposition for their participation and civic spirit and pledged to work with them. At the same time, however, the president vowed that Venezuela would "continue its march toward the democratic socialism of the 21 st century." In Venezuela's December 16, 2012 state elections in which 23 governorships were at stake, voters delivered a resounding victory to President Chávez and the PSUV, which won 20 out of 23 states. Prior to the elections, the PSUV had held 15 state governorships with the balance held by opposition parties or former Chávez supporters. The state elections took place with political uncertainty at the national level as President Chávez was in Cuba recuperating from his fourth cancer surgery (see " Chávez's Health Status " below). Opposition candidates won just three states, Amazonas, won by a former PSUV member; Lara, where former PSUV member Henrí Falcón was reelected; and Miranda, where former MUD presidential candidate Henrique Capriles Radonski was reelected, defeating former Vice President Eliás Jaua. While the opposition suffered a significant defeat, most observers contend that Capriles's win solidified his status as the country's major opposition figure, and as the most likely the standard bearer of the Democratic Unity Roundtable (MUD) in a future presidential election. Since mid-2011, President Chávez's precarious health situation has raised questions about Venezuela's political future. Most recently, a fourth difficult surgery in December 2012 with significant complications for the President has resulted in Venezuela indefinitely postponing the country's presidential inauguration scheduled for January 10, 2013. President Chávez's health threats date back to June 2011, when the President underwent emergency surgery for a "pelvic abscess." The initial operation took place on June 11, followed by another operation (date unknown) to remove a cancerous tumor. Rumors were abounding about Chávez's health until June 30, when Chávez, from Cuba, announced on Venezuelan television that he had cancer, although the president did not disclose the type of cancer he was battling. Several days later, Chávez returned to Caracas on July 4, 2011, in order to be in the country the next day for its bicentennial celebrating Venezuelan independence from Spain. Chávez traveled to Cuba several times for chemotherapy beginning in mid-July 2011, and by mid-October declared that he had beaten cancer. Chávez appeared to be frail in the summer and fall, and gave up most public appearances including his weekly Sunday television program, Alo Presidente . By late 2011, however, Chávez had returned to public appearances, including a meeting of Latin American and Caribbean leaders at the founding of the Community of Latin American and Caribbean States (CELCAC) in Caracas in early December 2011. He hosted Iranian President Mahmoud Ahmadinejad in early January 2012 and also returned to his weekly television program. In an apparent attempt to send a message that his health had returned, on January 13, 2012, Chávez gave a marathon address to Venezuela's National Assembly that lasted more than nine hours. Just several weeks later, however, on February 21, 2012, Chávez announced that his doctors had found a new lesion in the same area of his pelvic region requiring surgery. He returned to Cuba for the surgery on February 28 and confirmed on March 4 that the lesion was malignant. Chávez headed home to Venezuela on March 16, but returned again to Cuba multiple times over the next three months for radiation treatment. The president has never disclosed the type of cancer that he is battling, but doctors reportedly have speculated that it is prostate, colon, or bladder cancer. In early July 2012, however, Chávez once again maintained that he was "cancer free," and ready to take on a tough reelection campaign. After winning reelection to another six-year term, Chávez returned to Cuba in late November 2012 for medical treatment. Upon his return to Venezuela, Chávez announced on December 8, 2012, that his cancer had returned and that he would soon undergo a fourth cancer surgery in Cuba. Most significantly, Chávez announced his support for Vice President Nicolás Maduro if anything were to happen to him. (Maduro had been sworn into office on October 13, 2012, and retained his position as foreign minister, which he has held since 2006. Under Venezuela's Constitution, the president has the power to appoint and remove the vice president; it is not an elected position.) According to Chávez: "If something happens that sidelines me, which under the Constitution requires a new presidential election, you should elect Nicolás Maduro." Chávez reportedly faced complications during and after his December 11 surgery, and while there were some indications of improvement by Christmas 2012, by year's end the President faced new respiratory complications. Chávez's grave health condition has introduced a significant measure of uncertainty into Venezuela's political system. After considerable public speculation about the inauguration scheduled for January 10, 2013, Vice President Maduro announced on January 8 that Chávez would not be sworn in that day. Instead, the Vice President invoked Article 231 of the Constitution, maintaining that the provision allows the President to take the oath of office before the Supreme Court at a later date. A day later, on January 9, 2013, Venezuela's Supreme Court upheld this interpretation of the Constitution, with the court's President, Luisa Estella Morales, maintaining that Chávez could take the oath of office before the Supreme Court at a later date when his health improves. Current government officials also would continue to fully exercise their functions after January 10, essentially allowing Vice President Maduro and other ministers to remain in power. The Supreme Court President also maintained that Chávez's medical treatment in Cuba was not a "temporary absence" involving Article 234 of the Constitution, but rather such a situation that was anticipated by Article 231, which allows for the oath of office to be taken at a later date. She also ruled out convening a medical board at this time to assess the health of the President (as outlined in Article 233 of the Constitution) that would certify whether Chávez's condition constituted permanent incapacity. (See Table 1 for the language of Venezuela's relevant constitutional provisions.) Some opposition leaders, as well as some Venezuelan legal scholars, have argued that the January 10 inauguration date is fixed by Article 231, and that since Chávez could not be sworn in on that date, then the President of the National Assembly, Diosdado Cabello, should have been sworn in as interim or caretaker President until either a new election was held or Chávez recovered. Opposition leader Henrique Capriles appeared to accept the Supreme Court's interpretation of the Constitution, but maintained that it did not end the uncertainties facing the country. He maintains that the court's decision was politically motivated to deal with a reported power struggle between Cabello and Vice President Maduro. According to Capriles: "The excuses are over....Mr. Maduro, you have to step up and govern, and solve the problems of all Venezuelans now." Many Latin American leaders expressed hope for Chávez's recovery, and Brazil maintained that its support for the delay in the President's inauguration. Leaders from Bolivia, Ecuador, and Uruguay also announced that they would attend a rally in Caracas on January 10 to express their support for Chávez. The State Department has maintained that the potential succession issue as well as the delay of the presidential inauguration is one for Venezuelans to decide, not the United States, but has stressed that the decision needs to be consensual. According to a State Department spokesman: "We do not believe that there is a made-in-America solution for Venezuela's transition. Only Venezuelans can make that set of decisions. This is the message that we are giving to Venezuelans of all stripes, that we want to see any transition be democratic, be constitutional, be open, be transparent, be legal within Venezuela, and that it has to be decided by Venezuelans." If Chávez does not recover, Venezuela will face a new presidential election. Article 233 of the Constitution requires that a new election is to be held within 30 days if the president dies or is incapacitated during the first four years of his term. President Chávez himself acknowledged before his recent operation in December 2012 that new elections would be needed if anything were to happen to him. In the scenario of a new election, while Henrique Capriles would likely be the opposition candidate, and would be advantaged by not having Chávez on the ballot, many observers contend that sympathy for Chávez would engender support for a Chavista candidate, most likely Vice President Maduro, aiming to protect Chávez's legacy and programs. With an estimated 211 billion barrels of proven oil reserves (the largest in the hemisphere, up from previously reported 99 billion in proven reserves), Venezuela's major economic sector is petroleum, which accounts for 90% of exports, more than 30% of its gross domestic product, and half of the government's fiscal income. The country is classified by the World Bank as an upper middle income developing country because of its relatively high per capita income of $11,820 (2011). Despite Venezuela's oil wealth, economic conditions in the country deteriorated in the 1990s. The percentage of Venezuelans living in poverty (income of less than $2 a day) increased from 32.2% to 48.5% of the population between 1991 and 2000, while the percentage of the population in extreme poverty (income of less than $1 a day) increased from 11.8% in 1990 to 23.5% in 2000. In 2002-2003, the country's political instability and polarization between the government of populist President Hugo Chávez and the political opposition contributed to a poor investment climate, capital flight, and declines in gross domestic product (GDP). A national strike orchestrated by the political opposition from late 2002 to early 2003 contributed to a contraction of the national economy by almost 9% in 2002 and 7.8% in 2003. From 2004-2008, however, Venezuela benefitted from the rise in world oil prices that began in 2004. Fueled by the windfall from oil price increases, the Venezuelan economy grew by over 18% in 2004 and averaged 8.6% growth annually from 2005 through 2008 (see Figure 2 ). The economic boom allowed President Chávez to move ahead with economic goals that fit into his "Bolivarian revolution." These included the expansion of a state-led development model, renegotiation of contracts with large foreign investors (especially in the petroleum sector) for majority government control, and the restructuring of operations at the state oil company, Petroleos de Venezuela S.A . (PdVSA). The government also nationalized numerous enterprises, including telecommunications, electricity, and steel companies, as well as cement, coffee, sugar, flour, and milk production facilities. The economic boom also allowed President Chávez to increase expenditures on social programs associated with his populist agenda. The government began implementing an array of social programs and services known as misiones or missions. There have been some 25 missions offering a wide array of services in the fields of education, health, nutrition, the environment, sports, culture, and housing, as well as targeted programs for indigenous rights and services for street children and adolescents. As a result of the booming economy and increased social spending, poverty rates in Venezuela declined from 48.6% in 2002 to 27.6% in 2008, with extreme poverty or indigence falling from 22.2% to 9.9% over the same period. The global financial crisis and associated drop in the price of oil had significant negative effects on the Venezuelan economy, which contracted 3.2% in 2009 and 1.5% in 2010. This made Venezuela the only country in South America, and one of the few in the region, to continue to decline economically in 2010, and poverty rates increased slightly in that year. Economic growth returned in 2011, however, with a growth rate of 4.2% because of the rise in oil prices and because of increased central government expenditure. The government increased its fiscal spending in order to help Chávez in the October 2012 presidential election. With this spending and high oil prices, estimated growth for 2012 is 5%. (See Figure 2 .) The Venezuelan government continues to face significant economic challenges. Over the past four years, high levels of inflation, averaging almost 28% annually from 2008 to 2011, have eroded purchasing power. The estimate for 2012 is almost 21%. (See Figure 3 .) In addition to inflation, there have been periodic shortages of basic food staples and other products because of price controls that have stifled local production. The government's response to shortages has been to nationalize some domestic agricultural producers or distributors. Venezuela's private sector describes the business community as being under siege from the government because some companies have been nationalized without compensation and without appropriate legal procedures being followed. In June 2010, Venezuelan authorities discovered 30,000 tons of rotten food at a government warehouse that was supposed to be delivered to state-run supermarkets known as Mercal . The scandal prompted widespread criticism of the government, and raised questions about its strategy of taking over more economic activities. Since 2002, hundreds of companies, both domestic and foreign, have been nationalized. Companies that have been nationalized under the Chávez government are in a variety of economic sectors, including energy, food and agriculture, finance, heavy industry, gold, steel, telecommunications, electricity, transportation, and tourism. While the government maintains that it will provide compensation for the nationalizations, foreign companies are often forced to seek settlement through international arbitration. There are currently 28 pending cases against Venezuela at the International Centre for Settlement of Investment Disputes (ICSID) affiliated with the World Bank. In January 2012, ExxonMobil won a settlement valued at some $900 million at the International Court of Arbitration (of the International Chamber of Commerce). The Chávez government reportedly welcomed the settlement because ExxonMobil had sought much more, but the company has another outstanding case against Venezuela at the ICSID that could provide it with a potentially much more significant settlement. President Chávez announced in early January 2012 that he would not recognize any decision made by the ICSID, and later in the month his government began procedures to withdraw from the organization. Some analysts, however, maintain that that the withdrawal process will be complex and could take as long as 15 years and involve Venezuela's renegotiation of bilateral investment treaties with over 20 countries. In January 2010, the Venezuelan government took action to shore up its fiscal situation by devaluing Venezuela's currency, the bolivar fuerte , which increased the value of its oil earnings and boosted government revenues. The government shifted the official exchange rate from Bolivares Fuertes (BsF) 2.15/U.S. $1 to BsF2.6/U.S.$1 for essential imports such as food, medicine, and for public-sector projects and strategic sectors, and established a second fixed exchange rate of BsF4.3/U.S.$1 for other imports. The increased revenue enabled the government to continue spending ahead of the September 2010 legislative elections, but also increased inflationary pressure. In January 2011, the government unified the two fixed foreign exchange rates by eliminating the BsF2.6/U.S.$1 rate for essential imports in favor of a rate of BsF4.3/U.S.$1 for all imports. According to some analysts, the government's move appears to be an effort to reduce the complexity of the multiple exchange-rate system, but the action has raised concerns about an increase in inflation. The government still retains an exchange rate of BsF5.4/U.S.$1 for bond swaps operated by the Central Bank, while the illegal black market rate is estimated at BsF9.3/U.S.$1, a reflection of the continued overvaluation of Venezuela's currency. Given the overvaluation, economic analysts expect Venezuela to devalue its currency again in 2013. As noted above, Venezuela still remains highly dependent on oil, which accounts for some 90% of its exports. Because of its substantial oil exports, the country generally runs a positive trade balance. The country's trade surplus began to grow significantly as oil prices began to increase in 2004. Venezuela's trade surplus grew from $16.7 billion in 2003 to a high of $44 billion in 2008. The decline in the price of oil beginning in 2009 reduced the country's exports by about 40%, from $95 billion in 2008 to $57 billion in 2009. During the same period, imports declined at a slower rate so that the trade surplus declined to almost $18 billion in 2009. Since then, with the recovery and increase of oil prices, the trade surplus grew to $27 billion in 2010 and $46 billion in 2011. (See Table 2 .) In terms of export markets, Venezuela's oil-based economy is highly dependent on the United States and has been for many years, even though the U.S. share of Venezuela's oil exports has been declining in recent years. The country is a major supplier of foreign oil to the United States, providing almost 10% of U.S. crude oil imports in 2011. In 2010, the United States was the destination of about 40% of Venezuela's total exports. Ten years earlier—in 2000—about 55% of Venezuela's exports were destined for the United States. The percentage of Venezuela's imports that come from the United States has also declined somewhat over time, although the United States still remains the single largest country of origin for Venezuelan imports. In 2010, about 29% of Venezuela's imports were from the United States, while 10 years earlier, the United States was the origin of about 38% of Venezuela's imports. The United States traditionally has had close relations with Venezuela, a major supplier of foreign oil to the United States, but there has been significant friction with the Chávez government. For several years, U.S. officials have expressed concerns about human rights, Venezuela's military arms purchases (largely from Russia), its relations with Cuba and Iran, its efforts to export its brand of populism to other Latin American countries, and the use of Venezuelan territory by Colombian guerrilla and paramilitary forces. Declining Venezuelan cooperation on antidrug and antiterrorism efforts also has been a U.S. concern. Since 2005, Venezuela has been designated annually (by President Bush and President Obama) as a country that has failed to adhere to its international anti-drug obligations. Since 2006, the Department of State has prohibited the sale of defense articles and services to Venezuela because of lack of cooperation on antiterrorism efforts. Tensions in relations turned especially sour in the aftermath of President Chávez's brief ouster from power in April 2002. Venezuela alleged U.S. involvement in the ouster, while U.S. officials repeatedly rejected charges that the United States was involved. In the aftermath of the coup, U.S. statements and actions of the interim government represented a defining moment that influenced the course of bilateral relations over the next several years. After Chávez's ouster, the United States expressed solidarity with the Venezuelan people and maintained that undemocratic actions committed or encouraged by the Chávez administration had provoked the political crisis. Yet at the same time, the leader of the interim government was dismantling the National Assembly, firing the Supreme Court, and suspending the Constitution. The interim government's hardline actions resulted in its loss of support from the Venezuelan military, and paved the way for Chávez's return to power. With Chávez's return, the United States called on him to heed the message sent by the Venezuelan people by correcting the course of his administration and "governing in a fully democratic manner." In contrast, many Latin American nations immediately condemned the overthrow of Chávez, labeling it a coup. The failure of the United States to quickly condemn the coup and instead to criticize President Chávez upon his return to power set the stages for continued deterioration in U.S.-Venezuelan relations. Moreover, even after the coup, the widespread perception that the United States supported continued efforts by Venezuela's opposition to remove President Chávez from power contributed to the downward spiral in bilateral relations. While strong political rhetoric from both U.S. and Venezuelan officials in the 2002 to 2006 period contributed to elevated tensions in U.S. relations, the tenor of U.S. political rhetoric changed in the second half of 2006. When Chávez spoke disparagingly of President Bush at the United Nations in September 2006, U.S. officials refrained from responding to those personal attacks. Likewise, when President Chávez led an anti-American rally in Argentina in March 2007 during President Bush's visit to Brazil and Uruguay, President Bush ignored the taunts and U.S. officials emphasized that they wanted to focus on a positive agenda of U.S. engagement with Latin America. In the aftermath of Colombia's March 1, 2008, bombing of a Revolutionary Armed Forces of Colombia (FARC) camp in Ecuador that killed the terrorist group's second in command, Colombian forces captured laptops that contained files potentially linking the Venezuelan government with efforts to support the FARC. In an apparent shift in policy, however, on June 8, 2008, President Chávez publicly urged the FARC to end its armed struggle, and release all hostages. In 2008, U.S. policy toward Venezuela appeared to be to refrain from getting into any unneeded conflicts or spats with President Chávez, and instead to focus on a positive U.S. agenda for the hemisphere. Then Assistant Secretary of State for Western Hemisphere Affairs Tom Shannon stated in July 17, 2008, congressional testimony that "we remain committed to a positive relationship with the people of Venezuela and have the patience and the persistence necessary to manage our challenging relationship." Shannon pointed out in his testimony that Venezuela "for the first time in many years, expressed a willingness to explore improved relations with the United States," including counter-drug cooperation, and that "we have told Venezuela that we would like to explore this diplomatic opening." By September 2008, however, U.S. relations with Venezuela took a significant turn for the worse when Venezuela expelled U.S. Ambassador Patrick Duddy in solidarity with Bolivian President Evo Morales, who had expelled the U.S. Ambassador in La Paz after accusing him of fomenting unrest; the United States responded in kind with the expulsion of Venezuelan Ambassador Bernardo Alvarez. Also in September, U.S. officials criticized Venezuela's efforts against drug trafficking, and President Bush determined, for the fourth year in a row, that Venezuela had failed demonstrably to adhere to its obligations under international narcotics control agreements. The U.S. Treasury Department also froze the assets of two high-ranking Venezuelan government officials and the former interior minister for allegedly helping the FARC with weapons and drug trafficking. In October 2008, the Treasury Department froze the assets of an Iranian-owned bank based in Caracas linked to an Iranian export bank that allegedly provided or attempted to provide services to Iran's ministry of defense. During the 2008 U.S. presidential campaign, Barack Obama maintained that his Administration would use principled bilateral diplomacy to engage with such adversaries in the region as Venezuela under populist President Hugo Chávez. Nevertheless, tensions continued in U.S.-Venezuelan relations, with President Chávez continuing "to define himself in opposition to the United States, using incendiary rhetoric to insult the U.S. Government and U.S. influence in Latin America." While in mid-2009, Ambassadors were returned, in late 2010, the Chávez government revoked an agreement for U.S. Ambassador-designate Larry Palmer to be posted to Venezuela. The Obama Administration responded by revoking the diplomatic visa of the Venezuelan Ambassador to the United States. Despite tensions in relations, the State Department maintains that the United States remains committed to seeking constructive engagement with Venezuela, focusing on such areas as anti-drug and counter-terrorism efforts. Developments in 2009. A week before his inauguration, President Obama maintained in an interview that President Chávez "has been a force that has impeded progress in the region," and expressed concern about reports that Venezuela is assisting the FARC. President Chávez strongly criticized Obama for his comments, but subsequently stated that he would like to restore bilateral relations to the same level as during the Clinton Administration. Chávez suggested that a new period of constructive relations based on respect might be possible, but that it would depend on the attitude of the President and Secretary of State. At the fifth Summit of the Americas held in Trinidad and Tobago in mid-April 2009, President Obama met President Chávez along with other hemispheric leaders. Chávez maintained that he would be open to the U.S. Ambassador returning to Caracas. Two months later, on June 25, 2009, the State Department announced that the United States and Venezuela had exchanged diplomatic notes and agreed to return respective ambassadors. This led to U.S. Ambassador to Venezuela Patrick Duddy resuming his post in Caracas, and to the return of Venezuelan Ambassador Bernardo Alvarez to Washington, DC. The return of respective ambassadors raised some hopes of an overall improvement in bilateral relations, but this did not occur. In an interview with Globovisión in early July 2009, Secretary of State Clinton maintained that there needs to be a dialogue between the United States and Venezuela on a range of issues, and that there are ways for countries that do not agree on many issues to have a conversation. At the same time, with regard to the political situation in Venezuela, Clinton maintained that she hoped to see over the next months "recognition that you can be a very strong leader and have very strong opinions without trying to take on too much power and trying to silence all your critics." State Department officials continued to express concerns about the intimidation of the news media in Venezuela, and steps taken by the government to restrict political participation and debate, and Secretary of State Clinton raised questions regarding Venezuela's military purchases. Developments in 2010. In February 2010, then-Director of National Intelligence (DNI) Dennis Blair testified before the Senate Select Committee on Intelligence on the annual threat assessment of the U.S. intelligence community. According to Blair, President "Chávez continues to impose an authoritarian populist political model in Venezuela that undermines democratic institutions." Blair maintained that with regard to foreign policy, "Chávez's regional influence may have peaked, but he is likely to support likeminded political allies and movements in neighboring countries and seek to undermine moderate, pro-U.S. governments." Blair maintained that "Chávez and his allies are likely to oppose nearly every U.S. policy initiative in the region, including the expansion of free trade, counter drug and counterterrorism cooperation, military training, and security initiatives, and even U.S. assistance programs." In August 2010, President Chávez criticized comments by U.S. Ambassador-designate to Venezuela Larry Palmer for his responses to questions for record for his nomination before the Senate Foreign Relations Committee that touched on Cuba's influence in the Venezuelan military and ties between members of the Venezuelan government and the FARC. The Venezuelan government maintained that it would not accept Palmer as U.S. Ambassador in Caracas, and on December 20, 2010, officially revoked its agreement for the appointment of Palmer as Ambassador. The State Department responded on December 27, 2010, by revoking the diplomatic visa of Ambassador Bernardo Alvarez. The full Senate did not act on Palmer's nomination by the end of the 111 th Congress, so the nomination was sent back to the President in December 2010. No further action has been taken to restore ambassadors. Developments in 2011 . In February 2011, Director of National Intelligence (DNI) James Clapper testified about President Chávez's waning influence in Latin America. According to Clapper, "deteriorating economic conditions in Venezuela and Chávez's declining popularity at home and abroad have limited his ability to exert influence beyond his core group of allies." Also in February 2011 congressional testimony, then Assistant Secretary of State Arturo Valenzuela criticized the December 2010 action of Venezuela's outgoing National Assembly for its approval of a law that delegated legislative authority to the executive for 18 months. Valenzuela maintained that the action undermined the authority of the incoming National Assembly and circumscribed its popular will. He maintained that the action "violates the doctrine of the separation of powers and therefore contravenes the Inter-American Democratic Charter." On May 11, 2011, the Department of State determined for the sixth consecutive year that Venezuela was not cooperating fully with U.S. antiterrorism efforts. This determination was made pursuant to Section 40A of the Arms Export Control Act (P.L. 90-629) and allowed for the continuation of the U.S. arms embargo on Venezuela since 2006. On May 24, 2011, the State Department also sanctioned the Venezuelan oil company, Petróleos de Venezuela (PdVSA), pursuant to the Comprehensive Iran Sanctions, Accountability, and Disinvestment Act of 2010 ( P.L. 111-195 ) for providing two shipments of reformate, an additive used in gasoline, to Iran, between December 2010 and March 2011. The shipments were valued at around $50 million. Under the sanctions, PdVSA is prohibited from competing for U.S. government procurement contracts, securing financing from the Export-Import Bank, and obtaining U.S. export licenses. The sanctions specifically exclude PdVSA subsidiaries (Citgo) and do not prohibit the export of oil to the United States. In September 2011, as part of the annual narcotics certification process, President Obama again determined that Venezuela had "failed demonstrably" to meet its obligations under international counternarcotics measures. This marked the seventh consecutive annual designation of Venezuela in this category. The justification accompanying the determination maintained that "individual "members of the government and security forces security forces were credibly reported to have engaged in or facilitated drug trafficking activities." The justification noted some positive steps taken by the Venezuelan government in the past year, including the transfer of several major drug traffickers to the United States and other drug traffickers to third countries and a bilateral counternarcotics agreement with Colombia. Developments in 2012 -2013 . On January 8, 2012, the Department of State declared as persona non grata the Venezuelan Consul General in Miami, Livia Acosta, and asked her to leave the United States. In December 2011, a documentary featured on the Spanish-language network Univisión had alleged that Iranian and Venezuelan diplomats in Mexico tried to recruit Mexican students for plotting possible cyberattacks against the United States. Acosta, a Venezuelan diplomat who had been based in Mexico, was recorded participating in the discussion with the Mexican students. The State Department issued the 2012 International Narcotics Control Strategy Report on March 7, 2012, which stated, as in previous reports, that Venezuela was one of the preferred trafficking routes for the transit of cocaine out of South America. The State Department also reiterated that the United States remained prepared to deepen anti-drug cooperation with Venezuela beyond the currently limited case-by-case level of cooperation. In a July 2012 press interview, President Obama maintained that his main concern about Venezuela "is having the Venezuelan people have a voice in their affairs" and "having fair and free elections." With regard to Iran's relations with Venezuela, the President maintained overall concern about "Iran engaging in destabilizing activity around the globe," but indicated that his "sense is that what Mr. Chávez has done over the past several years has not had a serious national security impact on us." This was subsequently reiterated by the head of the U.S. Southern Command, General Douglas Fraser, who maintained that he does not see Venezuela as a "national security threat," and that Iran's connection with Venezuela is primarily diplomatic and economic. In the aftermath of President Chávez's October 2012 reelection, the Obama Administration, while acknowledging differences with Chávez, congratulated the Venezuelan people on the high level of participation and the relatively peaceful electoral process (see " Election Results and Implications " above). Subsequently, in November 2012, the State Department's Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson engaged in a conversation with Vice President Maduro about improving bilateral relations, including greater cooperation on counternarcotics issues. In early January 2013, the State Department reiterated that the United States remains open to dialogue with Venezuela on a range of issues of mutual interest, and subsequently confirmed the Assistant Secretary's conversation with Vice President Maduro in November. In light of the setback in President Chávez's health, a State Department spokesman maintained on January 9, 2013, that "regardless of what happens politically in Venezuela, if the Venezuelan government and if the Venezuelan people want to move forward with us, we think there is a path that's possible. It's just going to take two to tango." With regard to U.S. views on Venezuela's potential political succession, the State Department has maintained that it is a decision for Venezuelans to make, but would like to see any transition be democratic, constitutional, and legal within Venezuela. (See " Chávez's Health Status and Political Implications " above.) Because of Venezuela's oil wealth and relatively high per capita income level, the United States has traditionally only provided small amounts of foreign assistance to Venezuela. In recent years, assistance has focused on counternarcotics and support for democracy programs. Table 3 below shows U.S. assistance level to Venezuela since FY2006. From FY2002 to FY2007, Venezuela received small amounts of U.S. assistance under the State Department's Andean Counterdrug Initiative (ACI) focusing on counternarcotics cooperation and judicial reform support. Since FY2008, no counternarcotics assistance has been requested for Venezuela, although in FY2009, the United States provided $0.5 million in International Narcotics Control and Law Enforcement (INCLE) assistance. For a number of years, the United States has provided democracy-related assistance to Venezuela through the U.S. Agency for International Development. In Table 3 , all funding for the Development Assistance (DA), Economic Support Funds (ESF), and Transition Initiatives (TI) foreign aid accounts are for democracy-related funding. In addition, the United States has supported democracy assistance in Venezuela through the U.S. government-funded National Endowment for Democracy (NED), but this type of support has not been typically reflected in U.S. foreign assistance funding statistics. From 2002 through December 2010, USAID supported democracy projects in Venezuela through its Office of Transition Initiatives (OTI) to provide assistance to monitor democratic stability and strengthen the county's democratic institutions. According to USAID, more than 600 small-grant and technical assistance activities were funded by OTI from 2002 through 2010. The objectives of the assistance, according to USAID, were to enhance access to objective information and peaceful debate on key issues, and to promote citizen participation and democratic leadership. At the end of December 2010, USAID's support for such activities for Venezuela was transferred from OTI to USAID's Latin America and Caribbean Bureau. In FY2011 and FY2012, the United States provided $5 million and $6 million, respectively, in ESF each year in democracy assistance for Venezuela, while for FY2013 the Obama Administration requested $3 million in such assistance. According to the State Department's FY2013 Congressional Budget Justification, the assistance seeks to promote broad participation in the democratic process by promoting good governance, raising awareness about social issues, increasing confidence in the democratic process, and encouraging citizen participation. In terms of congressional action on FY2013 foreign aid appropriations, the report to the House Appropriations Committee bill, H.R. 5857 ( H.Rept. 112-494 ), directs that $5 million in ESF be provided for democracy programs in Venezuela, the same amount appropriated in FY2012, and $2 million more than the Administration's request for $3 million. In contrast, the report to the Senate Appropriations Committee bill, S. 3241 ( S.Rept. 112-172 ), recommends $3 million for democracy programs in Venezuela to be administered by the National Endowment for Democracy (NED) instead of USAID or the Department of State. The 112 th Congress did not complete action on a FY2013 full-year foreign operations appropriations, but it did approve a Continuing Appropriations Resolution, FY2013 ( P.L. 112-175 ) in September 2012, which funds regular foreign aid accounts at the same level as in FY2012, plus 0.612% through March 27, 2013, although specific country accounts are left to the discretion of responsible agencies. The 113 th Congress will need to address foreign aid appropriations for the balance of FY2013. NED has funded democracy projects in Venezuela since 1992, but the level of funding increased under the Chávez government. The FY2006 Foreign Operations appropriations measure ( P.L. 109-102 ) provided $2 million in Democracy Funds for NED for democracy programs in Venezuela. In subsequent years, NED's funding amounted to more than $800,000 in FY2007 for 17 projects; over $1 million in FY2008 for 18 projects; $1.4 million in FY2009 for 14 projects; almost $1.6 million in FY2010 for 21 projects, and $1.53 million in FY2011 for 27 projects. The Venezuelan government and Chávez supporters have strongly criticized U.S. government funding for democracy projects in Venezuela. They maintain that NED-funded groups were headed by people involved in the overthrow of Chávez in April 2002 as well as a group, Súmate , involved in the signature collecting process for the 2004 recall referendum campaign. Critics of the USAID and NED democracy programs maintain that they meddle in Venezuelan domestic politics. They argue that the United States should get out of the business of democracy-promotion in Venezuela, maintaining that such activity lends credence to claims by Chávez and others that the U.S. government is pursuing a policy of regime change. U.S. officials strongly defend U.S. democracy promotion activities in Venezuela, and Congress has continued to fund such activities. In particular, U.S. officials criticized the Venezuelan government's efforts to intimidate the leaders of Súmate by charging them with conspiring against the government. The State Department asserts that the charges are without merit, and constitute an attempt "to intimidate members of civil society for exercising their democratic rights." According to NED, its program in Venezuela "focuses on promoting citizen participation in the political process, civil and political rights, freedom of expression and professional journalism, and conflict mediation." NED asserts that all of the Venezuelan programs that it funds operate on a non-partisan basis. As a result of issues raised regarding NED's programs in Venezuela, in 2004 Congress reaffirmed NED's duty to ensure that all sponsored activities adhere to core NED principles and required a comprehensive report on NED's activities in Venezuela since FY2001 (Division B of P.L. 108-447 , H.Rept. 108-792 ). In December 2010, Venezuela's outgoing National Assembly approved a measure that could make it difficult for the U.S. government or other foreign donors to assist civil society groups in Venezuela. The legislation prohibits civil society organizations involved in defending political rights or monitoring the performance of government bodies from receiving international funds and would impose stiff fines on those that do. As discussed below, human rights organizations have expressed concern about the effect of the legislation. Human rights organizations and U.S. officials have expressed concerns for several years about the deterioration of democratic institutions and threats to freedom of speech and press in Venezuela under the Chávez government. According to Human Rights Watch's World Report 201 2 , "the weakening of Venezuela's democratic system of checks and balances under President Hugo Chávez has contributed to a precarious human rights situation." It maintained that "without judicial checks on its actions, the government has systematically undermined the right to free expression, workers' freedom of association, and the ability of human rights groups to protect rights." An extensive Human Rights Watch report on Venezuela issued in July 2012 maintains that the human rights situation in the country has become even more precarious in recent years. It noted that the pro-Chávez majority in the National Assembly approved legislation in 2010 expanding the government's powers to limit free speech and punish its critics. It asserts that the Supreme Court "has explicitly rejected the principle that the judiciary should serve as a check on presidential power, while joining with the president in dismissing the authority of the Inter-American system of human rights." For almost a decade, President Chávez has not allowed the Inter-American Commission on Human Rights to visit the country, while in July 2012 he announced that Venezuela would withdraw from the jurisdiction of the Inter-American Court of Human Rights. The report contends that "the accumulation of power in the executive, the removal of institutional safeguards, and the erosion of human rights guarantees have given the Chávez government free reign to intimidate, censor, and prosecute Venezuelans who criticize the president or thwart his political agenda." The State Department's 2011 human rights report (issued in May 2012) maintains that the "principal human rights abuses reported during the year included government actions to impede freedom of expression and criminalize dissent." According to the State Department, the Venezuelan government harassed and intimidated privately owned television stations, other media outlets, and journalists. The government was reported to have thwarted judicial independence, and to have used the judiciary to intimidate and selectively prosecute political, union, business, and civil society leaders critical of the government. The State Department report also cites other human rights problems such as unlawful killings; torture and degrading treatment; prison violence and harsh prison conditions; inadequate juvenile detention centers; arbitrary arrests and detentions; police corruption and impunity; interference with property rights; and threats against domestic nongovernmental organizations. The significant problem of prison violence was highlighted once again on August 19, 2012, when a clash between gangs at a prison in Miranda state reportedly resulted in at least 25 deaths. In terms of political prisoners, the State Department human rights report cites a Venezuelan NGO, the Venezuelan Awareness Foundation, which listed 12 political prisoners in Venezuela at the end of 2011—as of August 2012, the organization listed a total of 13 political prisoners. Numerous other political prisoners have been released after being detained from a few days to several years. In a prominent human rights case that captured world-wide attention, Judge María Lourdes Afiuni was arrested and imprisoned on charges of corruption in December 2009 just hours after she had ordered the release of businessman Eligio Cedeño (who subsequently fled to the United States), who had been imprisoned since February 2007 in pretrial detention on charges of corruption and embezzlement. President Chávez urged that the judge receive the maximum sentence of 30 years. U.N. human rights experts criticized the judge's arrest, maintaining that Venezuela's reprisal against the judge created a climate of fear that undermines the rule of law and obstructs justice. According to Human Rights Watch, Judge Afiuni was held in deplorable conditions for over a year, where she was repeatedly insulted and threatened by other inmates. She reportedly received inadequate health treatment during her detention until she was released from prison and placed under house arrest on February 2, 2011. International human rights groups, such as Amnesty International and Human Rights Watch, have called for the charges to be dropped completely. In early March 2012, the United Nations Working Group on Arbitrary Detention asked Venezuela to release Judge Afiuni, maintaining that her detention was an act of retaliation for her release of an individual whom the Working Group had asked to be released. Afiuni maintained in an interview for a book published in November 2012 that she had been raped in 2010 while being held in a women's prison and then had an abortion after becoming pregnant. In another high-profile case, retired General Raúl Baduel, a former defense minister in the Chávez government, was sentenced to 7 years and 11 months in prison in May 2010 on corruption-related charges. Baduel, who was first arrested and imprisoned in April 2009, was a strong critic of President Chávez during the 2007 constitutional reform. Venezuelans at times have turned to using hunger strikes as a form of protest against the government. On August 30, 2010, hunger striker Franklin Brito died at a Venezuelan military hospital. Brito had been engaged in a battle with the Venezuelan government beginning in 2004 over the seizure of a portion of his farm by squatting farmers who were given permission by Venezuela's National Land Institute (INTI). On February 22, 2011, more than 80 students ended a 23-day hunger strike after the government agreed to review cases of alleged political prisoners and to establish a committee to discuss the students' grievances. The government conditionally released several of those detained, including jailed opposition legislator Biagio Pilieri. In May 2011, a former PdVSA employee who had been fired (along with some 19,000 oil workers during and after the 2002-2003 opposition strike) died of respiratory failure after a five-month hunger strike to protest the firings. In November 2011, a jailed newspaper editor, Leocenis Garcia, imprisoned for insulting public officials and inciting hatred, was released after an almost two-week hunger strike. NGOs in Venezuela and human rights organizations abroad have expressed concern about legislation approved in December 2010, the Law for the Defense of Political Sovereignty and National Self-Determination, that prohibits civil society organizations that "defend political rights" or "monitor the performance of government bodies" from receiving international funds and would impose stiff fines on those that do. According to Human Rights Watch, the measure would make it very difficult for Venezuelan human rights to secure sustainable financing. As noted above, the Chávez government has taken actions in recent years that have undermined the right to free expression. While there is vibrant political debate in Venezuela reflected in the print and broadcast media, the government has discriminated against media that offer views of political opponents, and has used laws and regulations regarding libel and media content as well as legal harassment and physical intimidation that, according to human rights groups, have effectively limited freedom of speech and the press in some cases. The Chávez government has also expanded state-owned media, including radio and television stations, newspapers, and websites in order to counter what it viewed as imbalance in the media environment. In August 2012, the Committee to Protect Journalists issued a special report documenting the Chávez government's attacks on private media and its establishment of a large state media that disseminates government propaganda and often is used to launch smear campaigns against critics. RCTV Case. As noted above, President Chávez's May 2007 closure of RCTV sparked significant protests and worldwide condemnation. The Venezuelan government maintained that it did not renew RCTV's broadcast license because of the station's actions in support of the April 2002 coup that temporarily removed Chávez from power. The 2007 closure shut down RCTV's general broadcast station that was available nationwide, but allowed RCTV to operate with a more limited audience as a subscription-based cable station known as RCTV-Internacional . In January 2010, however, the Venezuelan government took RCTV-Internacional off the air (along with five other stations that were subsequently allowed to resume broadcasting). Many observers believe that the government's actions were taken to silence RCTV-Internacional , which had continued to broadcast criticism of the Chávez government. The government maintains that the stations violated the Law of Television and Radio Social Responsibility by not complying with a requirement to broadcast government announcements and presidential speeches (which have been numerous under President Chávez's rule). International cable stations are not required to comply with this broadcast requirement, but in December 2009, a decree by the National Telecommunications Commission (CONATEL) maintained that cable stations would only be considered international if 70% or more of their programming is foreign. This ultimately led to the government taking RCTV-Internacional and the other five stations off the air on January 24, 2010. There was widespread Venezuelan domestic and international criticism of the government's shutdown of the cable stations. OAS Special Rapporteur for Freedom of Expression Catalina Botero and the Inter-American Commission on Human Rights' Commissioner for Venezuelan Affairs Paulo Sérgio Pinheiro expressed their strong opposition and requested that guarantees of freedom of expression and due process be reestablished. Human rights organizations, including Human Rights Watch, the Committee to Protect Journalists, Reporters without Borders, and the Washington Office on Latin America, also strongly criticized Venezuela's action. Globovisión Case. The Venezuelan government also began targeting the operation of Globovisión in 2009, a Caracas-area television news station that has often been critical of the government, and has used administrative and criminal investigations against the station. In March 2010, the president of Globovisión , Guillermo Zuloaga, was arrested for making remarks deemed offensive to President Chávez at a meeting in Aruba of the Inter-American Press Association. After strong domestic and international criticism, Zuloaga was released, but in June 2010, he fled the country after another arrest warrant charged him with hoarding cars in an effort to capitalize on future price increases at his car dealership. In October 2011, the Venezuelan government fined Globovisión about $2.1 million for extensive coverage of a month-long standoff between prisoners and government troops at a large prison outside Caracas. The government claimed that the coverage had stirred public anxiety and included false accusations against the government. In early March 2012, the Committee to Protect Journalists condemned an attack on Globovisión journalists covering an opposition rally. The attack was allegedly conducted by members of the ruling PSUV. In June 2012, Globovisión agreed to pay the $2.1 million fine cited above after Venezuela's Supreme Court ordered that its assets be frozen. Radio Broadcasting. With regard to radio broadcasting, the Chávez government announced in 2009 that it would open administrative proceedings against 240 radio stations (reportedly more than a third of all stations) to revoke their licenses because they failed to update their registration papers. Subsequently, 32 stations were shut down. Press rights groups such as the Committee to Protect Journalists maintain that the action was another attempt by the Venezuelan government to expand pro-government media, control the flow of information, and suppress dissent. Print Media. In terms of print media, there is a wide variety of privately owned newspapers in Venezuela that often take a strong editorial stand against the Venezuelan government. Nevertheless, according to some observers, there has been an increase of self-censorship since privately owned newspapers are strongly dependent on government advertising and owners do not want to jeopardize their companies. Press rights groups criticized the prosecution of a journalist in June 2010 for reporting on a case of nepotism in local government. Press rights groups also criticized a Venezuelan court's decision in August 2010 to ban print media from publishing images of violence in the lead-up to the September 2010 legislative elections. They characterized the ban as an attempt to censor news coverage of crime and violence before the elections. In January 2009, Orel Sambrano, the director of a political weekly magazine, was murdered after covering several drug trafficking cases. A former police officer was convicted for the murder in May 2010, while in August 2010, a member of a powerful Venezuelan business family, Walid Makled Garcia, the presumed instigator of the murder, was arrested in Colombia. Makled is wanted in the United States on drug trafficking charges, but on November 16, 2010, Colombian President Juan Manuel Santos announced that Makled would be extradited to Venezuela. This ultimately occurred on May 9, 2011. (Also see " Extradition of Walid Makled from Colombia " below.) In May 2011, Venezuelan newspaper columnist Wilfred Iván Ojeda was shot and killed in the state of Aragua. Press rights groups called on Venezuela authorities to fully investigate the murder and bring those responsible to justice. In August 2011, the Venezuelan government temporarily closed a Venezuelan newspaper, 6to Poder (Sixth Power), and charged two of its executives with inciting hatred and insulting public officials after the paper published a satirical article on several high-ranking female government officials. One of the executives, newspaper editor Leocenis Garcia, was imprisoned for nearly three months, but released in November 2011 after an almost two-week hunger strike. Venezuela, which has a Jewish community of about 9,000, has witnessed a rise in anti-Semitic acts over the past several years under the government of President Chávez. In the past, anti-Semitism appeared to be rare in Venezuela, but has grown in recent years as Venezuela has moved toward closer relations with Iran and as it has criticized Israel for its actions in Lebanon against Hezbollah and for its actions in Gaza. According to the State Department's 2009 human rights report, there was an increase in anti-Semitic vandalism, caricatures, and expression at rallies and in newspapers. Government-affiliated media outlets broadcast or printed numerous anti-Semitic comments. The State Department report noted that the government did not officially condone anti-Semitism, but maintained that it orchestrated several anti-Israel demonstrations and that President Chávez called on the Jewish community to denounce Israel's actions. These activities were accompanied by an increase in anti-Semitic rhetoric and graffiti, and vandalism of property owned by Jews. In late January 2009, a Caracas synagogue was vandalized. Criminal charges were filed against 11 people for the attack, including 8 police officers (A Venezuelan court sentenced six of the 11 defendants to 10 years in prison in July 2011, while the remaining five defendants remain on trial.) According to the State Department's 2009 international religious freedom report, Venezuelan government officials publicly condemned the synagogue attack, including President Chávez, who phoned the president of the Confederation of Jewish Associations in Venezuela (CAIV) and promised to guarantee the safety of the Jewish community. A State Department official at the OAS condemned the incident, maintaining that it served "as a warning of what can happen in a highly politicized environment when intolerance is left to simmer." In February 2009, 16 Members of Congress spoke out against the synagogue attack in a letter to President Chávez. They stated in the letter that they believed that the attack was "a direct result of the dangerous environment of fear and intimidation against the Jewish community which your government has fostered." The Members called on Chávez "to end the bullying and harassment of the Jewish community" and "to extend the community the robust protection it deserves in light of the threats it faces." In the aftermath of Israel's Gaza flotilla incident in late May 2010, the Venezuelan government's strong anti-Israeli rhetoric and conspiracy theories about the state of Israel contributed to continued anti-Semitic language in Venezuelan media. In a September 2010 meeting with President Chávez, Jewish leaders raised the problem of anti-Semitism in the state-owned media. In May 2011, CAIV and U.S.-based Jewish organizations denounced a state-owned radio station that featured a reading of selections from the anti-Semitic tract known as the "Protocols of the Elders of Zion," with the radio host suggesting that listeners read it. In February 2012, U.S. Jewish groups criticized attacks in the Venezuelan media against opposition presidential candidate Henrique Capriles Radonski that portrayed his Jewish heritage negatively. Capriles is a practicing Catholic, but is the grandson of Polish Jewish immigrants who survived the Holocaust. Since Venezuela is a major supplier of foreign oil to the United States, providing 9.7% of U.S. crude oil imports in 2011 (and 8.3% of total crude oil and petroleum products imports), a key U.S. interest has been ensuring the continued flow of oil exports. Venezuela was the fourth-largest foreign supplier of crude oil and products to the United States in 2011 (after Canada, Mexico, and Saudi Arabia), exporting 944,000 barrels per day to the United States. Venezuela's oil exports to the United States amounted to about $42 billion in 2011, accounting for 97% of Venezuela's total exports to the United States. According to the U.S. Energy Information Administration (EIA), Venezuela sends a large share of its crude oil exports to the United States, about 43% in 2010. Venezuela's state-run oil company, PdVSA, owns CITGO, which operates three crude oil refineries and a network of some 14,000 retail gasoline stations in the United States. Venezuela, according to EAI, is attempting to diversify its export destinations away from the United States. One of the fastest growing destinations for Venezuelan crude oil exports has been China, which imported almost 126,000 barrels per day, about 6% of Venezuela's crude oil in 2010. Venezuela's proven oil reserves are estimated to be 211 billion barrels of oil, up from 99 billion barrels in 2010 because of the inclusion of heavy Orinoco Belt oil in the estimate. This makes Venezuela the country with the largest reserves in the hemisphere. Venezuela's proven natural gas reserves are estimated to be 195 trillion cubic feet (the second largest in the hemisphere after the United States). Most of Venezuela's proven natural gas reserves are associated gas linked to its oil production, but in September 2009, the Spanish energy company Repsol YPF announced a major offshore gas find in the Gulf of Venezuela involving gas that reportedly could amount to 7 trillion-8 trillion cubic feet. Under President Chávez, the Venezuelan government has asserted greater control over the country's oil reserves. By March 2006, it had completed the conversion of its 32 operating agreements with foreign oil companies to joint ventures, with the Venezuelan government now holding a majority share of between 60% and 80% in the ventures. In 2007, the government completed the conversion of four strategic associations involving extra-heavy oil Orinoco River Basin projects. Six foreign companies had been involved in the projects—U.S.-based ConocoPhillips, Chevron, and ExxonMobil; Norway's Statoil-Hydro; Britain's BP; and France's Total. In the conversion to Venezuelan government majority ownership, Chevron and BP maintained their previous investments, Total and Statoil-Hydro reduced their holdings, and ConocoPhillips and ExxonMobil chose to leave the projects. Subsequent bilateral agreements for the development of additional Orinoco Belt resources have involved PdVSA partnering with a number of foreign oil companies, including Chevron, PetroVietnam, the China National Petroleum Corporation (CNPC), Italy's Eni, Malaysia's Petronas, and Spain's Repsol as well as Indian, Japanese, and Russian consortiums. According to the EIA, Venezuela's total oil production has been falling in recent years and was estimated at around 2.36 million barrels per day (mbd) in 2010, with crude oil accounting for 2.09 mbd. This compares to total oil production of 2.47 mbd in 2009 and 2.64 mbd in 2008. The decline in production, according to EIA, stems from natural decline at older fields, maintenance issues, and compliance with OPEC production cuts. Total oil production in 2011, however, is estimated to have increased to 2.47 mbd, with crude oil accounting for 2.24 mbd. Despite notable frictions in bilateral relations, Venezuela has continued to be a major supplier of oil to the United States. On numerous past occasions, however, Chávez threatened to stop selling oil to the United States, although Venezuelan officials maintained that Venezuela would only stop sending oil to the United States if attacked by the United States. Because of Chávez's strong rhetoric, however, some observers raised questions about the security of Venezuela as a major supplier of foreign oil. In June 2006, the Government Accountability Office (GAO) issued a report, requested by then-Senate Foreign Relations Committee Chairman Richard Lugar, on the issue of potential Venezuelan oil supply disruption. At the time, the GAO report concluded that a sudden loss of all or most Venezuelan oil from the world market could raise world prices up to $11 per barrel and decrease U.S. gross domestic product by about $23 billion. On August 25, 2012, an explosion at a Venezuelan oil refinery killed more than 40 people, and raised questions about whether the government has neglected maintenance and safety in its management of PdVSA. Venezuela's largest oil union has called for the resignation of the head of PdVSA, Rafael Ramirez, who also serves as minister of oil and mining. The issue became a campaign issue, with critics of President Chávez maintaining that his government has used PdVSA to fund social programs, with not enough slated for maintenance and investment for the oil company's infrastructure. Because of Venezuela's extensive 1,370-mile border with Colombia, it is a major transit route for cocaine and heroin destined for the United States. Venezuela suspended its cooperation with the U.S. Drug Enforcement Administration (DEA) in August 2005 because it alleged that DEA agents were spying on Venezuela. U.S. officials maintained that the charges were baseless. From 2005 to 2008, President Bush annually designated Venezuela, pursuant to international drug control certification procedures set forth in the Foreign Relations Authorization Act, FY2003 ( P.L. 107-228 ), as a country that had failed demonstrably to adhere to its obligations under international narcotics agreements. At the same time, the President waived economic sanctions that would have curtailed U.S. assistance for democracy programs in Venezuela. President Obama has taken the same action over the past three years, most recently in September 2012, marking the eighth consecutive year for Venezuela's designation as a country not adhering to its anti-drug obligations. The United States and Venezuela were on the verge of signing an anti-drug cooperation agreement in 2006 that had been negotiated in 2005 (an addendum to the 1978 Bilateral Counternarcotics Memorandum of Understanding or MOU), but Venezuelan approval of the agreement has still not taken place. The issue has been repeatedly raised by the United States as a way to improve bilateral antidrug cooperation. The Treasury Department has imposed sanctions on at least 14 Venezuelans for narcotics trafficking, freezing the assets of these individuals subject to U.S. jurisdiction and blocking U.S. persons from engaging in any transactions with these individuals. These include seven current or former Venezuelan officials. In September 2008, the Treasury Department froze the assets of two senior Venezuelan intelligence officials—General Hugo Carvajal and General Henry Rangel—and the former interior minister, Ramón Rodríguez Chacín, for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with drug and weapons trafficking. General Rangel was subsequently appointed Venezuela's defense minister in January 2012. He stepped down in October 2012, and went on to win the governorship of the Venezuelan state of Trujillo in December 2012 elections. Rodríguez Chacín also was elected as governor of the state of Guárico in December. In September 2011, the Treasury sanctioned four more Venezuelan officials for supporting the weapons and drug-trafficking activities of the FARC. These included Major General Cliver Antonio Alcala Cordones; Freddy Alirio Bernal Rosales, a PSUV representative to Venezuela's National Assembly; Amilicar Jesus Figueroa Salazar, a former alternative president of the Latin American Parliament; and Ramon Isidro Madriz Moreno, an officer with the Venezuelan Intelligence Service (SEBIN, Servicio Bolivariano de Inteligencia ). Some press reports have cited concerns that elements of the Venezuelan military are becoming increasingly involved in drug trafficking, moving from simply facilitating the transit of drugs to taking direct control of shipments and routes. As noted above, then General Henry Rangel—added to the U.S. Treasury Department drug trafficking sanctions list in 2008—was elevated to minister of defense in 2011 (serving until October 2012) while another military official, General Cliver Alcala Cordones, was added to the list in September 2011. Some reports allege that Venezuela's military leaders involved in drug trafficking pressed President Chávez to negotiate with Colombia for the extradition of Walid Makled, a Venezuelan drug trafficker who alleged that he had paid off numerous Venezuelan military officials. (Also see " Extradition of Walid Makled from Colombia " below.) On the other hand, there been increased counternarcotics cooperation between Venezuelan and Colombia since 2010 under the government of Colombian President Juan Manuel Santos. Several top Colombian drug traffickers have been arrested in Venezuela over the past two years, including most recently, the September 18, 2012 capture of Daniel Barrera (also known as "El Loco") in the Venezuelan city of San Cristóbal in Tachira state bordering Colombia. Barrera reportedly was based in Venezuela since 2008 overseeing the flow of drugs from Colombia through Venezuela to outside markets. Barrera had been on the U.S. Treasury Department's drug kingpin list (Specially Designated Narcotics Trafficker) since March 2010, and was indicted in September 2011 for cocaine drug trafficking to the United States. His September 2012 arrest reportedly resulted from cooperation among law enforcement and intelligence officials from Colombia, Venezuela, Britain, and the United States. In its March 2012 International Narcotics Control Strategy Report (INCSR), the State Department contended that Venezuela was one of the preferred trafficking routes for the transit of cocaine out of South America because of a porous border with Colombia, a weak judicial system, inconsistent international counternarcotics cooperation, generally permissive law enforcement, and a corrupt political environment. The illicit drugs transiting Venezuela are destined for the Eastern Caribbean, Central America, United States, Western Africa, and Europe. The report maintained that U.S. government estimates of cocaine transiting through Venezuela were 161-212 metric tons (compared to 250 metric tons noted in the 2011 INCSR). According to the 2012 INCSR, Venezuela's National Anti-Drug Office (ONA), Venezuela seized 42 metric tons in 2011 (down from 63 metric tons in 2010), with 62% cocaine and 37% marijuana. In 2011, Venezuela also deported three fugitives wanted on drug charges to the United States: in March, Gloria Rojas Valencia, allegedly working for Los Zetas (a violent Mexican drug trafficking organization) in Venezuela; in September, Lionel Scott Harris, a U.S. citizen; and in December, Maximiliano Bonilla Orozco, also known as "Valenciano," one of Colombia's top drug traffickers. The State Department maintained in the INCSR that that "the United States remains prepared to deepen cooperation with Venezuela to help counter the increasing flow of cocaine and other illegal drugs." As in the past, the State Department reiterated that cooperation could be improved through formal reengagement between Venezuelan and U.S. law enforcement agencies and the signing of the outstanding addendum to the 1978 Bilateral Counternarcotics MOU that was negotiated in 2005, which would provide funds for joint counternarcotics projects and demand reduction programs. The INCSR proffered that bilateral cooperation could also include counternarcotics and anti-money laundering training programs for law enforcement and other officials; Venezuelan participation in the U.S. Coast Guard's International Port Security Program; and activation of the Container Inspection Facility at Puerto Cabello that was partially funded by the United States in 2004. According to the INCSR, "these cooperative activities would increase the exchange of information that could lead to arrests, help dismantle organized criminal networks, aid in the prosecution of criminals engaged in narcotrafficking, and stem the flow of illicit drugs transiting Venezuelan airspace, land, and sea." On September 14, 2012, President Obama issued the eighth annual determination (as part of the annual narcotics certification process) that Venezuela had "failed demonstrably" to meet its obligations under international counternarcotics measures. According to a memorandum of justification accompanying the determination, while "as a matter of stated policy, Venezuela does not encourage, support, or facilitate illegal activity involving drug trafficking...individual members of the government and security forces were credibly reported to have engaged in or facilitated drug trafficking activities." The justification maintained that since Venezuela ceased formal cooperation with the DEA in 2005, bilateral counternarcotics cooperation has been conducted on a limited case-by-case basis, consisting "mainly of coordination of fugitive deportations from Venezuela to the United States and maritime interdiction activities carried out by the U.S. Coast Guard." While Venezuela continued to grant the U.S. Coast Guard to board Venezuelan-flagged vessels suspected of narcotics trafficking, it also required the return of confiscated vessels, suspects, and contraband to Venezuela with no follow up information provided to U.S. officials. The justification noted some positive steps taken by the Venezuelan government in the past year, such as the transfer of drug traffickers to the United States and Colombia and its increasing cooperation with Colombia, including the capture and transfer of several members of the FARC and FARC and National Liberation Army (ELN) guerrilla groups (which rely heavily on drug trafficking to fund their operations). Venezuelan officials maintain that, contrary to U.S. government claims, their government has been taking significant antidrug measures, including 52 international anti-drug cooperation agreements and participation in the OAS's Inter-American Drug Abuse Control of Drug Commission (CICAD). The government maintains that the annual U.S. anti-drug determination is designed to serve political ends and is an inaccurate portrayal of Venezuela's actions. According to Venezuelan government statistics, Venezuela seized 63 metric tons of illicit drugs in 2010, 36% more than in 2004, the last year of cooperation between Venezuela and the DEA. The government maintains that it has a zero tolerance policy toward drug trafficking, with more than 13,000 drug-related arrests in 2010, and more than 9,000 arrests in the first six months of 2011. According to the government, in recent years it has stepped up patrols along the border with Colombia and acquired new radar stations to intercept planes and special incinerators to dispose of seized drugs. The government also maintains that it takes a comprehensive approach to combating drugs, including a national anti-drug plan under which Venezuela's National Anti-Drug Office has supervised hundreds of educational workshops and aims to train 5 million Venezuelans as prevention advisers. On November 16, 2010, Colombian President Juan Manuel Santos said that his government would extradite a Venezuelan businessman and alleged narcotics trafficker, Walid Makled Garcia, to Venezuela. Makled was arrested in Colombia in August 2010. In addition to narcotics trafficking, Makled is wanted in Venezuela for several killings, including the 2008 killing of a suspected Colombian drug trafficker in Venezuela and for the murder of journalist Orel Sambrano in January 2009. After his arrest, Makled gave media interviews alleging that he had close links with high-level Venezuelan officials and that he paid millions of dollars for favors and protection. Venezuelan officials refute the claims, and President Chávez has alleged that the United States would try to use the fabricated allegations in order to justify an attack against his government similar to the 1989 U.S. invasion of Panama that removed General Manuel Noriega from power. Makled is also wanted in the United States on drug trafficking charges. In May 2009, President Obama identified Makled as a significant foreign narcotics trafficker under the Foreign Narcotics Kingpin Designation Act (which targets the financial assets of traffickers), while in early November 2010, Makled was indicted by a federal court in New York for trafficking tons of cocaine into the United States. While the United States wanted Makled extradited to the United States, the Administration maintained that it respected Colombia's extradition processes. Some Members of Congress called on President Santos to reconsider extraditing Makled to Venezuela and to instead extradite him to the United States. President Santos maintained that Venezuela's extradition request came before that of the United States, and that he gave his word to President Chávez that Makled would be handed over once the judicial process in Colombia was completed. This ultimately occurred on May 9, 2011, reflecting continued warming relations with Colombia. In a media interview before his extradition, Makled maintained that 5 current Venezuelan legislators and 40 generals had been on his payroll, including General Hugo Carvajal, the director of Military Intelligence. Makled also reportedly was questioned by U.S. officials before his extradition. For several years, U.S. officials have expressed concerns about Venezuela's purchases of military equipment. In January 2006, the State Department reported that the United States had denied licenses—required by the Arms Export Control Act—to transfer U.S. technology for use in 12 military transport planes that Spanish companies had contracted to sell to Venezuela. According to a State Department spokesman at the time, the proposed sale could have contributed to de-stabilization in Latin America. Spain initially responded by indicating that it would go ahead with the sale of the airplanes utilizing non-U.S. technology, but in mid-October 2006, Spain's foreign minister announced that such an alternative was not economically feasible and the deal was cancelled. Venezuela responded to the U.S. action by labeling it as "imperialist." The State Department official also indicated that the United States had expressed similar concerns to Brazil about military sales to Venezuela. Venezuela expressed interest in purchasing at least a dozen light-attack aircraft, manufactured by Embraer ( Empresa Brasileira de Aeronáutica , SA), that contain U.S. technology. In May 2006, the State Department determined (pursuant to Section 40A of the Arms Export Control Act) that Venezuela was not fully cooperating with U.S. antiterrorism efforts, an action that triggered a prohibition on the sale or license of defense articles and services to Venezuela. Since then, the State Department has made the same annual determination each year, most recently in May 2012. Venezuela has bought significant amounts of military equipment from Russia, more than $6 billion from 2005 through 2009. This included 24 Sukhoi Su-30 fighter jets, helicopters, armored personnel carriers, air defenses missiles, and small arms. The Venezuelan government maintains that it purchased the Russian fighter jets because the United States is refusing to sell the country spare parts for its aging fleet of F-16 fighters that it purchased in the 1980s. After visiting Russia in September 2009, President Chávez announced that Russia would grant Venezuela a $2.2 billion credit line to purchase military equipment. At the end of 2011, Venezuela and Russia reportedly signed another $4 billion Russian credit deal to fund additional military equipment, including additional fighter aircraft. Over the past several years, several Directors of National Intelligence (DNI) have expressed concerns about Venezuela's military purchases. In January 11, 2007, testimony before the Senate Select Committee on Intelligence, then-DNI John Negroponte expressed concern that President Chávez's military purchases and moves toward developing his own weapons production capability were increasingly worrisome to his neighbors, and could fuel an arms race in the region. In February 5, 2008, testimony before the same committee, then-DNI Michael McConnell again noted growing anxiety among Venezuela's neighbors because of this arms build-up. McConnell also testified at a February 27, 2008, Senate Armed Services Committee hearing that Venezuela's military build-up is probably three to four times what would be needed for external defense. With regard to rifles from Venezuela potentially ending up in the hands of the FARC, DIA Director Maples maintained at the hearing that he had not seen that, and that the likely purpose was "using asymmetric capabilities and tactics and empowering the population in some way, in a home guard sense." Under the Obama Administration, then-DNI Dennis Blair testified before the Senate Select Committee on Intelligence on February 12, 2009, that while the Chávez government's military purchases from Russia have been significant, Venezuela's overall military capabilities remain plagued by logistic, maintenance, and transportation shortfalls. In September 2009, Secretary of State Clinton noted U.S. concern about Venezuela's arms purchases, which she maintained raised questions about a potential arms race in the region. The Secretary urged Venezuela to be transparent in its purchases and clear about the purposes of the purchases. She maintained that Venezuela "should be putting in place procedures and practices to ensure that the weapons that they buy are not diverted to insurgent groups or illegal organizations, like drug trafficking gangs and other criminal cartels." On February 2, 2010, then-DNI Blair again testified before the Senate Select Committee on Intelligence that while Venezuela's military acquisitions from Russia are significant, more than $6 billion since 2005, "their armed forces lack the training and logistics capacity to use these to their full capacity." In response to U.S. criticism, President Chávez has vowed to continue with his nation's military purchases, asserting that he is acquiring the minimum equipment for Venezuela to defend itself from the United States. Venezuelan Foreign Minister Nicolás Maduro maintains that the purchases are a sovereign decision and that U.S. criticisms have "no political or moral weight." For a number of years, the Chávez government has focused its relations with Latin America and its activities in the region in part as a means of countering the United States and U.S. interests and influence in the hemisphere, but Venezuela's influence in the region appears to have waned. In February 2011, Director of National Intelligence (DNI) James Clapper testified that "deteriorating economic conditions in Venezuela and Chávez's declining popularity at home and abroad have limited his ability to exert influence beyond his core group of allies." Over the years, there had been concerns about President Chávez's attempts to export his brand of populism to other Latin American countries. He strongly supported Bolivia's President Evo Morales, and offered assistance to help Bolivia rewrite its constitution and implement radical reforms to the economy. Venezuela also has had close relations with Nicaragua under the presidency of Daniel Ortega, providing substantial assistance, and with Ecuador under the presidency of Rafael Correa. President Chávez launched a Bolivarian Alternative for the Americas (ALBA) in 2004 as an alternative to the Free Trade Area of the Americas. ALBA advocates a socially oriented trade block that includes mechanisms for poverty reduction, and cooperation in a range of areas including health, education, culture, investment, and finance. Currently, eight countries in the region have joined ALBA. Venezuela and Cuba were the first countries to launch ALBA in 2004, while Bolivia joined in 2006, and Nicaragua in 2007. In 2008, the Caribbean nation of Dominica joined in January, while Honduras joined in August, but subsequently withdrew in January 2010 under the de facto government of Roberto Micheletti. In June 2009, three additional countries joined—Ecuador, St. Vincent and the Grenadines, and Antigua and Barbuda, while in February 2012, both Suriname and St. Lucia expressed interest in joining ALBA. Despite the increase in its membership, DNI James Clapper testified before Congress in late January 2012 that "ALBA was created in part to spread Chávez's influence in the region," but "is only muddling through." Over the past decade, Venezuela has provided Cuba with substantial assistance. Cuba benefits from a preferential oil agreement with Venezuela signed in 2000, which provides Cuba with more than 90,000 barrels of oil per day. In payment for the oil, Cuba has provided extensive services to Venezuela, including thousands of medical personnel and advisers in a number of other areas, including sports, education, agriculture, communications, and even security programs involving the military. In addition to the substantial oil provided to Cuba, Venezuela has made significant investments in Cuba. PdVSA Cuba upgrade an oil refinery in Cienfuegos, which was inaugurated in 2007, and reportedly will help boost refining at the plant from 65,000 barrels per day to 150,000 barrels per day. It also reportedly will help upgrade another current refinery in Santiago, and has plans to build a joint oil refinery in Matanzas province. In June 2010, construction of a joint Cuban-Venezuelan nickel plant began in western Cuba. PdVSA has signed an offshore oil exploration and production agreement with Cupet, Cuba's state-oil company (although in early November 2012, Cuba announced that an oil well drilled offshore Cuba by PdVSA was not commercially viable). Because of Venezuela's oil assistance, the country is very much an economic lifeline for Cuba. There would be significant economic disruption in Cuba if the flow of Venezuelan oil were curtailed. Since 2005, President Chávez has used so-called "oil diplomacy" to provide oil to other Caribbean Basin nations on preferential terms in a program known as PetroCaribe, prompting some concern that Venezuela is using these programs to increase its influence in the region. Under the program, Venezuela initially offered to supply oil to the region on preferential terms with 50% of the oil financed over 25 years at an annual interest rate of 1%. At a July 2008 PetroCaribe summit, President Chávez announced that up to 60% of the oil could be financed while oil prices remained over $100 a barrel, and this would rise to 70% financed if oil prices rise to over $150 a barrel. Most Caribbean nations are members of PetroCaribe, with the exception of Barbados and Trinidad and Tobago. In Central America, Nicaragua and Honduras joined PetroCaribe in 2007 and Guatemala joined in July 2008. Venezuela stopped exporting preferential oil to Honduras under PetroCaribe in 2009 after the ouster of Honduran President Zelaya, but the new Honduran government of President Porfirio Lobo rejoined the program in January 2012. PetroCaribe also has the goal of putting in place a regional supply, refining, and transportation and storage network, and establishing a development fund for those countries participating in the program. Favorable opinions of President Chávez in Latin America are weak. As reflected in the annual Latinobarómetro public opinion survey of Latin American countries, President Chávez has been one of the least favorite leaders in the Americas over the past several years. His rating improved in the 2011 survey, likely because of sympathy because of his illness, but he still ranked among the least favorite leaders in the region. In contrast, favorable ratings for President Barack Obama have remained high since he took office and have made him the most popular leader in the Americas. U.S. officials have expressed concerns over the past several years about Venezuela's lack of cooperation on antiterrorism efforts, President Chávez's sympathetic statements for Colombian terrorist groups (the FARC and ELN), and Venezuela's relations with Cuba and Iran. Since May 2006, the Secretary of State has made an annual determination that Venezuela has not been "cooperating fully with United States antiterrorism efforts" pursuant to Section 40A of the Arms Export Control Act (P.L. 90-629). As a result, the United States has imposed an arms embargo on Venezuela since 2006, which prohibits all U.S. commercial arms sales and retransfers to Venezuela. For several years, U.S. officials also expressed concern that Venezuelan citizenship, identity, and travel documents were easy to obtain, making the country a potentially attractive way-station for terrorists. In June 2011 congressional testimony, State Department officials again expressed concern about "Venezuela's relations with Iran, its support for the FARC, [and] its lackluster cooperation on counterterrorism." To date, the United States has imposed financial sanctions against seven current or former Venezuelan government and military officials for providing support to the FARC. As noted above, in September 2008, the Treasury Department froze the assets of two senior intelligence officials—General Hugo Carvajal and General Henry Rangel—and the former interior minister, Ramón Rodríguez Chacín, for allegedly helping the FARC with weapons and drug trafficking. General Rangel was appointed by President Chávez as defense minister in January 2012, an action that raised concern among U.S. policymakers. As noted above, Rangel stepped down in October 2012, and went on to win the governorship of the Venezuelan state of Trujillo in December 2012 elections while Rodríguez Chacín also was elected as governor of the state of Guárico in December. In September 2011, the Treasury Department imposed financial sanctions on four more Venezuelan officials for acting for or on behalf of the FARC, often in direct support of its narcotics and arms trafficking activities. (Also see " Counternarcotics Issues " above.) According to June 2011, State Department congressional testimony, "Colombian-Venezuelan cooperation on terrorism and security matters is clearly increasing and being systematized, yielding notable results." The State Department noted Venezuela's deportation of several FARC and ELN members to Colombia, including key operatives and high-profile political actors. It said that President Chávez has "called on the FARC to join a political reconciliation process and has claimed that any discussion between Venezuelan government officials and the FARC about establishing bases in Venezuela took place without his authorization." In October 2011 congressional testimony, a U.S. official maintained that there continues to be evidence that the FARC are sheltering in Venezuela, but not as close to the border as before. The State Department's Country Reports on Terrorism 2011 (issued in July 2012) maintained that Venezuela and Colombia continued the dialogue begun in 2010 on security and border issues, and noted that on several occasions during the year, President Chávez, in referring to the FARC and ELN terrorist groups, stated that his government would not permit the presence of illegal armed groups in Venezuelan territory. More recently, Colombian President Juan Manuel Santos and FARC leader Rodrigo Londoño (also known as Timochenko), announced in early September 2012 that official peace talks would begin with the FARC. The talks began in mid-October 2012 in Norway, and then resumed in Cuba in November 2012. Venezuela and Chile have been involved in supporting the talks. President Chávez maintained that he was willing to do "whatever needs to be done for Colombia's peace," and that the conflict needs a political and not a military solution. Over the past several years, there has been concern among policymakers about Iran's growing interest and activities in Latin America, particularly its relations with Venezuela under President Chávez, although there has been disagreement over the extent and significance of Iran's relations with the region. The January 2012 visit by Iranian President Mahmoud Ahmadinejad on a four-nation tour to Cuba, Ecuador, Nicaragua, and Venezuela increased concerns of some policymakers about Iran's efforts to deepen ties with Latin America. In legislative action, the 112 th Congress approved the Countering Iran in the Western Hemisphere Act of 2012 ( P.L. 112-220 , H.R. 3783 ) in 2012, which the President signed into law on December 28, 2012. The House had approved the bill, amended, by voice vote on September 19, 2012, and the Senate had approved the measure, amended, by voice vote on December 12, 2012. As enacted, the law requires the Secretary of State to conduct an assessment within 180 days of the "threats posed to the United States by Iran's growing presence and activity in the Western Hemisphere" and a strategy to address these threats. The bill also states that "it shall be the policy of the United States to use a comprehensive government-wide strategy to counter Iran's growing hostile presence and activity in the Western Hemisphere by working together with United States allies and partners in the region to mutually deter threats to United States interests by the Government of Iran, the Iranian Islamic Revolutionary Guards Corps (IRGC), the IRGC's Qods Force, and Hezbollah." Iran's ties to the region predate its recent increased attention. Venezuela's relations with Iran have been long-standing because they were both founding members of OPEC in 1960. Under the government of President Mohammed Khatami (1997-2005), Iran made efforts to increase its trade with Latin America, particularly Brazil, and there were also efforts to increase cooperation with Venezuela. Not until President Ahmadinejad's rule began in 2005, however, did Iran aggressively work to increase its diplomatic and economic linkages with Latin American countries. A major rationale for this increased focus on Latin America has been Iran's efforts to overcome its international isolation. The personal relationship between Ahmadinejad and Chávez also has driven the strengthening of bilateral ties. Venezuela and Iran reportedly have signed numerous accords over the past decade, including agreements on construction projects (including housing, agricultural and food plants, and corn processing plants), car and tractor factories, energy initiatives (including petrochemicals and oil exploration in the Orinoco region of Venezuela), and banking programs. During an April 2009 trip to Tehran, Chávez and Ahmadinejad inaugurated a new development bank for economic projects in both countries, with each country reportedly providing $100 million in initial capital. Weekly flights between the two countries began in 2007, but were curtailed in September 2010. The State Department had expressed concern about these flights, maintaining that they were only subject to cursory immigration and customs controls. An April 2010 unclassified Department of Defense report to Congress on Iran's military power (required by Section 1245 of the National Defense Authorization Act for FY2010, P.L. 111-84 ) maintained that Iran's Qods Force, which maintains operational capabilities around the world, has increased its presence in Latin America in recent years, particularly in Venezuela. Despite the report, the commander of the U.S. Southern Command, General Douglas Fraser, subsequently maintained that the focus of Iran in the region has been diplomatic and commercial, and that he has not seen an increase in Iran's military presence in the region. In November 2010 and again in May 2011, an online German publication, Die Welt , alleged that Venezuela and Iran had signed an agreement in October 2010 for a jointly operated missile base in Venezuela. The Department of State, however, maintains that there is no evidence to support such claims, and that that there is no reason to believe that the assertions are credible. Venezuela's foreign minister called the reports by the German newspaper "an extravagant lie." In December 2011, a documentary featured on the Spanish-language network Univisión alleged that Iranian and Venezuelan diplomats in Mexico tried to recruit Mexican students for plotting possible cyberattacks against the United States. There is no indication that U.S. officials have been able to corroborate the allegations in the documentary. Subsequently, a Venezuelan diplomat based in Mexico at the time, Livia Acosta, who was recorded participating in the discussion with the Mexican students, was declared persona non grata by the State Department on January 8, 2012, and asked to leave the United States from her position as Venezuelan Consul General in Miami. President Ahmadinejad began his fifth official visit to Latin America on January 8, 2012, first stopping in Venezuela. During the trip, Iran and Venezuela signed cooperation agreements in industry, science and technology, and politics. The agreements reportedly included training, studies, workshops, and professional exchanges in nanotechnology; the creation of bi-national groups on development needs and complementary productive activities; and technology transfer in areas of agriculture, food industry, mining, and construction. During the visit, President Chávez maintained that Venezuela was showing its solidarity with Iran since it is "one of the targets that Yankee imperialism has in its sights." Venezuela also has played a key role in the development of Iran's expanding relations with other countries in the region. This outreach has largely focused on leftist governments—Bolivia, Ecuador, and Nicaragua—that share the goal of reducing U.S. influence in the region. While Iran has promised significant assistance and investment to these countries, observers maintain that there is little evidence that such promises have been fulfilled. Iranian President Ahmadinejad also visited Cuba, Nicaragua, and Ecuador in January 2012. Although he signed a number of agreements during his tour, it is doubtful that this will lead to significant Iranian investment or financial support. Analysts point out that leaders' statements during these trips are largely propaganda, with the official Iranian press trumpeting relations with these countries in order to show that Iran is not isolated internationally and that it has good relations with countries geographically close to the United States. Some press accounts characterized Ahmadinejad's tour of the region as "lackluster" and a mere diplomatic show attempting to remind the world that Iran continues to have relations with countries in Latin America. Director of National Intelligence James Clapper testified before Congress in late January 2012 that while the U.S. intelligence community remains concerned about Iran's connection with Venezuela, Ahmadinejad's recent trip to Latin America "was not all that successful." The State Department's Country Reports on Terrorism 2011 (issued in July 2012) maintained that "Venezuela maintained its economic, financial, and diplomatic cooperation with Iran as well as limited military related agreements." In a July 2012 press interview, President Obama expressed general concern about "Iran engaging in destabilizing activity around the globe," but indicated that his "sense is that what Mr. Chávez has done over the past several years has not had a serious national security impact on us." This was reiterated by the head of the U.S. Southern Command, General Douglas Fraser, who maintained that he does not see Venezuela as a "national security threat," and that Iran's connection with Venezuela is primarily diplomatic and economic. The United States has imposed sanctions on Venezuelan companies because of their alleged support for Iran, and also has imposed sanctions on Venezuelan individuals because of their support for Hezbollah, the radical Lebanon-based Islamic Shiite group supported by Iran. To date, the United States has imposed sanctions on two companies in Venezuela because of connections to Iran's proliferation activities. In August 2008, the State Department imposed sanctions on the Venezuelan Military Industries Company (CAVIM) pursuant to the Iran, North Korea, and Syria Nonproliferation Act ( P.L. 109-353 ) for allegedly violating a ban on technology that could assist Iran in the development of weapons systems. The sanctions prohibited any U.S. government procurement or assistance to the company. While these sanctions expired in 2010, they were imposed once again on May 23, 2011, for a two-year period. In October 2008, the U.S. Treasury Department imposed sanctions on an Iranian-owned bank based in Caracas, the Banco Internacional de Desarollo , C.A., under Executive Order 13382 that allows the President to block the assets of proliferators of weapons of mass destruction and their supporters. The bank is linked to the Export Development Bank of Iran (EDBI), which the Treasury Department asserts has provided or attempted to provide services to Iran's Ministry of Defense and Armed Forces Logistics. In May 2011, the United States imposed sanctions on Venezuela's state oil company, Petróleos de Venezuela S.A. (PdVSA), pursuant to the Comprehensive Iran Sanctions, Accountability, and Disinvestment Act of 2010 ( P.L. 111-195 ) because the company provided $50 million worth of reformate, an additive used in gasoline, to Iran between December 2010 and March 2011. Specifically, the State Department imposed three sanctions on PdVSA to prohibit it from competing for U.S. government procurement contracts, securing financing from the Export-Import Bank, and obtaining U.S. export licenses. The sanctions specifically exclude PdVSA subsidiaries (Citgo) and do not prohibit the export of oil to the United States. Past Venezuelan comments about potential Iranian support for the development of nuclear energy in Venezuela raised concerns among U.S. officials and other observers. In September 2009, President Chávez announced during a visit to Iran that Venezuela was working on a preliminary plan for the construction of a "nuclear village" in Venezuela with Iranian assistance so that "the Venezuelan people can count in the future on this marvelous resource for peaceful purposes." The transfer of Iranian nuclear technology from Iran would be a violation of U.N. Security Council Resolutions—1737 (2006), 1747 (2007), and 1803 (2008)—that imposed restrictions on Iran's nuclear technology transfers. In September 2010, President Chávez maintained that his government was carrying out initial studies into starting a nuclear energy program. In October 2010, Russia agreed to help Venezuela build its first nuclear power plant, but in March 2011, in the aftermath of Japan's nuclear plant disaster, President Chávez said that he was freezing plans for a nuclear power program. In September 2009, comments by Venezuelan officials offered conflicting information about Iran's support for Venezuela's search for uranium deposits. Venezuelan Minister of Basic Industry and Mining Rodolfo Sanz said that Iran was assisting Venezuela in detecting uranium reserves in the west and southwest of Venezuela. Subsequently, however, Venezuela's Minister of Science, Technology, and Intermediary Industry Jesse Chacon denied that Iran was helping Venezuela seek uranium, while Venezuela's Minister of Energy Rafael Ramirez maintained that Venezuela has yet to develop a plan to explore or exploit its uranium deposits. Observers point out that Venezuela does not currently mine uranium. U.N. Security Council Resolution 1929 (June 9, 2010) bars Iranian investment in uranium mining projects abroad. Another reason for U.S. concerns about Iran's deepening relations with Latin America is its ties to Hezbollah, a State Department-designated Foreign Terrorist Organization. Hezbollah, along with Iran, is reported to have been linked to two bombings against Jewish targets in Argentina in the early 1990s: the 1992 bombing of the Israeli Embassy in Buenos Aires that killed 30 people and the 1994 bombing of the Argentine-Israeli Mutual Association (AMIA) in Buenos Aires that killed 85 people. The United States has imposed sanctions on individuals and companies in Latin America for providing support to Hezbollah. Specifically as it relates to Venezuela, in June 2008, the Treasury Department imposed sanctions on two Venezuelans—Ghazi Nasr al Din (a Venezuelan diplomat serving in Lebanon) and Fawzi Kan'an—for providing financial and other support to Hezbollah. U.S. citizens are prohibited from engaging in any transactions with the two Venezuelans, including any business with two travel agencies in Caracas owned by Kan'an. In June 2012, the Treasury Department imposed sanctions on three dual Lebanese-Venezuelan citizens and a company in Venezuela involved in an international drug trafficking network run by Lebanese citizen Ayman Joumaa that has links to Hezbollah. The State Department's Country Reports on Terrorism 2011 (issued in July 2012) maintained that "there were credible reports that Hizballah sympathizers and supporters engaged in fundraising and support activity in Venezuela." P.L. 112-220 ( H.R. 3783 ) . Countering Iran in the Western Hemisphere Act of 2012, signed into law December 28, 2012. Introduced January 18, 2012; referred to the House Committee on Foreign Affairs. Marked up by the Subcommittee on Terrorism, Nonproliferation, and Trade March 1, 2012. Marked up and ordered reported by the House Committee on Foreign Affairs March 7, 2012. House passed, as amended, September 19, 2012, by voice vote. Senate approved, amended, by voice vote December 12, 2012. House agreed to the Senate amendment December 18, 2012 by a vote of 386-6. As enacted, the measure requires the Secretary of State to conduct an assessment within 180 days of the "threats posed to the United States by Iran's growing presence and activity in the Western Hemisphere" and a strategy to address these threats. The required strategy may be submitted in classified form, but shall include an unclassified summary of policy recommendations to address the growing Iranian threat in the Western Hemisphere. The bill also states that "it shall be the policy of the United States to use a comprehensive government-wide strategy to counter Iran's growing hostile presence and activity in the Western Hemisphere by working together with United States allies and partners in the region to mutually deter threats to United States interests by the Government of Iran, the Iranian Islamic Revolutionary Guards Corps (IRGC), the IRGC's Qods Force, and Hezbollah." H.Res. 247 (Mack). Introduced May 4, 2011; referred to House Committee on Foreign Affairs. The resolution would have called on the Secretary of State to designate Venezuela as a state sponsor of terrorism and urged increased and sustained cooperation on counter-terrorism initiatives between the United States and allies in the region. H.R. 2542 (Mack). Introduced July 14, 2011; referred to the House Committee on Foreign Affairs; ordered reported (amended) by the House Subcommittee on the Western Hemisphere December 15, 2011. As introduced, the bill would have withheld 20% of U.S. assessed and voluntary contributions to the OAS for every Permanent Council meeting that took place in which Article 20 of the Inter-American Democratic Charter was not invoked with regard to Venezuela's violation of the Charter. (Note—Article 20 of the Charter may be invoked by the Secretary General or any OAS member "in the event of an unconstitutional alteration of the constitutional regime that seriously impairs the democratic order in a member state.") H.R. 2583 (Ros-Lehtinen). Foreign Relations Authorization Act, Fiscal Year 2012. Introduced July 19, 2011. Reported, amended, by the House Committee on Foreign Affairs September 23, 2011 ( H.Rept. 112-223 ). As reported, Section 931 of the bill would have provided that no funds authorized under the Act could be made available to the governments of Argentina, Venezuela, Nicaragua, Ecuador, or Bolivia. H.R. 5857 (Granger)/ S. 3241 (Leahy). FY2013 State Department, Foreign Operations, and Related Programs Appropriations Act, 2013. H.R. 5857 introduced and reported ( H.Rept. 112-494 ) May 25 by the House Committee on Appropriations. S. 3241 introduced and reported ( S.Rept. 112-172 ) by the Senate Committee on Appropriations May 24, 2012. The report to the House bill directs that $5 million in ESF be provided for democracy programs in Venezuela, the same amount appropriated in FY2012, and $2 million more than the Administration's request. In contrast, the report to the Senate bill recommends $3 million for democracy programs in Venezuela to be administered by the National Endowment for Democracy (NED) instead of USAID or the Department of State; this is the same amount requested by the Administration, but would be for NED. (Note: The 112 th Congress did not complete action on a full-year foreign operations appropriations, but it did approve a Continuing Appropriations Resolution, FY2013 ( P.L. 112-175 ), signed into law September 28, 2012, which funds regular foreign aid accounts at the same level as in FY2012, plus 0.612% through March 27, 2013, although specific country accounts are left to the discretion of responsible agencies. The 113 th Congress will need to address foreign aid appropriations for the balance of FY2013.) H.R. 6067 (Ros-Lehtinen). Western Hemisphere Security Cooperation Act of 2012. Introduced June 29, 2012; referred to the Committees on Foreign Affairs, Judiciary, Financial Services, and Oversight and Government Reform. Section 210 of the bill would have imposed restrictions on U.S. nuclear cooperation with any country assisting the nuclear program of Venezuela or Cuba or transferring advanced conventional weapons or missiles to Venezuela or Cuba. The bill also included a number of provisions designed to counter Iranian and Hezbollah activities in the Western Hemisphere as well as broader provisions promoting Western Hemisphere cooperation on terrorism Several initiatives were enacted, considered, or introduced in the 111 th Congress regarding Venezuela and proliferation, terrorism, and human rights concerns. P.L. 111-195 ( H.R. 2194 ) , Comprehensive Iran Sanctions, Accountability, and Disinvestment Act of 2010, signed into law July 1, 2010. The law amended the Iran Sanctions Act of 1996 to make gasoline sales to Iran subject to U.S. sanctions. The House approved the measure on December 15, 2009, while the Senate passed it on March 11, 2010. A conference report ( H.Rept. 111-512 ) was filed on June 23, 2010, which was approved by both houses on June 24, 2010. On June 4, 2010, the Senate Committee on Armed Services reported S. 3454 (Levin), the National Defense Authorization Act for FY2011 ( S.Rept. 111-201 ), with a provision in Section 1237 that would have required a report on Venezuela related to terrorism issues within 180 days of enactment. The report was to contain a description of any activities by the government of Venezuela to supply any terrorist organization with planning, training, logistics, and lethal material support; activities to provide direct or indirect support to any terrorist organization; activities to provide other types of assistance that could provide material support for the activities of any terrorist organization; activities or assistance to governments currently on the U.S. list of state sponsors of terrorism; and activities by the government of Venezuela in the Western Hemisphere that undermine the national interest of the United States. The report was to focus primarily, but not be limited to, Hamas, Hezbollah, the National Liberation Army (ELN, of Colombia), and the FARC. The House version of the defense authorization bill, H.R. 5136 , did not have a similar provision, and Senate action was not completed on S. 3454 . On July 22, 2009, the Senate approved S.Amdt. 1536 (Martinez) to the Senate version of the National Defense Authorization Act for FY2010, S. 1390 , that would have required the Director of National Intelligence to provide a report within180 days on issues relating to Venezuelan military and intelligence activities. The Senate subsequently approved S. 1390 on July 23, 2009, and then approved the language of S. 1390 as an amendment to H.R. 2647 , the House legislative vehicle for the defense authorization measure. The House bill did not include a similar Venezuela report requirement, and the October 7, 2009, conference report to the measure did not include the Senate provision ( H.Rept. 111-288 ). On June 10, 2009, the House approved its version of the Foreign Relations Authorization Act for FY2010 and FY2011, H.R. 2410 , with a provision in Section 1011 that would have required a report within 90 days after enactment of the act on Iran's and Hezbollah's actions in the Western Hemisphere. The provision cited the State Department's 2008 terrorism report noting passengers on the weekly flights connecting Tehran and Damascus with Caracas were reportedly subject to only cursory immigration and customs controls in Caracas. The provision also noted that Iran had sought to strengthen ties with several Western Hemisphere countries in order to undermine U.S. foreign policy. The Senate did not consider the measure. H.R. 375 (Ros-Lehtinen), introduced January 9, 2009, as the Western Hemisphere Counterterrorism and Nonproliferation Act of 2009, would, among its provisions, have placed restrictions on nuclear cooperation with countries assisting the nuclear programs of Venezuela or Cuba (Section 209). The bill would also have authorized the President to impose foreign aid and export controls on countries that the President determined was engaged in military cooperation or nonmarket-based trade with a state sponsor of terrorism, was carrying out policies that threaten U.S. national security interests, or was not fully cooperating with U.S. counterterrorism or nonproliferation efforts (Section 106). It would also have amended annual international drug control certification procedures to include progress in adhering to obligations under international counterterrorism agreements and the implementation of effective counterterrorism measures (Section 104). H.R. 2475 (Ros-Lehtinen), the Foreign Relations Authorization and Reform Act for FY2010 and FY2011 introduced on May 19, 2009, included a provision (Section 728) identical to that in H.R. 375 described above that would have placed restrictions on nuclear cooperation with countries assisting the nuclear programs of Venezuela or Cuba. Also related to proliferation concerns, H.R. 4436 (Ros-Lehtinen), introduced January 13, 2010, would have expressed the sense of Congress that any use by Iran of nuclear cooperation agreements with other countries as a means to proliferate weapons technology and expertise to countries such as Venezuela, either directly or by means of arrangements with Belarus or other countries, would not be in the interest of the United States. The bill also would have required an annual report from the Secretary of State (1) regarding a determination as to whether nuclear cooperation agreements and activities involving Iran, Belarus, or Venezuela were being used as means to proliferate nuclear arms technology and expertise and (2) on the sale or delivery of weapons or related technologies from Belarus to any country designated as a state sponsor of terrorism or not fully cooperation with U.S. antiterrorism efforts, including Venezuela. Before Venezuela's February 2009 constitutional referendum was held, H.Res. 161 (Mack) was introduced on February 11. The resolution would have expressed the sense of the House regarding the need for free, democratic, transparent, and fair elections in Venezuela without threats or intimidation. Also related to the state of democracy in Venezuela is a resolution introduced on March 1, 2010, S.Res. 428 (LeMieux), which would have expressed concerns about violations of civil liberties taking place in Venezuela. Before Venezuela's September 26, 2010, legislative elections, S.Res. 645 (Ensign) was introduced on September 24, 2010; it would have expressed the sense of the Senate supporting the right of the people of Venezuela to free and fair elections and to freedoms of speech and assembly and rejecting any effort by President Chávez to intimidate or punish Venezuelans who exercise these rights. Two introduced resolutions would have expressed concerns about anti-Semitism in Venezuela. H.Res. 174 (Hastings), introduced February 13, 2009, would have expressed concern about "the growing threat of anti-Semitism throughout South America, namely in Venezuela, Bolivia, and Argentina." H.Con.Res. 124 (Mack), introduced May 12, 2009, would have expressed the support of Congress for the Jewish community in Venezuela. Among its provisions, the resolution would have condemned anti-Semitic acts in Venezuela and urged the government of Venezuela to take verifiable steps to ensure the safety of the Jewish community in the country. The resolution also would have expressed grave concern regarding the increased collaboration between Iran, Hezbollah, and the Venezuelan government, and the ramifications of such collaboration on the Jewish community in Venezuela. H.Res. 872 (Mack), introduced October 27, 2009, would have condemned the Venezuelan government "for its state-sponsored support of international terrorist groups"; called on the Secretary of State to designate Venezuela as a state sponsor of terrorism; and urged increased and sustained cooperation on counterterrorism initiatives between the government of the United States and allies in Latin America. Appendix A. Links to U.S. Government Reports Background Note, Venezuela , State Department Date: April 6, 2012 Full Text : http://www.state.gov/r/pa/ei/bgn/35766.htm Congressional Budget Justificati on for Foreign Operations FY2013 , Annex: Regional Perspectives (pp. 849-850 of pdf ) , State Department Date: April 3, 2012 Full Text : http://www.state.gov/documents/organization/185015.pdf Country Reports on Human Rights Practices 2011 , Venezuela , State Department Date: May 24, 2012 Full Text: http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?dlid=186550#wrapper Country Reports on Terrorism 2011 (Western Hemisphere Overview) , State Department Date: July 31, 2012 Full Text : http://www.state.gov/j/ct/rls/crt/2011/195546.htm Doing Business in Venezuela: 2011 Country Commercial Guide for U.S. Companies , Commerce Department Date: 2011 Full Text : http://www.buyusainfo.net/docs/x_9727130.pdf International Religious Freedom Report for 2011 , Venezuela , State Department Date: July 30, 2012 Full Text: http://www.state.gov/j/drl/rls/irf/religiousfreedom/index.htm?dlid=193009#wrapper International Narcotics Control Strategy Report 2012 , Vol. I (Venezuela, pp . 465-470 of pdf ) , State Department Date: March 2012 Full Text: http://www.state.gov/documents/organization/184314.pdf International Narcotics Control Strategy Report 2012 , Vol. II (Venezu ela, pp. 190-191 of pdf ) , State Department Date: March 2012 Full Text: http://www.state.gov/documents/organization/184329.pdf National Trade Estimate Repor t on Foreign Trade Barriers 2012 ( Venezuela , pp. 393-400 of pdf), Office of the United States Trade Representative Date: March 2012 Full Text: http://www.ustr.gov/sites/default/files/NTE%20Final%20Printed_0.pdf Tr afficking in Persons Report 2012 (Venezuela, pp. 369-370 of pdf ) , State Department Date: June 19, 2012 Full Text: http://www.state.gov/documents/organization/192598.pdf Appendix B. Earlier Key Developments in 2009-2012 On September 14, 2012, President Obama issued the eighth annual determination (as part of the annual narcotics certification process) that Venezuela had "failed demonstrably" to meet its obligations under international counternarcotics measures. On September 4, 2012, Colombian President Juan Manuel Santos and Rodrigo Londoño (also known as Timochenko), the leader of the Revolutionary Armed Forces of Colombia (FARC), announced that official peace talks would begin in Norway in October 2012 and continue in Cuba. President Chávez praised the forthcoming talks. Along with Cuba and Norway, Venezuela and Chile are involved in supporting the talks. On August 25, 2012, an explosion at a Venezuelan oil refinery killed more than 40 people, and raised questions about whether the government has neglected maintenance and safety in its management of the state oil company, PdVSA. On July 31, 2012, the head of the U.S. Southern Command, General Douglas Fraser, maintained in a press interview that he did not view Venezuela as a "national security threat," and that Iran's connection with Venezuela is primarily diplomatic and economic. Fraser's comments followed a press interview with President Obama earlier in July in which the President expressed general concern about "Iran engaging in destabilizing activity around the globe," but indicated that his "sense is that what Mr. Chávez has done over the past several years has not had a serious national security impact on us." The President maintained that his main concern about Venezuela "is having the Venezuelan people have a voice in their affairs" and "having fair and free elections." On May 24, 2012, the State Department issued its 2011 human rights report. With respect to Venezuela, the report maintained that the "principal human rights abuses reported during the year included government actions to impede freedom of expression and criminalize dissent." (The full text of the Venezuela chapter is available at http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/index.htm?dlid=186550#wrapper .) On May 8, 2012, for the seventh consecutive year, the Department of State made a determination pursuant to Section 40A of the Arms Export Control Act that Venezuela has not been cooperating fully with the United States on antiterrorism efforts. On March 7, 2012, the State Department issued the 2012 International Narcotics Control Strategy Report , which stated, as in previous reports, that Venezuela was one of the preferred trafficking routes for the transit of cocaine out of South America. The State Department also maintained in the report that the United States remained prepared to deepen anti-drug cooperation with Venezuela beyond the currently limited case-by-case level of cooperation. On March 7, 2012, the House Committee on Foreign Affairs reported out a measure, H.R. 3783 , which would require the Administration to develop a "strategy to address Iran's growing hostile presence and activity in the Western Hemisphere." On February 28, 2012, President Chávez underwent surgery in Cuba to remove a pelvic lesion that turned out to be malignant. Chávez had two previous cancer surgeries and chemotherapy treatment in Cuba in 2011, but has not revealed the type of cancer he is battling. The president returned to Venezuela on March 16, but returned again to Cuba multiple times over the next three months for radiation treatment. In early July 2012, however, Chávez once again maintained that he was "cancer free," and ready to take on a tough reelection campaign. On February 12, 2012, Venezuela's opposition parties held a unified presidential primary under the banner of the Democratic Unity Roundtable (MUD). Henrique Capriles Radonski, governor of Miranda state, won the primary with 62% of the vote. On January 8, 2012, the Department of State declared as persona non grata the Venezuelan Consul General in Miami, Livia Acosta, and asked her to leave the United States. In December 2011, a documentary featured on the Spanish-language network Univisión had alleged that Iranian and Venezuelan diplomats in Mexico tried to recruit Mexican students for plotting possible cyberattacks against the United States. Acosta, a Venezuelan diplomat who had been based in Mexico, was recorded participating in the discussion with the Mexican students. On January 6, 2012, President Chávez appointed General Henry Rangel as defense minister. In September 2008, the Treasury Department imposed financial sanctions on Rangel for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with drug and weapons trafficking. On June 24, 2011, three House subcommittees (House Committee on Foreign Affairs, Subcommittee on the Western Hemisphere and Subcommittee on the Middle East and South Asia; House Committee on Oversight and Government Reform, Subcommittee on National Security, Homeland Defense and Foreign Operations) held a joint hearing on "Venezuela's Sanctionable Activities" featuring State Department and Treasury Department witnesses. On June 10, 2011, while visiting Cuba, President Hugo Chávez underwent emergency surgery for a "pelvic abscess." Rumors abounded about the president's health. On May 24, 2011, pursuant to the Comprehensive Iran Sanctions, Accountability, and Disinvestment Act of 2010 ( P.L. 111-195 ), the State Department imposed sanctions on Petróleos de Venezuela (PdVSA) for providing cargoes of reformate, an additive used in gasoline, to Iran between December 2010 and March 2011 valued at around $50 million. The State Department prohibited PdVSA from competing for U.S. government procurement contracts, securing financing from the Export-Import Bank, and obtaining U.S. export licenses. The sanctions specifically exclude PdVSA subsidiaries (like Citgo) and do not prohibit the export of oil to the United States. On May 11, 2011, for the sixth consecutive year, the Department of State made a determination pursuant to Section 40A of the Arms Export Control Act that Venezuela has not been cooperating fully with the United States on antiterrorism efforts. On May 9, 2011, Colombia extradited to Venezuela alleged Venezuelan trafficker and murderer Walid Makled Garcia. Makled is also wanted in the United States on drug trafficking charges, and several Members of Congress had wanted Colombia to extradite Makled to the United States. On April 8, 2011, the State Department issued its 2010 human rights report detailing numerous human rights problems in Venezuela. (See the full text of the report at http://www.state.gov/g/drl/rls/hrrpt/2010/wha/154523.htm .) On March 1, 2011, the State Department issued its 2011 International Narcotics Control Strategy Report , which maintained that Venezuela was one of the preferred trafficking routes for the transit of cocaine out of South America because of a porous border with Colombia, a weak judicial system, inconsistent international counternarcotics cooperation, and a generally permissive and corrupt environment. On February 22, 2011, more than 80 students ended a 23-day hunger strike after the government agreed to review cases of some 27 alleged political prisoners. On February 2, 2011, Judge María Lourdes Afiuni was released from prison and placed under house arrest. The judge has been held since December 2009 after she had ordered the release of a prominent businessman. Human rights groups called for the corruption charges against her to be dropped completely, and view her imprisonment as creating a climate of fear that undermines the rule of law. On December 20, 2010, the Venezuelan government revoked its agreement for the appointment of Larry Palmer, nominated to be U.S. Ambassador to Venezuela. The United States responded by revoking the diplomatic visa of Venezuelan Ambassador Bernardo Alvarez. On December 17, 2010, Venezuela's outgoing National Assembly approved an enabling law granting President Chávez far-reaching decree powers for 18 months. On November 16, 2010, Colombian President Juan Manuel Santos said that his government would extradite a Venezuelan businessman and alleged narcotics trafficker, Walid Makled, to Venezuela. While the United States also wanted Makled extradited to the United States on drug trafficking changes, the Administration maintained that it respected Colombia's extradition processes. On September 26, 2010, Venezuela held elections for its 165-member unicameral National Assembly, in which pro-Chávez supporters won 98 seats while opposition parties won 67 seats. Even though the ruling party won a majority of seats, the result was viewed as a significant defeat for President Chávez because it denied his government the three-fifths and two-thirds majorities needed for a variety of actions to ensure the enactment of the government's agenda. On September 15, 2010, President Obama issued the sixth annual determination that Venezuela had "failed demonstrably" to meet its obligations under international counternarcotics measures. The justification accompanying the determination maintained that Venezuela has not responded to U.S. government offers to work in a consistent, rigorous, and effective way towards greater cooperation on counternarcotics. On August 30, 2010, hunger striker Franklin Brito died. He had been protesting the seizure of a portion of his farm in 2004. On August 5, 2010, the State Department released its 2009 Country Reports on Terrorism , which maintained that Venezuela's cooperation with the United States on counterterrorism was reduced to an "absolute minimum" after the United States and Colombia signed a defense cooperation agreement in 2009. On July 22, 2010, Venezuela suspended diplomatic relations with Colombia after the government of outgoing Colombian President Álvaro Uribe asserted at the Organization of American States that Venezuela was harboring Colombian guerrillas. Less than three weeks later, on August 10, 2010, bilateral tensions eased when new Colombian President Juan Manuel Santos met with President Chávez and the two leaders agreed to reestablish diplomatic relations. On July 1, 2010, President Obama signed into law the Comprehensive Iran Sanctions, Accountability, and Disinvestment Act of 2010 ( P.L. 111-195 , H.R. 2194 ), which amended the Iran Sanctions Act of 1996 to make gasoline sales to Iran subject to U.S. sanctions. In September 2009, Venezuela and Iran signed an agreement for Venezuela to supply Iran with some gasoline in the case of U.N. or U.S. sanctions against Iran's gasoline imports. On June 16, 2010, the House Subcommittee on the Western Hemisphere held a hearing on "Press Freedom in the Americas" that focused in part on threats to freedom of expression in Venezuela. (A transcript of the hearing is available from the subcommittee's website at http://foreignaffairs.house.gov/111/56996.pdf .) On June 4, 2010, the Senate Committee on Armed Services reported S. 3454 (Levin), the National Defense Authorization Act for FY2011 ( S.Rept. 111-201 ), with a provision in Section 1237 that would have required a report on Venezuela related to terrorism issues within 180 days of enactment. The Senate did not complete action on the measure. On March 11, 2010, the State Department released its annual human report for 2009. The section on Venezuela maintained that "politicization of the judiciary and official harassment and intimidation of the political opposition and the media intensified during the year." (See the full text of the report at http://www.state.gov/g/drl/rls/hrrpt/2009/wha/136130.htm .) On March 1, 2010, the State Department released its 2010 International Narcotics Control Strategy Report (INCSR), in which it maintained that Venezuela continued to suffer from high levels of corruption, a weak judicial system, and inconsistent counternarcotics cooperation that have enabled a growing illicit drug transshipment industry. The State Department also asserted that the United States was prepared to deepen anti-drug cooperation beyond the minimal cooperation that now exists. On February 2, 2010, Director of National Intelligence Dennis Blair testified before the Senate Select Committee on Intelligence that President "Chávez continues to impose an authoritarian populist political model in Venezuela that undermines democratic institutions." Blair maintained that Chávez "and his allies are likely to oppose nearly every U.S. policy initiative in the region, including the expansion of free trade, counter drug and counterterrorism cooperation, military training, and security initiatives, and even U.S. assistance programs." Venezuela's Ambassador to the United States strongly criticized Blair's statement, maintaining the assessment was full of politically motivated and cynical accusations against Venezuela. On February 2, 2010, Venezuelan officials announced the deportation of suspected Colombian drug trafficker Salomon Camacho Mora to the United States. The officials also announced the deportation of two other drug traffickers to France and Colombia. On January 25, 2010, two students were killed during demonstrations between pro- and anti-government supporters. Venezuelan human rights groups called for the government to guarantee the right to peaceful protest. On January 24, 2010, the Venezuelan government took six cable channels off the air, including RCTV Internacional , which had broadcast programs critical of the government. The government's action prompted widespread domestic and international criticism, including by the Inter-American Commission on Human Rights. On January 8, 2010, President Chávez announced a devaluation of the bolivar fuerte and the creation of a two-tiered exchange rate system. The action will likely help shore up the government's fiscal situation, but could lead to a surge in inflation. On December 15, 2009, the House approved H.R. 2194 (Berman), the Iran Refined Petroleum Sanctions Act of 2009 on December 15, 2009, which would amend the Iran Sanctions Act of 1996 to make gasoline sales to Iran subject to U.S. sanctions. (The Senate subsequently approved the measure, amended, on March 11, 2010, and a conference report ( H.Rept. 111-512 ) was approved by both houses on June 24, 2010.) On December 10, 2009, a Venezuelan judge released prominent business leader Eligio Cedeño from prison. Cedeño had been held in pretrial detention in 2007, and some human rights activists considered him a political prisoner. After his release, Cedeño traveled to the United States and is awaiting an immigration hearing; Venezuela has asked for his extradition. The judge who released Cedeño, María Lourdes Afiuni, was arrested just hours after his release on allegations of corruption. U.N. human rights experts criticized the judge's arrest as undermining the rule of law. On October 27, 2009, the House Subcommittee on the Western Hemisphere held a hearing on "Iran in the Western Hemisphere" that focused extensively on Venezuela's deepening relations with Iran. On September 15, 2009, President Obama made a determination pursuant to the annual narcotics certification process that Venezuela had "failed demonstrably" during the last 12 months to adhere to international counternarcotics agreements. This marked the fifth consecutive annual designation of Venezuela in this category. At the same time, President Obama waived economic sanctions that would have cut U.S. funding for democracy programs in Venezuela. On July 27, 2009, the government of Sweden asked for an explanation from Venezuela of how the Revolutionary Armed Forces of Colombia (FARC) obtained Swedish-made anti-tank rocket launchers that had been sold to Venezuela in the 1980s. President Chávez asserted that the missiles were stolen in a robbery in 1995, and that Colombia made the claims to divert attention from the plan to open seven of its military bases to the United States. On July 22, 2009, the Senate approved an amendment to the Senate version of the National Defense Authorization Act for FY2010, S. 1390 / H.R. 2647 that would have required the Director of National Intelligence to provide a report within 180 days on issues relating to Venezuelan military and intelligence activities. The House version of the bill did not include a similar provision, and it was stripped from the conference report on the measure ( H.Rept. 111-288 filed October 7, 2009). On July 20, 2009, the U.S. Government Accountability Office issued a report on the status of drug trafficking through Venezuela and the status of U.S.-Venezuelan counternarcotics cooperation. The report concluded that the lack of Venezuelan counternarcotics cooperation is a significant impediment to the U.S. capacity to interdict drugs en route to the United States. According to the report, U.S. and Colombian officials assert that Venezuela has extended a lifeline to illegally armed Colombian groups by providing significant support and safe haven along the border. On June 25, 2009, the State Department announced that the United States and Venezuela agreed to return respective ambassadors. This led to U.S. Ambassador to Venezuela Patrick Duddy resuming his post in Caracas, and to the return of Venezuelan Ambassador Bernardo Alvarez to Washington. On February 15, 2009, Venezuelans voted in a national referendum to approve a constitutional amendment abolishing term limits for elected local, state, and national officials, including president. The amendment was approved with almost 55% voting for it and 45% voting against it. President Chávez proclaimed that the vote was a victory for the Bolivarian Revolution, and virtually promised that he would run for reelection in 2012. On January 30, 2009, an unidentified group of assailants vandalized a synagogue in Caracas. President Chávez and other Venezuelan officials strongly condemned the attack. Subsequently, on February 2, 2009, 16 Members of Congress spoke out against the attack in a letter to President Chávez. The Members called on Chávez "to end the bullying and harassment of the Jewish community" and "to extend the community the robust protection it deserves in light of the threats it faces."
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Under the rule of populist President Hugo Chávez, first elected in 1998, Venezuela has undergone enormous political changes, with a new constitution and unicameral legislature, and even a new name for the country, the Bolivarian Republic of Venezuela. Human rights organizations have expressed concerns about the deterioration of democratic institutions and threats to freedom of expression under the Chávez government. President Chávez won reelection to another six-year term on October 7, 2012, by a margin of 11%, capturing about 55% of the vote compared to 44% for opposition candidate Henrique Capriles. On December 11, 2012, however, Chávez faced a fourth difficult operation in Cuba for an undisclosed form of cancer that has raised questions about Venezuela's political future. Because of significant health complications, Vice President Nicolás Maduro announced on January 8, 2013, that President Chávez would not be sworn into office on January 10 as planned, but that he would be sworn into office at a later date, a decision supported by Venezuela's Supreme Court. Looking ahead, if President Chávez does not recover, the Constitution calls for a new election to be held within 30 days if the president dies or is incapacitated during the first four years of his term. U.S. Policy The United States traditionally has had close relations with Venezuela, a major supplier of foreign oil, but there has been friction in relations under the Chávez government. Over the years, U.S. officials have expressed concerns about human rights, Venezuela's military arms purchases, its relations with Iran, and its efforts to export its brand of populism to other Latin American countries. Declining cooperation on anti-drug and anti-terrorism efforts has been a major concern. The United States has imposed sanctions: on several Venezuelan government and military officials for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with drug and weapons trafficking; on three Venezuelan companies for providing support to Iran; and on several Venezuelan individuals for providing support to Hezbollah. Despite tensions in relations, the Obama Administration remains committed to seeking constructive engagement with Venezuela, focusing on such areas as anti-drug and counter-terrorism efforts. In the aftermath of President Chávez's reelection, the White House, while acknowledging differences with President Chávez, congratulated the Venezuelan people on the high level of participation and the relatively peaceful election process. Legislative Initiatives As in past years, there were concerns in the 112th Congress regarding the state of Venezuela's democracy and human rights situation and its deepening relations with Iran, and these concerns will likely continue in the 113th Congress. The 112th Congress approved H.R. 3783 (P.L. 112-220), which requires the Administration to conduct an assessment and present "a strategy to address Iran's growing hostile presence and activity in the Western Hemisphere." Other initiatives that were not approved include: H.R. 2542, which would have withheld some assistance to the Organization of American States unless that body took action to invoke the Inter-American Democratic Charter regarding the status of democracy in Venezuela; H.R. 2583, which included a provision prohibiting aid to the government of Venezuela; and H.Res. 247, which would have called on the Secretary of State to designate Venezuela as a state sponsor of terrorism. In action on FY2013 foreign aid appropriations, the report to the House Appropriations Committee bill, H.R. 5857 (H.Rept. 112-494, reported May 25, 2012), directs that $5 million in Economic Support Funds be provided for democracy programs in Venezuela, the same amount appropriated in FY2012, and $2 million more than requested by the Administration. In contrast, the report to the Senate Appropriations Committee bill, S. 3241 (S.Rept. 112-172, reported May 24, 2012), recommends $3 million for democracy programs in Venezuela to be administered by the National Endowment for Democracy. Ultimately, the 112th Congress did not complete action on a FY2013 full-year foreign operations appropriations measure, but it did approve a Continuing Appropriations Resolution, FY2013 (P.L. 112-175) in September 2012, which funds regular foreign aid accounts at the same level as in FY2012, plus 0.612% through March 27, 2013. Specific country accounts, however, are left to the discretion of responsible agencies. The 113th Congress will need to address foreign aid appropriations for the balance of FY2013. Note: This report provides background on political and economic changes in Venezuela, U.S. policy, and U.S. legislative action and initiatives from 2009-2012 covering the 111th and 112th Congress. It will not be updated.
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Under the McCarran-Ferguson Act of 1945, insurance regulation is generally left to the individual states. For several years prior to the recent financial crisis, some Members of Congress had introduced legislation to federalize insurance regulation along the lines of the regulation of the banking sector, although none of this legislation reached the committee markup stage. Various other pieces of legislation have also been introduced to reform insurance regulation in more narrow ways. The debate around federal involvement in insurance regulation had traditionally focused on the negative and positive aspects of the state-centered approach compared to increased federal government involvement. The recent financial crisis, particularly the involvement of insurance giant American International Group (AIG) and the smaller bond insurers, changed the tenor of the debate around insurance regulation. The crisis grew largely from sectors of the financial industry that had previously been perceived as presenting little systemic risk. Many see the crisis as resulting from failures or gaps in the financial regulatory structure, particularly a lack of oversight for the system as a whole and a lack of coordinated oversight for the largest actors in the system. This increased urgency in calls for overall regulatory changes, such as the implementation of increased systemic risk regulation and federal oversight of insurance, particularly of larger insurance firms. Generally good performance of insurers through the crisis, however, has also provided additional arguments for those seeking to retain the state-based insurance system. Although insurers in general appear to have weathered the financial crisis reasonably well, the insurance industry saw two significant failures, one general and one specific. The first failure involved financial guarantee or "monoline" bond insurers. Before the crisis, there were only about a dozen bond insurers in total, with four large insurers dominating the business. This type of insurance originated in the 1970s to cover municipal bonds, but the insurers expanded their businesses since the 1990s to include significant amounts of mortgage-backed securities. In late 2007 and early 2008, strains appeared due to exposure to mortgage-backed securities. Ultimately some smaller bond insurers failed and the larger insurers saw their previously triple-A credit ratings downgraded significantly. These downgrades rippled throughout the municipal bond markets, causing unexpected difficulties for both individual investors and municipalities who might have thought they were relatively insulated from problems stemming from rising mortgage defaults. The second failure in the insurance industry was that of a specific company, AIG. AIG had been a global giant of the industry, but it essentially failed in mid-September 2008. To avoid bankruptcy in September and October 2008, AIG was forced to seek more than $100 billion in assistance from, and give 79.9% of the equity in the company to, the Federal Reserve. Multiple restructurings of the assistance have followed, including up to $69.8 billion through the U.S. Treasury's Troubled Asset Relief Program (TARP). AIG is currently in the process of selling off parts of its business to pay back assistance that it has received from the government; how much value will be left in the 79.9% government stake in the company at the end of the process remains an open question. The near collapse of the bond insurers and AIG could be construed as regulatory failures. One of the responsibilities of an insurance regulator is to ensure that insurers remain solvent and are able to pay future claims. Because the states are the primary insurance regulators, some may go further and argue that these cases specifically demonstrate the need for increased federal involvement in insurance. The case of AIG, however, is complicated. AIG was primarily made up of state-chartered insurance subsidiaries, but the state insurance regulators did not oversee the entire company. At the holding company level, AIG was a federally regulated thrift holding company and thus overseen by the Office of Thrift Supervision (OTS). The immediate losses that caused AIG's failure came from both derivatives operations overseen by OTS and from securities lending operations that originated with securities from state-chartered insurance companies. OTS claimed that it had sufficient regulatory authority and competence to oversee a complicated holding company such as AIG. Others, particularly the Federal Reserve, disputed this claim and argued that a single body is needed to oversee systemic risk and large financial holding companies. The Dodd-Frank Act was passed in the House on June 30, 2010, by vote of 237-192, and in the Senate, on July 15, 2010, by a vote of 60-39. President Obama signed the legislation, now P.L. 111-203 , on July 21, 2010. Title V, Subtitle A of the Dodd-Frank Act creates a Federal Insurance Office (FIO) inside of the Department of the Treasury. A similar office was previously proposed in a 2008 Treasury "Blueprint for a Modernized Financial Regulatory Structure," in H.R. 5840 in the 110 th Congress, and in H.R. 2609 in the 111 th Congress. FIO is to monitor all aspects of the insurance industry and coordinate and develop policy relating to international agreements. It has the authority to preempt state laws and regulations when these conflict with international agreements. This preemption authority is somewhat limited. It can only apply when the state measure (1) results in less favorable treatment of a non-U.S. insurer compared with a U.S. insurer, and (2) is inconsistent with a written international agreement regarding prudential measures. Such an agreement must achieve a level of consumer protection that is "substantially equivalent" to the level afforded under state law. FIO preemption authority does not extend to state measures governing rates, premiums, underwriting, or sales practices, nor does it apply to state coverage requirements or state antitrust laws. FIO preemption decisions are also subject to de novo judicial review under the Administrative Procedures Act. The monitoring function of FIO includes information gathering from both public and private sources. This is backed by subpoena power if the director issues a written finding that the information being sought is necessary and that the office has coordinated with other state or federal regulators that may have the information. Title X of the Dodd-Frank Act creates a Bureau of Consumer Financial Protection within the Federal Reserve. This bureau enjoys significant budgetary independence, and the director is to be appointed by the President and confirmed by the Senate. Consumer protection issues relating to the business of insurance, however, do not fall under the oversight of the bureau, but would remain within the purview of the states. Consumer protection issues that relate to insurance products that are also considered securities continue to be addressed by the Securities and Exchange Commission (SEC). Although insurance products are generally under state regulation, there are some products, particularly variable annuities, that are considered securities products under federal law and jointly overseen by the SEC. In 2008, the SEC adopted new rules, generally known as "Rule 151A," that would have expanded SEC oversight to include some fixed indexed annuities that previously had solely been overseen by the states as insurance products. This rule provoked controversy, with Representative Gregory Meeks and Senator Benjamin Nelson introducing the Fixed Indexed Annuities and Insurance Products Classification Act of 2009 ( H.R. 2733 / S. 1389 ) to overturn Rule 151A. H.R. 4173 included no provisions addressing Rule 151A as it moved through consideration in the House, and neither did S. 3217 in the Senate. Senator Tom Harkin proposed S.Amdt. 3920 , which would have added the text of H.R. 2733 / S. 1389 to S. 3217 ; but the amendment was not considered on the floor of the Senate. The conference committee agreed to an amendment by Senator Harkin, contained in Section 989J of the act, that did not insert the previous language specifically nullifying Rule 151A, but is broadly aimed at returning indexed annuities solely to state oversight. The exemption from SEC oversight in Section 989J depends in part on either the states or the companies meeting certain consumer protection standards. Depending on future regulatory action by the SEC, this exemption language may require court action before the full impact of Section 989J is known. In addition to the language on annuities, Section 913 of the act may affect some insurance producers who also sell security products. This section authorizes the SEC to establish a fiduciary duty for broker-dealers who give personalized investment advice. SEC-registered investment advisers are already subject to a fiduciary duty, which requires them to act in their customers' best interests. Broker-dealer recommendations, on the other hand, must be suitable for customers; the act directs the SEC to harmonize the standards applicable to broker-dealers and investment advisers. This provision is of interest to the insurance industry because agents who sell securities products, such as mutual funds or variable annuities, have been required to register as broker-dealers, but not generally as investment advisers. If the SEC issues rules creating a fiduciary duty, such agents will have to meet the best-interests standard that applies to advisers. The Dodd-Frank Act provides for systemic risk provisions that affect the insurance industry primarily through oversight of firms deemed systemically significant and through specific financial resolution authority. Financial companies, including insurers, judged to be systemically significant by the Financial Stability Oversight Council are to be subject to Federal Reserve oversight and higher prudential standards. The council includes a presidential appointee who is to be familiar with insurance issues, a state insurance commissioner, and the director of the Federal Insurance Office with the latter two being non-voting members. Section 619 of the Dodd-Frank Act includes restrictions on proprietary trading by banking entities, a provision commonly known as the "Volcker Rule." Insurers that have banking subsidiaries or who are under a holding company structure with other banking subsidiaries would be subject to these restrictions, potentially affecting the investment strategies of these insurers. The language, however, includes an exemption for trading done "by a regulated insurance company directly engaged in the business of insurance for the general account of the company by any affiliate of such regulated insurance company, provided that such activities by any affiliate are solely for the general account of the regulated insurance company." The transactions must also comply with applicable law, regulation, or guidance; and there must be no determination by the regulators that a relevant law, regulation, or guidance is insufficient to protect the safety and soundness of the banking entity or the financial stability of the United States. A financial company could be subject to the act's special resolution regime based on a finding that its failure would cause systemic risk. Any insurance subsidiaries of such a financial company, however, would not be subject to this regime. Instead, the resolution of insurance companies would continue to be conducted in accordance with the applicable state insurance resolution system. With regard to funding for the resolution of systemically significant financial firms, there is no pre-funded resolution mechanism under the act. Instead, the Federal Deposit Insurance Corporation (FDIC) is to impose assessments on financial companies with more than $50 billion in assets, as well as other financial firms that are overseen by the Federal Reserve, to fund the resolution of a systemically significant firm in the event the assets of the failed firm are insufficient to do so. The FDIC is to impose such assessments on a risk-adjusted basis. When imposing such assessments on an insurance company, the FDIC is to take into account the insurers' contributions to the state insurance resolution regimes. Title V, Subtitle B of the Dodd-Frank Act is entitled the Nonadmitted and Reinsurance Reform Act of 2010 and includes essentially the same language as H.R. 2571 / S. 1361 . Similarly titled bills were introduced in the 109 th and 110 th Congresses and passed the House, but were not considered by the Senate. This language addresses a relatively narrow set of insurance regulatory issues pre-dating the financial crisis. In the area of nonadmitted (or "surplus lines") insurance, the act harmonizes, and in some cases reduces, regulation and taxation of this insurance by vesting the "home state" of the insured with the sole authority to regulate and collect the taxes on a surplus lines transaction. Those taxes that would be collected may be distributed according to a future interstate compact, but absent such a compact their distribution would be within the authority of the home state. It also preempts any state laws on surplus lines eligibility that conflict with the National Association of Insurance Commissioners (NAIC) model law and implements "streamlined" federal standards allowing a commercial purchaser to access surplus lines insurance. For reinsurance transactions, it vests the home state of the insurer purchasing the reinsurance with the authority over the transaction while vesting the home state of the reinsurer with the sole authority to regulate the solvency of the reinsurer.
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In the aftermath of the recent financial crisis, broad financial regulatory reform legislation was advanced by the Obama Administration and by various Members of Congress. Ultimately Congress passed, and the President signed, the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203). The Dodd-Frank Act largely responded to the financial crisis that peaked in September 2008, but other efforts at revising the state-based system of insurance regulation also pre-date this crisis. Members of Congress previously introduced both broad legislation to federalize insurance regulation along the lines of the regulation of the banking sector, as well as more narrowly tailored bills addressing specific perceived flaws in the state-based system. The financial crisis, particularly the role of insurance giant American International Group (AIG) and the smaller bond insurers, changed the tenor of the existing debate around insurance regulation, with increased emphasis on the systemic importance of some insurance companies. Although it could be argued that insurer involvement in the financial crisis suggested a need for full-scale federal regulation of insurance, the Dodd-Frank Act did not implement such a federal regulatory system for insurance. Title V of the Dodd-Frank Act addressed specifically insurance, with a subtitle creating a Federal Insurance Office (similar to language originally contained in H.R. 2609) and a subtitle streamlining the existing state regulation of surplus lines and reinsurance (similar to language originally contained in H.R. 2572/S. 1363). The Federal Insurance Office is to monitor all aspects of the insurance industry and coordinate and develop policy relating to international agreements. It also has limited authority to preempt state laws and regulations when these conflict with international agreements. The act harmonizes, and in some cases reduces, regulation and taxation of surplus lines insurance by vesting the "home state" of the insured with the sole authority to regulate and collect the taxes on a surplus lines transaction. For reinsurance transactions, the act vests the home state of the insurer purchasing the reinsurance with the authority over the transaction while vesting the home state of the reinsurer with the sole authority to regulate the solvency of the reinsurer. In addition to Title V's specific insurance provisions, various other parts of the act may affect insurers and the insurance industry, including provisions addressing systemic risk, consumer protection, investor protection, and securities regulation. This report explains how insurance markets were affected by the financial crisis and summarizes the provisions of the Dodd-Frank Act that pertain to insurance. It will not be updated.
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On June 22, 2010, the U.S. Department of Agriculture's (USDA's) Grain Inspection, Packers and Stockyards Administration (GIPSA) published a proposed rule on the implementation of regulations dealing with livestock marketing practices as mandated by Title XI (Livestock) of the Food, Conservation and Energy Act of 2008 (2008 farm bill; P.L. 110-246 ). The proposed rule amends the regulations (9 C.F.R. 201) under the Packers and Stockyards Act of 1921 (P&S Act, 7 U.S.C. §181 et seq . ) to describe and clarify conduct that violates the P&S Act. USDA received more than 61,000 public comments on the proposed rule, and it was the subject of considerable debate in Congress during 2010 and 2011. On November 3, 2011, after nearly a year of review, USDA notified stakeholders that a final rule and an interim final rule on livestock and poultry marketing practices had been sent to the Office of Management and Budget (OMB) for final review. USDA indicated that the final rule would contain provisions covering the suspension of delivery of birds, additional capital investment, breach of contract, and arbitration—four provisions addressed in Sections 11005 and 11006 of the 2008 farm bill. Also, USDA said the final rule would contain a section on swine and poultry contracts. Importantly, USDA also indicated that it would not go forward with proposed and controversial provisions that banned packer-to-packer sales and limited the relationship between packers and packer buyers. USDA also dropped the requirement that written records providing justification for pricing differentials be maintained. However, on November 18, 2011, the FY2012 Agriculture Appropriations Act ( P.L. 112-55 ) was enacted and included a general provision that limited USDA's ability to finalize a large portion of its proposed rule. Section 721 of the act placed specific conditions and prohibitions on which parts of the proposed rule USDA could finalize. It required that the combined annual cost to the economy from a final rule or an interim final rule must be less than $100 million. Section 721 also prohibited USDA from using any funds to implement eight specific provisions of the proposed rule, regardless of the annual cost to the economy of the final or interim final rule. Furthermore, Section 721 required that USDA publish any rules in the Federal Register by December 9, 2011, and that no funding be used to implement the final rule until after 60 days of being published. On December 9, 2011, USDA issued the final rule on livestock and poultry marketing practices. The rule went into effect on February 7, 2012. The final rule was a significant modification of the proposed rule. It included four provisions from the proposed rule, addressing suspension of the delivery of birds, additional capital investment, remedy of breach of contract, and arbitration. However, it did not include many of the most contentious provisions, either because of congressional prohibitions enacted in P.L. 112-55 or because USDA decided not to pursue some provisions at this time. For more information on USDA and congressional actions affecting the proposed rule, see " Congressional Limits in FY2012 Appropriations ," and " USDA's Final Rule ," below. The Grain Inspection, Packers and Stockyards Administration (GIPSA) is the USDA agency that promulgates regulations under the Packers and Stockyards Act of 1921 (P&S Act, 7 U.S.C. §181 et seq.; see box, "The Packers and Stockyards Act of 1921") to oversee livestock and poultry markets. GIPSA is responsible for monitoring, reviewing, and investigating livestock and poultry markets to promote fair competition; providing payment protection through bonding and packer trusts, and guarding against deceptive and fraudulent trade practices. Some farmers and ranchers and their advocate groups believe that as the meat and poultry industries have become increasingly concentrated over time, competition has eroded, and producers have little say in market transactions with large meat companies. In addition, some claim USDA has not used the P&S Act sufficiently to protect livestock and poultry producers, especially small producers, from perceived unfair trade practices of large meat companies. During 2010, in order to address ongoing concerns about competition in the livestock and poultry industries, USDA and the Department of Justice (DOJ) jointly held five workshops to discuss competition and regulatory issues in agriculture. The five workshops covered farming, poultry, dairy, livestock, and margins (the difference between the price producers receive and the price consumers pay). These workshops provided an opportunity for stakeholders from various sectors of the meat and poultry industries to air their concerns. USDA issued a proposed GIPSA rule on livestock and poultry marketing practices in mid-2010. Proponents and opponents espoused widely differing interpretations of it. According to USDA and supporters of the proposed rule, the regulations allowed for more effective and efficient enforcement of the P&S Act. According to USDA, the interaction between meat companies would be more transparent, as the proposed rule required meat packers and poultry processors to justify pricing differences and provide sample contracts to GIPSA. The proposed rule defined and gave examples of practices that GIPSA considered unfair that would violate the P&S Act. The proposed rule would bring fairness to marketing transactions, according to supporters. Opponents of the proposed rule claimed that there would be unintended consequences that would adversely affect normal livestock and poultry marketing practices. They argued that the proposed rule amounted to the government stepping in to manage the day-to-day working of markets, which would lead to inefficiencies, increased litigation, and the loss of gains that the industry has experienced over the years. The proposed rule was issued with a 60-day comment period. After considerable comment and feedback, the comment period was extended for an additional 90 days ending November 22, 2010. The proposed rule generated more than 61,000 public comments. Some Members of Congress expressed considerable interest in the GIPSA rule throughout the comment period, and during the 112 th Congress there has been considerable interest in overseeing USDA's implementation of the final rule. This report provides background on the genesis of the proposed and final rules and a summary of their provisions. The report discusses some of the major concerns about the proposed rule, and describes congressional interest and oversight. Advocates for stronger anticompetitive measures in the livestock industry contend that, because of the substantial market consolidation that has occurred over the past several decades, packers and poultry processors/integrators or live poultry dealers have more market power than individual producers when negotiating contracts and in the livestock market in general. Others argue that this consolidation occurred in previous decades and has stabilized in recent years, bringing with it efficiencies that benefit producers and consumers alike. Furthermore, barring collusion, others argue that it only takes two interested buyers to have sufficient competition for a market to work properly. Market concentration in the meat and poultry industries has increased over the last two decades, with a few firms now dominating each sector. The "four-firm concentration ratio" measures the four largest firms' share of the market and is commonly cited as a summary indicator of concentration and overall structural change in the industry. The historical evolution of industry concentration ratios for the slaughter of fed cattle (steers and heifers), hogs, and poultry is shown in Figure 1 below. From 1986 to 2008, the four-firm share of slaughter increased from 55% to 79% for cattle, 33% to 65% for hogs, and 34% to 57% for poultry. The concentration ratios appear to have stabilized in the mid-1990s for the cattle sector, around 2003 for the hog sector, and since about 2006 for the poultry sector. Recent estimates of the various marketing strategies employed by the three major livestock species are displayed in Table 1 . Some in the industry are concerned that the share of cash transactions is not sufficient to adequately determine cash prices, which is critical because the cash market is often used as input for contracts or other marketing arrangements. The cash market still comprises a relatively large share (estimated at 41% in 2008) of fed cattle sales. The hog sector's cash market share of sales has been declining over the past several decades and now stands at less than 10% of all sales. However, the hog cash market is still fairly robust and provides the basis for much of the formula and forward contract pricing. In the poultry sector, cash sales of broilers are essentially nonexistent, with production contracts accounting for nearly all transactions. Previously, producers initiated several closely watched lawsuits under the P&S Act challenging the contracting and marketing practices of large meat and poultry companies. These generally unsuccessful efforts added impetus to calls for legislative action to strengthen existing antitrust authorities, to impose more mandates on the executive branch to enforce these authorities, and to provide new contract protections for farmers and ranchers. In what many analysts considered to be a landmark legal case under the P&S Act— Pickett v. Tyson Fresh Meats, Inc. —a group of cattle feeders in 1996 sued Iowa Beef Packers (IBP), which was bought by Tyson in 2001, for violating the P&S Act. This was reportedly the first class action certified for producers against a packer in the P&S Act's long history. Following eight years of litigation, a jury in early 2004 agreed with producer arguments that the packer had used "captive supplies" to control the supply of cattle available on the market, thereby causing lower cattle prices. The jury set damages at more than $1.2 billion. However, the federal judge in the case set aside the verdict on the grounds that the jury had insufficient evidence to find that Tyson had no legitimate business reason for using captive supplies. The plaintiffs appealed, but a U.S. Court of Appeals in August 2005 upheld the lower judge's decision. The appeals court rejected the plaintiffs' argument that there was a violation of the P&S Act. "If a packer's course of business promotes efficiency and aids competition in the cattle market, the challenged practice cannot, by definition, adversely affect competition," the court declared. The plaintiffs and their supporters asked the U.S. Supreme Court to review the case, but the Court declined to do so in early 2006. In a more recent example, in January 2011, the U.S. Supreme Court declined to review the case, Terry v. Tyson Farms, Inc. , brought by a Tennessee poultry grower against Tyson Farms. Terry sued Tyson in federal court in 2008 claiming unfair practices under the P&S Act because Tyson would not allow him to view the weighing of his birds when they were delivered to the plant. Eventually Tyson canceled its contract with Terry. The federal court and the U.S. Court of Appeals, Sixth Circuit, had found that Tyson's action had not harmed competition, and Terry's P&S Act claims were dismissed. Over the past decade, some farmer-rancher coalitions have proposed to address perceived anticompetitive market behavior by large meat and poultry companies through legislation, specifically by adding a "livestock competition" title to the omnibus farm bill. Early in the debate on the 2002 farm bill ( P.L. 107-171 ) a coalition of farm groups proposed that Congress rework antitrust laws and change the P&S Act to reflect the consolidation in the meat industry. An agriculture competition title was included in an early version of the farm bill ( S. 1628 ) but was removed in the Senate Agriculture Committee markup. During subsequent floor action on the bill, the Senate approved some individual competition amendments that were enacted in the final 2002 farm bill. One gave producers the right to discuss their contracts with family members and advisors, and the other extended new P&S Act protections to swine producers with production contracts (Sections 10502 and 10503 of P.L. 107-171 ). In February 2007, ahead of deliberations on the 2008 farm bill in the 110 th Congress, Senator Harkin introduced the Competitive and Fair Agricultural Markets Act of 2007 ( S. 622 ) to clarify and strengthen the P&S Act and the Agricultural Fair Practices Act of 1967 (7 U.S.C. §2301 et seq.). S. 622 was intended to be the basis for a competition title in the new farm bill. A similar House bill ( H.R. 2135 ) was introduced in May 2007. Similar to proposals during the 2002 farm bill debate, S. 622 would have established an Office of Special Counsel for Competition within USDA to investigate and prosecute violations of the P&S Act and be a liaison with the Department of Justice and the Federal Trade Commission. The bill also would have set up production contract and enforcement provisions. Parts of S. 622 were incorporated into the Senate-passed version ( S. 2302 ) of the farm bill, which contained a new title on Livestock, Marketing, Regulatory, and Related Programs (Title X). The Senate version of the farm bill also contained a provision to ban packer ownership of cattle. Although the final version of the 2008 farm bill did not include a competition title or the ban on packer ownership of cattle, the enacted farm bill contained competition provisions that provided producers with contract and arbitration rights. Although congressional interest in livestock market competition issues did not result in a competition title, the most recently enacted omnibus farm bill in 2008 ( P.L. 110-246 ) included a livestock title (Title XI). Previous farm bills generally addressed livestock issues in miscellaneous titles. The livestock title of the 2008 farm bill included 17 sections that cover issues such as mandatory price reporting for livestock, country-of-origin labeling for meat, and catfish grading and inspection. Sections 11005 and 11006 of the farm bill specifically addressed the P&S Act. The first of these sections dealt with production contracts and the second section with promulgating regulations for the P&S Act. The proposed rule was issued by USDA to fulfill the 2008 farm bill requirements. Section 11005 of the 2008 farm bill amended the P&S Act to add Section 208, which provides poultry growers and swine producers the right to cancel contracts. The law now requires that growers and producers have at least three days from the date of contract execution to cancel. In addition, contracts have to clearly disclose the cancellation rights of producers, including the method and deadline for cancellation. The 2008 farm bill also requires that production contracts state whether poultry growers or swine producers would be required to make additional large capital investments during the life of the contract. Specifically, if the contract requires an additional investment, the farm bill requires that the first page of a contract include such a statement. The farm bill also added Section 209 to the P&S Act to include provisions about the choice of law and venue in a contract dispute. The forum for resolving disputes over a poultry, swine, or marketing contract would be located in the federal judicial district where the contract is performed. Also, the contract may specify which state law is to apply if there is a dispute over production or marketing contracts. Lastly, the farm bill added arbitration provisions in Section 210 of the P&S Act. The provisions state that if a livestock or poultry contract contains an arbitration clause for resolving disputes, then the grower or producer must have the option to decline arbitration. The enacted farm bill requires that contracts clearly disclose the right of a producer or grower to decline the arbitration provision. The law also provides that producers and growers could opt for arbitration even after declining the arbitration provision at the time of contract execution, if both sides agree in writing to take a dispute to an arbitrator. The Secretary of Agriculture was directed to promulgate regulations that would ensure producers and growers have a meaningful chance to participate in the arbitration process. Following the addition of new laws on production contracts, Section 11006 of the farm bill required the Secretary of Agriculture to promulgate regulations concerning violations of the P&S Act. The regulations were to be issued within two years of the enactment of the farm bill (i.e., by June 2010). The farm bill specifically directed the Secretary of Agriculture to establish criteria in four areas: first, criteria to determine if producers or growers are treated with undue or unreasonable preference or advantage; second, criteria to determine whether poultry dealers give enough notice to poultry growers before suspending the delivery of birds; third, criteria to determine if required additional capital investments during a poultry or swine contract were a violation of the P&S Act; and fourth, criteria to determine if poultry growers or swine producers are given enough time to remedy a breach of contract before contracts are terminated. On June 22, 2010, GIPSA published the requisite proposed rule (9 C.F.R. Part 201) in the Federal Register (75 Fed. Reg. 35338). The rule was initially opened for a 60-day comment period, to close on August 23, 2010; however, in response to substantial industry feedback and concerns expressed by some Members of Congress, GIPSA, on July 26, 2010, extended the comment period until November 22, 2010. The proposed rule generated more than 61,000 public comments. Many of the public submissions were "form letter" comments, but USDA still received approximately 30,000 unique comments. GIPSA reviewed and evaluated the public comments in preparation for publishing a final rule. Besides fulfilling the requirements of the farm bill, USDA also saw the proposed rule as an opportunity to address the increasing use of contracting in livestock and poultry production. USDA stated that, "The goal of this regulation is to level the playing field between packers, live poultry dealers, and swine contractors, and the nation's poultry growers and livestock producers." The proposed rule and GIPSA's discussion of the rule covered four broad areas: competitive injury, unfair or unjustly discriminatory or deceptive practices, undue or unreasonable preference or advantages, and arbitration. The proposed rule addressed the poultry grower and swine producer contract provisions in the 2008 farm bill and also included regulations that prohibit what USDA has deemed unfair market practices. The proposed rule introduced new requirements for contracts and market practices with the aim of creating a fairer, transparent market for livestock and poultry producers. The Appendix of this report includes a synopsis of the proposed rule and a discussion of USDA's supporting arguments and opponents' concerns. In the proposed rule, GIPSA established its definition of competitive injury or harm to competition. Section 202 of the P&S Act describes actions that are unlawful. The first actions are any unfair, unjustly discriminatory, or deceptive practices. The second involve undue or unreasonable preferences. The other unlawful actions under Section 202 include conduct where packers, swine contractors, or poultry dealers apportion supply, control prices, or create monopolies that restrain commerce (harm to competition), or aid and abet in these actions. Sections 201.2 and 201.3 of the proposed rule specifically addressed the first two unlawful acts of Section 202 of the P&S Act. When courts have heard P&S Act cases, the rulings usually have required that plaintiffs prove that the conduct of meat packers or poultry processors has harmed competition. Proponents of the proposed rule claimed that it is nearly impossible for an individual grower or producer to prove a broad charge of harm to competition. In Section 201.2 of the proposed rule, GIPSA defined competitive injury as any action that distorts competition in the marketplace. GIPSA defined likelihood of competitive injury as any reasonable basis that competitive injury will occur. This could be conduct by packers, contractors, or poultry dealers that raises costs for competitors or misuses market power to distort competition with rivals. In addition, the proposed rule extended the definition of likelihood of competitive injury to conduct by packers, contractors, and poultry dealers directed toward livestock producers and poultry growers. Conduct that depresses prices to producers and growers or prevents producers and growers from competing with other producers or growers can be a competitive injury or harm to competition. GIPSA also stated in Section 201.3 of the proposed rule that depending on the circumstance, conduct could be a violation of the P&S Act without a finding of harm or likely harm to competition. The second category of issues in the proposed rule covered unfair, unjust discriminatory and deceptive practices. In this area USDA described actions that it considers unfair and that would be violations of the P&S Act. USDA specifically noted that these actions do not require a finding of harm or likely harm to competition to be a P&S Act violation. In Section 201.210 of the proposed rule USDA provided eight examples of unfair practices by meat packers and poultry dealers: 1. actions that a reasonable person would consider unscrupulous or deceitful; 2. retaliatory actions, such as coercion or intimidation, in response to a lawful action by a producer or grower; 3. refusal to provide statistical data used to determine contract payments; 4. actions to limit producers' or growers' legal rights; 5. paying premiums or discounts without documenting a reason; 6. terminating a production contract based only on allegations of misconduct by a producer or grower; 7. practices that are fraudulent or likely to mislead a producer or grower; and 8. broadly, any act that causes or creates a likelihood of competitive injury. In Section 201.215, USDA proposed that live poultry dealers provide at least 90 days' notice that they are going to suspend the delivery of birds to poultry growers. This period would provide growers an opportunity to find other options for using their growing houses. Sections 201.216 and 201.217 of the proposed rule addressed capital investment requirements and the criteria that USDA would use to consider a required capital investment a violation of the P&S Act. Sample criteria included whether or not a poultry grower or swine producer has the discretion to decide against making the investment, whether or not they are coerced into making the investment, and whether or not other similar growers or producers are required to make additional capital investments. Also, it could be considered a violation of the P&S Act if a poultry or swine contractor plans to substantially reduce or shut slaughter or processing facilities within 12 months of requiring additional capital investments. But contractors could get a waiver from that regulation for catastrophic or natural disasters, or other emergencies. If additional capital investments were required, the grower or producer would have to be given a contract of sufficient length to allow them to recoup 80% of the cost of the investment. Section 201.218 of the proposed rule set criteria to determine if a contract grower or producer has been given sufficient opportunity to remedy a breach of contract. The proposed rule required that a written notice be given to the contract grower or producer and that the notification identify the breach, when it occurred, and how it can be remedied. Growers and producers would also have the chance to rebut a breach of contract claim. Contractors would also consider the welfare of the animals that growers or producers are responsible for when considering actions and timelines for remedying a breach of contract. Last, USDA proposed in Section 201.212(c) that packer-to-packer sales of livestock be banned. This would include affiliated companies and wholly-owned subsidiaries. A packer could receive a waiver for catastrophic or natural disasters. In the rule discussion, GIPSA noted that it did not consider these transactions as part of its definition of unfair practices, but as a "separate and distinct regulation" intended to prevent packers from manipulation. The third part of the proposed rule addressed undue or unreasonable preference or advantage, that is, when producers who produce the same or similar poultry or livestock product receive different treatment or payment from contractors. This includes proposed regulations for differential pricing, recordkeeping, and packer-dealer relationships. In general, the Secretary of Agriculture would use three criteria to determine if poultry growers or livestock producers had been treated with undue or unreasonable preference in violation of the P&S Act (§201.211): 1. whether contract terms were available to any producer or grower who could meet the terms of the contract; 2. whether premiums for product standards were offered to a producer or group of producers who could meet the standards; and 3. whether information about handling, processing, and the quality of livestock was made available to all producers if made available to one. Two sections of the proposed rule, Sections 201.94 and 201.214, addressed prices in poultry and livestock markets. Section 201.94 required that packers, swine contractors, and live poultry dealers keep written records to justify differential pricing. The justification would have to provide the cost-benefit basis for different prices. GIPSA noted in its rule discussion that participation in a branded product program could be justification for a packer paying premium prices to cattle producers. Section 201.214 prohibited discounting base pay by live poultry dealers who use the tournament system to pay poultry growers. In a tournament system a poultry grower's birds are ranked or compared with the performance of other growers. Then grower payments are adjusted up or down based on performance relative to the group. In Section 201.212(a), GIPSA proposed to prohibit livestock dealers from buying livestock for more than one packer. Livestock dealers buy and sell livestock for their own account or for another vendor or purchaser. A dealer who buys for a packer is often called a packer-buyer. Also, Section 201.212(b) required that a packer report to USDA if a packer-buyer relationship were established with a livestock dealer. In order to provide more information for growers and producers, GIPSA proposed in Section 201.213 that contractors be required to provide sample copies of unique contracts to GIPSA. The sample contracts would be made publicly available except for trade secrets, confidential business, and personal identity information. In Section 201.219 of the proposed rule, GIPSA set the criteria to be used to ensure that contract growers have a meaningful opportunity to participate in arbitration. The first part of the proposed arbitration regulation required that contracts clearly disclose the costs, the process, and the limits to legal rights and remedies associated with arbitration. It stated that the costs should be reasonable compared with typical arbitration processes and provide reasonable time limits and access to information discovery by growers and producers. The arbitration process should comply with the Federal Arbitration Act (9 U.S.C. §1 et seq.). The second part of Section 201.219 also required that contracts contain the following statement giving a grower or producer the right to decline arbitration: Right to Decline Arbitration. A poultry grower, livestock producer or swine production contract grower has the right to decline to be bound by the arbitration provision set forth in this agreement. A poultry grower, livestock producer or swine production contract grower shall indicate whether or not it desires to be bound by the arbitration provision by signing one of the following statements: I decline to be bound by the arbitration provisions set forth in this Agreement ________ I accept the arbitration provisions as set forth in this Agreement ________ Failure to choose an option by signing one of the above renders the contract void. A cross-reference of sections in the farm bill provisions and the relevant GIPSA proposed rule is provided in Table 2 . The Appendix of this report includes a side-by-side synopsis of the pro and con positions for each provision. On November 3, 2011, USDA submitted a final rule and an interim final rule on livestock and poultry marketing practices to the Office of Management and Budget (OMB) for review. USDA informed stakeholders that the proposed rule had been modified in its final form. USDA indicated that the final rule would contain provisions covering the suspension of the delivery of birds, additional capital investment, breach of contract, and arbitration. USDA also noted that the final rule would include a section on sample swine and poultry contracts. In addition, USDA planned to publish a separate interim final rule on the poultry tournament pricing system. However, on November 18, 2011, the Consolidated and Further Continuing Appropriations Act, 2012 ( P.L. 112-55 ) was signed into law and it curtailed USDA's ability to finalize its rule. Specifically, FY2012 funds could only be used to publish a final or interim final rule if the annual cost to the economy, which would include the livestock and poultry industries, is less than $100 million. USDA's notification on November 3, 2011, to stakeholders indicated that the final rule and its interim final rule would have an economic impact under $100 million. Opponents of the GIPSA rule believed the economic impact could reach into the billions of dollars and had strongly criticized USDA for not providing a comprehensive economic analysis of the proposed rule (see " Economic Impact of the Proposed Rule "). In February 2011 testimony, Secretary of Agriculture Tom Vilsack had assured Members of Congress that USDA was analyzing public comments and incorporating them into additional economic analysis of the rule. The FY2012 appropriations provision significantly restricted what USDA could put forward in its final rule. Section 721 prohibited USDA from using any funds to implement eight specific sections of the proposed rule, regardless of the annual cost to the economy of the final or interim final rule. Section 721 prohibited USDA from using funds to finalize definitions of the tournament system (§201.2(l)), competitive injury (§201.2(t)), and the likelihood of competitive injury (§201.2(u)). It also did not allow funding for USDA's proposed provision that recognized the possibly of a violation of the P&S Act without necessarily there being harm or likely harm to competition (§201.3(c)). The section prohibited USDA from using funds to issue criteria for determining unfair, unjust discriminatory and deceptive practices or devices (§201.210) and undue or unreasonable preferences or advantages (§201.211). Furthermore, USDA was prohibited from using funds for collecting sample swine and poultry contracts (§201.213) and finalizing regulations on the tournament system (§201.214). Section 721 further required that USDA publish any rules in the Federal Register by December 9, 2011, and stated that no funding could be used to implement the published rules until 60 days after publication. The prohibitions enacted in FY2012 were continued in the FY2013, FY2014, and FY2015 appropriations acts ( P.L. 113-6 , P.L. 113-76 , and P.L. 113-235 , Div. A). See " Congressional Interest and Oversight " for further information. On December 9, 2011, USDA published its final rule on livestock and poultry marketing practices. The rule went into effect on February 7, 2012. The final rule included four provisions from the proposed rule: suspension of the delivery of birds (§201.215), additional capital investment (§201.216), remedy of breach of contract (§201.217, §201.218 in proposed rule), and arbitration (§201.218, §201.219 in proposed rule). The final rule also included three definitions—principal part of performance (§201.2(m)), additional capital investment (§201.2(n)), and suspension of delivery of birds (§201.2(o))—and a section on the applicability of the rule (§201.3). See Table 3 for a comparison of the proposed rule and the final rule. Three of the final four provisions addressed three of the four parts of Section 11006 of the 2008 farm bill that required the Secretary of Agriculture to establish criteria that could be used to determine if there is a violation of the P&S Act. In the final rule, USDA made small adjustments to the proposed provisions based on public comments. USDA's final rule removed parts of the proposed rule that could be considered prescriptive, and focused on criteria. Section 11006(1), which addressed "undue or unreasonable preference or advantage," is not included in the final rule because it is one of the sections of the proposed rule (§201.211) prohibited by P.L. 112-55 . The fourth provision on arbitration addressed Section 11005 of the 2008 farm bill, which required the Secretary of Agriculture to promulgate regulations to carry out the arbitration amendment to the P&S Act and to establish criteria to determine that poultry growers and livestock producer are able to participate in the arbitration process. Suspension of the delivery of birds (§201.215) addressed Section 11006(2) of the 2008 farm bill, in which Congress required the Secretary of Agriculture to set criteria to determine if poultry growers are given reasonable notification of the suspension of the delivery of birds. Under the rule, USDA will examine whether or not poultry companies give poultry growers at least a 90-day notice that birds are not going to be delivered under their contract agreement. The notice should include the reason for not delivering birds, how long the suspension of delivery will last, and an estimate of when delivery will resume. Also, when considering whether or not a violation of the P&S Act has occurred, USDA may consider natural disasters or emergencies, such as bankruptcy. In its economic analysis of the provision, USDA estimated that the annual cost to the industry was $75,480 based on the administrative cost of providing written notices to poultry growers. The provision on additional capital investment (§201.216) addressed Section 11006(3) of the 2008 farm bill and establishes criteria that may be used to determine if contracts that require additional capital investment violate the P&S Act. The final rule included eight criteria which are similar to the proposed rule (see " Unfair Practices "), with small changes to account for public comments. The final rule moved the equipment part of the proposed rule on capital investments requirements and prohibitions (§201.217(c)) into Section 201.216. In the proposed rule, if new equipment investments were required, the poultry dealer or livestock contractor would have been required to provide adequate contract compensation incentives to the grower or producer. Under the final rule, if new equipment investment is required when previously approved equipment is functioning properly, compensation incentives are criteria to be considered in determining a violation of the P&S Act. The provision on remedy of a breach of contract (§201.217) addressed Section 11006(4) of the 2008 farm bill. The provision provided criteria that could be considered to determine if a poultry grower or livestock producer is given a reasonable time to remedy a breach of contract that could ultimately lead to the termination of a contract. The final rule provision was similar to the proposed provision (see " Unfair Practices ") in that the criteria to be considered included whether or not growers or producers are given written notice with a description of the breach, the date of the breach, the means to remedy the breach, and the date by which it should be remedied. The proposed provision that set a 14-day period for growers or producers to rebut a breach of contract claim was dropped because it was viewed as a requirement instead of a criterion. This final rule provision was originally Section 208.218 of the proposed rule. As in the proposed rule, the final rule on arbitration contained the provision that contracts include on the signature page a statement providing poultry growers and livestock producers the right to decline arbitration provisions in a contract (see " Arbitration "). The required statement was similar to the proposed rule clause, except that in the final rule, absence of a signature is considered to constitute declining the arbitration provision, instead of voiding the contract, as in the proposed rule. Also, in order to determine that growers and producers have a meaningful opportunity to participate in arbitration, USDA could consider if any costs and limits are disclosed to growers and producers and whether costs and time limits are reasonable. Also, USDA could consider whether or not growers and producers have a chance at reasonable discovery of information, if arbitration covers only issues relevant to the contract, and if arbitration findings follow applicable law and legal principles. One of the chief complaints by opponents of USDA's proposed rule was the lack of a rigorous economic impact analysis (see " Economic Impact of the Proposed Rule "). In studies conducted for the livestock and poultry industries, the economic impact of the proposed rule ran into the billions of dollars. In the final rule, USDA estimated the impact of the four provisions to fall in the range of $21.3 million to $72.1 million, based on costs for industry adjustment to the new rules, and legal and administrative costs. Most of the costs fall on the poultry sector. USDA noted that many of the high cost estimates associated with the proposed rule were due to potential litigation or administrative actions. Because proposed provisions that were considered most likely to lead to litigation or cause market disruptions were not included in the final rule, the estimated costs were much lower than industry estimates for the proposed rule. Reaction to the final rule was mixed. Some proponents of the proposed rule described the final rule as a "start" or as "modest steps," but also expressed disappointment that USDA was not able to finalize key provisions addressing anticompetitive issues in the livestock and poultry industries. For example, the National Farmers Union (NFU) said, "While the final rule is a good first step, it is certainly not a last step," and said the rule "will make the livestock market at least somewhat more transparent and fair." NFU noted that it was critical for USDA to implement the competitive injury provisions of the proposed rule. At the same time, proponents expressed disappointment that Congress prevented USDA from finalizing most of the proposed rule. Opponents of the proposed rule were generally satisfied with the final rule, but also were concerned about provisions that were not finalized and what might eventually happen with those provisions. Provisions that define competitive injury, and set criteria for determining unfair, unjustly discriminatory, and deceptive practices and undue or unreasonable preferences or advantages were considered some of the most contentious of the proposed rule, and opponents argued that these provisions would lead to increased litigation between packers and poultry dealers and producers and growers. Opponents remained concerned that USDA could re-evaluate and re-propose these provisions in the future. The debate on the GIPSA rule stretched from the middle of 2010 until the end of 2011, and some of the issues could arise in the context of the upcoming farm bill debate. The following section includes a description of several of the major concerns about the proposed rule, as well as the positions of those for and against the proposed rule. A description of each section of the proposed rule and arguments for and against them also is provided in the Appendix of this report. The box above includes a partial list of organizations that were actively involved in the debate over the proposed rule. Proponents of the proposed rule argued that the P&S Act had not lived up to its potential because rules had not been properly promulgated over the years and courts had incorrectly interpreted the act. The Organization for Competitive Markets (OCM), one of the leading proponents of the proposed rule, stated in its comments to GIPSA that "perhaps its most important worth is in addressing what we believe to be errant court rulings that there is a requirement to establish 'harm to competition' prior to considering harm to an individual." According to proponents, the proposed rule would bring fairness to contracts and reshape interactions between producers and large meat packers and processors, especially for poultry growers who rely almost entirely on contracts. The proposed rule, according to OCM, would not "reinvent" the P&S Act but "reinvigorate" it. OCM also contended that opponents had overblown the rule's potential impacts. Opponents of the proposed rule were concerned about how USDA proposed to establish criteria for violating the P&S Act, as well as a number of other provisions. Also, the proposed rule contained several provisions to address the perceived unequal balance of market power between packers or poultry dealers and individual producers or growers. Overall, opponents expected the rule to significantly alter how business is currently conducted, to the detriment—in their view—of producers, consumers, and industry participants. According to the critics, the proposed rule would have resulted in increased litigation if GIPSA's view that harm to competition is not necessary to determine a violation of the P&S Act prevailed. Opponents also were concerned that the proposed rule attempted to impose a "one-size-fits-all" rule on the marketing structure and processes of different livestock sectors. They pointed to a wide range of differences in structure and the nature of markets, with nearly all poultry produced under contract while a substantial portion of steer and heifer slaughter is traded on the cash market. The marketing of hogs falls in between poultry and cattle with respect to the four firm concentration and marketing methods (see Figure 1 and Table 1 ). Hence they argued that several rules that might appear reasonable for one sector might be counterproductive for another. An initial concern expressed by many opponents of the rule was whether GIPSA had exceeded the intent of Congress as expressed in Sections 11005 and 11006 of the 2008 farm bill, and to what extent GIPSA had authority to revise and amend existing regulations of the P&S Act. According to opponents, the proposed rule included provisions—such as banning packer-to-packer sales of livestock—that extended well beyond the requirements of the 2008 farm bill. In the proposed rule, GIPSA argued that its authority derives in large part from Section 407 of the P&S Act (7 U.S.C. 228), which provides that the Secretary "may make such rules, regulations, and orders as may be necessary to carry out the provision of the Act." GIPSA was supported in this conclusion by a group of 21 Senators who, in an August 13, 2010, letter to USDA Secretary Vilsack, argued that "GIPSA authority and responsibility to address the full scope of subject matter covered in the proposed rule is amply supported and justified by the letter and intent of the P&S Act, as amended, and by well-established principles of federal administrative law enunciated by the Supreme Court of the United States and other federal courts." In contrast, concerned industry groups and some Members of Congress charged that the proposed rule went beyond what was required in the farm bill. Furthermore, opponents said that it contradicted several congressional votes taken during the debate on farm bill Sections 11005 and 11006, and that the proposed rule appeared to contradict the decisions of several federal courts. One of the more contentious issues surrounding the proposed rule was GIPSA's view that harm to competition is not necessary to conclude that certain conduct violates the P&S Act. GIPSA argued in its discussion of the proposed rule that USDA has long believed that unfair or deceptive practices or unreasonable or discriminatory preferences (Sections 202 (a) and (b) of the P&S Act) can be a violation of the P&S Act without a finding of harm to competition. GIPSA contended that Congress intended the same. They said that unlike in Sections 202 (c)-(e), which specifically note conduct that harms competition or creates monopolies, Congress did not include "harm to competition" and "creates monopolies" conditions in parts (a) and (b), and would have done so if it believed that harm to competition was necessary for determining a violation. GIPSA noted that courts of appeal have disagreed with USDA's view on harm to competition and stated that the courts are inconsistent with the language of the P&S Act in rulings that require findings of harm to competition. GIPSA said the courts have failed to defer to USDA's interpretation of the regulations. This line of reasoning was supported by the August 13, 2010, letter from the group of 21 Senators to Secretary Vilsack, which stated: A cardinal principle is that the courts are to give deference to the interpretation of laws by the federal agencies that are charged with implementing and administering them. Specifically, for instance, GIPSA is to be accorded deference in its interpretation, spelled out in the proposed rule, that the P&S Act protects individual producers against "unfair, unjustly discriminatory, or deceptive practice[s] or devices[s]" without a necessity of showing such conduct has an impact on the broader market. In Sections 201.210 and 201.211 of the proposed rule, GIPSA proposed to establish criteria for determining conduct that violates the P&S Act. GIPSA contended that conduct that is unfair or deceptive, or discriminatory, may not harm the larger market or harm competition within that market, but producers or growers may be hurt financially by the packer or poultry processor actions, and GIPSA said this would violate the P&S Act. Proponents of the rule contended that it is too difficult to prove harm to competition because sufficient or compelling evidence is difficult to acquire. GIPSA cited numerous examples where individual producers have been harmed by packer or poultry processor behavior that did not necessarily involve harm to competition. For example, some chicken growers have stated that even though there are two poultry processors in their areas, it is understood that growers can only grow for one company and cannot switch. Small hog producers claim that packers offer lower prices for small lots of hogs, even if hogs are comparable to larger lots from large producers. In contrast, opponents of the regulations charged that federal courts have consistently ruled that a plaintiff must show such harm to win a case. In particular, the American Meat Institute (AMI) contends that "USDA is attempting to use the rulemaking process to outflank the courts. Our system of government, however, is designed such that if the law is going to be changed, it should be changed by Congress, not by bureaucratic fiat." AMI contended that if the requirement to prove harm to competition is waived, "in virtually every case brought, a trial lawyer representing a plaintiff in a P&S Act case will argue that there is no need for the plaintiff to show injury to competition." Many livestock groups and producers fear that this weaker standard of proof could undermine the use of alternative marketing arrangements (AMAs). They are concerned it could lead to a profusion of litigation such that the use of AMAs will be reduced or they will become so standardized that value-added improvements and other market innovations will be unrewarded and thus abandoned, leaving the industry less consumer-driven. In the long run, some believe the meat industry would become more concentrated if AMAs are undermined, as packers and poultry processors would seek more control over their slaughter supplies. Status: Provisions in the FY2012, FY2013, FY2014, and FY2015 appropriations acts prohibited USDA from finalizing the provisions on harm to competition and establishing criteria for determining unfair, unjustly discriminatory and deceptive practices or devices, and determining undue or unreasonable preferences or advantages. According to opponents of the proposed rule, Sections 201.212 and 201.214, which covered the packer and dealer relationship and tournament systems for poultry pricing, overstepped the intent of the farm bill, and would severely disrupt livestock and poultry markets. USDA and proponents of the proposed rule argued that these practices need to be limited because they allow packers and processors to manipulate prices. Currently, livestock dealers often buy livestock for multiple packers. Dealers, or packer-buyers, often go to feedlots or sale barns and, based on packer specifications, purchase livestock for packers. Section 201.212(a) and (b) of the proposed rule would have limited livestock dealers to working with a single packer. Likewise, packers could only enter an exclusive arrangement with a dealer who has been identified as the packer's buyer and has officially notified GIPSA. USDA argued that the regulation would open livestock markets to more buyers and prevent collusion between multiple packers using one dealer as an exclusive agent, which it says could lead to price manipulation. GIPSA noted that this would especially benefit the cow/bull slaughter market, where a single dealer often buys for multiple packers, by opening the market to more dealers. Rule opponents argued that restricting livestock dealers to a single packer could impose a burden on packers, especially small packers who lack the resources to send multiple dealers across the countryside to various auction houses, sale barns, or feedlots. Currently, small packers may share the costs of a single dealer operating in different market zones. Similarly, a single dealer may need to interact with multiple packers in order to obtain sufficient earnings. Opponents also argued that restricting dealers could reduce competition, especially in small markets. Some packers could choose to exit small markets because transaction costs would rise if they were required to use their own packer-buyer instead of being able to share transactions costs with multiple packers. Status: On November 3, 2011, when USDA submitted the final rule to OMB for review, USDA indicated that it would not finalize Section 201.212 of the proposed rule. Provisions in the FY2012, FY2013, FY2014, and FY2015 appropriations acts did not address the proposed provision on packer-buyer relationships. Section 201.212(c) would have banned packer-to-packer sales. USDA and proponents contended that price information is exchanged during packer-to-packer transactions, which creates a situation where packers may be able to manipulate prices to the detriment of producers. If the packer-to-packer sale price is not publicly reported, then the marketplace and producers are missing a crucial market signal. Opponents argued that a ban on packer-to-packer sales as proposed in the rule could cause market harm and speed up industry consolidation rather than slow it down. Critics of such a ban said that packer-to-packer sales are a key tool for smoothly meeting occasional disequilibrium in supply and demand at the plant level. Without such sales, opponents said, packers would further integrate into the livestock production sector to limit procurement risks stemming from a loss of this additional source of supply (i.e., purchases from other packers). Alternatively, they would have to sell feeding facilities (perhaps to other packers) that were not within a reasonable shipping distance to their own slaughter operations, raising animal welfare issues. Status: On November 3, 2011, when USDA submitted the final rule to OMB for review, USDA indicated that it would not finalize Section 201.212 of the proposed rule. Provisions in the FY2012, FY2013, FY2014, and FY2015 appropriations acts did not address the proposed provision on packer-to-packer sales. The tournament system is a ranking system used by poultry processors to pay their contract poultry growers. At the end of a seven-week growing period, the quality of each grower's flock of birds is ranked against a pool (settlement group) of other grower flocks. Depending on growing performance, a discount or a premium may be applied to the base contract pay for each grower. Section 201.214 of the proposed rule would have required live poultry dealers that use a tournament system to pay the same base pay to growers who raise the same type and kind of poultry. They would have been required to rank growers in settlement groups with other growers with like poultry growing facilities. Proponents of the proposed rule, specifically some poultry producers, contended that the tournament system is "designed to appear like a method to allow growers to compete fairly for pay based on performance. However, because the inputs that determine a producer's performance are supplied by the poultry company itself, the ranking system has become a back-door, anticompetitive mechanism for poultry companies to shift risks to growers and to discourage dissension." Proponents argued that because poultry processors provide inputs, such as chicks and feed, the contract growers have little control over the performance of their flocks. Opponents of the proposed tournament provisions, primarily processors, argued that the best contract growers would be penalized. Since the proposed rule prohibits discounts to base pay, poultry processors could reduce base pay below current levels to protect from paying poor performers more than if discounts were allowed. Premiums on base pay to the best growers might not match current levels. They argued that the current system already reflects the fundamentals of a free market that rewards efficiency. Also, opponents believed that under the proposed rule's fairness provisions, differential pricing would invite increased litigation, further depressing the incentive to provide premium pricing to the best growers. USDA indicated on November 3, 2011, that it intended to publish for comment an interim final rule on the poultry tournament pricing system. The proposed rule required that poultry dealers using the tournament payment system to compensate growers must pay the same base pay to growers who raise "the same type and kind" of poultry, and growers must be ranked by "like house types." The interim final rule clarified wording in the proposed rule by defining "the same type and kind" to mean poultry that is of "the same breed and shares the same target weight range." "Like house types" is defined as growing houses that use "comparable production technology." USDA estimated that the direct cost to the industry of the interim final rule would be $22.6 million. Status: The final rule issued on December 9, 2011, did not contain a provision on tournament systems. Provisions in the FY2012, FY2013, FY2014, and FY2015 appropriations acts prohibited USDA from spending funds to implement provisions on the tournament system. In Section 201.94, the proposed rule would have required a packer, swine contractor, or live poultry dealer to maintain written records that provide legitimate reasons for differential pricing or any deviation from standard price or contract terms offered to poultry growers, swine production contract growers, or livestock producers. According to USDA, producers who appear to be able to deliver the same product but currently receive lower prices than other producers have no means to capture higher returns that other producers receive. The department contended that better documentation would facilitate enforcement of the P&S Act, particularly regarding certain types of differential pricing or contract terms deemed to be unfair. Opponents claimed that this recordkeeping rule was too vague about what documents and justifications would be suitable to maintain compliance. Combined with the belief that the proposed rule would lead to more litigation because a lower standard than harm to competition would be applied, opponents believed that buyers might no longer want to pursue alternative marketing arrangements (AMAs) that pay premiums for delivering livestock or poultry with particular traits. Opponents asserted that buyers use these and other contracting arrangements to ensure a steady supply of animals (as well as other agricultural commodities) to keep high-capacity plants operating efficiently; such arrangements also allow for necessary price adjustments for quality, grade, or other market-prescribed factors. The proposals for change would hurt producers too, opponents added, because many of them use contracts or other marketing agreements with packers to limit their own exposure to price volatility and to obtain capital. According to rule opponents, the result could be the loss of economic incentives to produce a higher quality of meat and could hurt "value-based marketing." Opponents wanted to know if specific documents or records would be deemed acceptable proof for price differentials in all cases. To gain industry-wide acceptance, this could be clarified so that companies could avoid uncertainty or error. Criteria could include feed/pasture information, genetics, and medical history, for example. Also, livestock that command market price premiums typically have identifiable physical attributes that distinguish them from "average quality" livestock. Top livestock producers may already keep records that would be suitable for enforcement of the rule. However, rule critics, in their comments, cited several examples of market situations where price differentials might emerge (for example, due to timing or geographic market conditions) for essentially the same livestock product. To further illustrate, critics offered the example of a packer that needs an additional 1,000 head of cattle to run its plant at peak efficiency. In its first market price offer, it might be able to obtain only 500 head. As a result, it makes a second higher-priced offer to obtain the second 500 head, even though all of the cattle are of comparable quality. In responding to market conditions, the packer did not exert any undue market power in acquiring the 1,000 head. Yet it is not clear if this transaction would violate the law or what documentation would justify this type of price differential. Status: USDA decided not to finalize the proposed provision on recordkeeping. In the final rule, USDA noted that public comments indicated that the proposed recordkeeping provision could have unintended consequences in reducing the use of premium payments. Also, the proposed provision would require creating new records, which was not the intent of the proposed rule. Provisions in the FY2012, FY2013, FY2014, and FY2015 appropriations acts did not address the proposed rule on recordkeeping. Several provisions, Sections 201.215, 201.216, and 201.217 in particular, appeared to address poultry growers. The proposed regulations appeared to shift production risk from producers to poultry processors, in an attempt to alter the balance of power between processors and producers when negotiating and fulfilling contracts. For example, current business practices in the poultry industry sometimes require successive capital investment upgrades. USDA asserted that it needed authority to limit these practices because they could harm a producer's financial position. Also, the rule would have required a production contract to be of sufficient length to allow poultry or swine growers to recoup 80% of the costs related to the capital investment. Some questioned whether the federal government should guarantee a certain rate of return for a producer. Critics contended that an underperforming producer would have an unfair advantage over a more efficient producer. Also, the provisions guaranteed that poultry growers would receive a 90-day notice from a live poultry dealer before bird deliveries were suspended. Opponents argued that a 90-day period is excessive, since unforeseen events, other than the excepted catastrophic or natural disasters and other emergencies, could warrant a shorter notification period. An example would be market economic conditions that change rapidly. Status: Most of these provisions were in the final rule in some form. Provisions proposed as requirements were adjusted to make them criteria that could be considered by USDA to determine a violation of the P&S Act. The proposed provision allowing growers to recoup 80% of the costs related to a capital investment was dropped. Section 201.213, requiring public disclosure of contracts, received less criticism than some other parts of the proposed rule because increased market transparency is considered by most to be a desirable goal. The provision would have corresponded with the transparency requirements for contracts in other sectors (e.g., insurance markets). However, opponents were concerned that not all proprietary information would be concealed or removed from public view. The concern expressed by critics was how it would be determined when an alteration or adaptation to an existing contract is sufficient to render it a "unique" contract such that it must also be posted. If every adjustment to a standard contract were posted, critics argued, they would reveal proprietary marketing strategy and sacrifice market advantage to competitors. Status: Provisions in the FY2012, FY2013, FY2014, and FY2015 appropriations acts prohibited USDA from finalizing its provision on livestock and poultry contracts. One of the primary concerns of opponents of the proposed rule was that it lacked a rigorous economic impact analysis. The rule was declared by the Office of Management and Budget (OMB) to be "significant," meaning it would have an annual effect on the economy of more than $100 million. A rule declared significant requires that an agency explain the need for the regulation, assess potential costs and benefits, and undergo OMB review. The proposed rule was not determined to be "economically significant," which requires an even more thorough cost and benefit analysis that includes a quantified assessment of the effects and possible alternatives to the rule. Also, there was significant criticism over the cost-benefit analysis presented in the rule, which opponents said was incomplete and merited further discussion because it failed to account for potential market consequences under various scenarios. On October 1, 2010, 115 Members of Congress sent a letter to Secretary Vilsack stating that the proposed rule went beyond the mandate of the 2008 farm bill and would cause major changes in livestock and poultry marketing. The letter stated, "The analysis contained in the proposed rule fails to demonstrate the need for the rule, assess the impact of its implementation on the marketplace, or establish how the implementation of the rule would address the demonstrated need." The Members asked that USDA's Office of Chief Economist provide a thorough economic analysis. In response to this request, Secretary Vilsack said in a letter to now-House Agriculture Committee Chairman Lucas that, "beyond the cost-benefit analysis we have conducted for the proposed rule, we look forward to reviewing the public comments to inform the Department if all factors have been properly considered, if or how changes should be incorporated, and to aid more rigorous cost-benefit and related analyses pursuant to the rulemaking process." Media reports stated that in a December 13, 2010, conference call with stakeholders, Secretary Vilsack said that USDA would review the public comments and conduct a more thorough cost-benefit analysis for the final rule. R-CALF USA, one of the leading proponents of the proposed rule, endorsed USDA's move to conduct another cost-benefit analysis that R-CALF believed would show the proposed rule's tremendous benefit for rural America and allow USDA to properly implement and enforce the P&S Act. Opponents noted that the proposed rule would have to be deemed economically significant in order for a meaningful analysis to be conducted. Secretary Vilsack's comments that the rule would be redrafted after considering public comments raised the hope of rule opponents that the final rule would be more limited in scope. Since the proposed rule was deemed significant, it was reviewed by the OMB, and GIPSA was required to provide justification. In the proposed rule, GIPSA identified three categories of costs: (1) administrative costs, (2) costs of analysis, and (3) adjustment costs. Most of the costs estimates were not quantified in the proposed rule but were of a qualitative nature. For example, the cost of the record retention requirement to support differential pricing would depend on the current level of recordkeeping. The stated benefit was that prices would be determined by supply and demand and that there would be increased transparency in the price decision-making process. For other provisions of the proposed rule, such as requirements for livestock dealers and the ban on packer-to-packer sales, the costs were "adjustment costs" associated with halting prohibited marketing practices. According to GIPSA, the costs to packers would increase because packers would have to pay higher prices to producers. The identified benefits were the prevention of monopolistic practices and a more fair and competitive market. Beyond qualitative costs and benefits noted for provisions of the proposed rule, GIPSA quantified several costs as required under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) for Sections 201.94, 201.213, 201.215, and 201.218. GIPSA estimated the cost of keeping records and conducting analysis for differential pricing to be $372,300 per year for the industry. The cost of submitting sample contracts was estimated at $24,083 per year for the livestock and poultry industries, and changing notifications for the suspension of bird deliveries for live poultry dealers was $12,500 per year. The estimated cost was $6,000 for administering the remedy to breach of contract provision. In response to perceived weaknesses of GIPSA's analysis, the meat and poultry industries released three studies of the proposed rule during the comment period that analyzed its impact on the U.S. economy and the livestock and poultry sectors. The studies were prepared for the American Meat Institute, the National Meat Association, and the National Chicken Council. Each study was conducted using differing assumptions and methodologies and resulted in considerably larger impacts than indicated in GIPSA's analysis. The first impact analysis of the proposed rule that the meat industry released on October 21, 2010, was the Economic Impact of Grain Inspection, Packers and Stockyards Administration Proposed Rule , prepared for the American Meat Institute (AMI). The analysis concluded that the proposed rule would result in increased litigation that would cause meat producers to move away from the use of marketing agreements and return to cash or spot market purchasing. The study contended that this would increase inefficiencies and raise retail meat prices and reduce meat demand. It projected that this would result in a $14 billion decline in U.S. gross domestic product (GDP) and a loss of more than 104,000 jobs. On November 8, 2010, Informa Economics, Inc. released An Estimate of the Economic Impact of GIPSA's Proposed Rules . The study was prepared for the National Meat Association (NMA) in cooperation with the National Cattlemen's Beef Association (NCBA), the National Pork Producers Council (NPPC), and the National Turkey Federation (NTF). The study's researchers interviewed beef, pork, and poultry industry participants to determine expected responses to the proposed rule and expected costs and then used the information to determine impacts on the industries and the U.S. economy. The Informa study made one-time estimates of the direct costs to the industries—costs associated with compliance to the proposed rule—at $136 million ($39 million for beef, $69 million for pork, and $28 million for poultry). Ongoing direct annual costs were projected at $169 million ($62 million for beef, $74 million for pork, and $33 million for poultry). The estimated indirect costs—losses due to reductions in product quality and/or efficiencies—were substantially higher. The annual losses were estimated at more than $1.3 billion ($780 million for beef, $259 million for pork, and $302 million for poultry). The Informa study estimated the economy-wide impact to be a reduction of $1.56 billion in GDP and nearly 23,000 lost jobs. The Informa study noted that it would take two to three years for the decline in efficiency to result in the losses, and that the costs would lessen over the long term as the industries adjusted. The National Chicken Council released Proposed GIPSA Rules Relating to the Chicken Industry: Economic Impact on November 11, 2010. The report was prepared by FarmEcon LLC and focused only on the chicken industry. The study estimated that the proposed rule would cost the chicken industry more than $1 billion over five years, with costs increasing each year. Over the fiver-year period of 2011 to 2015, feed and housing costs would increase $794 million; costs associated with bird death loss from less efficient management and increased feed sampling and analysis costs would increase $225 million. In addition, the study projected a one-time administrative cost of $6 million for the industry during the first year. Furthermore, the FarmEcon study found that the proposed rule would lead to higher costs associated with increased litigation, which it said would cause the U.S. chicken industry to be less innovative. The 112 th Congress showed considerable interest in GIPSA's intent and implementation of the proposed rule. Immediately after the November 2010 election, Representative Frank Lucas, chairman of the House Committee on Agriculture, indicated that the proposed GIPSA rule could be of interest as part of the committee's oversight responsibilities during the first session of the 112 th Congress. Also, in a letter to Senator Debbie Stabenow, chairwoman of the Senate Agriculture Committee, and Senator Pat Roberts, ranking Member, Senator Mike Johanns stated that hearings on GIPSA's proposed rule should be one of several issues included in the Agriculture Committee's oversight responsibilities. Eventually, Congress expressed its concern about the GIPSA rule through the appropriations process. The 112 th Congress enacted an appropriations rider for FY2012 that placed restrictions on USDA's ability to finalize and implement parts of the proposed GIPSA rule. The 113 th Congress continued to enact the prohibitions in appropriations bills for FY2013 through FY2015, and included provisions to rescind parts of the finalized rule in FY2013 and FY2015. For the first time since FY2012, the appropriations bill for FY2016 did not contain a GIPSA rider. The GIPSA rule was part of the farm bill debate, as House-passed measures in the 2012 and 2013 farm bill versions would have permanently prevented USDA from finalizing and implementing the GIPSA rule or issuing similar rules in the future. Senate farm bill versions did not include GIPSA repeal provisions. In the end, the farm bill conference report for the Agriculture Act of 2014 (P.L. 113-79) did not include a GIPSA repeal provision. If the farm bill provisions had been successfully enacted, the appropriations provisions would not have to be renewed annually. On February 17, 2011, during separate oversight hearings on the farm economy conducted by the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry, Secretary Vilsack was asked about the proposed rule and when USDA's economic analysis would be completed and the proposed rule finalized. Without providing a time frame, he indicated that USDA was working on the economic analysis, using the numerous public comments, and would take the time necessary to complete a thorough analysis. The Secretary was also asked if USDA's economic analysis would be peer-reviewed and made available for a public comment period, but no commitment was given. In a May 18, 2011, letter to Secretary Vilsack, 147 Members of the House of Representatives followed up the hearing by requesting that USDA allow for public comment on any revisions to the proposed rule and on the new economic analysis. In addition to these initial hearings where questions and concerns about the proposed rule were raised, the proposed rule was questioned and discussed in several other hearings. Witnesses in three hearings on the state of the beef, pork, and poultry sectors conducted by the House Committee on Agriculture's Subcommittee on Livestock, Dairy, and Poultry raised concerns that the proposed rule would hamper or damage the way they conducted business. A hearing on the state of the livestock industry held by the Senate Committee on Agriculture Nutrition and Forestry also aired concerns about the proposed rule by Senators and industry representatives, while a witness from the National Farmers Union testified that farmers and ranchers needed the proposed rule to provide fairness in the marketplace. In addition, the GIPSA proposed rule was the subject of oversight hearings by the House Committee on Small Business, Subcommittee on Agriculture, Energy, and Trade, and the House Committee on Oversight and Government Reform. As in the earlier hearings, industry witnesses mostly expressed their concerns that the proposed rule would economically damage their operations. In the Small Business hearing, a witness from a Pennsylvania farm organization testified that the proposed rule would help protect poultry growers and hog producers from the loss of competition due to industry consolidation. In response to significant concerns by some Members of Congress, the FY2012 appropriations bill (H.R. 2112) that passed the House on June 16, 2011, contained Section 721, prohibiting USDA from using any appropriated funds "to write, prepare, develop, or publish a final rule or an interim final in furtherance of, or otherwise to implement" the proposed GIPSA rule. During debate on H.R. 2112, Representative Marcy Kaptur opposed Section 721 in floor comments but did not offer an amendment to remove it. Instead, she argued that the proposed rule benefitted farmers and ranchers and that GIPSA should be allowed to proceed with the rulemaking process. Representative Kaptur also entered statements from the American Farm Bureau and a group of 140 farm organizations that supported allowing USDA to move the proposed rule forward. The House Committee on Appropriations' report on H.R. 2112 expressed concern that GIPSA's proposed rule misinterpreted the intent of Congress concerning the regulation of livestock marketing practices and underestimated the cost of the proposed rule. The report also expressed concern that USDA might not have complied with the Administrative Procedures Act that governs rulemaking by publishing its "Farm Bill Regulations—Misconceptions and Explanations" document. In addition, by closing the comment period in November 2010 before holding the last of five workshops on competition held jointly with the Department of Justice in December 2010, the committee report stated that the Department might have limited the public's ability to comment on the proposed rule. The Senate version of H.R. 2112 that was passed on November 1, 2011 did not include a similar provision. However, the FY2012 conference report for H.R. 2112 included Section 721 with its conditions and prohibitions on USDA's authority to finalize and implement certain parts of the proposed rule. (Sections 201.2(l), 201.2(t), 201.2(u), 201.3(c), 201.210, 201.211, 201.213, and 201.214); see Table 3 ). On November 18, 2011, the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112-55) was enacted. Proponents of the proposed rule characterized the considerable restrictions as a "mortal blow" to the proposed rule, and the "death knell" of the P&S Act. In a November 16, 2011, letter to Members of the Senate, the National Farmers Union noted that Section 721 blocked USDA action that would have helped independent farmers and ranchers. On the other hand, opponents of the proposed rule believed many of their concerns were addressed through Section 721. In its statement on the Agriculture Appropriations Act, the American Meat Institute said, "We also commend lawmakers' action to prevent GIPSA from proceeding with the most disruptive and costly provisions contained in its 2010 proposed rule." The provisions that blocked USDA from implementing the majority of the GIPSA rule in FY2012 were continued in FY2013. Section 742 of the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ), which was enacted March 26, 2013, included language from the FY2012 Agriculture appropriations bill that restricted how USDA could finalize its proposed rule on livestock and poultry marketing practices. In addition, Section 742 included a provision that required the Secretary of Agriculture to rescind three provisions that USDA finalized in December 2011 (see "USDA's Final Rule"). The three provisions were the definition of the "suspension of delivery of birds" (§201.2(o)), the provision that made the rule applicable to live poultry (§201.3(a)), and the 90-day notification period required when a poultry company intends to suspend the delivery of birds to a grower (§201.215(a)). Under Section 742, USDA was required to rescind the three provisions within 60 days of the enactment of the bill. The provision to rescind parts of the GIPSA rule that had already been finalized first appeared in Section 719 of the House-reported FY2013 appropriations bill ( H.R . 5973 ). The only difference was that the House bill also would have rescinded the definition of "additional capital investment" (§201.2(n)). The Senate FY2013 appropriations bill ( S. 2375 ) did not contain a provision similar to Section 719. The rescinding provisions of Section 719 were not included in the FY2013 continuing resolution (CR; P.L. 112-175 ), which was enacted September 28, 2012, to provide appropriations through March 27, 2013. The extension of the appropriations and authorities from FY2012's P.L. 112-55 in the CR resulted in the majority of the GIPSA rule remaining blocked. In March 2013, the 113 th Congress began addressing appropriations for the remainder of FY2013. The House-passed appropriations bill, Department of Defense, Military Construction and Veterans Affairs, and Full-Year Continuing Appropriations Act, 2013 ( H.R. 933 ), did not include specific language regarding the GIPSA rule, but extended the prohibitions from FY2012 appropriations. However, Section 742 of the Senate-amended version of H.R. 933 , the Consolidated and Further Continuing Appropriations Act, 2013, included language to continue the prohibitions on finalizing and implementing parts of the GIPSA rule, and rescinded three of USDA's finalized provisions. Reportedly, Section 742 was included during negotiations between the House and Senate over Agriculture appropriations in December 2012. During the debate, proponents of the GIPSA rule sent a letter to the Senate Appropriations Committee objecting to the inclusion of Section 742 in the appropriations bill stating that it limited USDA's ability to "address anti-competitive and fraudulent practices in the livestock and poultry sectors." The American Farm Bureau Federation also weighed in with a letter to Senators that expressed opposition to Section 742. Senators Tester, Johnson (SD), Brown, and Leahy proposed an amendment ( S.Amdt. 75 to H.R. 933 ) that would have struck the GIPSA provisions from the Senate appropriations bill. However, the amendment did not receive a floor vote. Section 742 of the House-reported FY2014 Agriculture appropriations bill ( H.R. 2410 ) included the same prohibition from the FY2012 and FY2013 appropriations acts that prevent USDA from using appropriated funds to finalize or implement certain provisions of the GIPSA rule. However, the section did not rescind the three finalized provisions as in P.L. 113-6 . The Senate-reported FY2014 Agriculture appropriations bill ( S. 1244 ) did not include a similar provision. The continuing resolution ( P.L. 113-46 ) that ended the government shutdown and provided funding through January 15, 2014, carried forward the FY2013 authority for the GIPSA prohibitions. The Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) was enacted on January 17, 2014. Section 744 of P.L. 113-76 continued to prohibit USDA from finalizing and implementing certain parts of the GIPSA rule, but did not include language rescinding the three provisions that were in the FY2013 act. For FY2015, continuing resolution ( P.L. 113-164 ) initially extended GIPSA funding prohibitions through December 11, 2014. Subsequently, Section 731 of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 , Division A) continued to prohibit GIPSA from finalizing and implementing GIPSA rule provisions for the remainder of the fiscal year. In addition, Section 731 included language to rescind the three finalized provisions that were included in the FY2013 appropriations act (see " FY2013 Appropriations "), but not the FY2014 act. On February 5, 2015, USDA issued a final rule that permanently removed the three rescinded provisions from regulations. The three were (1) the definition of the "suspension of delivery of birds" (§201.2(o)), (2) the provision that made the rule applicable to live poultry (§201.3(a)), and (3) the 90-day notification period required when a poultry company intends to suspend the delivery of birds to a grower (§201.215(a)). The enacted Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) does not include a GIPSA rider prohibiting USDA from finalizing and implementing rules on livestock and poultry marketing. Neither the House-reported agricultural appropriations bill ( H.R. 3049 ) nor the Senate-reported bill ( S. 1800 ) included GIPSA riders. As stated above, any effort to prohibit implementation of the GIPSA rule in the context of the appropriations bill expires at the end of the fiscal year. Critics of the GIPSA rule sought a permanent solution through repealing and prohibiting GIPSA provisions in farm bill legislation. Both the 2013 House farm bills, H.R. 1947 and H.R. 2642 , contained provisions that would have permanently prevented USDA from implementing the GIPSA rule or issuing similar rules in the future. The Senate-passed 2013 farm bill ( S. 954 ) did not contain provisions similar to the House versions. In the end, the farm bill conference report for the Agriculture Act of 2014 ( P.L. 113-79 ) did not include the GIPSA repeal provision. On May 15, 2013, during the House Agriculture Committee markup of the 2013 farm bill ( H.R. 1947 ), Representatives Conaway and Costa offered an amendment to repeal Section 11006 of the 2008 farm bill, and permanently stop USDA from finalizing or implementing eight sections of the GIPSA rule that were included in appropriations bills (Sections 201.2(l), 201.2(t), 201.2(u), 201.3(c), 201.210, 201.211, 201.213, and 201.214; see Table 3 ). In addition, the amendment repealed the existing regulation that defined additional capital investment (§201.2(n)), and prohibited USDA from enforcing the three existing regulations that were rescinded in the FY2013 appropriations bill ( P.L. 113-6 ). These were the definition of suspension of delivery of birds (§201.2(o)), the applicability to live poultry (§201.3(a)), and the 90-day notification for suspension of the delivery of birds (§201.215(a)). The amendment also permanently prohibited USDA from issuing regulations or adopting provisions similar to those in the amendment. The House Agriculture Committee adopted the Conaway-Costa amendment on voice vote and it became Section 12102 of H.R. 1947 . After H.R. 1947 failed on the floor of the House on June 20, 2013, the GIPSA amendment was included as Section 11102 of H.R. 2642 , which was passed by the House on July 11, 2013. On September 28, 2013, the House passed H.Res. 361 , which inserted the House-passed Nutrition Reform and Work Opportunity Act of 2013 into H.R. 2642 as the Nutrition title (Title IV), making the GIPSA provision Section 12102 of the amended House farm bill. The House-reported 2012 farm bill ( H.R. 6083 ) also contained a GIPSA provision. The Senate-passed 2012 farm bill ( S. 3240 ) did not include a GIPSA provision. Proponents of the GIPSA rule provisions oppose Section 11102 of H.R. 2642 . In a letter sent prior to the markup of H.R. 1947 to Chairman Lucas and Ranking Member Peterson, the National Farmers Union noted that the provision would "undercut the enforcement of farmer protections" that GIPSA provides under the P&S Act. Stakeholders that oppose the GIPSA rule support the inclusion of the provision. The Livestock Marketing Association (LMA), an association that represents livestock marketing businesses, has expressed concern that the language in Section 11102(c)(3) prohibiting USDA from issuing or adopting policies "similar to" the GIPSA provisions could tie USDA's hands in future rulemaking. LMA notes that the P&S Act could require future updates that are widely supported by industry, but if any future measure were deemed "similar to" provisions from the 2010 GIPSA rule, USDA could be prevented from addressing it. LMA recommends that the "similar to" language could be dropped without undermining the intent of the section.
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The 2008 farm bill (P.L. 110-246) included new provisions that amended the Packers and Stockyards Act (P&S Act) to give poultry and swine growers the right to cancel contracts, to require that poultry processors clearly disclose to growers additional required capital investments, to set the choice of law and venue in contract disputes, and to give poultry and swine growers the right to decline an arbitration clause that requires arbitration to resolve contract disputes. The farm bill required USDA to propose rules to implement these provisions. On June 22, 2010, the U.S. Department of Agriculture's (USDA's) Grain Inspection, Packers and Stockyards Administration (GIPSA) published a proposed rule to implement regulations (9 C.F.R. 201) on livestock and poultry marketing practices as mandated by the 2008 farm bill. The proposed rule, commonly referred to as the "GIPSA rule," added new regulations to clarify conduct that violates the P&S Act. The P&S Act regulations are used by USDA to ensure fair competition in livestock and poultry markets. In what some saw as a major change from current practice, GIPSA proposed that a violation of the P&S Act does not require a finding of "harm or likely harm to competition." The proposed rule set criteria for "unfair, discriminatory, and deceptive practices" and "undue or unreasonable preference or advantages" that violate the P&S Act. The proposed rule also included arbitration provisions to ensure that contract growers have a meaningful opportunity to participate in arbitration and the right to decline arbitration. According to proponents of the proposed rule implementing the farm bill provisions, the rule brought fairness to contracts and reshaped interactions between producers and large meat packers and poultry processors. Opponents argued that the proposed rule went far beyond the intent of Congress in the 2008 farm bill, and that the rule altered business practices to the detriment of producers, consumers, and the industries. USDA issued a final rule on December 9, 2011, which went into effect on February 7, 2012. The final rule, a significant modification of the proposed rule, included four provisions that address, respectively, suspension of the delivery of birds, additional capital investments, remedy of breach of contract, and arbitration. In November 2011, before USDA finalized the GIPSA rule, Congress passed the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112-55), which prohibited USDA from finalizing or implementing the most contentious parts of the rule. Congress continued to enact such appropriations riders in FY2013, FY2014, and FY2015. In addition, the FY2013 and FY2015 appropriations acts included language to rescind three provisions that USDA had finalized in 2011. These were the definition of the "suspension of delivery of birds," the 90-day notification period required when a poultry company intends to suspend the delivery of birds to a grower, and the provision that made the rule applicable to live poultry. In February 2015, USDA removed the three provisions from its regulations. For the first time in four years, the enacted Consolidated Appropriations Act, 2016 (P.L. 114-113) did not include a GIPSA rider prohibiting USDA from finalizing and implementing rules on livestock and poultry marketing. Also, the GIPSA rules were addressed during the debate over the 2014 farm bill. Section 12102 of the House-passed 2013 farm bill (H.R. 2642) permanently prohibited USDA from finalizing or implementing GIPSA provisions that have been temporarily halted in appropriations acts. The Senate-passed farm bill (S. 954) did not contain a similar provision. The House GIPSA provision was not included in the conference report for the Agricultural Act of 2014 (P.L. 113-79).
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Meeting highway capacity needs while protecting the environment is a challenging task formany states. In order to receive federal highway funding, several environmental requirements mustbe met. The Clean Air Act requires states with poor air quality to demonstrate that plans to expandhighway capacity would conform with their plans to control emissions, referred to as "transportationconformity." A state may be denied access to federal highway funds if conformity is notdemonstrated, or if air quality plans are determined to be inadequate. As required by the NationalEnvironmental Policy Act of 1969 (NEPA), the potential environmental impacts of all highway andtransit projects are also subject to review prior to the approval of federal highway funds for finalproject design, property acquisition, or construction. While air quality impacts are a prominentconsideration in the approval of many projects, other common environmental impacts include waterpollution from contaminated runoff and the loss of wetlands or other natural habitat that may occurfrom clearing the land for construction. Such impacts would need to be mitigated as a condition ofapproval for federal highway funds. Environmental permits or other documentation may also berequired before certain aspects of a project may proceed. To address potential conflicts between surface transportation needs and environmental quality, Congress has established numerous programs and authorities intended to help mitigate pollutionresulting from highway construction and travel. The most recent multi-year funding authorizationfor these activities was provided in the Transportation Equity Act for the 21st Century (TEA-21, P.L.105-178 ), which expired on September 30, 2003. This law authorized a total of $218 billion forfederal highway and transit programs from FY1998 through FY2003. It set aside approximately $9billion of this amount for air quality projects, authorized tax benefits for cleaner-burningalcohol-based fuels, and permitted states to exempt certain low-emission vehicles from HighOccupancy Vehicle (HOV) lane requirements. TEA-21 also made funding available for mitigatingwater pollution from highway runoff, and authorized funding for environmental research and thedevelopment of advanced vehicle technologies. The most controversial issues for the reauthorization of federal highway and transit programs have been the amount of funding to provide for surface transportation infrastructure needs and howto allocate this funding among the states. Demonstration of conformity with air quality requirementsand the performance of environmental reviews are pertinent to these overall funding issues, as theyplay a major role in the approval of federal highway funds for individual projects. Transportationstakeholders, including numerous state departments of transportation and transportation advocacyorganizations, argue that extending the time frame for conformity would provide more time tocontrol emissions and that streamlining the environmental review process would be more efficient,thereby speeding project delivery. On the other hand, some environmental organizations haveexpressed concern that such changes may compromise environmental protection. There also has been significant interest in the adequacy of funding for air quality projects under the Congestion Mitigation and Air Quality Improvement Program (CMAQ). States andenvironmental organizations advocate significantly increasing the funding for this program, in lightof emissions reductions that states may soon need to make in order to attain stricter federal air qualitystandards for ozone and fine particulates. Stakeholders have expressed differing levels of interestin other environmental issues regarding the adequacy of funding for the mitigation of water pollutionfrom highway runoff, research on how surface transportation impacts the environment, and thedevelopment of advanced-vehicle technologies. Whether to extend tax benefits for renewablealcohol-based fuels, and whether to expand the exemption for low-emission vehicles from HOV lanerequirements, are also issues. This report provides background information on activities intended to help mitigate pollution resulting from highway construction and travel, and analyzes key issues for Congress. This reportis a resource document for the reauthorization debate and will not be updated. (For a discussion ofreauthorization legislation, see CRS Report RL32454, Environmental Provisions in SurfaceTransportation Reauthorization Legislation: SAFETEA (S. 1072) and TEA-LU (H.R.3550) ; CRS Report RL32226 , Highway and Transit Program Reauthorization Legislationin the 2nd Session, 108th Congress ; CRS Report RL32032 , Streamlining Environmental Reviewsof Highway and Transit Projects: Analysis of SAFETEA and Recent Legislative Activities ; CRS Report RL32106 , Transportation Conformity Under the Clean Air Act: In Need of Reform? ; andCRS Issue Brief IB10128, Alternative Fuels and Advanced Technology Vehicles: Issues inCongress .) Slower growth in motor fuels excise tax revenues that support the Federal Highway Trust Fundis a significant consideration in determining how much funding is available for surface transportationinfrastructure and related environmental needs. During the previous authorization cycle, robustgasoline sales led to a substantial increase in trust fund revenues. Congress used the greateravailability of funds to significantly expand most highway and transit programs, including numerousenvironmental activities. However, the fiscal climate of the current authorization cycle is morerestrictive, due to a smaller balance in the trust fund as a result of slower growth in motor fuelsexcise tax revenues. The limitation on available funding has made it more challenging to balancehighway capacity needs with protecting the environment and other competing priorities. In addition to deciding how much funding is made available for environmental activities, the category of funding under which these activities would be authorized will be a critical factor indetermining whether their support is insured. TEA-21 established a new budget category ofdiscretionary spending guarantees that function as a "firewall" to ensure a minimum level of fundingfor the majority of highway and transit programs, including most environmental activities. Guaranteed funding is separated from the rest of the discretionary budget in a way that prevents theuse of Federal Highway Trust Fund revenues for any other purpose, and as such, is not subject toreduction in the annual appropriations process. (1) In addition to guaranteed funding, TEA-21 authorized traditional discretionary funding for certain programs, which is entirely subject to the annual appropriations process. In appropriationssubsequent to TEA-21, Congress did not fully support the authorized levels for some of thetraditional discretionary funding for environmental programs, such as those for clean fuel buses,environmental research, and advanced vehicle technologies. Consequently, an issue for thereauthorization of environmental programs is the extent to which funding for them should befirewalled to guarantee support for their implementation. Motor vehicles have become cleaner in operation with the gradual tightening of federalemission standards since 1965. (2) However, the risein the number of vehicle miles traveled has offsetsome of the reductions in air pollution achieved by more advanced emission controls. (3) As a result,motor vehicles continue to be major sources of air pollution, including ground-level ozone,commonly referred to as smog. (4) Emissions frommotor vehicles continue to contribute significantlyto poor air quality in numerous metropolitan areas, making it difficult for some states to comply withemissions limits in their State Implementation Plans (SIPs) to attain and maintain the NationalAmbient Air Quality Standards (NAAQS). (5) Howto meet public needs for greater highway capacitywhile controlling emissions is a major issue for states with areas that are in nonattainment with theNAAQS and areas that must maintain them, as the availability of federal highway funding in theseareas is dependent on the state demonstrating that its transportation plan conforms to the emissionsbudget for motor vehicles in its air quality plan. In order to reduce conflicts between highway capacity needs and air quality requirements, Congress has authorized the use of federal highway funds for various projects that would reducevehicular emissions. The majority of the air quality funding authorized in TEA-21 was allocated tothe CMAQ program. Federal transit funding has also been made available to local transit agenciesfor the purchase of clean fuel buses. Congress has also authorized tax benefits to encourage theproduction and sale of renewable alcohol-based fuels that reduce vehicular emissions and petroleumconsumption. In addition, states have had the flexibility to allow the single-occupant use of certainlow-emission vehicles in High Occupancy Vehicle (HOV) lanes, in order to encourage the purchaseof cleaner vehicles. Further background information on transportation conformity and specific airquality programs and authorities, and key issues for Congress, are discussed below. The Clean Air Act requires states and metropolitan planning organizations to demonstrate that their transportation plans conform to their air quality plans. The purpose of this requirement is toensure that the change in emission levels resulting from new transportation projects would notinterfere with the state's efforts to attain or maintain federal air quality standards. Many states haveexperienced greater challenges in demonstrating conformity as air quality requirements have becomemore stringent. Background. Section 176 of the Clean Air Act prohibits federal agencies from funding projects in nonattainment or maintenance areas, unless thoseprojects conform to a state's SIP. (6) Because newhighways generally lead to an increase in emissions,both the statute and regulations currently require that a metropolitan planning organization'sTransportation Improvement Program (TIP) demonstrate conformity no less frequently than everytwo years. Highway and transit projects cannot receive federal funds unless they are part of aconforming TIP. States also must demonstrate that their long-term transportation plans conform totheir air quality plans over a 20-year time frame. In addition to conformity requirements, Section179 of the Clean Air Act authorizes federal highway funds to be withheld from a state if an adequateSIP is not prepared or implemented properly. (7) (Foradditional discussion of conformityrequirements, refer to CRS Report RL32106 , Transportation Conformity Under the Clean Air Act:In Need of Reform? ) Key Policy Issues. There has been increasing support for allowing states more time to demonstrate conformity, due to the likelihood that theimpact of conformity requirements on states will grow in the next several years. Numerous factorshave made it more challenging for states to control emissions and demonstrate conformity, such as(1) the growth of emissions from sport utility vehicles (SUVs) and other light trucks whoseemissions are not regulated as strictly as passenger vehicles, (2) greater than expected increases invehicle miles traveled, (3) recent court decisions that tightened conformity rules, and (4) theimplementation of more stringent federal air quality standards for ozone and fine particulates,scheduled for 2004, which will result in more areas being subject to conformity demonstrations. Numerous metropolitan areas may face a cutoff of highway and transit funds in the future, unless they impose sharp reductions in emissions to demonstrate conformity. During a lapse inconformity, a state may receive federal highway funds only for a limited set of exempted projects(mostly safety-related or replacement and repair of existing transit facilities). The rules do not evenallow funding of new projects that might reduce emissions, such as new transit lines. Howconformity requirements may affect a state's access to federal highway funds has raised significantconcerns for the reauthorization of federal surface transportation programs. While conformityrequirements could be modified to provide greater compliance flexibility for states, proposals to doso have been controversial because conformity is the only current mechanism to ensure that statesconsider how their transportation planning decisions might affect air quality. Congress established the CMAQ program under the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA, P.L. 102-240 ). This program is based on the fundamental conceptthat lowering the number of miles traveled by motor vehicles, and reducing congestion to makevehicles operate more efficiently, can reduce emissions and improve overall air quality. Theprogram has been widely popular among local areas struggling to reduce air pollution, as it is thelargest single source of federal funding for air quality projects. While questions have been raisedabout the program's effectiveness, there appears to be broad support for increasing its funding levelsin response to concern that greater emission reductions will be needed in many states when newnonattainment areas are designated. Background. Congress originally authorized $6 billion for the CMAQ program from FY1992 through FY1997. In enacting TEA-21, Congressauthorized another $8.1 billion for continuing it from FY1998 through FY2003. CMAQ funding isavailable only for projects that would reduce traffic congestion and assist states in complying withthe NAAQS for carbon monoxide, ozone, and particulate matter. States with areas that are innonattainment with the NAAQS for these pollutants, and those that must maintain them, receiveCMAQ funds according to a formula based on the severity of air pollution in those areas and thepopulation residing in them. States that do not have any nonattainment or maintenance areas receive0.5% of the total annual CMAQ apportionment, and have the flexibility to use this amount fortransportation projects that are eligible under CMAQ or the Surface Transportation Program. TEA-21 also allowed each state to transfer a portion of its CMAQ funds to other highway programsthat the state determines to have a higher priority, if certain conditions are met. Most transportation control measures identified in Section 108 of the Clean Air Act are eligible for funding. (8) CMAQ projects generally fall into oneof the following eight categories: (1) masstransit; (2) traffic flow improvements; (3) rideshare programs; (4) traffic demand managementprograms; (5) bicycle and pedestrian projects; (6) public education; (7) vehicle inspection andmaintenance programs; or (8) alternative fuel conversions. According to the Federal HighwayAdministration, more funding has been obligated for conventional mass transit projects than for anyother activity, approximately 44% of total CMAQ funds since FY1992. Key Policy Issues. After more than a decade of implementation, questions have been raised as to whether the CMAQ program has reducedemissions significantly enough to help states comply with the NAAQS. Whether to modify variouselements of the program to improve its effectiveness, or possibly to shift its focus, is an issue forreauthorization. Congress included a provision in TEA-21 that required the National Academy ofSciences (NAS) to study whether the emission reductions from CMAQ projects have been largeenough to help states comply with the NAAQS. The NAS released its report in the spring of 2002. (9) The study indicated that the air quality benefits of CMAQ projects were difficult to assess becauseof the lack of quantitative data for all projects. For those with quantitative data, the NAS concludedthat the emission reductions were relatively small and that these projects were less cost-effective thanother pollution control measures. However, the NAS also concluded that when these emissionreductions are assessed collectively the overall air quality benefits that they provide may be greatenough to help states attain and maintain the NAAQS in areas that are on the margin of compliance. Consequently, the NAS recommended that the program be continued and suggested variousmodifications to improve its effectiveness. The findings of the NAS have raised numerous issues for reauthorization. Since the impact of the program on air quality was difficult to quantify, some argue that the focus should be shifted toreducing traffic congestion in general, rather than linking eligibility to air quality benefits that arequestionable. There also are arguments that the statutory formula should at least be amended toprovide a higher amount of minimum funding to states that do not have any air quality problems, butthat would still benefit from a reduction in traffic congestion. Rising traffic congestion andprogressively lengthier commuting times in some metropolitan areas have motivated support for suchoptions among some transportation stakeholders. On the other hand, proponents of the program argue that areas on the verge of attainment may benefit from the continued use of CMAQ funds for air quality projects, even if the emissionreductions are relatively small. They also argue that more areas will be in need of emissionreductions in order to comply with stricter federal standards for ozone and fine particulates,scheduled to become effective in 2004, and that air quality benefits from CMAQ projects, no matterhow small, would be helpful. However, the current funding formula does not include a factor toaccount for new areas that will be in nonattainment with these stricter standards. Consequently, theformula would need to be changed during reauthorization, in order to allow affected states to receivegreater funding. In general, transit projects provide air quality benefits by reducing the number of motor vehicles on the road and the emissions that are generated from their operation. However, transit vehicles(mainly buses) produce emissions themselves. In many local areas with air quality problems, transitagencies have purchased buses that operate on cleaner-burning fuels as a means to control emissions. In enacting TEA-21, Congress set aside funding for a program to assist transit agencies in purchasingclean fuel buses, but subsequently redirected this funding to a more general fund for bus purchasesnot restricted to fuel type. While this program has not been implemented, many transit agencies have still chosen to purchase clean fuel buses with federal funds at their discretion. The upcoming designation of newnonattainment areas has sparked further interest in the use of clean fuel buses, and some haveadvocated that a dedicated source of funding should be established for acquiring them. This proposalhas been controversial to those who argue that local transit agencies should be allowed to decidewhat kinds of buses best meet their capacity needs, rather than having a portion of federal transitfunds restricted to certain types of buses based on fuel type. Background. TEA-21 authorized the Secretary of Transportation to establish a Clean Fuels Formula Grant Program to assist transit agencies inacquiring low-emission alternative-fueled buses, improving facilities to accommodate them, andrebuilding pre-1993 engines with clean fuel technology. Under this authority, the Secretary ofTransportation may award competitive grants to transit agencies based on a formula that factors inthe number of vehicles in a transit system's fleet, the number of passenger miles traveled, and theseverity of air pollution in a recipient's area. Eligible technologies include compressed natural gas(CNG), liquified natural gas (LNG), biodiesel fuel, battery power, alcohol-based fuel, hybrid electricpower, fuel cells, clean diesel fuel, or similar technologies. To support the program, TEA-21 authorized $200 million annually from FY1999 through FY2003, for a total authorization of $1 billion over five years. Of the $200 million annualauthorization, $100 million was authorized as guaranteed "firewalled" funds, and the remaining $100million was authorized as traditional discretionary funds subject to the annual appropriations process. In appropriations bills subsequent to TEA-21, Congress has not appropriated any of the $100 millionin traditional discretionary funds that were annually authorized for the program, and has redirectedthe $100 million in guaranteed annual funding to traditional capital bus improvement projects. TheFederal Transit Administration reports that data are not available to determine the extent to whichtransit agencies have purchased alternative-fueled buses with the redirected funding. Even though there is no dedicated source of funding for the purchase of clean fuel buses, they do receive preferential treatment under federal matching funds requirements to help local areas attainor maintain federal air quality standards. Generally, federal transit programs provide up to 80% ofthe cost of new bus purchases, and local transit agencies are responsible for securing funding fromstate or local sources to pay the remaining 20%. However, the federal contribution can be increasedto 90% to purchase buses that use "clean" or "alternative" fuels for the purpose of complying withClean Air Act requirements. (10) The major capital assistance programs administered by the Federal Transit Administration that have funded the purchase of alternative-fueled buses include the Capital Investment Grants andLoans Program, Urbanized Area Formula Program, Non-Urbanized Area Formula Program, ElderlyPersons and Persons with Disabilities Program, and the Job Access/Reverse Commute Program. Some funding is also available under the "New Starts" Program. Of these programs, the UrbanizedArea Formula Program has been the largest source of funding for buses that operate on alternativefuels. Alternative-fueled buses have accounted for a significant share of Federal Transit Administration funding obligations in recent years. The agency began compiling data on new buspurchases by fuel type in FY2000. As indicated by the data in the table below, an average of 34%of the federal funding obligated for the purchase of new transit buses from FY2000 to FY2002 hasbeen devoted to those that operate on alternative fuels. Air quality concerns are frequently among the most prominent factors in a transit agency's decision to purchase clean fuel buses, despite their typically higher costs. For example, transitagencies located in metropolitan areas that need emissions reductions to comply with federal airquality standards under the Clean Air Act are more likely to choose cleaner buses that operate onalternative fuels. Other factors may include the extent to which the purchase of cleaner buses wouldimprove the public's perception of transit and increase ridership, and whether there are any state orlocal mandates or incentives for the use of alternative fuels. Apart from air quality concerns, an economic factor that transit agencies typically consider in their planning process is the extent to which the purchase of alternative-fueled buses would help tomaximize the benefits of past investments in the refueling infrastructure necessary for such vehicles. Consequently, transit agencies that have invested in alternative-fueled buses in the past are morelikely to purchase additional ones in the future. Conversely, transit agencies that have not yetinvested in them are less likely to do so, as they would need to invest additional resources in newrefueling infrastructure. Federal Funding Obligated by the Federal Transit Administration for the Purchase of Buses by Type of Fuel from FY2000 to FY2002a Source: Prepared by the Congressional Research Service using data from the Federal TransitAdministration, Statistical Summaries for FY2000, FY2001, and FY2002. a Dollar amounts in the table reflect the amount of federal funding obligated to assist transit agenciesin purchasing buses. Dollar amounts do not include funds provided by transit agencies to meetmatching funds requirements, and therefore do not reflect the total cost of bus purchases. b Alternative fuels include compressed natural gas, liquified natural gas, liquified petroleum gas,methanol, ethanol, electric, biodiesel, dual fuel operation, fuel cell, and hybrid electric. Key Policy Issues. As indicated by the above data, funding obligations for alternative-fueled buses have significantlyexceeded the original $200 million annual authorization for the Clean Fuels FormulaGrant Program. This trend has caused some to argue that setting aside fundingexclusively for the purchase of alternative-fueled buses is not necessary to encouragetheir use, and that the favorable 10% matching funds requirement is sufficientencouragement. Some also point out that stricter standards for heavy-duty dieselengines and fuels, which are scheduled to be phased in beginning in 2007 and 2006respectively, will allow diesel buses to achieve a level of emissions performance thatis equivalent to alternative fuels such as CNG. Such critics say that the cleanerperformance of new diesel buses that are on the way will negate the need forreserving a portion of transit funds for alternative-fueled buses in order to reduceemissions. On the other hand, some environmental organizations have expressedskepticism that diesel buses equipped with cleaner engines will generate as fewemissions in actual operation as those that operate on alternative fuels. They arguethat dedicated funding should be set aside in reauthorization for alternative-fueledbuses to ensure that transit agencies continue to purchase them, as a means toimprove air quality. The federal government currently provides an excise tax reduction and an income tax credit to promote the production, sale, and use of renewablealcohol-based fuels, including ethanol and methanol. (11) Vehicles operated on thesefuels typically produce fewer tailpipe emissions (particularly carbon monoxide) thanthose operated on conventional gasoline or diesel. A reduction in tailpipe emissionscan help to reduce the impact of highway travel on air quality. However,alcohol-based fuels can be more "volatile" than conventional gasoline or diesel, andthe use of these alternative fuels can result in higher evaporative emissions duringrefueling, which could offset tailpipe emission reductions in some cases. Whilealcohol-based fuels have the potential to improve air quality, the preferentialtreatment of these fuels in the U.S. tax code has been controversial. Background. The current authority for the tax benefits that apply to alcohol-based fuels expires at the end of2007. These benefits are available for alcohol-based fuels if they are derived fromrenewable sources. Those produced from petroleum, natural gas, or coal arespecifically excluded from eligibility under the U.S. tax code. (12) Ethanol is producedprimarily from the distillation of corn and is therefore renewable. While methanolcan also be derived from renewable biomass or municipal waste, it usually isproduced from natural gas, which is not renewable. Consequently, the tax benefitsfor alcohol-based fuels apply mostly to the sale of ethanol. Among alternative fuels, ethanol is the most commonly used. The majority of the ethanol sold is not used in its pure form. Rather, it is blended with gasoline toproduce "gasohol," which can be used in any conventional vehicle as a substitute forordinary gasoline. Ethanol is also used as an additive for various purposes. It iscommonly added to "reformulated" gasoline (RFG) to increase the oxygen contentof the fuel. RFG must be made available in certain areas to meet Clean Air Actrequirements to reduce vehicular emissions of precursors to ground-level ozone,commonly referred to as smog. During the winter months, RFG also must be usedin certain areas to reduce emissions of carbon monoxide. In addition to meetingoxygenate requirements for RFG, ethanol is added to gasoline in some areas toincrease octane levels. (For additional information on ethanol, refer to CRS Report RL30369, Fuel Ethanol: Background and Public Policy Issues .) The excise tax reduction for ethanol is most commonly taken at the blended state by either fuel producers or distributors. The amount of the tax reductiondepends on the percentage of the blend that is composed of ethanol. The current taxreduction is 5.2 cents per gallon for gasohol consisting of at least 10% ethanol, 4.0cents per gallon for blends of at least 7.7% ethanol, and 3.0 cents per gallon forblends of at least 5.7% ethanol. These amounts reduce the excise tax levied on thesale of gasohol below the current tax rate of 18.4 cents per gallon for ordinarygasoline. While nearly all of the excise taxes on gasoline are deposited into theFederal Highway Trust Fund, 2.5 cents of the per gallon tax for gasohol are depositedinto general Treasury funds, and are therefore not dedicated to the support of federalsurface transportation programs. Key Policy Issues. Since the wholesale cost of ethanol is relatively high, tax benefits for the sale of ethanol areneeded to make it competitive with other fuel additives and with conventional fuels. However, there has been disagreement as to whether these benefits are appropriate. Proponents argue that ensuring the commercial viability, and resulting availability,of ethanol improves air quality due to reduced vehicle emissions, lowers U.S.dependence on foreign oil, and provides an additional market for corn farmers whogrow the biomass needed to produce ethanol. On the other hand, opponents arguethat gasohol tax benefits are essentially a subsidy for the ethanol industry, whichreduces overall revenues for the Federal Highway Trust Fund. Some also argue thatthe emissions and energy benefits of ethanol can be offset by the energy needed toproduce the fuel and the resulting emissions from generating that energy. Key issuesfor reauthorization include (1) whether to extend the tax benefits beyond this timeframe, (2) whether to increase or decrease the amount of the excise tax reduction andthe income tax credit, and (3) whether to continue the current policy of devoting aportion of alcohol fuel tax revenues to general Treasury funds. Many states have constructed HOV lanes as a means to reduce traffic congestion. Through reducing congestion, these types of lanes also can provide airquality benefits because vehicles typically generate fewer emissions when operatingmore efficiently at steady speeds. In TEA-21, Congress approved a novel approachto using HOV lanes for air quality purposes by allowing states to permit vehicles withextremely low emissions to operate in an HOV lane with only one occupant. Thepremise was to offer a benefit that would possibly encourage the purchase of cleanervehicles, thereby helping to improve air quality. This authority expired on October1, 2003. Some have advocated that it should be renewed and expanded to includeother low-emission vehicles that were not clean enough to qualify under the previousauthority. However, others have expressed concern that expanding this benefit toinclude a greater number of vehicles could cause traffic congestion to rise, impairingthe primary function of HOV lanes. Background. TEA-21 provided the authority for states to permit a vehicle with only one occupant to operate in anHOV lane, if the vehicle is certified under federal regulations as an "inherentlylow-emission vehicle" (ILEV). The law authorized states to implement this policythrough September 30, 2003, and granted each state the right to revoke this policywithin its borders if HOV lane congestion were to increase as a result of this practice. EPA established the ILEV category to recognize the inherently low emissions ofcertain types of fuel and vehicle technologies and to encourage their use. The ILEVstandards are so strict that only those vehicles without evaporative fuel emissions areable to meet them. Consequently, a vehicle that burns any quantity of gasoline ordiesel cannot meet the standards, including hybrid vehicles that operate on acombination of gasoline or diesel and electric batteries. Vehicles that operate entirelyon alternative fuels with no evaporative emissions, such as compressed natural gas(CNG), liquified natural gas (LNG), or purely electric vehicles, are the only ones thatare able to meet the standards. Such vehicles account for a very small percentage ofthe on-road fleet. Due to the limited availability of ILEVs, few motorists have beenable to take advantage of the HOV lane benefit provided in TEA-21. Key Policy Issues. There has been growing interest among motorists, the vehicle industry, and some states in renewingthe HOV lane benefit and expanding it to hybrid vehicles, which are more widelyavailable. Proponents argue that hybrid vehicles are almost as clean as ILEVs, andthat expanding this benefit to include them would encourage additional sales of"cleaner" vehicles that would help to improve overall air quality. Over theshort-term, allowing hybrid vehicles to use HOV lanes with only one occupant maynot cause HOV lanes to become noticeably more congested in areas where there isexcess HOV lane capacity to accommodate them, because they currently representa fairly small percentage of the vehicle fleet. However, HOV lanes could becomemore congested in some areas over the long-term, if the popularity and correspondingsales of these vehicles were to rise, making them a larger share of the on-road fleet. In addition to contributing to air pollution, highway travel and constructionactivities can impair water quality. Runoff from highways can deposit a variety ofpetrochemicals and other potentially hazardous substances into adjacent waterwaysand wetlands, which can migrate over time throughout a watershed and result inviolations of water quality standards. Highway runoff is basically a "nonpoint"source that is more difficult to quantify and control than a conventional "point"source, such as a water discharge pipe from a stationary facility. In seeking federal funds for new highway construction, states must consider the potential impacts of highway runoff on water quality and wetlands during theenvironmental review process, required by NEPA. Depending on the extent of theseimpacts, mitigation, such as storm water management systems, may be required toprevent or minimize the potential for pollution. If wetlands would be lost as a resultof new highway construction, other measures, such as mitigation "banks" may berequired in order to make up for these losses. TEA-21 established a preference forthe use of these banks to address the impact of new highway construction onwetlands. (13) The costs of water pollutionmitigation and the replacement of wetlandsis typically absorbed as part of the total costs for a new highway construction project. However, many highways were constructed prior to more recent requirements for the installation of storm water management systems, or other water pollutionmitigation measures. Consequently, many waterways adjacent to highways havebeen contaminated from years of runoff and are in need of environmental restoration. In response to these needs, Congress has provided authority for states to use federalhighway funds for environmental restoration or mitigation projects to address waterpollution from existing highways. Eligibility for these projects is provided under theSurface Transportation Program in general, and under the TransportationEnhancements set-aside within this program. The conditions of eligibility under eachauthority and key issues for Congress are discussed below. Most federal highway programs are devoted to meeting specific needs, such interstate maintenance, bridge repair, or highway safety, and states are generally notpermitted to use funds allocated to these programs for other purposes. The SurfaceTransportation program is different in that it gives states broad flexibility to usefederal highway funds to meet multiple surface transportation needs. In enactingTEA-21, Congress amended the eligibility requirements of the SurfaceTransportation Program to include projects that would address the impacts ofhighway travel on water quality. Background. Under the Surface Transportation Program, the Federal Highway Administration is authorized to makefunds available to the states for environmental restoration and pollution abatementprojects that address water contamination or environmental degradation attributed torunoff from an existing highway. (14) Forclarification purposes, the construction orretrofit of storm water treatment systems is highlighted as an eligible activity. Surface Transportation Program funds may be spent on environmental restorationand pollution abatement activities only when an existing highway is undergoing"reconstruction, rehabilitation, resurfacing, or restoration." The portion of programfunds that can be spent on environmental restoration and pollution abatementactivities for these types of highway projects is limited to 20% of the total projectcost. The law does not provide the authority for states to expend program funds tomitigate water pollution from past runoff, if improvements are not being made to thehighway at the time. While environmental restoration and pollution abatement activities are eligible for funding, the law does not require states to expend their Surface TransportationProgram funds on these activities. Rather, a state may use program funds for theseactivities at its discretion. Determining how many states have done so, and in whatamount, is not possible because states are not required to comprehensively track thisinformation. However, states may voluntarily supply this information to the FederalHighway Administration. Based on the data that have been provided, the statesreport that they have spent a total of $19 million in Surface Transportation Programfunds on environmental restoration and pollution abatement projects from FY1998through mid-FY2003. However, the actual expenditure may be significantly greaterthan this amount, due to the absence of complete data from all states. States alsomust spend a portion of their federal funds for new highway construction to satisfywater pollution mitigation requirements. Due to the scope of most new constructionand the extent of its impacts, these amounts mostly likely have exceeded the fundingthat has been spent to mitigate pollution from older highways. However, data on thespecific amount of funding are not available because states do not typically separatemitigation costs out from the total costs of new highway construction. Key Policy Issues. Some of the relevant issues for the reauthorization of the Surface Transportation Program are (1)whether to increase the limitation on the portion of the total project cost that can bespent on environmental restoration and pollution abatement activities, in order toaccommodate cases in which mitigation costs may exceed the current 20% cap; (2)whether to establish a comprehensive reporting mechanism for tracking the amountof STP funds expended by states on these activities, so as to gain a betterunderstanding of the extent to which transportation facilities have impacted waterquality and necessitated mitigation; and (3) whether to permit STP funds to be usedto address water pollution from highway runoff, even if no highway improvementsare underway at the time. Although states have the flexibility to fund a wide variety of projects under the Surface Transportation Program, they must set aside 10% of their annualapportionment of funds under this program for "transportation enhancements" thatwould improve the multimodal, environmental, cultural, or aesthetic aspects of thenation's surface transportation system. In enacting TEA-21, Congress modified thedefinition of enhancements to include the mitigation of water pollution from highwayrunoff as an eligible activity. While the use of enhancements funding to addresswater quality needs has not been controversial, some criticisms have been raisedabout the use of federal highway funds for some enhancements that are not directlyrelated to surface transportation infrastructure needs. Background. States may choose to spend their enhancements funds on numerous categories of eligible activities. Thecategories that have received the most funding include bicycle paths and pedestrianwalkways, preservation of historic transportation facilities, and landscaping andscenic beautification. (15) Of the eligible categories,mitigation of water pollution fromhighway runoff has received a relatively small percentage of overall enhancementsfunding. TEA-21 authorized a total of $3.3 billion for transportation enhancementsfrom FY1998 through FY2003. Of this amount, the National TransportationEnhancements Clearinghouse reports that states had expended $66 million (or nearly2%) on water pollution mitigation projects through mid-FY2003. (16) While thisamount represents a small fraction of enhancements funding, it is more than threetimes the amount that states had reportedly spent on these types of projects withgeneral Surface Transportation Program funds. The federal contribution to the cost of projects funded under the Surface Transportation Program, including pollution mitigation, is generally limited to 80%,as is the case with most other federal highway programs. However, states have theflexibility to calculate the nonfederal share of the total cost of TransportationEnhancements based on individual projects, multiple projects, or on a programmaticlevel. States also can use funds from federal agencies other than the Department ofTransportation to count toward the nonfederal share of the cost of enhancements. (17) Consequently, the federal share of the cost of an individual project can be as high as100%, if the federal share for others is low enough to offset that amount and yield afederal share of no more than 80% for an entire group of projects. Key Policy Issues. Whilenumerous states, local communities, historic preservation interests, andenvironmental organizations have expressed support for the diversity of activities thatare supported with enhancements funding, some argue that certain enhancements arean ineffective use of federal highway funds. Opponents believe that federal highwayfunds should only be spent on improvements to surface transportation infrastructure,rather than on projects that may provide some related benefit, but that do not meethighway capacity needs, help to relieve traffic congestion, or meet an environmentalrequirement necessary for project approval. Limitations on federal highway fundsas a result of a recent decline in trust fund revenues have sparked some support forsuch arguments. If the funding for transportation enhancements were reduced oreliminated, states would still be able to use general Surface Transportation Programfunds at their discretion for pollution mitigation projects, assuming that currentauthority were not repealed. The majority of research and development activities that are supported withfederal highway funds focus on how to improve the overall function and safety of thenation's surface transportation system, in order to meet travel needs. A relativelysmall fraction of federal highway funds has been devoted to researching theenvironmental impacts of highway travel or developing environmentally beneficialtechnologies. Some argue that more highway resources should be devoted toenvironmental research and development in light of the impacts of vehicular travelon air and water quality. Others counter that highway capacity and safety needsshould remain the focus of research funded with motor fuels tax revenues, and thatother federal agencies, such as EPA or the Department of Energy, already conducta variety of activities to research pollution from motor vehicles and developadvanced vehicle technologies. While TEA-21 authorized the Secretary ofTransportation to establish an environmental research program, it was neverimplemented due to lack of funding. TEA-21 also authorized a program to developadvanced vehicle technologies, but its implementation has been limited due toinsufficient funding. TEA-21 authorized the Secretary of Transportation to establish a Surface Transportation-Environment Cooperative Research Program to be carried out withother federal agencies, state and local officials, scientists and engineers, andenvironmental organizations. It was designed to examine the complex relationshipsbetween surface transportation systems and the environment, and to improve methodsfor assessing transportation needs and determining the environmental impacts oftransportation. The law authorized $592 million in guaranteed funds for surfacetransportation research from FY1998 to FY2003, but a specific amount was notallocated for the environmental research program. In subsequent appropriations,Congress has not designated funding to implement the program, nor has theAdministration allocated funding for it within its discretion. TEA-21 authorized the Secretary of Transportation to establish an Advanced Vehicle Technologies Program to encourage the development of multimodal andenvironmental technologies to improve the efficiency, safety, and cost-effectivenessof the national transportation system. The law directed the Secretary ofTransportation to promote technological advances through contracts, cooperativeagreements, grants, and other transactions with other federal agencies, state and localgovernments, businesses, and research or educational organizations. TEA-21authorized a total of $250 million in general Treasury revenues to support theprogram from FY1999 to FY2003, which was subject to the annual appropriationsprocess. Of the $250 million authorization, Congress has appropriated $10 millionto date. Consequently, the implementation of the program has been limited. Theprojects that have been funded have focused on the development of low and zeroemission technologies, such as hybrid, all- electric, and fuel cell power trains. (18) Many stakeholders at the state and local level have expressed long-standingconcerns that the environmental review process for highway construction projects can be overly time-consuming and can impose additional costs. Some statetransportation departments and transportation advocacy organizations supportrevisions to certain elements of the process that could speed project delivery.However, environmental organizations have expressed concern that changes to theprocess might weaken environmental protections. They also argue that lengthyenvironmental reviews are sometimes warranted due to the scope of proposedalterations to the natural landscape and the potential effects of increased trafficcapacity on air and water quality. The National Environmental Policy Act of 1969 (NEPA, P.L. 91-190) requires all federal agencies to consider the environmental impacts of their proposed actions.To ensure that these impacts are considered before final decisions are made, NEPArequires federal agencies to provide a detailed statement of environmental impactsfor every proposed federal action significantly affecting the quality of theenvironment. The "detailed statement" has been subsequently referred to as anEnvironmental Impact Statement (EIS). The EIS must include a description of theproject's purpose and need, an analysis of all reasonable project alternatives, adescription of the affected environment, and the environmental consequences ofimpacts to the affected environment of each alternative. (19) The EIS must alsodemonstrate that appropriate comments were solicited from relevant federal, state andlocal agencies and from the public. Relevant agencies obligated to provide commentsare those with jurisdiction by law or special expertise with regard to theenvironmental impacts of the project. If it is not clear whether a project would have significant impacts, an Environmental Assessment (EA) must be prepared. An EIS is required if significantimpacts are identified at any time during preparation of the EA. Otherwise, a Findingof No Significant Impact (FONSI) will be issued. Projects that do not individuallyor cumulatively have a significant social, economic, or environmental impact areexcluded from the requirement to prepare an EA or EIS. Such projects are processedas a Categorical Exclusion (CE), which according to the Federal HighwayAdministration, account for about 91% of all highway projects. State agencies arerequired to provide FHWA with documentation to prove the action qualifies as a CE.The type of documentation required will depend upon the project. Final designactivities, property acquisition, or project construction cannot proceed until one ofthe following occurs: an action is classified as a CE, a FONSI is approved for an EA,or an EIS is approved. (For further discussion, refer to CRS Report RL32024 , Background on NEPA Implementation for Highway Projects: Streamlining theProcess. ) The Federal Highway Administration reports that approximately 3% of all federally funded highway projects have a significant enough impact on theenvironment to require the preparation of an EIS. These projects have received about9% of all federal highway funds. While these amounts represent a relatively smallportion of projects and overall funding, projects requiring an EIS are usually largeand costly and affect sizeable populations. Consequently, construction delays can becontroversial. The Federal Highway Administration has indicated that the planningand construction of a major highway project typically takes between 9 and 19 years,depending on size and complexity. Of these projects, the preliminary design andenvironmental review process accounts for one to five years of this time. To reduce the approval time for highway projects and speed the delivery of federal highway funds to states and local areas, Congress included provisions inSection 1309 of TEA-21 which require the Secretary of Transportation to streamlinethe environmental review process. Environmental streamlining can generally bedescribed as cooperatively establishing realistic project development time framesamong transportation and environmental agencies, and then working together toadhere to those time frames. The Department of Transportation has taken numerousadministrative actions in response to this requirement, but has not issued finalregulations to put streamlining into practice on a national scale. While the Clinton Administration did submit a streamlining regulatory proposal in May 2000, it was widely criticized on numerous grounds by Congress, the states,highway interest groups, and environmental organizations. The principal criticismswere that it did not fully address the requirements of TEA21, and that it would haveadded new elements to the planning and development process that may have resultedin further project delays. Due to the these concerns, the Bush Administration withdrew the proposal in September 2002, and indicated that a new proposal would not be forthcoming untilit is clear how Congress may address the issue during surface transportationreauthorization. In the interim, President Bush has issued an executive order whichdirects federal agencies to expedite environmental reviews for high-prioritytransportation projects, and has established specific goals to reduce the time framesfor review. (20) Hearings were held during the 107th Congress to examine the streamlining issue, and streamlining has been discussed in hearings on surface transportationreauthorization during the 108th Congress. In the conference report on TEA-21( H.Rept. 105-550 ), Congress stated its expectation that the Secretary ofTransportation would implement the streamlining requirements through theregulatory process. Some Members have expressed their disappointment that fiveyears after the enactment of the law, streamlining regulations have yet to be finalized. The lack of final regulations has increased interest in further legislative action tospeed project delivery and meet public demands for transportation infrastructure.
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Balancing public needs for surface transportation infrastructure with protecting the environment has been a long-standing issue among states and local communities. These two objectives can oftenconflict due to the rise in pollution that typically results when new highways or roadways areconstructed, or a highway is expanded, to provide greater traffic capacity. Expanding highwaycapacity can be especially challenging for states, if the resulting rise in pollution would be greatenough to make compliance with federal air quality standards more difficult. In order to receivefederal highway funds, the Clean Air Act requires states with air quality problems to demonstratethat their transportation plans conform to their plans to control emissions, referred to as"transportation conformity." To help reduce potential conflicts between highway capacity needs and environmental requirements, Congress has authorized the use of federal highway funds to alleviate some of thepollution resulting from highway construction and travel. The most recent multi-year fundingauthorization for these activities was provided in the Transportation Equity Act for the 21st Century(TEA-21, P.L. 105-178 ), which expired at the end of FY2003. How to meet state needs for highwayinfrastructure, while ensuring compliance with environmental requirements, is among the key issuesfor reauthorization. TEA-21 authorized a total of $218 billion for federal highway and transit programs from FY1998 to FY2003. It set aside $9 billion for air quality projects, including $8 billion for theCongestion Mitigation and Air Quality Improvement Program (CMAQ) to offset some of theemissions from highway travel, as a means to assist states in complying with federal air qualitystandards. The other $1 billion was authorized for the purchase of clean fuel transit buses. TEA-21also expanded funding eligibility to allow states to use federal highway funds for mitigating waterpollution from highway runoff. The law also authorized funding for environmental research and thedevelopment of advanced vehicle technologies, and it included several other provisions related toenvironmental protection. The use of federal highway funds to address environmental needs has focused mostly on air quality projects, due primarily to requirements for states to demonstrate conformity as a conditionfor receiving federal highway funds. Most of this funding has been provided under the CMAQprogram. While the program's effectiveness has been questioned, there is broad support forincreasing its funding in response to an upcoming rise in air quality needs among the states. Otherair quality issues involve the use of transit funding for the purchase of clean fuel buses, offering taxbenefits for cleaner-burning alcohol-based fuels, and exempting certain low-emission vehicles fromHigh Occupancy Vehicle (HOV) lane requirements. The extent to which water pollution mitigationprojects and environmental research and development activities should be eligible for federalhighway funds are issues as well. This report provides background information and analysis of key issues to serve as a resource document for the reauthorization debate. It will not be updated.
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